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Hedging Putin's Will

"First one down gets to run!" President Dmitry Medvedev (left) with Prime Minister Vladimir Putin on the ski slopes together in 2010.
"First one down gets to run!" President Dmitry Medvedev (left) with Prime Minister Vladimir Putin on the ski slopes together in 2010.
Russian asset-management firm Arbat Capital has tailored its services to reflect total uncertainty over who will run in the March 2012 presidential election.

The enterprising asset-management group is creating a fund that will actually invest in portfolios of companies based on their apparent ties to either President Dmitry Medvedev or Prime Minister Vladimir Putin.

In a country where business and politics often overlap, investors are thus effectively able to throw the dice and speculate on whether it will be powerful Putin or incumbent Medvedev in the Kremlin next year.

Putin and Medvedev, former colleagues and friends from the St. Petersburg 1990s, have been unforthcoming and often utterly cryptic when quizzed on who will run for the presidency with only seven months to go until polls.

Putin recently sneered at a journalist for even posing the question.

They say that revealing which of them might run for the Kremlin could trigger infighting as clans vie with each other to lay the appropriate groundwork for their political and business survival until 2018 (Medvedev increased presidential terms to six years).

Nadia Popova points out for the WSJ's "Emerging Europe" blog that Arbat Capital believes it has a solution for investors in its "New Kremlin Fund," which is expected to be registered and operative in August.

Arbat Capital gives a number of examples "to illustrate how the upcoming elections can affect the value of public companies."

The outcome of the poll is crucial for businesses operating in Russia that are thought to require informal approvals from the Kremlin before striking major deals. The companies to benefit from Mr. Putin’s possible third term are gas producer OAO Novatek and media holding CTC-Media Inc., said Arbat Capital managing director Yulia Bushueva, the creator of the New Kremlin Fund.

The choice of the next president also has major impact on potential collaborations between Russian and foreign companies, according to Arbat Capital. It points to the example of TNK-BP, British Petroleum's 50-50 Russia venture.

TNK-BP has been a central party in the dispute over a share swap between BP and Rosneft, oil behemoth. The latter was until recently chaired by Igor Sechin, the powerful deputy prime minister at the heart of Putin's inner circle.

A Putin return could potentially give Sechin more sway in the BP-Rosneft deal, which he himself has championed.

But, for gamblers with more modest investment capital but who still have a penchant for reading the Kremlin tea leaves, there are other outlets.

British gambling sites Paddy Power and Stan James are offering odds of 2/7 and 4/11 respectively on Putin staging a comeback to the Kremlin. They put the incumbent's chances at 9/4 and 2/1.

Analysts are divided over Russia's burning question and many can agree only that Putin, president from 2000 to 2008 and widely perceived as Russia's most powerful leader, will ultimately have the final say in who runs despite handing the reins to Medvedev in 2008.

Nikolai Petrov of the Carnegie Moscow Center says that Prime Minister Putin may base his decision to run in the presidential elections on his performance in the December parliamentary elections.

Putin has said he will "need to wash" after election season.

-- Tom Balmforth

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Written by RFE/RL editors and correspondents, Transmission serves up news, comment, and the odd silly dictator story. While our primary concern is with foreign policy, Transmission is also a place for the ideas -- some serious, some irreverent -- that bubble up from our bureaus. The name recognizes RFE/RL's role as a surrogate broadcaster to places without free media. You can write us at

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