An imminent presidential decree will announce the Duma election for 2 December, and this formality raises expectations of President Putin revealing his hand on the presidential succession. Given the time required for constitutional amendment procedures, supporters of a third term for Putin must give up any remaining hope if he fails to initiate the necessary amendments immediately.
Those hoping instead for an early end to uncertainty about Putin’s choice of recommended successor are also likely to be disappointed. Putin will prefer to prevent the Duma election becoming entangled with the presidential succession. His goal of bringing about a smooth and stable handover of the presidency to his preferred successor – either Dmitry Medvedev or Sergey Ivanov – will be achieved by means of a compact operation in the 13 weeks between the Duma and presidential elections. So December is the time for the traditional equity market rally on the removal of political uncertainties.
Russia’s election season is now open. The constitution and the Duma election law define a period beginning on 30 August and ending on 18 September in which the president must issue a decree announcing the Duma election for 2 December (click here for a detailed electoral timetable).
Besides purely formal announcements, it is possible that the next few days will bring a substantive statement of intent from President Putin about the elections.
Some expect that even now he will reverse his repeatedly stated position on leaving office at the end of his term in May 2008 and announce his intention to secure an amendment to the constitution enabling him to serve a third term. This view is not only to be found among some experienced observers of the Russian political scene, but is also shared by fully 50 per cent of the general public, according to an opinion poll commissioned by Renaissance Capital in mid-June.
Another view is that Putin will stick to his declared intention of leaving office and at last remove the uncertainty about his choice of whom to recommend to the voters as his successor. Given Putin’s overwhelming popularity, and barring only some ‘act of God’, the person recommended will be freely elected by an absolute majority of voters in the first round of the presidential election on 2 March 2008, removing the need for a second round run-off.
This expectation raises two questions.
First, will the recommended successor be one of the two men whom Putin himself has, in effect, put forward as front-runners – Dmitry Medvedev and Sergey Ivanov? Or will Putin instead choose a ‘dark horse’, either from among the widely canvassed names of alternative candidates or a complete surprise?
Second, will Putin indicate his choice of successor now or wait until after the presidential election process has been formally launched by the Federation Council (the upper house of the federal parliament)? The Federation Council is obliged by law to announce the presidential election for 2 March 2008 at some point during the period 24 November to 4 December 2007.
In the event that Putin remains silent about the presidential succession until after the Duma election, another question arises about whether he will express a clear preference at all. He might instead indicate more than one person whom he would be happy to see as president, leaving the final choice to the voters. There is no expectation among the political commentators, let alone the broader public, that Putin would relax control over the presidential succession to that extent. We nevertheless mention this scenario not merely for theoretical completeness but rather because Putin himself hinted at such an approach in the last explicit public comments which he made on the subject – at his big annual press conference on 1 February 2007.
In this note, we revisit our view on these scenarios, and we pay particular attention to the timing. For this is the key to positioning for a positive asset price response – particularly likely in the Russian equity market – to the removal of uncertainty surrounding the forthcoming elections.
To start with the timing of a major statement by Putin on the presidential succession, this could come in the week beginning 2 September – the first week after the summer holiday season. As already noted, a formal presidential decree on the Duma election is in any case required at this time, and this creates a convenient peg for a more substantive announcement. The ‘new year’ feel of the first week in September has been used in the past by Putin to launch major political initiatives – notably the ‘National Projects’, in September 2005.
Amid all the unavoidable guesswork, it is possible to find one source of certainty. If Putin does not make an announcement in early September that he intends to run for a third term, then this scenario can at long last be ruled out altogether.
We have never seen reason to doubt Putin’s commitment to leave office. His motives here – more or less explicitly stated – are Russia’s domestic stability and international legitimacy, which have been core goals of his entire presidency. At the same time, his record and standing will enable him to retain considerable and perhaps decisive influence when he is no longer president. But all that, of course, has been a matter of opinion. The difference now is that time is running out to complete the procedures necessary to amend the existing constitutional ban on the same person holding the presidency for more than two consecutive terms.
The most time-consuming part of the constitutional amendment procedure is the requirement that once an amendment has been passed by qualified majorities in the two chambers of the federal parliament (two-thirds of the State Duma and three-quarters of the Federation Council), it can enter into force only after approval by two-thirds of the regional legislatures. While all the necessary majorities could be secured, if desired, by Putin, the procedural steps could not realistically be completed in less than the 12 weeks now remaining until the presidential election is due to be formally announced.
So it is ‘now or never’ as regards setting up a third Putin term starting in 2008. Moving beyond our firm view that the answer is ‘never’, there remains the question of why the ‘third term’ scenario still has followers – and even some recent converts.
Part of the answer is the cultural assumption that a Russian leader still in his prime and at the height of his power (in the literal sense, that his public approval rating reached its all time high in July 2007) cannot be expected to step down of his own accord . A more serious reason for continued speculation about a third term is the conjunction of Putin as an ever more powerful, vigorous and assertive incumbent president and the continued absence of any signal from him about the succession.
While this reality may lead some commentators to what we believe is the wrong conclusion that Putin is heading for a third term, its implications are important for drawing the right conclusion. Putin’s clear priority is to ensure stability through the election period and a smooth transition of authority to his successor at the end of it. This requires asserting his own authority with more force than ever to deter and, if necessary, counter any rocking of the boat from whatever quarter – from factional intrigues in and around the Kremlin itself through to the jihadist threat in the North Caucasus. The explosion and derailment of a passenger train on the Moscow-St Petersburg line in August 2007 may not have caused serious injury or death, but it does highlight the most serious risk to a stable presidential succession. The most plausible reason for any change to our judgements about the election season would be a resurgence of terrorist outrages this autumn.
The same goal of ensuring a stable power transition must be an important reason for Putin not yet declaring his choice of successor. Not only would such a declaration make him a lame duck; more important, it would mean that influential figures (including in Putin’s own team) who are unhappy with his choice would have more time to try to ‘shoot down’ the declared successor and so destabilise the whole process.
A second reason for delay in naming the successor is the desirability of keeping the presidential succession separate from the Duma election. An important part of Putin’s overall political strategy has been to upgrade the role of political parties – a policy that will bear fruit to a considerable extent in the next Duma, which will be elected entirely on the basis of party lists. Putin himself has acknowledged that this strategy leads logically to the presidency itself becoming party political; but he has also repeatedly stated his view that this remains premature at Russia’s present stage of development.
We see no grounds for Putin having a change of mind on this subject. A mass of opinion poll evidence shows that the public see and value the directly elected presidency not only as the only legitimate and meaningful institution but also as a ‘father-of-the-nation’ office which should remain above the party-political fray. If Putin’s choice of successor emerged ahead of the Duma election, this would result in the dominant United Russia (UR) party basing its campaign around that individual (and, if UR gets its way, having the designated successor at the top of its list). All this would make the next president appear to emanate from a political party and, to some extent, depend on that party.
There is a precise date by which our view on this point will be proved right or wrong: the deadline for the political parties’ submission of their lists to the Central Electoral Commission, which will fall in the period from 29 September to 18 October. The three names at the top of the UR list (and which appear on the ballot paper) would routinely be the known senior party officials. But if one of those three names is, instead, Dmitry Medvedev or Sergey Ivanov or one of the recognisable reserve candidates for the presidential succession (such as Sergey Naryshkin or Dmitry Kozak), then – regardless of whether Putin himself has made any explicit statements – we will know that that person is Putin’s choice of successor and that Putin has, after all, decided to base the presidency on a ruling party.
To repeat, we see this outcome as unlikely. Our view remains that Putin will want to avoid entangling the presidential succession with the Duma election. It follows that we expect him to announce his chosen successor after the Duma election on 2 December. The presidential succession would thus become a compact and rapid special operation carried out in the few weeks leading up to the 2 March election, minimising the risk of anything going wrong.
That leaves the ‘headline’ question of the identity of the successor. There is one strong precedent in Putin’s track record for the ‘dark horse’ scenario, namely the selection of the little known Mikhail Fradkov as prime minister in March 2004. Putin himself was, of course, a dark horse when chosen by Boris Yeltsin in August 1999. And it might be consistent with the spirit of the ‘special operation’ for the presidential succession if Medvedev and Ivanov proved to have been mere decoys all along, drawing attention away from the person whom Putin really has in mind and intends to present to the public at the latest practicable moment.
Although there is something in these arguments, we still reckon that Putin will choose either Medvedev or Ivanov (we do not have high hopes that Putin would allow an open race between the two, beneficial as that would be for improving the weak culture of political competition in Russia and reducing long-term country risk). The careful preparation of both those potential candidatures seems to us an important part of Putin’s whole approach to ensure a stable and smooth succession devoid of surprises or shocks.
As for which of those two front-runners will end up winning Putin’s definitive and decisive endorsement, the harsh reality for commentators is that it remains absolutely impossible to tell. This reality is significant in itself. It shows the care which Putin has taken to allow both candidates to establish their credentials in a kind of shadow campaign. In the period February-July 2007, Ivanov reversed Medvedev’s earlier poll lead and has accordingly become the front-runner. But the latest Levada Centre poll (conducted in mid-August) shows the two drawing virtually level once again.
This contending equilibrium allows Putin, the final arbiter and supreme elector, to choose between his two groomed successors without being rushed. He will most likely keep us all waiting until December.
President Putin is the opposite of a lame duck...
...prompting continued speculation about a third term – for which time is running out.
From Article 136 of the Russian Constitution:
Amendments to Chapters 3-8 of the Constitution [the provisions on the limit of two consecutive presidential terms occurs in these chapters] require a three-quarters majority in the Federation Council and a two-thirds majority in the State Duma, and enter into force after being approved by two-thirds of the regional legislatures.
The above votes would take a minimum of four weeks.
From the Constitutional Court Resolution of 31 October 2005 interpreting Article 136 of the Constitution:
...the legislative branch may lay down procedures for submitting adopted constitutional amendments to regional legislatures and arrangements for verifying that due procedures are observed by the regional legislatures in approving those amendments.
These arrangements and procedures have not been defined by the federal parliament. That would take time even before the 85 regional legislatures began their own internal procedures.
The modern-day elected tsar elected remains the cornerstone of legitimacy and stability.
Medvedev and Ivanov have been kept in contending equilibrium.
President Putin's statements on the 2008 presidential succession point to a hand-picked successor emerging after the 2007 Duma election.
From his main programme speech on 12 February 2004 ahead of his re-election to a second term in March 2004:
I remain opposed to constitutional amendments – whether to extend my tenure as president or for any other reason. Rotation in leadership is beneficial for Russia, to avoid stagnation. But I will share with the public my view of who would be a suitable candidate to succeed me as president. If people agree, they will vote for that person. Such a person would stand for broad policy continuity, but any new president will always come with fresh ideas and his own team.
From his Kremlin press conference, 1 February 2007:
There will be no official successor, only free elections in which the people will choose the next president. Like any citizen, I am entitled to express my own preferences [note plural], something which I will do once the presidential election campaign is under way.
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