Neon Knights International Gaming Guild - Russia re-inventing self... again!

Source:
Bloomberg

Putin Changes Russia's Government Before Elections (Update4)
Feb. 24 (Bloomberg) -- President Vladimir Putin dismissed the Russian government and said in a broadcast address to the nation he will name a new cabinet before presidential elections in less than three weeks.

Putin fired Prime Minister Mikhail Kasyanov and appointed his deputy, Viktor Khristenko, 46, as acting prime minister, marking the end of the second-longest-serving government since the Soviet Union fell in 1991. Putin, 51, said he made the change in order to emphasize his policies before elections set for March 14.

``This was expected, though for some, the timing is earlier than anticipated,'' Mohamed El-Erian, who manages $12 billion of emerging-market debt at Pacific Investment Management Co., said in an e-mail from Newport Beach, California.

Putin, who in 1999 became the youngest Russian leader since Tsar Nicholas II ascended the throne in 1894, may win about 80 percent of the vote, according to a poll conducted by the Moscow- based All Russia Center for the Study of Public Opinion from Feb. 13 to Feb. 16. The survey of 1,600 people in 100 cities had a margin of error of 3.4 percent. Under the constitution, Putin must appoint a new government after the election.

`Right Not to Wait'

Today's change ``is dictated by the wish to again highlight my position on the question of what will be the country's course of development after March 14,'' Putin said. ``I consider it right at this time not to wait for the end of the electoral campaign.''

The dismissal may indicate Putin is determined to rid the government of officials linked to former President Boris Yeltsin, who himself overhauled the cabinet four times in the 17 months through August 1998. The prime minister is one of the three most powerful posts in Russia.

Last October, Putin sacked his chief of staff, Alexander Voloshin, a Yeltsin appointee. That position, also among the top three, was filled by Dmitry Medvedev, a Putin ally from the president's hometown of St. Petersburg.

Putin ``would have changed the government in six weeks anyway, so it's surprising that he would do it now,'' said Tim McCarthy, who manages $500 million in Russian assets at Moscow- based Troika Dialog Asset Management.

Russia's 5 percent bond maturing 2030, the most-traded emerging market Eurobond, rose 0.2 of a cent to 98.2 cents, according to Deutsche Bank AG prices as of 4:49 p.m. in London.

Stocks Decline

Russian stocks declined: The Moscow Interbank Currency Exchange Index fell as much as 2.3 percent, then pared that loss to trade 0.4 percent lower at 574.01 at 6:45 p.m. Moscow time.

The benchmark RTS stock index, based in dollars, has risen 28 percent in the last three months, making it the world's fourth- best-performing index.

The timing of today's decision may be an attempt to boost turnout in the election, said Nikolai Kharitonov, the Communist candidate for the presidency. According to the All Russia poll, as many as 15 percent of voters said they wouldn't vote, and another 9 percent didn't know if they would.

``It is a public-relations move designed to attract attention to the president in the run-up to the presidential elections and to ensure a high turnout,'' said Kharitonov, who had 5 percent in the poll, the second-highest ranking.

Khristenko, as deputy prime minister, supervised Russia's energy industries, overseeing the work of Energy Minister Igor Yusufov and Natural Resources Minister Viktor Arktyukhov. Khristenko represents the government on the boards of OAO Gazprom, the world's biggest natural-gas supplier, and OAO Transneft, Russia's oil-pipeline monopoly.

Khristenko's Role

Khristenko was born in Chelyabinsk, in Russia's Asian region. He was appointed deputy prime minister first in 1998, for six months, and again from May 1999. He also oversaw the nation's rail system and was responsible for developing telecommunications, according to the government's Web site.

``Kasyanov was not Putin's man,'' said Ian Hague, who manages more than $500 million in Russian and East European assets at Firebird Management LLC in New York. ``Khristenko may not last that long either. It is possible that the role of the prime minister will be reduced, and instead you will have ministers reporting directly to Putin.''

Kasyanov, 46, was the only head of government in Putin's four years in office and was the longest-serving Russian prime minister since Viktor Chernomyrdin, who was fired by Yeltsin in 1998.

Candidates for the premiership may include Economy Minister German Gref and Finance Minister Alexei Kudrin, said Timothy Ash, an economist at Bear Stearns International in London. Another candidate may be Defense Minister Sergey Ivanov, Russian newspapers have reported.

``The key is knowing who the prime minister will be, and we don't know that yet,'' said Martin Taylor, a fund manager at Thames River Capital in London, with $800 million under management. ``The appointment of a reformer, such as Kudrin, Gref or Medvedev, would be positive. The appointment of someone from the security apparatus would be negative.''