№ 8 (August 2007)
The appointment of a person with the profile of Viktor Zubkov to the role of Prime Minister is entirely consistent with the view that President Putin will not only remain the dominant player during the next presidency, but that it is highly probable he will return as Russia's fourth President for a further eight years. It is also entirely possible that this could occur well before the scheduled election date in 2012.
By Chris Weafer
Stability remains firmly intact. Such a scenario is strongly supportive of our favorable view of the investment case for Russian assets through 2008. It means that the critical criteria for investing in any emerging market, Political Stability and Economic Predictability, remain firmly intact for the Russia case.
Zubkov well placed for presidency. The nomination of Zubkov as prime minister was, as expected, ratified by the Duma today. While this does not automatically mean that he will be President Putin's choice as successor in March '08, it does place him firmly in pole position. Zubkov now has three months to raise his profile with Russia's voters and the international community, before Putin is expected to name his preferred successor in mid to late December.
Indications that corruption will be the "theme" of Duma election. The new prime minister is expected to accomplish that by leading a vigorous campaign against corruption amongst state bureaucrats with one or more high profile prosecutions. We have previously had a strong indication that the Kremlin sees an active campaign against corruption within the state bureaucracy as the "theme" of this year's Duma election, and Zubkov's background makes him the ideal person to lead that. Zubkov is also expected to have a higher profile role as prime minister than his predecessor and that should also allow him achieve very high media exposure both at home and internationally.
A relative unknown. Putin nominating a relative unknown, as Zubkov was until this week, to be his preferred successor in December would have caused greater instability and fostered a plethora of conspiracy theories. Nominating a familiar name, as the prime minister surely will be by then, will not.
Putin aims to retain power. What we know of President Putin's ambition is that he not only wants to remain as Russia's most powerful person until the March 2008 election, but also to carve a post-election role that will allow him a powerfully influential role within the next presidency. Furthermore, it is very likely that Putin will want at least the option to return to the presidency in 2012, and very possibly before that should circumstances warrant it.
Zubkov would be the ideal successor to Putin. Zubkov ideally fits the profile of the successor that would best accommodate Putin's stated and implied ambitions. He is reported to be a trusted friend and, most importantly, is not associated with any Kremlin faction. He is also acceptable to the Kremlin establishment and apart from pursuing a more intense campaign against corruption and financial criminality, he is not expected to want to make any changes to the Kremlin's planned strategies. At seventy years (as he will be in 2012), he would be most unlikely to want to push for a second term and, should circumstances warrant it, he would be more likely to accommodate Putin's earlier return than might others.
Cabinet reshuffle expected. The new prime minister is expected to make changes to the cabinet within days. Economics Minister Gref has previously said that he may leave government in the next re-shuffle. He is expected to be the highest-profile departure, albeit not the only one.
