Emerging Markets Roundup: Russia

PUTIN PRESIDENCY RUN FACES LITTLE OPPOSITION

 

By Kim Iskyan

 

Following much speculation on whether current Russian president Dmitry Medvedev or Prime Minister and former president Vladimir Putin would run for president in March 2012, Medvedev announced in late September that he would hand the baton to Putin.

 

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Mikhail Prokhorov dropped by opposition party

In turn, Putin said that once he takes office—a virtual certainty, as there is no opposition to speak of—he would name his protégé Medvedev as prime minister.

 

To many investors focused on predictability and certainty, Putin—who remains by far the country’s most popular politician—is a safe pair of hands who will continue to provide a much-needed element of stability to the country’s economic and political environment. But there is widespread doubt among investors that Putin will carry on reforms Medvedev initiated during his term, or that Putin will push to reduce Russia’s excessive reliance on commodities. The likely return of Putin to the presidency further emphasizes the importance of the individual in the Russian political system. The abrupt departure of finance minister Alexei Kudrin (see the Newsmakers section for more detail) cast a pall over what was intended to be a celebratory announcement.

 

Russia’s 19-year journey to WTO accession appears unlikely to come to a conclusion in 2011. Former Soviet republic Georgia, which was invaded by Russia in August 2008, said in early October that talks with Russia aimed at securing Georgian approval of Russia’s membership application were proceeding slowly. Georgia said that it was prepared to exercise the veto power that it (and every other WTO member) holds to bar Russian entry—although American and European pressure will at some point likely force the Caucasus country to compromise.

 

In mid-September, the bizarre and short political career of Russian oligarch Mikhail Prokhorov, who holds assets worth around $18 billion, came to a sudden end. Tapped over the summer by the Kremlin to head up Right Cause, a sanctioned “opposition” political movement designed to attract reform-minded middle class voters, Prokhorov strayed off-course with increasingly provocative criticism of the current regime, and was dumped in an apparent party coup.

 

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