Bloomberg News

Putin Opponents to Keep Rallies Up as Presidency Vote Nears

December 16, 2011

(Updates with Putin comments in second paragraph.)

Dec. 15 (Bloomberg) -- Russian middle-class protests will continue against Prime Minister Vladimir Putin as he tries to shore up his support less than three months before a presidential election.

Opposition leaders got permission yesterday to follow up Moscow’s biggest ever anti-Putin demonstration on Dec. 10 with a rally of as many as 50,000 people on Dec. 24. That would be double the size of the crowd police estimated last week. Putin in a televised call-in show today denied fraud in this month’s parliamentary vote and warned his opponents against destabilizing the country.

Growing discontent handed the ruling United Russia party its worst electoral setback in the Dec. 4 parliamentary vote and is threatening to force Putin into a runoff for the first time in his bid to return to the presidency. Protests over election fraud, led by urban professionals who benefited from Russia’s prosperous decade, have pushed equity prices lower and helped send the ruble on its longest losing streak since January 2009.

“I don’t think cold weather and snow are going to be enough to put this middle-class genie back in the bottle,” Roland Nash, chief investment strategist at Moscow-based Verno Capital, which manages $175 million, said yesterday by e-mail. “I think there are enough politicized people to keep up the pressure until March.”

The dollar-denominated RTS stock index has lost more than 13 percent of its value since markets reopened after the parliamentary elections, in which United Russia won just below 50 percent of votes amid accusations of ballot-stuffing. The ruble has declined for 10 straight sessions against the dollar.

‘Very Volatile Market’

“It’s a very volatile market at the moment,” Javier Garcia, a portfolio manager at Swiss & Global Asset Management Ltd. in Zurich who manages the $30 million Julius Baer Russia Fund, said in a Bloomberg Television interview yesterday. “The new government now has a big chance to listen to this new force and to implement reforms and to bring Russia into the next growth level.”

United Russia’s majority in the State Duma slumped to 238 of the legislature’s 450 seats from 315 in 2007 as stalling wage growth and the government’s shortcomings in curbing corruption repelled voters. U.S. and European observers said the vote was neither free nor fair.

The party won more than 46 percent of the vote in Moscow, Europe’s largest city with 11.5 million people and the epicenter of the protests to date, according to official results. That compared with 27.5 percent support in an exit poll by the Public Opinion Foundation.

‘No One-Time Phenomenon’

The momentum for protests will grow as demonstrators plan more rallies across the country, according to Vladimir Ryzhkov, a leader of Solidarity, an umbrella group that unites several opposition movements.

“The authorities need to understand that this isn’t just a one-time phenomenon but a constant campaign of civil protests like in Syria, Libya, Georgia or Yugoslavia, until the people achieve their goals,” Ryzhkov said in a Dec. 12 interview. “The thousands that came to protest Dec. 10 are just the tip of the iceberg.”

Elena Ivanovskaya, 33, a mother-of-three who works in publishing in Moscow, was among the protesters who braved snow and near-freezing temperatures on Dec. 10 on an island south of the Kremlin and plans to protest again on Dec. 24.

“We want change,” said Ivanovskaya, who worked as a volunteer election-commission member for the pro-democracy Yabloko party during the parliamentary poll and is going to file a court complaint on vote falsification at her station. “If the authorities continue to behave in the same way, pressuring people, they will provoke even the most loyal citizens to protest.”

Presidential Vote

Putin, 59, said in September he plans to return to the presidency, pushing aside Dmitry Medvedev, who replaced him in 2008 after his predecessor completed the constitutional maximum two consecutive terms.

He needs to win more than 50 percent backing in the March 4 election to avoid a runoff and may face billionaire Mikhail Prokhorov and Gennady Zyuganov, leader of the Communist Party, which came second in the Duma vote.

Putin is “determined to win in the first round,” which can only be achieved by mass fraud, according to Stanislav Belkovsky, a former Kremlin adviser who heads the Institute for National Strategy in Moscow.

If this happens, “hundreds of thousands of people will take to the streets, not tens of thousands as before,” he said by phone Dec. 13.

‘Election Abuse’

There may be greater fraud in the presidential elections because there will be fewer players involved and therefore less monitoring, according to Golos, a vote-monitoring group.

“This offers a greater possibility for election abuse,” Alexander Kynev, head of Moscow-based Golos’s analytical department, said yesterday by e-mail. “If the list of candidates holds no intrigue and is of no interest, turnout will be low. That will hugely increase the temptation to inflate it through fraud.”

Putin would risk unleashing a “destructive force” by rigging parliamentary and presidential elections, the Center for Strategic Studies, a Moscow-based research group that advises the government, warned in a March report.

Economic growth averaged 7 percent a year during Putin’s 2000-2008 tenure and he remains Russia’s most popular politician.

His approval rating is 46 percent, according to a Nov. 26-27 poll of 3,000 people by the Public Opinion Foundation. No margin of error was given. The state-run All-Russian Center for the Study of Public Opinion, or VTsIOM, gives Putin 41 percent approval in a poll conducted among 1,600 people on Nov. 26-27 with a 3.4 percentage-point margin of error.

Dealing With Dissent

The Dec. 10 rally, which passed without violence or detentions, shows that Russian authorities are becoming better at dealing with dissent, said Joerg Forbrig, senior program officer for Central and Eastern Europe at the German Marshall Fund of the United States in Berlin.

Putin has been “on a learning curve for the past 20 years and now better knows how to handle protests and win back popular support,” he said. “It’s very smart of Putin to let it go and give free space to protesters and let them be covered in the media. The Christmas holiday is coming and it may peter out.”

To address voter concerns, Putin “should focus on reforms, push them through, bring down corruption and bureaucracy and make Russia an attractive place to invest in,” Swiss & Global’s Garcia said.

Middle Class

It’s the successful, urban professionals that have featured prominently at rallies so far who Putin must please, according to Andrei Nechayev, a former economy minister and president of the Russian Finance Corporation.

“This means the middle-class is fed up, this is an entirely new development,” said Nechayev, who attended the Dec. 10 rally.

While the emergence of a politically active middle class may prove a thorn in Putin’s side as he gears up for a return to the Kremlin, it’s positive for Russia’s development, according to Verno’s Nash.

“In the past, about the only force able to discipline Russia’s leaders has been the oil price,” he said. “A politically active middle class has to be a better way of delivering that.”

--With assistance from Ilya Arkhipov in Moscow. Editors: Andrew Langley, Balazs Penz

To contact the reporters on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net Lyubov Pronina in Moscow at lpronina@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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