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Putin's $40 billion fortune

Putin, the Kremlin power struggle and the $40bn fortune

Luke Harding in Moscow
Friday December 21, 2007

Guardian

An unprecedented battle is taking place inside the Kremlin in advance of Vladimir Putin's departure from office, the Guardian has learned, with claims that the president presides over a secret multibillion-dollar fortune.
Rival clans inside the Kremlin are embroiled in a struggle for the control of assets as Putin prepares to transfer power to his hand-picked successor, Dmitry Medvedev, in May, well-placed political observers and other sources have revealed.

At stake are billions of dollars in assets belonging to Russian state-run corporations. Additionally, details of Putin's own personal fortune, reportedly hidden in Switzerland and Liechtenstein, are being discussed for the first time.

The claims over the president's assets surfaced last month when the Russian political expert Stanislav Belkovsky gave an interview to the German newspaper Die Welt. They have since been repeated in the Washington Post and the Moscow Times, with speculation over the fortune appearing on the internet.

Citing sources inside the president's administration, Belkovsky claims that after eight years in power Putin has secretly accumulated more than $40bn (£20bn). The sum would make him Russia's - and Europe's - richest man.

In an interview with the Guardian, Belkovsky repeated his claims that Putin owns vast holdings in three Russian oil and gas companies, concealed behind a "non-transparent network of offshore trusts".

Putin "effectively" controls 37% of the shares of Surgutneftegaz, an oil exploration company and Russia's third biggest oil producer, worth $20bn, he says. He also owns 4.5% of Gazprom, and "at least 75%" of Gunvor, a mysterious Swiss-based oil trader, founded by Gennady Timchenko, a friend of the president's, Belkovsky alleges.

Asked how much Putin was worth, Belkovsky said: "At least $40bn. Maximum we cannot know. I suspect there are some businesses I know nothing about." He added: "It may be more. It may be much more.

"Putin's name doesn't appear on any shareholders' register, of course. There is a non-transparent scheme of successive ownership of offshore companies and funds. The final point is in Zug [in Switzerland] and Liechtenstein. Vladimir Putin should be the beneficiary owner."

Putin has not commented on Belkovsky's claims. The Guardian put the allegations to the Kremlin but was told Putin's chief spokesman, Dmitry Peskov, was not available.

Discussion of Putin's wealth has previously been taboo. But the claims have leaked out against the backdrop of a fight inside the Kremlin between a group led by Igor Sechin, Putin's influential deputy chief of staff, and a "liberal" clan that includes Medvedev.

The Sechin group is made up of siloviki - Kremlin officials with security/military backgrounds. It is said to include Nikolai Patrushev, the head of the Federal Security Service (FSB), Russia's KGB successor agency, his deputy Alexander Bortnikov, and Putin's aide Viktor Ivanov.

Those associated with the liberal camp include Roman Abramovich, the Russian oligarch and owner of Chelsea football club who is close to Putin and the Yeltsin family. Other members are Viktor Cherkesov, the head of the federal drug control service, and Alisher Usmanov, an Uzbek-born billionaire.

Insiders say the struggle has little to do with ideology. They characterise it as a war between business competitors. Putin's decision to endorse as president Medvedev - who has no links with the secret services - dealt a severe blow to the hardline Sechin clan, they add.

Some analysts have said Putin would like to retire but has been forced to carry on to shield Medvedev from siloviki plotting. Others disagree and say Putin wants to stay in power. On Monday Putin confirmed he intends next year to become Russia's prime minister.

"The siloviki are not at all nice," Yulia Latynina, a Russian political commentator said. Latynina, who hosts a political talkshow on the liberal radio station Ekho Moskvy, was one of the first journalists to draw attention last month to Putin's reported links with Gunvor.

The company is based in Zug, a picturesque Swiss canton known as a bolthole for publicity-shy international businessmen. Gunvor has neither a website nor a Moscow office - but in 2007 posted profits of $8bn on a turnover of $43bn, an astronomic figure, according to industry experts. Like Putin, its reclusive owner, Timchenko, worked in the KGB's foreign affairs directorate. He is said to have met Russia's president in the late 1980s through KGB circles.

Gunvor, which has its head office in Geneva, failed to comment.

Critics say the wave of renationalisations under Putin has transformed Putin's associates into multimillionaires. The dilemma now facing the Kremlin's elite is how to hang on to its wealth if Putin leaves power, experts say. Most of its money is located in the west, they add. The pressing problem is how to protect these funds from any future administration that may seek to reclaim them.

"There's no point in having all this money if you can't travel to the Maldives or Paris and spend it," Elena Panfilova, the director of Transparency International in Russia said.

The first hints of the intra-clan warfare gripping the Kremlin emerged last month, when the FSB arrested General Alexander Bulbov, the deputy head of the federal drug agency, and part of the liberal group. His arrest saw a surreal standoff, with his bodyguards and FSB agents pointing machine guns at each other.

Earlier this month Russia's deputy finance minister, Sergei Storchak - another "liberal" - was also arrested and charged with embezzling $43.4m. He is currently in prison. His boss, Russia's finance minister, Alexei Kudrin, part of the liberal clan, says he is innocent.

But the liberal group - one of several competing factions inside the Kremlin - has struck back. Earlier this month Oleg Shvartsman, a previously obscure businessman, gave an interview to Kommersant newspaper claiming he secretly managed the finances of a group of FSB officers. Their assets were worth £1.6bn, he revealed.

The officers were involved in "velvet reprivatisations", Shvartsman, a fund manager, said - in effect forcibly acquiring private companies at below-market value and transforming them into state-owned firms. These assets were redistributed via offshore companies, he said.

According to Panfilova, the "randomised" corruption of the 1990s has given way to the "systemic and institutionalised corruption" of the Putin era. Members of Putin's cabinet personally control the most important sectors of the economy - oil, gas and defence. Medvedev is chairman of Gazprom; Sechin runs Rosneft; other ministers are chairmen of Russian railways, Aeroflot, a nuclear fuel giant and an energy transport enterprise.

Putin has created a new, more streamlined oligarchy, his critics say. "The crown jewels of the country's wealth have ended up in the hands of Putin's inner circle," Vladimir Rzyhkov - a former independent MP - wrote in Monday's Moscow Times.

Belkovsky - who published a book about Putin's finances last year, and who is the director of the National Strategic Institute, a Moscow thinktank - claims he is confident of his assessment of Putin's hidden wealth. "It's not a secret among the elites,' he said. "But please pay attention that Vladimir Vladimirovich [Putin] has never sued me."

Belkovsky adds that the west has misunderstood Putin and has been distracted by his "neo-Soviet" image. Putin, Belkovsky claims, is ultimately a "classic" businessman who believes money can solve any problem, and whose psychology was shaped by his experiences working in the St Petersburg mayor's office in Russia's crime-ridden early 1990s.

"He is quite sure of this. A problem that can't be resolved with $1bn can be resolved with $10bn, and if not with $10bn then $20bn, and so on," Belkovsky said.

In an interview on Wednesday with Time magazine, which named Putin its person of the year, the president vehemently denied that those inside the Kremlin were corrupt.

Asked whether "some of the people closest to you are getting rich", Putin said: "Then you know who and how. Write to us, to the foreign ministry, if you are so confident. I presume you know the names, you know the systems and the tools.

"I can assure you and everyone who would listen to us, watch us and read us, that the reaction would be swift, immediate, [and] within the prevailing law."


ALSO IF YOU HAVE NOT SEEN THE TIME'S "PUTIN: MAN OF THE YEAR" ARTICLE...SEE BELOW:

PUTIN: TIMES PERSON OF THE YEAR

A Tsar Is Born

By Adi Ignatius

No one is born with a stare like Vladimir Putin's. The Russian President's pale blue eyes are so cool, so devoid of emotion that the stare must have begun as an affect, the gesture of someone who understood that power might be achieved by the suppression of ordinary needs, like blinking. The affect is now seamless, which makes talking to the Russian President not just exhausting but often chilling. It's a gaze that says, I'm in charge.

This may explain why there is so little visible security at Putin's dacha, Novo-Ogarevo, the grand Russian presidential retreat set inside a birch- and fir-forested compound west of Moscow. To get there from the capital requires a 25-minute drive through the soul of modern Russia, past decrepit Soviet-era apartment blocks, the mashed-up French Tudor-villa McMansions of the new oligarchs and a shopping mall that boasts not just the routine spoils of affluence like Prada and Gucci but Lamborghinis and Ferraris too.

When you arrive at the dacha's faux-neoclassical gate, you have to leave your car and hop into one of the Kremlin's vehicles that slowly wind their way through a silent forest of snow-tipped firs. Aides warn you not to stray, lest you tempt the snipers positioned in the shadows around the compound. This is where Putin, 55, works. (He lives with his wife and two twentysomething daughters in another mansion deeper in the woods.) The rooms feel vast, newly redone and mostly empty. As we prepare to enter his spacious but spartan office, out walk some of Russia's most powerful men: Putin's chief of staff, his ideologist, the speaker of parliament—all of them wearing expensive bespoke suits and carrying sleek black briefcases. Putin, who rarely meets with the foreign press, then gives us 3 1⁄2 hours of his time, first in a formal interview in his office and then upstairs over an elaborate dinner of lobster-and-shiitake-mushroom salad, "crab fingers with hot sauce" and impressive vintages of Puligny-Montrachet and a Chilean Cabernet.

Vladimir Putin gives a first impression of contained power: he is compact and moves stiffly but efficiently. He is fit, thanks to years spent honing his black-belt judo skills and, these days, early-morning swims of an hour or more. And while he is diminutive—5 ft. 6 in. (about 1.7 m) seems a reasonable guess—he projects steely confidence and strength. Putin is unmistakably Russian, with chiseled facial features and those penetrating eyes. Charm is not part of his presentation of self—he makes no effort to be ingratiating. One senses that he pays constant obeisance to a determined inner discipline. The successor to the boozy and ultimately tragic Boris Yeltsin, Putin is temperate, sipping his wine only when the protocol of toasts and greetings requires it; mostly he just twirls the Montrachet in his glass. He eats little, though he twitchily picks the crusts off the bread rolls on his plate.

Putin grudgingly reveals a few personal details between intermittent bites of food: He relaxes, he says, by listening to classical composers like Brahms, Mozart, Tchaikovsky. His favorite Beatles song is Yesterday. He has never sent an e-mail in his life. And while he grew up in an officially atheist country, he is a believer and often reads from a Bible that he keeps on his state plane. He is impatient to the point of rudeness with small talk, and he is in complete control of his own message.

He is clear about Russia's role in the world. He is passionate in his belief that the dissolution of the Soviet Union was a tragedy, particularly since overnight it stranded 25 million ethnic Russians in "foreign" lands. But he says he has no intention of trying to rebuild the U.S.S.R. or re-establish military or political blocs. And he praises his predecessors Yeltsin and Mikhail Gorbachev for destroying a system that had lost the people's support. "I'm not sure I could have had the guts to do that myself," he tells us. Putin is, above all, a pragmatist, and has cobbled together a system—not unlike China's—that embraces the free market (albeit with a heavy dose of corruption) but relies on a strong state hand to keep order.

Like President George W. Bush, he sees terrorism as one of the most profound threats of the new century, but he is wary of labeling it Islamic. "Radicals," he says, "can be found in any environment." Putin reveals that Russian intelligence recently uncovered a "specific" terrorist threat against both Russia and the U.S. and that he spoke by phone with Bush about it.

What gets Putin agitated—and he was frequently agitated during our talk—is his perception that Americans are out to interfere in Russia's affairs. He says he wants Russia and America to be partners but feels the U.S. treats Russia like the uninvited guest at a party. "We want to be a friend of America," he says. "Sometimes we get the impression that America does not need friends" but only "auxiliary subjects to command." Asked if he'd like to correct any American misconceptions about Russia, Putin leans forward and says, "I don't believe these are misconceptions. I think this is a purposeful attempt by some to create an image of Russia based on which one could influence our internal and foreign policies. This is the reason why everybody is made to believe...[Russians] are a little bit savage still or they just climbed down from the trees, you know, and probably need to have...the dirt washed out of their beards and hair." The veins on his forehead seem ready to pop.

Elected Emperor

Putin has said that next spring, at the end of his second term as President, he will assume the nominally lesser role of Prime Minister. In fact, having nominated his loyal former chief of staff (and current Deputy Prime Minister) Dmitri Medvedev to succeed him as President, Putin will surely remain the supreme leader, master of Russia's destiny, which will allow him to complete the job he started. In his eight years as President, he has guided his nation through a remarkable transformation. He has restored stability and a sense of pride among citizens who, after years of Soviet stagnation, rode the heartbreaking roller coaster of raised and dashed expectations when Gorbachev and then Yeltsin were in charge. A basket case in the 1990s, Russia's economy has grown an average of 7% a year for the past five years. The country has paid off a foreign debt that once neared $200 billion. Russia's rich have gotten richer, often obscenely so. But the poor are doing better too: workers' salaries have more than doubled since 2003. True, this is partly a result of oil at $90 a barrel, and oil is a commodity Russia has in large supply. But Putin has deftly managed the windfall and spread the wealth enough so that people feel hopeful.

Russia's revival is changing the course of the modern world. After decades of slumbering underachievement, the Bear is back. Its billionaires now play on the global stage, buying up property, sports franchises, places at élite schools. Moscow exerts international influence not just with arms but also with a new arsenal of weapons: oil, gas, timber. On global issues, it offers alternatives to America's waning influence, helping broker deals in North Korea, the Middle East, Iran. Russia just made its first shipment of nuclear fuel to Iran—a sign that Russia is taking the lead on that vexsome issue, particularly after the latest U.S. intelligence report suggested that the Bush Administration has been wrong about Iran's nuclear-weapons development. And Putin is far from done. The premiership is a perch that will allow him to become the longest-serving statesman among the great powers, long after such leaders as Bush and Tony Blair have faded from the scene.

But all this has a dark side. To achieve stability, Putin and his administration have dramatically curtailed freedoms. His government has shut down TV stations and newspapers, jailed businessmen whose wealth and influence challenged the Kremlin's hold on power, defanged opposition political parties and arrested those who confront his rule. Yet this grand bargain—of freedom for security—appeals to his Russian subjects, who had grown cynical over earlier regimes' promises of the magical fruits of Western-style democracy. Putin's popularity ratings are routinely around 70%. "He is emerging as an elected emperor, whom many people compare to Peter the Great," says Dimitri Simes, president of the Nixon Center and a well-connected expert on contemporary Russia.

Putin's global ambitions seem straightforward. He certainly wants a seat at the table on the big international issues. But more important, he wants free rein inside Russia, without foreign interference, to run the political system as he sees fit, to use whatever force he needs to quiet seething outlying republics, to exert influence over Russia's former Soviet neighbors. What he's given up is Yeltsin's calculation that Russia's future requires broad acceptance on the West's terms. That means that on big global issues, says Strobe Talbott, president of the Brookings Institution and former point man on Russia policy for the Clinton Administration, "sometimes Russia will be helpful to Western interests, and sometimes it will be the spoiler."

Up from the Ruins

How do Russians see Putin? For generations they have defined their leaders through political jokes. It's partly a coping mechanism, partly a glimpse into the Russian soul. In the oft told anecdotes, Leonid Brezhnev was always the dolt, Gorbachev the bumbling reformer, Yeltsin the drunk. Putin, in current punch lines, is the despot. Here's an example: Stalin's ghost appears to Putin in a dream, and Putin asks for him help running the country. Stalin says, "Round up and shoot all the democrats, and then paint the inside of the Kremlin blue." "Why blue?" Putin asks. "Ha!" says Stalin. "I knew you wouldn't ask me about the first part."

Putin himself is sardonic but humorless. In our hours together, he didn't attempt a joke, and he misread several of our attempts at playfulness. As Henry Kissinger, who has met and interacted with Russian leaders since Brezhnev, puts it, "He does not rely on personal charm. It is a combination of aloofness, considerable intelligence, strategic grasp and Russian nationalism" (see Kissinger interview).

To fully understand Putin's accomplishments and his appeal, one has to step back into the tumult of the 1990s. At the end of 1991, just a few months after Yeltsin dramatically stood on a tank outside the parliament in Moscow to denounce—and deflate—a coup attempt by hard-liners, the Soviet Union simply ceased to exist. Yeltsin took the reins in Russia and, amid great hope and pledges of help from around the world, promised to launch an era of democracy and economic freedom. I arrived in Moscow a week later, beginning a three-year stint as a Russia correspondent.

I retain three indelible images from that time. The first: the legions of Ivy League—and other Western-educated "experts" who roamed the halls of the Kremlin and the government, offering advice, all ultimately ineffective, on everything from conducting free elections to using "shock therapy" to juice the economy to privatizing state-owned assets. The second: the long lines of impoverished old women standing in the Moscow cold, selling whatever they could scrounge from their homes—a silver candleholder, perhaps, or just a pair of socks. The third, more familiar image: a discouraged and embattled Yeltsin in 1993 calling in Russian-army tanks to shell his own parliament to break a deadlock with the defiant legislature when everything he was trying to do was going wrong.

Yeltsin bombed his way out of the threat of civil war and managed to hang on to power, but Russia was left hobbled. Virtually every significant asset—oil, banks, the media—ended up in the hands of a few "oligarchs" close to the President. Corruption and crime were rampant; the cities became violent. Paychecks weren't issued; pensions were ignored. Russia in 1998 defaulted on its foreign debt. The ruble and the financial markets collapsed, and Yeltsin was a spent force. "The '90s sucked," says Stephen Sestanovich, a Columbia University professor who was the State Department's special adviser for the new Independent States of the former Soviet Union under President Bill Clinton. "Putin managed to play on the resentment that Russians everywere were feeling." Indeed, by the time Putin took over in late 1999, there was nowhere to fall but up.

Path to Power

That Russia needed fixing was acknowledged by all. But how was it that Putin got the call? What was it that lifted him to power, and to the dacha in Novo-Ogarevo?

Putin's rise continues to perplex even devoted Kremlin observers. He was born into humble circumstances in St. Petersburg in 1952. His father had fought in World War II and later labored in a train-car factory. Putin's mother, a devout Orthodox Christian, had little education and took on a series of menial jobs. The family lived in a drab fifth-floor walk-up in St. Petersburg; Putin had to step over swarms of rats occupying the entranceway on his way to school. Putin's only ancestor of note was his paternal grandfather, who had served as a cook for both Lenin and Stalin, though there's no sign that this gave his family any special status or connections.

Putin describes his younger self as a poor student and a "hooligan." Small for his age, he got roughed by his contemporaries. So he took up sambo—a Soviet-era blend of judo and wrestling—and later just judo. From all accounts, he devoted himself to the martial art, attracted by both its physical demands and its contemplative philosophical core. "It's respect for your elders and opponents," he says in First Person, his question-and-answer memoir published in 2000. "It's not for weaklings."

It was the KGB that rescued Putin from obscurity—and turned the child into the man. Putin had begun to apply himself to schoolwork, and in 1975, during his senior year at Leningrad State University, he was approached by an impressive stranger who said, "I need to talk to you about your career assignment. I wouldn't like to specify exactly what it is yet." Putin, who had dreamed of becoming a spy, was intrigued. Within months he was being trained in counterintelligence. By the mid-1980s he was assigned to East Germany, where he worked undercover, pursuing intelligence on nato and German politicians. He was in Dresden, not Berlin where the action was, and probably would have been only a bit player in the Le Carré version of the cold war. But when the Berlin Wall came down in 1989, so did Putin's KGB career. As angry crowds moved on the local KGB headquarters, Putin and his colleagues feverishly burned files that detailed agents' names and networks—so much paper, he recalls in the memoir, that "the furnace burst." Then he slipped into the crowd and watched as the newly liberated mobs sacked the detested building. Within two years, he left the KGB altogether.

Putin's big break was a friend's introduction to Anatoli Sobchak, the liberal mayor of St. Petersburg, who was happy to bring in an intelligent, no-nonsense outsider to help push his reformist agenda. Putin ran the office that registered businesses and promoted foreign investment. He was responsible for ensuring that President Clinton's visit to the city in 1996 went smoothly—it was the first time American officials saw Putin in action. But later that year, Sobchak, damaged by a perception of ineffectiveness and rumors of corruption, lost his re-election bid. As Putin tells us at the dacha, as a member of the losing team, he was suddenly untouchable. "Nobody would hire me there," he says.

So Putin headed to Moscow. What transpired next seemed to Kremlin watchers as unlikely as Chauncey Gardiner's unwitting rise to power in the Jerzy Kosinski novel Being There. Although Putin often says that he had no connections when he arrived in the capital in mid-1996, he had several powerful allies who landed him work in the Kremlin. He became deputy to the head of Yeltsin's general-affairs department. Within two years he was asked to head the FSB, the spy-agency successor to the disbanded KGB. Putin, in his memoir, says he received a call out of the blue asking him to head to the airport to meet Russia's Prime Minister, Sergei Kirienko. Kirienko offered congratulations. When Putin asked why, he replied, "The decree is signed. You have been appointed director of the FSB." Then, in August 1999, Putin was named Prime Minister. It's a grand title, but it doesn't come with much security: Putin was Yeltsin's fifth Prime Minister in 17 months. But Putin did far better than survive; within four months a declining Yeltsin asked Putin to take over as acting President. Putin tells us he initially declined but that Yeltsin raised it again, saying, "Don't say no." By the last day of 1999 Putin was running the country.

We ask if it had ever occurred to Putin that history would place him in such a role. "It never occurred to me," he says. "It still surprises me."

Experts generally believe that Putin won Yeltsin's endorsement because he was competent, because he wasn't part of any of the major Moscow factions competing for power and because his KGB past gave him a source of authority. But they also widely assume that he made a deal with Yeltsin and his family: in return for Yeltsin's endorsement, Putin would not pursue corruption charges against the outgoing President and his relatives, despite the rumors that surrounded the family's dealings. It's impossible to verify, but neither Yeltsin, who died this year, nor his well-connected daughter Tatyana Dyachenko was ever a subject of public investigation (though Putin quickly fired her from her position as a Kremlin image consultant). Indeed, Putin's first decree guaranteed Yeltsin and his family immunity from such probes. Putin explains things to us this way: "Mr. Yeltsin realized that I would be totally sincere and would spare no effort to fulfill my duties and would be honest and see that the interest of the country could be secured." Eight years on, one can't help seeing a parallel with the latest maneuverings in the Kremlin: just as Yeltsin rewarded Putin for his loyalty, now Putin is doing the same for his anointed successor, Medvedev. There is already a new Putin joke: Putin goes to a restaurant with Medvedev and orders a steak. The waiter asks, "And what about the vegetable?" Putin answers, "The vegetable will have steak too."

Taking Control

Putin is no vegetable. In 1999, when he assumed the role of acting President, he was a relative unknown. It was his response to a Chechen rebel incursion in the Russian republic of Dagestan in the North Caucasus that quickly set him on a path toward national glory. Alexei Gromov, who has served with Putin as press secretary since he came to power, remembers being in the room when Putin told his wife Lyudmila that he was preparing to go on a New Year's Eve trip to the war zone to meet with the troops. She was worried about his safety and went along with him. In the end, the trip may have been no more than a calculated, if risky, photo op, but it was effective. Russians met their new leader and admired his courage and energy.

The following year Putin stepped up Russia's invasion of the breakaway republic of Chechnya. Rambo-style, he promised a quick and decisive victory, reiterating his earlier pledge to defeat enemy fighters "even in the toilet." Grozny, Chechnya's capital, was all but obliterated; Russia reassumed power and installed a puppet leader. Despite heartbreaking subsequent Chechen terrorist attacks—including a 2004 assault on a school in Beslan, North Ossetia, where 339 civilians, most of them children, were killed—Russians by and large admire Putin for drawing the line in the south. Having watched Eastern Europe and the Soviet republics slip from Moscow's grip, Russians were happy to keep Chechnya—even a bombed-out Chechnya—in the fold.

To the West, meanwhile, Putin was a mystery. Russia watchers debated endlessly: Was he a pro-Western reformer? (He had worked for Sobchak.) Or a hard-liner? (He was a career KGB man.) Yet just as 9/11 helped define President Bush, so did external challenges allow Putin to grow into a leader. His first steps on the world stage were tentative. His global coming-out had occurred in Auckland at a 1999 meeting of heads of apec (Asia-Pacific Economic Cooperation) nations. Sestanovich, who was traveling with President Clinton, remembers meeting Putin at Clinton's hotel suite. "He seemed rodentlike," says Sestanovich, "like an overgrown summer intern." But Clinton was willing to work with him. Putin tells us how, at an apec dinner at which he was feeling somewhat lost, Clinton crossed the room past other world leaders and leaned down to talk to him. "Volodya," Clinton said, using the familiar form of the name Vladimir, "I suggest we walk out together from this room." Putin rose to his feet, and the two men strolled out together. "Everyone applauded," Putin recalls. "I will remember that forever." It was Putin's only sign of softness during the 3 1⁄2 hours we spoke.

Clinton was not the only American who found something to like about Putin. Two years later, in a line that has haunted him ever since, President Bush declared that he had looked inside Putin's soul. It was their first meeting, at a summit in Slovenia, and Bush said, "I looked the man in the eye. I found him to be very straightforward and trustworthy...I was able to get a sense of his soul." We ask Putin to return the favor, to describe what he has sensed of the U.S. President's soul. He declines to get personal. "I have a very good personal relationship with Mr. Bush," he says. "He is a very reliable partner, a man of honor."

The terrorist attacks on 9/11 provided Putin with another defining moment. He was one of the first world leaders to offer condolences and help to President Bush. That probably led the U.S. to back off from stridently criticizing the Chechnya adventure. But the initial shared objectives between Putin and the Bush Administration did not last. Putin strongly opposed America's invasion of Iraq and established Russia as a steady voice of opposition to Bush's adventure, demanding that decisions on Iraq be made at the U.N. (where Russia, of course, has Security Council veto power). America's occupation of Iraq has affirmed Putin's sense that he was right. "If one looks at the map of the world, it's difficult to find Iraq, and one would think it rather easy to subdue such a small country," Putin tell us. "But this undertaking is enormous. Iraq is a small but very proud nation." The debacle in Iraq plays into what is perhaps Putin's most cherished foreign-policy dictum: that nations shouldn't interfere in one another's affairs. And what that really means, of course, is that no one should interfere in Russia's affairs.

Another Putin joke: Putin and Bush are fishing on the Volga River. After half an hour Bush complains, "Vladimir, I'm getting bitten like crazy by mosquitoes, but I haven't seen a single one bothering you." Putin: "They know better than that."

A Ruthless Streak

Now that Putin has solidified his grip on power, he no longer seems overly concerned with courting Western approval. Despite a chorus of disapproving clucks from the West, Putin has shackled the press, muted the opposition, jailed tycoons who don't pledge fealty. In Russia this has been a terrible time to be a democrat, a journalist, an independent businessman. Just ask Garry Kasparov. The chess grandmaster—the highest-rated player of all time—is a far cry from stereotypically dysfunctional champions like Bobby Fischer. Kasparov has a keen political mind and a lively sense of humor. For years he has fought an increasingly lonely struggle as a democratic activist facing an uncompromising state. On Nov. 24, while holding a political rally in Moscow, he was arrested on a technicality and spent five days at Moscow's Petrovka 38 jail.

A week or so after Kasparov's release, we are sitting in Moscow's Cosmos Hotel, where he is taking part in a human-rights meeting. Assembled is a ragtag group of Russian activists, and here Kasparov is a star. (Even here his two bodyguards sandwich him whenever he walks about.) Unlike many of Putin's other critics, who seem fearful of chastising their leader openly, Kasparov isn't cowed. "Putin wants to rule like Stalin but live like Abramovich," he says, referring to Roman Abramovich, the billionaire Russian oil trader who owns London's Chelsea soccer team. "Putin's system is more like Mafia than democracy."

Putin's administration has blocked democrats like Kasparov from participating effectively in politics by making it all but impossible for them to meet the entry requirements. The President, in our discussion, routinely suggests that Kasparov is a stooge of the West because he spoke to the foreign press in English after his arrest. "If you aspire to be a leader of your own country, you must speak your own language, for God's sake," he says. Kasparov recently gave up his long-shot race for President.

Dmitri Muratov also knows the difficulties of life in the Putin era. A softspoken, heavyset man whose neatly trimmed beard is turning gray, Muratov is the editor in chief of Novaya Gazeta, a Moscow newspaper, published twice a week, with a reputation for pursuing tough investigative pieces. In the past seven years, three of his journalists have been murdered; all were looking into corruption and wrongdoing. After the third murder, Muratov decided to close the 14-year-old paper to avoid putting any other journalist at risk. But his staff talked him out of it. The paper is perpetually harassed by officials around the country, but, Muratov notes with a weary smile, "we're still alive."

The last of Muratov's journalists to die, Anna Politkovskaya, was shot in the elevator of her apartment building last year on Oct. 7. Alexander Litvinenko, a former FSB officer turned government critic living in London, accused Putin of sanctioning the killing. Within weeks, Litvinenko himself was dead too, killed by radiation poisoning from a mysterious dose of polonium 210. (Britain wants to charge a former KGB officer, Andre Lugovoy, who has just been elected to Russia's parliament, with the killing. He denies it, and Russian law prevents the extradition of Russian citizens.)

Muratov, for his part, doesn't know who ordered his journalists' killings. He says only that he blames "corruption," which has flourished during Putin's eight years.

Although few Russians seem to think Putin himself is corrupt, it is commonly believed that he is surrounded by business and political heavies who are amassing millions in payoffs. Indeed, if anything can bring him down, it may well be graft. As long as living standards rise, people are more likely to forgive the perception that officials are getting obscenely rich by demanding illicit payoffs. But if the economy stops growing—if the price of oil falls back to earth—Putin will face a challenge, whether from the masses in the streets or from military and civilian challengers.

One insider, who asked that his identity be protected, spelled out for us just one example of how the game is played, detailing the payments a prospective regional governor has to make to political bagmen in Moscow in order to get the Kremlin's nod for the post. For wealthier regions, such an endorsement can cost as much as $20 million, money that the politicians raise quietly from corporate "sponsors" that expect special treatment in return. The amount of money flowing to kingmakers in the Kremlin, in other words, is staggering.

When we ask about the view that he is surrounded by corrupt officials, Putin turns testy: "If you are so confident, then I presume you know the names and the systems and the tools...Write to us." As for Politkovskaya, who had been investigating policy failures and human-rights abuses in Chechnya when she was killed—and who authored the 2004 book Putin's Russia: Life in a Failing Democracy—Putin says he believes she was murdered by a provocateur to cast suspicion on his administration.

For all the attention the outside world pays to such cases, formal polls make it clear that within Russia, Putin's critics are in the minority. For every journalist distressed at the rollback of freedoms, there are scores of Russians who quietly applaud Putin's efforts to reassert stability. Once a year, when Putin takes phone calls from citizens around the country, tens of thousands of people try to get through. Listening to the calls, however screened and rehearsed they may be, one is struck by the ardor of the appeals to the President to get things done and by the broad range of information at Putin's fingertips. (A woman who lives on an island off Vladivostok complained about the local ferry service. Putin told her a bridge will soon be built to link the island to the mainland.)

Certainly life in Russia today is better than it has been for years. The stores are stocked with goods. The once worthless ruble is a genuine currency, strengthening against the dollar these days. Crime persists, but the cities are not as rough as in previous years.

And then there are the President's loudest and most visible defenders: members of Nashi (Ours, in Russian), the cultish pro-Putin youth movement. In mid-December, about 20,000 of the Nashi faithful from all over Russia gathered for a rally by the Kremlin walls to celebrate the recent victory of Putin's United Russia Party in elections to the parliament. From the stage, speakers, rock singers and rappers declared their patriotism and love for the President. A banner read, into the future with putin! Someone introduced Dasha, a 10-year-old member of Mishki (Bear Cubs), the new children's division of Nashi. "I love Russia," said Dasha. "I love teddy bears. I love Putin. Together we will win!"

I went to Nashi's Moscow headquarters a few days later and met with Lyubov Serikova, a pretty 22-year-old redhead from Russia's Chuvash Republic who is a rising star in the organization. She was thrilled with the recent election and credited Nashi with helping thwart an unnamed enemy's attempt to launch an "orange revolution" in Russia. Her world seemed conspiratorial, and she echoed Putin's own statements: those who run against the President were trying to bring the country down. Putin, she said, "has made Russia a leading country in just a few years."

When we finish talking, I take a look at an official Nashi poster hanging outside her office, which excoriates U.S. policies. It's reminiscent of Soviet-era propaganda with its non sequitur acceleration of hysteria: "Tomorrow there will be war in Iran. The day after tomorrow Russia will be governed externally!" But this is no fringe group. Putin frequently visits Nashi's training camps and meets with its leaders. And from there he sometimes launches anti-Western tirades, including a recent blast at London authorities who are demanding the extradition of the suspected killer of Litvinenko.

Putin's mission is not to win over the West. It is to restore to Russians a sense of their nation's greatness, something they have not known for years. This is not idle dreaming. When historians talk about Putin's place in Russian history, they draw parallels with Stalin or the Tsars. Putin, one can't stress enough, is not a Stalin. There are no mass purges in Russia today, no broad climate of terror. But Putin is reconstituting a strong state, and anyone who stands in his way will pay for it. "Putin has returned to the mechanism of one-man rule," says Talbott of the Brookings Institution. "Yet it's a new kind of state, with elements that are contemporary and elements from the past."

And there's plenty that could go wrong. The depth of corruption, the pockets of militant unrest, the ever present vulnerability of the economy to swings in commodity prices—all this threatens to unravel the gains that have been made. But Putin has played his own hand well. As Prime Minister, he is set to see out the rest of the drama of Russia's re-emergence. And almost no one in Russia is in a position to stop him. If he succeeds, Russia will become a political competitor to the U.S. and to rising nations like China and India. It will be one of the great powers of the new world.

Back at the dacha, with snow falling lightly outside, our dinner and discussion continue. Putin has been irritable throughout, a grudging host. Suddenly, at 10 o'clock, he stands and abruptly ends the evening. "We've finished eating, there's nothing more on the table, so let's call it a day," he declares. Actually, the main course (choice of sturgeon or veal) and dessert ("bird's milk" cake)—lovingly printed in gold ink on the prepared menu cards—haven't yet been served. The Russian President's brusqueness is jarring. Have our questions angered him? Bored him? Does he have another appointment? It's not clear. "Bye bye," says Putin—in English—as he walks briskly out of the room. The work of rebuilding Russia, apparently, is never done.

Russia by the Numbers

THE WALL STREET JOURNAL EUROPE - STEPHEN SESTANOVICH

After meeting with leaders of the European Union recently, Vladimir Putin boasted that the surging Russian economy has overtaken that of Italy, and will overtake France in 2009. Such astonishing claims have become commonplace in statements by Russian officials, who insist Russia will become the world's fifth largest economy by 2020.

Mr. Putin's popularity at home -- and his standing abroad -- rest in large part on economic performance, so it's worth looking closely at these forecasts. They are based on a system of measurement called purchasing-power-parity (PPP), under which economists try to assign every good -- from rice to subway fares -- the same price world-wide. (The conventional method, by contrast, takes the price of goods produced locally and translate them into dollars at the current exchange rate.) PPP inflates the size of poor economies in which food and the other basics of life are cheap. In the Russian case, black bread, vodka and run-down apartments pump up GDP.

The effect can be dramatic. Measured in conventional terms, Russia, far from overtaking France in two years, is actually less than half its size -- $1.22 trillion vs. $2.52 trillion. At current growth rates, their GDPs will not be equal for 17 years. All those people who sneered about the puny Russian economy of the 1990s -- no bigger than the Netherlands, they said -- need to update their numbers, but not by much. After eight years of strong growth, the Russian economy -- in conventional terms -- is now as big as the Netherlands plus Belgium and Luxembourg.

Of course, which system of measurement is "right" depends on what you want to know. If you're interested in a country's place in the global economy, then exchange-rate measures are for you. If you want a feel for living standards, then purchasing-power-parity can, carefully used, be a helpful tool. And not just to measure food consumption: During the Cold War the U.S. government estimated the Soviet military budget by asking how much it would cost for the U.S. to produce the same fighting force. Once you assigned Red Army conscripts the same wages as American volunteers, Soviet defense spending looked a lot scarier. You might say this is what Mr. Putin is trying to do for his entire economy.

There are, however, two problems with the way Russian officials treat these GDP estimates. First, they use the PPP numbers to measure something -- their global economic standing -- that the conventional numbers measure better. You have only to play with international trade figures for a while to see how underdeveloped Russia's role in the world economy remains. How much, for example, would you expect the United States to trade with a country that might soon overtake France? The U.S. exported five times more to France in 2006 ($24.2 billion) than to Russia ($4.7 billion). This year the U.S. still exports more to the Dominican Republic than to Russia. And U.S. two-way trade with Malaysia is twice its two-way trade with Russia.

Perhaps, you say, Russian-American trade is atypical, and looking at Russia's trade with its closest neighbor -- Europe -- would paint a different picture? Yes, but not as different as you might think. As Peter Mandelson, the EU's trade commissioner, put it recently, Russia's exports to the EU are, apart from energy, "about the same as those of Morocco or Argentina" -- slightly less than 3.5% of Europe's total imports.

The EU's energy imports from Russia are, of course, about twice that level, or 7% of all imports -- a big number. But it too should be kept in perspective. Between 2000 and 2005, Russia's share in European natural gas imports dropped, from 50% to 42%. European politicians say they want to diversify their sources of supply. They're talking about something that may already be happening and can be pushed further.

There is a second problem with Russian leaders' economic claims. If we use PPP figures as intended -- to compare living standards -- we will be at least as impressed by how far Russia has to go as by how far it has already come. Just consider per-capita GDP growth in Russia, France and Italy. Under Mr. Putin, Russian per-capita income -- even in PPP terms -- has gone from somewhat less than a third of the level of France and Italy to somewhat more than a third. This increase is good news for Russian consumers, but they remain Europe's poor relations all the same.

Interestingly, Mr. Putin himself used to make this point when he first became president. To underscore how poor his country was, and how urgent it was to reform, he observed that it would take 15 years of 8% economic growth for Russia's per-capita income to equal Portugal's. This was a particularly brutal comparison, because Russians saw Portugal not as a rich European state but as a poor one. (And how humiliating to be compared to such a small country.)

These days, Mr. Putin does not use the Portugal comparison so much -- the urgency of reform is less on his mind -- so here's the update. With all its growth Russia is gaining ground, but the absolute gap between the two countries is only modestly narrower than when Mr. Putin first compared them -- just over $12,000 then, just under $11,000 now. Meanwhile, the gap between Russia and both France and Italy has widened slightly. Even if Russia keeps steaming ahead, it will probably not catch up with Portugal until 2020 -- and by some estimates, long after that.

These comparisons do not detract from the Russian economy's extraordinary growth. Its transformation is a huge opportunity for anyone who is a part of it. The reason, however, is not that Russia has catapulted itself into the ranks of the rich, but that it is still relatively poor. The low base from which it is growing means that strong increases can continue for a long time before petering out. (Just ask European machinery exporters: Their sales to Russian companies quadrupled between 2000 and 2006.) Similarly, the low living standards of the Russian people mean that the leveling off of their consumption surge is decades away. It's good politics -- and maybe even good geopolitics -- for Mr. Putin and his colleagues to claim they've come further than they have. But we'll understand today's Russia better if we don't believe them.

Mr. Sestanovich is a senior fellow at the Council on Foreign Relations and a professor of international diplomacy at Columbia University.

Three IMPORTANT Articles

Putin Says He'll Be Prime Minister


MOSCOW (AP) - President Vladimir Putin told a congress of Russia's dominant party Monday that he would agree to become prime minister if Dmitry Medvedev is elected as his successor - and said he would not seek to make the premiership more powerful.

Putin's statement virtually ensures that the 42-year-old Medvedev, seen as business-friendly and non-hawkish, will be elected March 2.

When Medvedev got Putin's endorsement last week, he quickly proposed that Putin become prime minister after the election. Putin had not publicly responded previously.

Putin told the United Russia congress that if he became premier, he would not seek to change the distribution of power between the president and prime minister. In Russia, the prime minister is a significantly less powerful figure than the president.

But by remaining in a prominent position, Putin could continue to exert his enormous influence and personal popularity to direct Russian affairs. He has previously said that a victory in parliamentary elections by United Russia would give him the "moral authority" to ensure that his policies are continued. The party won the Dec. 2 vote with an overwhelming majority of seats.

"If the citizens of Russia show trust in Dmitry Medvedev and elect him the new president, I would be ready to continue our joint work as prime minister, without changing the distribution of authority" between the positions, Putin said.

The Perils of Putinism

The Wall Street Journal – Editorial

Plans for a transition of power were unveiled this week in Russia. The news is that there won't be one.

Many Russians and foreign investors alike were cheered by Vladimir Putin's clearest signal yet of his intention to stay in charge beyond March's presidential elections. Shares soared on his endorsement Monday of longtime aide Dmitry Medvedev to nominally take his spot in the Kremlin. Shares jumped again a day later when the heir apparent returned the favor and pledged to name Mr. Putin as the next Prime Minister with, so everyone presumes, stronger powers than the next President.

This choreographed switcheroo is Putinism to a tee. The President and his men trample on civic freedoms and concentrate power in the name of "order" and "stability." With the economy growing on the back of oil approaching $100 a barrel, up from $15 when Mr. Putin took office in 2000, complaints are muted -- sometimes by force. But of all people, Russians ought to have learned from history that personalizing and centralizing so much authority brings trouble down the road.

An old friend of Mr. Putin's from his KGB days told us this week that the President wanted to step down to establish a precedent for future Russian leaders. But in the same breath he said that it was too dangerous for Mr. Putin to step aside -- for Russia, and for Mr. Putin himself. This is largely true, and is another feature of Putinism.

The President has made himself indispensable to keeping the peace among his boyars. The 42-year-old Mr. Medvedev holds no sway over the influential Kremlin group of siloviky -- the ex-KGB men around Mr. Putin, a KGB colonel himself -- or the security services as a whole. To them, as well presumably to Mr. Putin, Mr. Medvedev's remarkable features are his loyalty and lack of any evident charisma. An added bonus for Mr. Putin is that his choice of sidekick-in-chief was hailed abroad as a "liberal" -- which is only true compared to the other candidates floated in recent months. Mr. Medvedev's first comments Tuesday were so deferential to Mr. Putin that no doubt was left about who will stay boss.

The Putinites have their own self-serving reasons for wanting the current regime to continue. Though less brashly than the oligarchs around Boris Yeltsin, the current establishment has done very well for itself in the past eight years. Dmitry Trenin, a Russian analyst at Carnegie's Moscow Center, writes in his new book "Getting Russia Right" that the same people "rule and own" the country. Having expropriated wealth from the previous crowd, they're worried that the same could happen to them.

Mr. Putin knows that leaving power is dangerous for a Russian politician. Every single previous national leader went out in a coffin (from natural or unnatural causes) or in disgrace. So he is looking for ways to protect himself by holding on to the reins.

This transition could have helped Russian democracy to mature. The country lost an opportunity in this decade of good economic times to build a proper and predictable political system around institutions rather than men. The blame falls squarely on Mr. Putin.

If all the President cared about was restoring economic health and Russian pride, he could have claimed credit for the few good reforms his government carried out (such as the flat 13% income tax) and rode the petroleum boom to the bank. But his actions reveal a deep unease about his own appeal to Russians.

The Kremlin went out of its way to destroy the free media, freeze out national opposition parties, cancel the elections of regional governors, and shrink independent civil institutions. The courts and the Duma were neutered, and elections made irrelevant. This month's parliamentary poll was the least free since Mikhail Gorbachev introduced perestroika.

A turning point was Ukraine's "Orange Revolution" in 2004. There, an Orthodox Slav nation rose against a corrupt and authoritarian clique in spite of a booming economy; this came too close to home for the Kremlin. In its wake, Mr. Putin has turned Russia's government into the most anti-Western outside of Iran, Cuba, North Korea and Venezuela. The recent campaign saw his nationalism hit a new high pitch.

The absence of democracy is dangerous for Russia, and the world. Putinism hangs on a single man. It denies Russians a proper outlet to discuss their problems. Others will be found. Fast rising inflation has brought impromptu demonstrations. The Kremlin has opened a Pandora's box by embracing neo-fascist youth groups and ideas that will be hard to control. After the thaw under Messrs. Gorbachev and Yeltsin, Russian citizens are once again nothing compared to the power of the state, and they may one day rediscover a taste for liberty. All of this makes Russia unpredictable.

In the meantime, power struggles will continue among various factions inside the Kremlin, beyond view and unchecked by laws. Contrary to its own advertising, Putinism has sown the seeds of instability. The tapping of Mr. Medvedev and the prominent role carved for Mr. Putin in no way ends the great uncertainty about Russia's near- and long-term future. It merely accentuates it.

Medvedev's challenge

The Washington Times - Ariel Cohen

Dmitry Medvedev's endorsement as presidential candidate by four pro-Putin political parties and by Vladimir Putin himself ends months of guessing games. Mr. Medvedev's appeal to Mr. Putin to serve as prime minister not only confirms Mr. Putin will play a pivotal role in Russian politics after he steps down — it signals that Mr. Putin, not Mr. Medvedev, will remain the No. 1 politician in Russia for years to come.

If Mr. Putin agrees to serve, it is most likely he will be a super-prime minister, the "national leader" with responsibilities over foreign, security and defense policy. It is possible that after the March elections Mr. Medvedev will change the constitution or promulgate laws transferring control of some or all of these areas to Mr. Putin.

Russia fundamentally differs from Mexico, which in the last century was under the rule of the Institutional Revolutionary Party (PRI) for 70 years. There, an outgoing president selected a successor, who then kept the former president safe. However, in Mexico, ex-presidents did not play an active role in government.

In the meeting with Mr. Putin I attended this past September in his Black Sea residence Sochi, he expressed hope he would continue to influence public affairs in Russia. "My successor will have to negotiate with me how we divide power," Mr. Putin said. Soon after, it became known Mr. Putin might become Russia's next prime minister.

Mr. Medvedev, media shy, is always keen to speak the language Westerners understand, hailing property rights, robust private sector, transparency and fighting corruption. He sounds serious and sincere.

However, as Mr. Putin will remain in the driver's seat, the chances for massive liberalization in strategic sectors, such as energy, remain meager. The Russian oligarchs, who are tight with top politicians, do not favor economic openness, which only breeds competition. Mr. Putin expressed his views in his Ph.D. dissertation, which hails the role of giant Russian state-owned natural resources companies in the global economy. Only the economic failure of such corporations could possibly force Mr. Putin and Mr. Medvedev to reconsider their statist approach.

Mr. Medvedev, a Putin protege, is perceived as a weak bureaucratic player and will require Prime Minister Putin's support as he consolidates power in the brutal world of Russia's political and oligarchic struggles.

In contrast to the judo black belt of Mr. Putin and other KGB veterans, Medvedev, a professor's son and a law professor himself, is soft-spoken and bookish. Having focused on domestic politics and policy, he lacks experience in foreign policy and national security and may depend on Mr. Putin's advice and support in these areas. He already has been called a "socially oriented president."

Despite his reputation as a market supporter, Mr. Medvedev is unlikely to be able to implement a classic liberal economic policy that can lead to more foreign investment and competition.

First, there are promises to keep, especially to the siloviki group — secret service generals who also control some of the choicest morsels of the economy. Kremlin Deputy Chief of Staff Igor Sechin leads this faction and also is chairman of Rosneft, the largest Russian state-owned oil company.

The siloviki have recently taken a bit of a beating. The public fight between the Federal Security Service, headed by Sechin ally Nikolay Patrushev, and the Federal Anti-narcotics Service led by Putin ally Gen. Viktor Cherkesov, spilled into public view with Gen. Cherkesov penning a controversial op-ed in Kommersant, blasting his FSB competitors.

Mr. Putin also did not appreciate a recent Kommersant interview with Oleg Shvartzman, essentially a business manager for the Sechin-affiliated business group. He disclosed too many details about the inner workings of the group's Kremlin-affiliated Russian business for anyone's comfort, including offshore tax evasion and extortion by power elites. While these publications may have weakened the siloviki, their power is still immense, and Mr. Putin and Mr. Medvedev must take their interests into account.

Mr. Medvedev, lacking a KGB, military or other security background, needs to keep the siloviki appeased and may have a hard time getting control of the levers of power. He will need Mr. Putin's continued support.

Even if Mr. Medvedev ever stands on his own two feet, he must remember the Russian public, from the days of the Romanovs and the Soviet Union, has always been unenthusiastic, to say the least, about weak leaders: Nicholas II, Josef Stalin's heir Georgii Malenkov, Nikita Khruschchev, Mikhail Gorbachev and Boris Yeltsin are all viewed with disdain by the majority of Russians, while many have a positive view of "strong leaders" such as Peter the Great, Catherine the Great, Alexander II, Mr. Putin and even the monstrous Stalin and bumbling Leonid Brezhnev.

Mr. Medvedev's greatest long-term threat is his perceived weakness. Historically, each regime in Russia has been markedly different from its predecessor. Thus, Mr. Gorbachev's reign differed from Mr. Brezhnev's, Mr. Yeltsin's administration differed from Mr. Gorbachev's, and Mr. Putin's rule was unlike Mr. Yeltsin's. Messrs. Gorbachev, Yeltsin and Putin all "campaigned" as the antithesis of their predecessors. Mr. Medvedev, on the other hand, is Mr. Putin's "official" heir and will find it impossible to shed his boss' control and vision even if he wants to.


Nevertheless, to succeed, Mr. Medvedev will eventually need to show his mettle, both in charting his own policy and by winning in power politics.

Ariel Cohen is senior research fellow at the Heritage Foundation.

Putin "heir" on course to win Russia election: poll

MOSCOW (Reuters) - The popularity of President Vladimir Putin's favored successor soared in an opinion poll released on Thursday and Putin critic Garry Kasparov pulled out of the contest.

Putin, Russia's most popular politician after nearly eight years in charge, this week anointed First Deputy Prime Minister Dmitry Medvedev as his preferred choice in the March 2 election.

Medvedev, a former law professor, was already pulling away from other possible contenders, independent pollsters Levada said of a survey mainly carried out before Putin's endorsement.

It showed 35 percent of people would vote for him, putting him 14 percentage points ahead of his nearest rival.

Analysts said they were watching to see whether Communist Party leader Gennady Zyuganov, the strongest opposition challenger, would risk running. Former world chess champion Kasparov said he would not take part.

"There is no choice in Russia," Kasparov told reporters in the town of Serpukhov, some 100 km (60 miles) south of Moscow, where he attended the funeral of an opposition activist.

"March 2 will just be the calendar date when the victor of the Kremlin power struggle is declared," Kasparov said. "We understand that a decision has been made not to allow my registration even at this preliminary stage."

Widely regarded in the West as a symbol of opposition to Putin, Kasparov's support at home is slim and pollsters say he had no chance of winning.

Kasparov said official obstruction meant he had not even been able to rent a hall to hold a meeting of supporters, a formality needed to launch a presidential bid.

U.S. CONCERN

Medvedev, 42 and board chairman at gas giant Gazprom, has offered Putin the post of prime minister if he is elected president, opening the way for the former KGB spy to preserve influence after he steps down in May.

David Kramer, U.S. deputy assistant secretary of state, said Putin's endorsement was likely to tip the balance towards Medvedev.

"I think there is some concern that the Kremlin-favored or even Putin-favored candidate will receive the benefit of media attention and other resources devoted to his candidacy the expense of others," Kramer told reporters in Berlin.

Putin's supporters credit him with cementing political stability and presiding over the longest Russian boom for a generation. Opponents say he has crushed dissent and crafted a political system dangerously dependent on one man.

The Levada poll, carried out from December 7 to 10, showed the second strongest potential candidate was First Deputy Prime Minister Sergei Ivanov, with 21 percent support, followed by Prime Minister Viktor Zubkov on 17 percent.

Both Zubkov and Ivanov have said they support Medvedev. Forty percent of those polled had said they would vote for whomever Putin anointed, said Denis Volkov of the Levada Centre.

Communist Party leader Zyuganov was the most popular possible presidential candidate from the opposition, the poll showed, with 15 percent support.

His party will meet this weekend to decide whether he will run in the presidential election. Zyuganov sat out the last vote, in 2004, allowing Putin to win almost unchallenged.

Vladimir Zhirinovsky, leader of the nationalist LDPR which casts itself as an opposition party but broadly backs Putin, had 11 percent support in the Levada opinion poll. Zhirinovsky announced on Thursday that he would run.

Kasparov Checkmated

(Forbes)LONDON - Russian chess legend Gary Kasparov has finally run out of moves against the grand master of Russian politics, President Vladimir Putin.

"My electoral campaign finishes tomorrow," Kasparov told journalists in Moscow on Wednesday, abandoning his hopes of challenging Putin's nominee Dmitry Medvedev, during the presidential elections due to take place in March. Kasparov blamed problems organizing an official meeting of supporters to back him as candidate, as required under Russian electoral law.

While Kasparov's move might grab headlines in the West, it is likely to cause no more than a flicker in Russia, where his defeat, like that of all other opposition parties, is a virtual given. Medvedev, Putin's successer as presidential candidate for the United Russia party is expected to sweep to victory in March, a win made all the more certain by last week's parliamentary elections. (See: "Russia's Kremlin Sustains Control")

While candidates from opposition parties do exist, they are expected to get no more than 15.0% of the vote, and Kasparov himself unlikely to have got more than 2.0%, Eurasia Group analyst Denis Maslov told Forbes.com.

Kasparov and other critics of the Putin regime have accused the Kremlin of crushing democratic opposition by dominating the media, instituting electoral laws that penalize small parties, and using heavy handed tactics to break up opposition rallies and demonstrations. (See: "Garry Kasparov's Next Move")

These factors have certainly played a role, but even without them observers believe that the astounding popularity of Putin and his policies would have given the opposition, which is heavily divided, little hope.

The huge strides made by Russia, both economically and on the international stage, during the past few years have made Putin virtually a cult figure. After the dark years that followed the collapse of the Soviet Union, the stable environment offered to businesses and the massive boost to the economy from oil and gas reserves, provided a deflated and despondent public with a much needed lift.

Though Medvedev's position as Chairman of Gazprom, may provoke some concern from European leaders already anxious about the power of the energy goliath, within Russia he represents a very credible and successor to Putin. At 42, he is relatively young, while his quiet political style is likely to help smooth the country's choppy relationship with the West. (See: "Mr. Gazprom For Russia")

According to Maslov, though, outside of Russia Kasparov has come to symbolize democratic opposition to Putin, within the country he is seen as just one of many.

"Kasparov may be a media darling in the West, but in Russia he is not seen as a particularly charismatic character," said Maslov. In particular, Kasparov's promises to change the system have not gone down well in a country that craves stability. "People in Russia don’t want any more revolutionary upheavals. They are quite pleased with how things are going."

Medvedev says Putin should be PM

(BBC) Russian President Vladimir Putin should become prime minister after stepping down next year, his chosen successor Dmitry Medvedev says.

Mr Putin named Mr Medvedev on Monday as his favourite for the presidency. Mr Putin's own popularity is likely to ensure he is elected, analysts say.

Mr Putin steps down in March but is expected to retain political influence.

Mr Medvedev was Mr Putin's chief of staff and is currently a first deputy PM and chairman of gas giant Gazprom.

"I appeal to [President Putin] with a request to give his agreement in principle to head the Russian government after the election of the new president," Mr Medvedev said on Russian television on Tuesday.

"It's one thing to elect a president - it's no less important to maintain the efficiency of the team," he said.

Uncharted territory

Mr Putin is constitutionally obliged to quit after his second presidential term ends next year.

It is not clear how the president will respond to Mr Medvedev's offer. Mr Putin's spokesman says only that he will continue to work as president until the day his term runs out.

In post-Soviet Russia, the president has always been more powerful than the prime minister.

If Mr Putin were to become prime minister, that could change, according to the BBC's Moscow correspondent, James Rodgers.

But, he says, this has never been tried before and it raises the risk of a conflict unless there is a clear understanding of how powers will be divided between the two posts.

Hot favourite



Mr Medvedev said on Tuesday that he wanted the benefits of economic growth to reach all sections of Russian society.


"Now we need to convert all the successes achieved in the past eight years into real programmes," he said.

If elected president, he said, he would pay the greatest attention to social issues.

Mr Medvedev was addressing leaders of the four pro-Kremlin parties backing him, including United Russia, the party which won a landslide victory in parliamentary elections earlier this month.


The 42-year-old former lawyer managed Mr Putin's election campaign in 2000.

As first deputy prime minister he has overseen national programmes in the areas of health, housing and education.

Russia has made huge economic gains as a result of soaring international oil prices.


The government has been facing demands to channel energy revenues into pensions, benefits and parts of the country's infrastructure that have been decaying since the collapse of the Soviet Union.

Pressure for continuity

Mr Putin has made it clear he will retain a significant national leadership role after he leaves office at the end of his second term.

He has said he expects Mr Medvedev to provide continuity.

"We have the chance to form a stable government after the elections in March 2008. And not just a stable government, but one that will carry out the course that has brought results for all of the past eight years," Mr Putin said on Monday.

United Russia leader Boris Gryzlov highlighted Mr Medvedev's role in managing national projects aimed at raising Russian living standards.

"Dmitry Anatolyevich [Medvedev] oversees national projects," he said.

"He oversees the demographic programme and we believe that it is precisely the issues to do with raising standards of living that are the most important issues for the forthcoming four-year period."

Putin backs First Deputy PM Medvedev for president

MOSCOW, December 10 (RIA Novosti) - First Deputy Prime Minister Dmitry Medvedev's candidature for Russian president has been backed by Vladimir Putin, the parliamentary speaker said on Monday.

Following months of speculation over who could assume the presidency next year, Putin said on national television: "I have known Dmitry Medvedev well for over 17 years, and I completely and fully support his candidature."

Speaker Boris Gryzlov, who also heads the ruling United Russia party, said four pro-Kremlin parties had put forward Medvedev's nomination.

"We would like to nominate the candidate that we all support. This is First Deputy Prime Minister Dmitry Medvedev," Gryzlov told a meeting between the president and the leaders of United Russia, A Just Russia, the Agrarian Party and Civil Force.

Medvedev, 42, chairs the board of Russia's state-controlled natural gas monopoly Gazprom and is overseeing an ambitious multi-billion-dollar "national project" to improve living standards in the country. In view of Putin's high popularity rating and full support of most of the legislature, his backing of the nomination is likely to guarantee Medvedev the presidency.

Putin, who is forbidden from seeking a third consecutive term as president next year, said the backing of four parties for a single candidate at the March 2 election meant there was a realistic chance of building a stable government in Russia.

Medvedev will be formally nominated as presidential candidate at a United Russia congress on December 17, Gryzlov said.

Medvedev, a trained lawyer, worked under Putin in the early 1990s in the mayor's office of St. Petersburg, the president's home town. He is widely seen as a pro-business moderate, in contrast to another first deputy premier who had been widely tipped for the presidency, ex-defense minister Sergei Ivanov, 54. Prime Minister Viktor Zubkov, 66, was also seen as a possible contender.
"This is positive news for the market as the most liberal of the three possible presidential candidates was approved," Yaroslav Lisovolik, a senior Deutsche Bank economics analyst, said. "The liberal aspect of Putin's economic policy can be preserved if Medvedev becomes president."

He also said that under Medvedev Russia would pursue a policy of integration into the global economy.

Echoing the statement, an economist at Russian brokerage Troika Dialog said the news would encourage investment in the country. Anton Struchevsky said Medvedev was seen as a liberal, unlike Ivanov, an ex-KGB 'silovik' treated with apprehension by Western countries.

However an analyst with Trust investment bank, Yevgeny Nadorshin, said Medvedev's appointment would not influence the investment climate in Russia, and that there was in fact little difference between the candidates.

Russia's stock market welcomed the news. The Russian Trading System (RTS) index rallied 1.14% to a new high of 2311.81 as of 2:30 p.m. Moscow time. The Moscow Interbank Currency Exchange (MICEX) gained 1.19% to 1936.14.

Medvedev moved to Moscow in 1999, when he was appointed acting deputy chief of President Putin's staff. He also headed the president's campaign headquarters in the run-up to the 2000 election. In 2003, he became chief of the presidential administration and retained the post until November 2005, when he was appointed first deputy prime minister.

Putin, while saying he will not violate the Constitution and remain in the Kremlin for a third term, has pledged to retain influence in Russian politics. Various theories have been circulated in domestic and international media as to what position the popular president could opt for after the polls next year.

Putin's party to name 'successor'

President Vladimir Putin's United Russia party, which won a huge majority in recent parliamentary elections, is to choose its presidential candidate.
The vote is expected to take place at a special party congress on 17 December.

The party's candidate is the strong favourite to succeed President Putin, who is due to step down in March.

There has been speculation that either Prime Minister Viktor Zubkov or the First Deputy Prime Minister, Dmitry Medvedev, will be nominated.

Mr Putin has made it clear he intends to continue to play a national leadership role after he leaves the presidency.

The leader of the United Russia party, Boris Gryzlov, said that he would be nominated for the post of speaker of parliament.

His announcement ends speculation that Mr Putin would himself take the post.

Russia sends aircraft carrier group to Mediterranean to try to restore naval presence

The Associated Press

Russia dispatched an 11-ship aircraft carrier group to the Mediterranean Sea, the defense minister said Wednesday part of what he said was an effort to resume regular Russian naval patrols on the world's oceans.

The announcement by Defense Minister Anatoly Serdyukov is the latest move by Russia to expand its military presence internationally and flex growing economic and military strength.

Speaking at a Kremlin meeting with President Vladimir Putin, Serdyukov said an aircraft carrier, two anti-submarine ships, a guided missile cruiser along with refueling ships from Russia's Northern and Black Sea fleets and 47 aircraft would be part of the group in the Mediterranean.

He said the group would conduct three tactical exercises with real and simulated launches of sea- and air-based missiles and make nearly a dozen port calls.

"The expedition is aimed at ensuring a naval presence and establishing conditions for secure Russian navigation," Serdyukov said in televised comments.

Earlier this year, naval chief Adm. Vladimir Masorin called for restoring a permanent Russian presence in the Mediterranean, saying it was a strategically important zone for the Black Sea Fleet.

Soviet navy ships used to be based at Syria's Mediterranean port of Tartus, and Russia still maintains a technical base there.

Analysts have said it made no sense militarily for Russia to have a presence in the Mediterranean. Others have suggested that Russia might seek to relocate part of its Black Sea Fleet there if it fails to get an extension of its agreement with Ukraine on leasing the Sevastopol port when it expires in 2017.

The naval expedition is the latest effort by Putin to breathe new life into Russian armed forces, bolstered by the torrent of oil revenues pouring into government coffers.

Earlier this year, he ordered the military to resume regular long-range flights of strategic bombers. In recent years, Russia's bombers have resumed flights to areas off Norway and Iceland, as well as Russia's northeast corner, across the Bering Strait from Alaska several years ago.

Still, it was unclear how much of a presence the Russian ships would have, either in the Mediterranean or elsewhere. Like other branches of military, the navy, particularly its surface fleet, suffered in the aftermath of the Soviet collapse, as a lack of funding resulted in ships and submarines rusting away in docks and berths.

Last month, a group of independent military experts said Putin's government had failed to reverse the post-Soviet decline of Russia's armed forces despite repeated pledges, saying the military continues to suffer from rampant corruption, inefficiency and poor morale. The Kremlin also has failed to deliver on promises to modernize arsenals, they said.

Experts also have said increasing military budgets under Putin have actually bought fewer weapons than under his predecessor, Boris Yeltsin, blaming graft as the root of the problem.

Putin’s easy route to a third term

There is a very easy way for Mr Putin to stay on for a third term: amend the constitution. Article 81, which limits presidents to two consecutive terms, can be amended by a two-thirds majority of the Duma and a two-thirds majority of the Federation Council. In Sunday’s election, United Russia, with Mr Putin’s name at the top of its list, received 64 per cent of the vote and 70 per cent of the seats. Another 18 per cent of the seats will go to the Liberal Democratic party and Fair Russia, both of which support Mr Putin. In the council, composed of representatives of the governments of the territorial units of the country, support for such an amendment would, if anything, be even more overwhelming. One of the most vocal supporters of the idea of a third term for Mr Putin has been Sergei Mironov, the chairman of the council.

An amendment of article 81 would take effect as soon as both houses have approved it. Since the presidential election will take place three months after Sunday’s election, there will be plenty of time for the newly elected Duma and the council to amend the constitution.

Mr Putin does not, of course, want to appear to be scheming to stay on as president and has never called for a constitutional amendment. But he has never said he would not run if the Duma and council amended the constitution, and there were intriguing signs during the election campaign that this may happen. Rallies and demonstrations took place throughout the country calling for him to remain in office. They would not have happened without the approval of local officials, and evidence has surfaced that local officials had a hand in organising them. Two weeks ago in Krasnoyarsk, Mr Putin said if United Russia won with an overwhelming majority he would have a “moral right” to ask the Duma and government to continue current policy. And, he said: “I’m refraining so far from saying in what form I will do that. There are various options and, if it happens [an overwhelming majority] I will have that opportunity.” United Russia won an overwhelming majority and Mr Putin now has that opportunity.

David R. Cameron,
Professor of Political Science,
Yale University,
New Haven, CT 06520, US

Russians accept election result without protest

MOSCOW (Reuters) - Foreign observers and opposition parties say Russia's parliamentary election was unfair but nobody expects big protests in a country riding the eighth year of an oil boom where political apathy is becoming a way of life.

President Vladimir Putin's United Russia party won a big majority in Sunday's election after a one-sided campaign in which state media and government resources relentlessly promoted the Kremlin line, monitors and independent analysts say.

Europe and the United States demanded an investigation into reports of election irregularities and opposition leaders decried "the dirtiest elections in Russian history".

But few Russians seemed bothered.

"The public is cynical and realizes that dubious tricks are being played but they don't care very much," said Masha Lipman, editor of the Pro et Contra Journal at the Moscow Carnegie Centre think-tank. "Life is better for them right now.

Former chess champion and opposition leader Garry Kasparov denounced Sunday's election while voting was still going on. He appealed for supporters to lay flowers at the Central Electoral Commission on Monday marking the "funeral of Russian democracy".

A few dozen people turned up and the protest fizzled out.

By contrast, around 10,000 youths belonging to Nashi, a pro-Putin youth movement, rallied the same day at the Kremlin walls wearing scarves, jackets and pins bearing Putin's face to celebrate their leader's victory.

Russia's history is dominated by autocratic rulers, from the tsars to the Soviet Communist leaders ushered in by the Bolshevik Revolution in 1917. Ordinary Russians often say they prefer tough rulers who brook little or no dissent.

"We can complain about the unfairness of the election but something we can't do is provide an opposition movement -- the Russian people have to do that themselves," one senior European diplomat said.

The liberal politicians who ruled Russia in the 1990s remain discredited, following the 1998 economic collapse in which many Russians lost their savings. The opposition has been marginalized and faces frequent police harassment at rallies.

Putin's supporters are set to win 393 of the 450 seats in the lower house of parliament. Russia's two liberal, pro-Western parties scored far below the 7 percent minimum needed to get in.

The Kremlin said the low vote was the liberal parties' own fault.

"Unfortunately there was a further collapse of the right," said a presidential spokesman. "It's a real signal they have to do something to get rid of their marginality."

"DIRTIEST ELECTIONS IN RUSSIA'S HISTORY"

Opposition politicians talked tough about unfairness on election day. Communist leader Gennady Zyuganov threatened legal challenges. Other parties were equally scathing.

But the Communists have long seemed content to stay in opposition and the Central Electoral Commission, headed by a Putin ally, quickly declared it had found no major problems.

The complaints about unfairness and cheating led some observers to recall events in neighboring Ukraine, where presidential elections were deemed unfair by voters in 2004.

Ukraine's controversial vote led to street protests which finally led to a re-run of the election and handed victory to the opposition.

Nobody expects a similar outcome in Russia.

"Even at that time (2004) it was totally obvious to any objective observer that there would never be anything like an Orange Revolution in Russia," Lipman said.

"If the stakes are as high as they are for the Kremlin elite to preserve the status quo, you want double, triple, quadruple protection."

Opinion pollsters say many Russians didn't expect a clean election in the first place.

"There won't be any protests," said Natalya Zorkaya, a researcher at the Levada Centre, a polling group. "Those who didn't vote for United Russia anticipated that the election would be dirty and those who did are happy with the outcome."

Putin's Party Sweeps Russian Vote (63%)

Putin Gets Mandate as His Party Sweeps Russian Vote

By Henry Meyer and Sebastian Alison

Dec. 3 (Bloomberg) -- President Vladimir Putin's party swept parliamentary elections, partial results showed, giving him the mandate he sought to keep guiding Russia after he leaves office next year.

The Central Election Commission said, with 38 percent of yesterday's vote counted, United Russia had 63.1 percent and two other pro-Kremlin parties a combined 17 percent -- handing them more than four-fifths of the seats in the State Duma. Turnout was above 60 percent, higher than in 2003. Opposition parties complained of unprecedented vote-rigging.

Putin, 55, who cannot run in March 2 presidential elections because of a ban on three consecutive terms, had called for Russians to vote in large numbers for his party, saying this would give him the ``moral right'' to retain a leading role. He has yet to reveal what that will be.

``Sixty-sixty does achieve the objective: to substantiate Putin's popularity and position,'' Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow, said in a telephone interview. ``He can now pretty much choose what position he wants going forward.''

Investors have welcomed the prospect of a continuation of the president's policies. Russia's economy has expanded nearly 7 percent a year since Putin was first elected in 2000, fueled by high energy prices, and the value of Russian stocks has grown by $1 trillion.

`Continue to Dominate'

``Although Mr. Putin is leaving office, his influence and approach and a team of like-minded colleagues will continue to dominate Russia's political structures and manage its macroeconomy regardless of who is elected president next year,'' Moody's Investors Service Vice President Jonathan Schiffer said in an e-mailed comment.

The partial results gave the opposition Communist Party second place with 11.5 percent. Two other parties that support Putin also were on course to clear the 7 percent barrier required to enter the lower house of parliament. The Liberal Democratic Party of Russia had 9.4 percent and Fair Russia 7.6 percent. Two small pro-democracy parties failed to win seats. The vote should be mostly counted by 10 a.m. Moscow time.

United Russia's chairman, Boris Gryzlov, said the elections ``were effectively a referendum'' on Putin and that the president ``won in the first round.''

``Putin will consider this result a victory,'' Olga Kryshtanovskaya, a political analyst at the Russian Academy of Sciences in Moscow, said in a telephone interview. ``I am sure he will manage to maintain his power.''

Duma Seats

United Russia and its allies would have almost 400 of the 450 Duma seats, based on the early results, with the Communists holding the remainder.

Opposition parties alleged that the state used its resources to rig the result in favor of United Russia. Communist leader Gennady Zyuganov denounced unparalleled ``administrative pressure,'' describing the elections as ``not democratic, not fair and not free.'' His party plans to contest the results in the Supreme Court.

According to Russian nongovernmental organization Golos, which receives U.S. government funding, the authorities put pressure on state employees to obtain absentee ballots, so that they could vote at work under official supervision, ``to artificially boost turnout'' and United Russia's share of the vote.

Election Observers

The main election-monitoring arm of the Organization for Security and Cooperation in Europe, the continent's leading rights and democracy watchdog, abandoned plans to observe the vote, citing ``unprecedented restrictions.'' Only a 70-strong European parliamentary observer mission monitored the election. It will announce its findings later today.

Putin, who stepped up anti-Western rhetoric during the campaign, warning of the danger of ``jackals'' backed by foreign powers taking control, accused the U.S. of advising the international observers to stay away.

The Bush administration called on Russian authorities to investigate reports of election-day irregularities.

``We expressed our concern regarding the use of state administrative resources in support of United Russia, the bias of the state-owned or influenced media in favor of United Russia, intimidation of political opposition, and the lack of equal opportunity encountered by opposition candidates and parties,'' White House spokesman Gordon Johndroe said in an e-mailed statement. ``We also regret that limitations Russia imposed on election monitors prevented OSCE's ODIHR from fielding an election monitoring mission.''

OSCE Absence

German Chancellor Angela Merkel said in an interview with Deutschlandfunk radio broadcast yesterday that she regretted the absence of OSCE observers and had told Putin of the importance of a multiparty system.

The Russian leader, who headed United Russia's list of candidates for the Duma, hasn't endorsed any candidate to replace him as president. Pollsters say that any politician who gets Putin's blessing will win.

Moscow Mayor Yury Luzhkov, a co-chairman of United Russia, said the party could announce its presidential candidate as early as Dec. 17, the Interfax news service reported.

Analysts say that among potential successors to Putin are First Deputy Prime Ministers Sergei Ivanov, 54, and Dmitry Medvedev, 41, and Prime Minister Viktor Zubkov, 66. Candidates must come forward by Dec. 23.

Russia prepares to vote with all eyes on Putin

MOSCOW (AFP) — Russians on Saturday prepared to vote in parliamentary elections expected to hand a sweeping victory to President Vladimir Putin's party and consolidate the Kremlin's power three months before presidential polls.

The opposition has denounced the elections as a "farce" and warned that Putin was leading the country to Soviet-style one-party rule during a campaign that has been overwhelmingly dominated by his United Russia party.

Voting kicks off at 2000 GMT Saturday in the Russian Far East region of Kamchatka, some 6,000 kilometres (3,700 miles) east of Moscow and polls are set to open nine hours later in the Russian capital.

Putin is standing as United Russia's lead candidate in the elections and has said that a convincing victory would give him a mandate to continue playing a role in politics after he steps down in March of next year.

The ex-KGB officer in power since 2000 has cast the elections as a referendum on his rule, saying that a vote for United Russia would safeguard the country's oil-driven economic boom and stability.

"The result of the parliamentary elections will, without a doubt, set the tone for the elections for a new president," Putin said in a televised address on Thursday that was aired again on Friday.

Russian authorities and businesses meanwhile mounted a massive effort to maximise the turnout, including through SMS messages from Russia's biggest operators encouraging mobile phone subscribers to vote.

Putin and his Kremlin allies are hoping that a strong victory coupled with a high turnout at the polls will give them a free hand to lay the groundwork for the presidential vote set for March 2.

In his final pitch to voters, Putin urged them to turn out at the polls, warning that a vote for his opponents could return the country to the "humiliation, dependency and disintegration" of the early post-Soviet years.

The campaign has also seen Putin ramp up his anti-Western rhetoric, likening his opponents to Western-funded "jackals" and warning that while Russia was committed to democratic development, it would not allow "this process to be corrected from the outside."

A campaign blackout went into effect as required by law, but television news showed footage of Putin, a judo black-belt, attending a martial arts competition in Moscow late Friday, nodding approvingly as he watched sumo wrestlers and kickboxers square off in the rings.

Giant United Russia posters remained prominently displayed in Moscow while those of the 10 other parties fielding candidates to the 450-seat State Duma were hard to spot.

The opposition has accused the Kremlin of suppressing debate during the campaign by dominating television coverage on state media, confiscating their election leaflets and arresting members.

Former chess champion turned Kremlin critic Garry Kasparov has dismissed the elections as a "farce" and warned that Putin was leading the country toward dictatorship.

After spending five days behind bars this week for taking part in an unauthorised protest against Putin, Kasparov accused the 55-year-old president of resorting to repression to cement his party's dominance.

"Fear is the only chance this regime has to survive," he said.

Election watchdog groups have voiced concern over allegations that voters have come under pressure from authorities to turn out and vote, with many told to cast ballots at their workplaces, under the watchful eye of their bosses.

But Saint-Petersburg governor Valentina Matviyenko, a Putin ally whose name has been floated as a possible successor, defended the elections as democratic and said: "I have no worries about tomorrow's victory", Interfax reported.

In the final days of campaigning, Putin appeared to confirm that he would not stand in the March vote, but whether he plans to anoint a successor, perhaps temporarily while he prepares a return to the presidency, remains unclear.

The campaign for the presidency kicked off on Wednesday with no frontrunner in sight and the clock is ticking for Putin to tip his hand before a December 23 deadline for parties to nominate their candidates for the top post.

Putin is barred by the constitution from seeking a third term.

The United States on Friday said it would be closely watching as some 109 million registered voters cast ballots in the Russia's fifth election since the 1991 collapse of the Soviet Union.

"We are concerned that people would not be able to have the free and fair elections that they deserve," said White House spokeswoman Dana Perino.

Some 450,000 police officers will be on duty across the country on Sunday to ensure order as voters flock to the 95,000 polling stations set up across Russia's 11 time zones.

The last polling stations are due to close at 1800 GMT in Kaliningrad, a Russian region sandwiched between Poland and Lithuania.