Putin Braces for First Russian Election Since Kremlin Return

(Bloomberg – bloomberg.com – Ilya Arkhipov and Anton Doroshev – October 12, 2012) Russia’s regional elections, including the first gubernatorial polls in eight years, are testing President Vladimir Putin’s efforts to reassert control after the largest protests in more than a decade.

Contenders backed by the ruling United Russia party may suffer setbacks in at least 10 mayoral and local legislative elections before the Oct. 14 vote, the Carnegie Moscow Center projects. Governing-party candidates are leading by double-digit margins in all five gubernatorial races, according to a report released this month by the Civil Society Development Fund.

The unrest is pushing Putin’s allies into a balancing act where a heavy-handed show of strength risks sparking new protests and rallying the opposition. Putin, who began his third presidential term in May, abolished direct elections of governors in 2004 and agreed to restore them last year after tens of thousands took to the streets to protest voting fraud.

“With this vote, the Kremlin wants to show it still maintains control of the situation,” said Mikhail Remizov president of the National Strategy Institute. “Secondly, the Kremlin wants to avoid angering people with unfair elections that may provoke large-scale protests.”

Russian equities, which have the lowest valuations based on projected earnings among 21 emerging markets tracked by Bloomberg, dropped for the fourth time in five days, with the Micex Index retreating 0.4 percent to 1,456.76 at 12:36 p.m. in Moscow. The ruble-denominated benchmark gauge trades at 5.6 times estimated earnings after gaining 3.9 percent this year.

Ratings Slump

Putin, who handed the chairmanship of the United Russia party to Prime Minister Dmitry Medvedev a year ago, is struggling to reverse a slump in approval ratings that are near the lowest level since mass protests broke out in December. A crackdown has since ensued, including prosecution of opposition activists and leaders, increased fines for unsanctioned rallies and tightened controls over the Internet.

Support for Putin is at 44 percent, after bottoming out at 41 percent last month, the Moscow-based Public Opinion Foundation, or FOM, said in an Oct. 11 report. The Russian leader won the March presidential election with 64 percent of the vote. FOM polled 3,000 Russians Oct. 6-7. No margin of error was given.

The Kremlin winnowed the contenders in gubernatorial elections by using a so-called municipal filter to screen candidates, while the heads of at least 20 of Russia’s 83 regions were replaced or reappointed before legislative changes went into effect.

Missed Chance

“The Kremlin lost a chance to show a willingness to allow for soft democratization,” said Grigory Melkonyants, head of Golos, a vote-monitoring watchdog. “We see almost as many violations and administrative pressure during the election campaign as before.”

The system of screening candidates includes a requirement to collect the signatures of as many as 10 percent of municipal lawmakers in the region. Most regional parliaments are controlled by United Russia and will decide individually whether independent candidates are allowed to run.

“Maybe we acted too harshly with the filters but in my opinion filters are needed,” said Sergei Ivanov, Putin’s chief of staff. “I can’t quite understand how we can allow 120 to 150 candidates to compete in gubernatorial elections.”

‘Boorish Behavior’

Speaking in an Oct. 7 television interview that marked his 60th birthday, Putin chided the opposition for their “boorish behavior” and said he held out “hope serious people will appear someday” among his opponents. The president cited an increase in the wellbeing of Russians, including a more than tenfold increase in average wages since 2000, among the greatest accomplishments of his tenure.

Even so, the world’s biggest energy exporter is facing slowing growth after inflation accelerated to a 10-month high in September and consumer confidence fell in the third quarter for the first time since January-March 2011.

The World Bank on Oct. 8 cut its forecasts for Russia’s economic expansion this year and next, citing the country’s weak harvest, the global economic turmoil and faster price growth eroding purchasing power.

Gross domestic product will grow 3.5 percent this year and 3.6 percent in 2013, the Washington-based lender said. The forecast for this year was cut 0.4 percentage points from a June estimate, while next year’s projection was lowered half a percentage point. GDP rose 4 percent from a year earlier in the second quarter.

‘Angered Elite’

“The elite is angered because it’s told the Kremlin couldn’t guarantee them victory in elections,” said Olga Kryshtanovskaya, a sociologist in Moscow, adding that fallout from the vote may prompt further escalation of political tensions. “The old agreement — you give me position and I give you my loyalty — is not working anymore.”

More Russians are leaning toward joining rallies against possible voter fraud, with 17 percent saying in September they would back local demonstrations to protest falsifications, up from 13 percent a month earlier and 15 percent last December, according to an Oct. 8 survey by the independent Levada Center.

About 63 percent of respondents in six of the country’s biggest cities have a very bad, bad or average impression of their mayors and governors, according to another poll published by Levada on Oct. 5.

Bryansk, Ryazan

Even so, incumbent governors will probably “win easily” in the regions of Amursk, Belgorod and Novgorod and overcome “some difficulties” to finish first in Bryansk and Ryazan, said Nikolay Petrov, a scholar at the Carnegie Moscow Center. Politicians backed by United Russia may suffer defeat in several local legislative races and mayoral elections in Kaliningrad, Nizhny Tagil and Khimki, according to Petrov.

“The Kremlin and regional authorities in many cases still enjoy almost complete control over the election process, but they are afraid to provoke mass protests,” Petrov said. “The Kremlin closely screened the regions and decided to permit elections only where no surprises were expected.”

Controversies have engulfed two of the regional elections. Russia’s Supreme Court yesterday reinstated Bryansk’s incumbent governor, Nikolai Denin, after a local court barred him from running because of falsified signatures. In the Ryazan region, the main challenger for the governor’s office dropped out of the race and accepted an offer to become a senator.

“A split in the elites is growing,” said Vladimir Mekhedov, a political scientist at Bryansk State University. “It may not be that distinct yet, but the discord is making itself felt, it’s hard to constrain it.”

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