Putin's Reversal of Democracy Pledge Risks New Protest Wave
Stepan Kravchenko, Henry Meyer - Bloomberg - bloomberg.com - 4.26.12 - JRL 2012-77
Vladimir Putin risks reigniting the unrest that gripped Russia last year as opponents accuse him of backtracking on pledges to make the political process more democratic, investors from Frankfurt to Moscow said.
file photoFour months after President Dmitry Medvedev promised to restore direct elections for regional governorships, Putin's lawmakers are introducing measures that make it harder for candidates to run, a move criticized by former Finance Minister Alexei Kudrin. The Kremlin is also racing to appoint governors before the law takes effect.
.That's sparking complaints that Putin, 59, tricked the opposition to quell the protests that brought tens of thousands to the streets of Moscow and other cities. Putin's actions may test whether Russians are prepared to go back on the streets to challenge his authority, with the risk for investors being a new round of the market turmoil that wiped out 7.3 percent of the value of companies in Russia's benchmark stock index in a week.
"There is still significant risk of opposition protests, both in Moscow and further afield," Roland Nash, chief investment strategist at Verno Capital in Moscow, which manages $200 million in assets, said by e-mail. "The political genie is out of the bottle, and if the government doesn't react, then protests will continue."
Re-pricing of Risk
Renewed political unrest, particularly if it affects Moscow, "will definitely lead to a re-pricing of Russian risk," said Sergey Dergachev, who helps oversee $8.5 billion in emerging-market funds at Union Investment Privatfonds in Frankfurt.
The dollar-denominated RTS stock index lost more than 13 percent of its value and the ruble had its longest losing streak since January 2009 in the 10 days after the disputed Dec. 4 parliamentary vote as tens of thousands of people protested in Russia's largest cities against what they said was fraud during the election.
Russia's 83 regions will be the focus of political competition as Putin, who'll be inaugurated on May 7 for a six- year Kremlin term, ruled out any national challenge to his power by refusing to hold new parliamentary elections after fraud claims. The opposition, which mounted a hunger strike in the southern city of Astrakhan after a disputed mayoral vote, is vowing to escalate its campaign.
Right to Veto
Putin will probably have the right to veto candidates. Aspiring governors must be vetted to protect Russia from the threat of "nationalism and separatism," he said on April 11. The country fought two wars in the 1990s against breakaway rebels in the mainly Muslim region of Chechnya.
"There won't be any stability in the regions anymore," said Gleb Pavlovsky, a former Kremlin adviser who heads the Moscow-based Effective Policy Foundation. "A new life is starting there and this law is going to provoke a growing number of conflicts."
As the unrest escalated, Medvedev announced the return to direct elections for governors, who have been appointed by the president since 2005, along with measures to make it easier to register parties and run for president.
Political Stagnation
Medvedev on April 24 trumpeted the changes as "unprecedented for the past 20 years," while saying that Russia's political system is showing signs of "stagnation" after stabilizing.
The president denied today that the law restoring the direct election of governors approved yesterday by the lower house of parliament created "obstacles" to political competition.
The measure won't remove the threat of regional authorities bullying opposition candidates, according to Kudrin, who left the government last year after clashing with Medvedev.
©2012 BLOOMBERG L.P. ALL RIGHTS RESERVED; article also appeared at http://www.bloomberg.com/news/2012-04-25/putin-s-reversal-of-democracy-pledge-risks-new-wave-of-protests.html
Keywords: Russia, Government, Politics - Russian News - Russia
Vladimir Putin risks reigniting the unrest that gripped Russia last year as opponents accuse him of backtracking on pledges to make the political process more democratic, investors from Frankfurt to Moscow said.
file photoFour months after President Dmitry Medvedev promised to restore direct elections for regional governorships, Putin's lawmakers are introducing measures that make it harder for candidates to run, a move criticized by former Finance Minister Alexei Kudrin. The Kremlin is also racing to appoint governors before the law takes effect.
.That's sparking complaints that Putin, 59, tricked the opposition to quell the protests that brought tens of thousands to the streets of Moscow and other cities. Putin's actions may test whether Russians are prepared to go back on the streets to challenge his authority, with the risk for investors being a new round of the market turmoil that wiped out 7.3 percent of the value of companies in Russia's benchmark stock index in a week.
"There is still significant risk of opposition protests, both in Moscow and further afield," Roland Nash, chief investment strategist at Verno Capital in Moscow, which manages $200 million in assets, said by e-mail. "The political genie is out of the bottle, and if the government doesn't react, then protests will continue."
Re-pricing of Risk
Renewed political unrest, particularly if it affects Moscow, "will definitely lead to a re-pricing of Russian risk," said Sergey Dergachev, who helps oversee $8.5 billion in emerging-market funds at Union Investment Privatfonds in Frankfurt.
The dollar-denominated RTS stock index lost more than 13 percent of its value and the ruble had its longest losing streak since January 2009 in the 10 days after the disputed Dec. 4 parliamentary vote as tens of thousands of people protested in Russia's largest cities against what they said was fraud during the election.
Russia's 83 regions will be the focus of political competition as Putin, who'll be inaugurated on May 7 for a six- year Kremlin term, ruled out any national challenge to his power by refusing to hold new parliamentary elections after fraud claims. The opposition, which mounted a hunger strike in the southern city of Astrakhan after a disputed mayoral vote, is vowing to escalate its campaign.
Right to Veto
Putin will probably have the right to veto candidates. Aspiring governors must be vetted to protect Russia from the threat of "nationalism and separatism," he said on April 11. The country fought two wars in the 1990s against breakaway rebels in the mainly Muslim region of Chechnya.
"There won't be any stability in the regions anymore," said Gleb Pavlovsky, a former Kremlin adviser who heads the Moscow-based Effective Policy Foundation. "A new life is starting there and this law is going to provoke a growing number of conflicts."
As the unrest escalated, Medvedev announced the return to direct elections for governors, who have been appointed by the president since 2005, along with measures to make it easier to register parties and run for president.
Political Stagnation
Medvedev on April 24 trumpeted the changes as "unprecedented for the past 20 years," while saying that Russia's political system is showing signs of "stagnation" after stabilizing.
The president denied today that the law restoring the direct election of governors approved yesterday by the lower house of parliament created "obstacles" to political competition.
The measure won't remove the threat of regional authorities bullying opposition candidates, according to Kudrin, who left the government last year after clashing with Medvedev.