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Putin sets stage for return as Russian president

Sep 24, 2011, 3:41 p.m.
Russia's President Dmitry Medvedev (R) and Prime Minister Vladimir Putin walk along tha stage to address the audience during the United Russia congress in Moscow September 24, 2011. REUTERS/Denis Sinyakov

Investors had been urging that Putin and Medvedev put an end to the political uncertainty that has deterred many from putting money into the $1.5 trillion economy of the world's largest energy producer.

"Market turmoil has hit Russia hard," said Charles Robertson, head of macro-strategy at emerging markets investment bank Renaissance Capital.

"With less political uncertainty, the authorities may hope that capital flight eases, and that some may return capital in coming months to take advantage of cheaper asset prices."

As president from 2000 to 2008, Putin oversaw an economic boom where household incomes improved on the back of a rise in global oil prices, and his tough talking and macho image helped restore Russia's self-confidence on the world stage.

But Putin, who was once a KGB officer in East Germany, is widely seen as more conservative than Medvedev and critics accuse him of riding roughshod over human rights and democracy, and expanding the power of the security forces.

Some economists say his return to the Kremlin makes it less likely that Russia will carry out much-needed changes such as pension reforms and reducing Russia's dependency on natural resources. Oil and gas revenues make up half the budget.

Others say Putin and Medvedev differ more in style than policy.

(Reporting by Timothy Heritage, Guy Faulconbridge, Gleb Bryanski, Steve Gutterman, Alexei Anishchuk, Douglas Busvine and Thomas Grove; editing by Ralph Boulton and Kevin Liffey)

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