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As Crisis Deepens, Russian President Promises New Deal

Russian President Dmitry Medvedev
MOSCOW (Reuters) -- President Dmitry Medvedev has promised Russians, alarmed by a worsening economic crisis, a new deal of more government openness in exchange for their loyalty and support.

"I consider that the authorities are obliged to speak about this [crisis] frankly and directly, to speak about the decisions which the authorities are taking to overcome the crisis and about the difficulties with which we are faced," he said.

"We will indeed overcome.... Everything will be normal," he said, adding that he promised to be frank about the state of the nation in regular television addresses.

"We need to work, everyone needs to carry out his duty in his place. We need to do this honestly," he said.

Medvedev took office in May at the high point of Russia's eight-year economic boom presided over by predecessor, Prime Minister Vladimir Putin. Putin's rule saw a centralization of power in the Kremlin's hands, which critics say make Russia's political system unstable.

Analysts have said the Kremlin has two options as public support wanes in the face of deteriorating standards of living: to switch completely to authoritarian rule and crush dissent or to engage in a new partnership with the Russian people.

Medvedev made clear he opted for the latter.

"The forecasts really don't make anyone happy," Medvedev said in an interview to state-run Rossia television, the first in a series of his planned regular public addresses. "We should expect our development to undergo a pretty tough scenario."

"But this does not mean we are in a hopeless situation or in a deeply alarming situation," he added. "Generally [the situation] is fairly readable and is under control."

Just a few months after Medvedev took the helm, the country was hit by the global financial crisis, which has left nearly 2 million Russians jobless and is expected to lead to negative growth next year for the first time in a decade.

So far, economic woes have failed to erode Medvedev's and Putin's popularity despite a series of public protests and opinion polls that show considerable growth in public pessimism.

Medvedev has recently made several gestures signaling his departure from Putin's policy of isolating the opposition, proposing giving small parties parliamentary seats and demanded a review of a bill, which critics say may allow authorities to charge government critics with high treason.

Medvedev has also met editor in chief of an opposition newspaper to express his condolences over the murder of its reporter, Anastasia Baburova, a move unthinkable under Putin.

The interview, acknowledging grim prospects for the Russian economy, contrasted strongly with previous upbeat government statements pledging a soft landing for the economy.

Medvedev touched upon two most painful problems for the majority of Russians: lay-offs and the devaluation of the ruble.

He said further job losses were inevitable but that the government planned to spend 44 billion rubles ($1.26 billion) on creating new jobs, including public spending and promoting small businesses.

He also defended the Central Bank's move to devalue the ruble by nearly 30 percent in a series of small moves.

"This needed to be done," he said. "It was needed for the stability, to allow our state, our economy to work normally."