Page 26 - IFR Opportunities in Russian capital markets

CHAPTER 01
ifrintelligence reports/Opportunities in: Russian Capital Markets
Table 1.7: Public trust in Russian politicians, 2006 (%)
Most trusted politicians %
Source: Levada Center
Analysts are expecting Putin to introduce his chosen successor to the public sometime in the second half of 2007, who will probably be made Prime Minister at the same time. At present, the identity of the presidential candidate is a matter of pure speculation. The two First Deputy Prime Ministers, Dmitry Medvedev and Sergei Ivanov, are the obvious front-runners, who are both close confidents of Putin. But political analysts all agree that a dark horse could emerge very late in the race; however, according to an opinion poll in December, about half of Russians intending to vote will vote for anyone Putin dubs as a successor, enough to give the candidate victory in the first round of the elections. The politicians who the electorate place most trust in are shown in Table 1.7.
Analysts at UBS sum up the received wisdom: "Theoretically, with both the executive and the legislature up for grabs, there should be the potential for a change in regime. However, we, like the bulk of analysts, see the chances of a real change as being close to zero: with Putin's popularity still sky-high and democracy ‘managed’, the questions are more second-order ones about who is promoted and whether there is any modest change in effectiveness and style."
The Duma election should return the pro-Putin ‘Party of Power’ – United Russia – with a majority, with the only unknown being the exact size of its majority.
Table 1.8: Duma election, Dec 2003 – share of popular vote (%), number of seats
President Putin 46 Dmitry Medvedev, First Deputy PM & Head of Gazprom 17 Sergei Shoigu, Emergencies Minister 12 Sergei Ivanov, First Deputy PM & Defence Minister 9 Boris Gryzlov, Speaker of Duma and Head of United Russia 9
Share of vote Duma seats*
United Russia 37.09 310 Communist Party 12.70 47 LDPR 11.60 33
Homeland/Rodina
Union of Right Forces/SPS Yabloko
Agrarian Party Pensioners Party
Russia re-birth Party Green Party
Others
Against all parties
9.10 28 4.00 0 4.30 0 3.70 0 3.10 0 1.90 12 0.40 0 6.50 0 4.80 0
*Note: 19 Deputies are independents
Source: Alfa Bank Research
The only drama in the elections will all come from the tail-end of the race, seeing which of the also-rans can muster the recently increased 7% of the vote threshold needed to get into the Duma.
Battling it out for second will be the newly formed left-leaning (and Kremlin-backed) ‘A Just Russia’, which will go up against the waning Communists. After almost a decade of loyally serving the Kremlin's interest (and providing Russia-watchers with a lot of entertainment) Nationalist Vladimir Zhirinovsky's LDPR will all struggle to get over the 7% hurdle, as will the liberal parties on the right, which are a spent political force. Details of the last Duma elections are given in Table 1.8.
The major themes of the election look set to be social equity and nationalism, suggesting the big policy question will be the extent to which policy drifts in this direction in 2008, says UBS.
However, Alfa Bank thinks that the election campaign could produce some fireworks in the form of an anti-corruption drive – something that is high on almost all Russians' list of moans.
"The election theme is expected to be an increasingly high profile campaign against corruption in state agencies and amongst law enforcement officials. It is possible that we may see some very high profile anti-corruption event in 2007 as the government looks to address the country's poor investment image and reflect voter concerns," says Alfa Bank.
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