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Investors see Putin’s plan to stay in power as token of stability

MOSCOW, October 3 (Itar-Tass)

Russian President Vladimir Putin’s declared consent to lead the United Russia party’s federal election ticket and, situation permitting, to take the prime minister’s seat after the expiration of his second presidential term of office in 2008 was not just a stroke of lightning that shed light on Russia’s hitherto obscure future political scene. Its effects were immediately in sight in the economic affairs as well.  

The promise of political stability – and this is precisely the way foreign investors interpreted Putin’s intention to stay in power – caused an upsurge in the Russian stock market. Most Russian securities on Tuesday closed 1.9-5.7 points higher, and the index of the Russian Trading System (RTS) for the first time ever closed above 2,100 points.  

Putin eases risks  

“Foreign investors are flocking back into the Russian market after a prolonged pause following the crisis of liquidity,” says the daily Kommersant. “Aggressive buying by foreign funds pushed the RTS index to a record high above 2,100 points. That was their response to Vladimir Putin’ s statement he was accepting the invitation from the United Russia party to number one position on its State Duma federal election ticket. The way the Western investors see it, the decision is a clear sign political risks have eased.”  

“The influx of Western investment was most significant into Gazprom and Sberbank securities,” the daily quotes a Troika Dialog trader, Alexei Golubykh as saying.  

“The investors have interpreted the Russian president’s statement as evidence the degree of political uncertainty in the country is down and the continuity of the current political course will be ensured,” says Yaroslav Lisovolik, the chief analyst at Yaroslav Lisovolik.  

“Putin’s intention to lead the United Russia list of candidates in the Duma elections and, probably, (at some future date) the Cabinet as well, has had a calming effect on the investors,” the daily Vedomosti quotes the chief trader of the Troika Dialog company, Timur Nasardinov, as saying. “For them it was equivalent to a confirmation the political course will remain as it is.”  

A Renaissance Capital group trader, Dmitry Kulyashentsev, told Vedomosti political news will have tangible effects on Russian share prices after a certain while, when there is some certainty about State Duma election results and about a future presidential successor candidate. 

The chief of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, has formulated the point of view of Russian businesses.  

The president’s decision gives businesses “guarantees of stability and continuity of the once-adopted policy irrespective of who becomes Russia’s president in 2008,” he said.  

“Now, that Vladimir Putin has made up his mind, the future presidential election for businesses is no longer as crucial as it has been so far, for there is emerging a very powerful system, a political construction with a built-in system of checks and counter-balances,” Shokhin said.  

“The situation in the world markets, and the events at the United Russia congress were very strong tremors, bound to have lasting aftershocks,” Prime-Tass quotes Alexei Kozlovsky, of the Aton company, as saying. “Monday’s statement by the head of state at the United Russia congress was a good start in a chain of future expectations.” 

Ronald Smith and Erik DePoy, both analysts at Russia’s Alfa-Bank, told Prime-Tass Putin’s decision would considerably ease the electoral risks for the Russian economy and the market, because the possibility of a political U-turn that might occur over the coming six months has now been pushed into the background.”  

“Stability and continuity are the watchwords of the day,” the analysts said. “Stability is up and risks, down.”  

It is to Putin’s decision that the Russian market owes the surge of the Russian Trading System RTS index to its all-time high, says the president of the National Energy Security Fund, Konstantin Simonov.  

“Businesses want at least some sort of stability. Putin stays, albeit in a different capacity, and the business community, judging by the market’ s response, has heaved a sigh of relief.”  

Business cleansing   

In particular, Russian mass media have emphasized Vladimir Putin’s call, sounded at the United Russia party congress, for separating business and power, for clearing the party’s ticket of businessmen. 

“Everybody was curious what United Russia will do to business people on its lists in the wake of the president’s harsh statement on that score,” says the daily Nezavisimaya Gazeta. “As many surely remember, the president described parliamentary immunity as a redundant luxury for the members of the business community.”  

The daily remarks the United Russia has had a “good night’s work” in that sense to remove about a hundred “faulty names” from the lists of its candidates. 

As the daily Kommersant has said, out went the chief of the oil company Rosneft Sergei Bogdanchikov and head of the Nafta-Moskva oil company Suleiman Kerimov, a man some saw as a future State Duma member from Dagestan. The other dropouts, first mentioned during intra-party primaries, were chief of the Bogosovlsk Aluminum Smelter Sibgatulla Aminov, General Director of the Irkutsk Aluminum Smelter Igor Grinberg, General Director of the Leningrad Region gas provider Lenoblgaz Yuri Strakhov, chief of the regional gas provider in the Perm Region (Permregiongaz) Alexander Agishev, head of the Sady Pridonya (Don River Valley Gardens) company Andrei Samokhin and chairman of the Chelyabinsk Coal Company’s board of directors, Konstantin Strukov.  

In the current State Duma big business tycoons number three dozen.  

By Itar-Tass writer Lyudmila Alexandrova  

Source: ITAR-TASS World Service


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Analytical series “The Political compass”:

Political power in Russia after presidential election
State Corporations in the Russian Economy
Political Results of 2007: Russia on the Eve of Power Shuffle
Political Landscape Ahead of the Parliamentary Election 2007
«Centers of influence» in the Russian politics

All reports for: 2009 , 2008 , 2007

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