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Putin Launches Overhaul That May Extend His 20-Year Russian Rule

Ilya Arkhipov and Henry Meyer
Putin Launches Overhaul That May Extend His 20-Year Russian Rule

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President Vladimir Putin replaced his long-serving prime minister and called for sweeping constitutional changes, fueling speculation that the Russian leader is moving to extend his grip on power beyond the end of his term in 2024.

The constitution now requires Putin to step down as president then but he could take on another post to ensure his continued influence. Putin hasn’t commented on his plans and his proposals didn’t include any overhauls that would have created a new post for him. But the shifts could reduce the sweeping powers currently held by the president, potentially reining in any successor while making other bodies more influential.

Putin gave little public explanation for the dramatic and unexpected upheaval, which saw Dmitry Medvedev, one of his most loyal lieutenants, ousted after nearly 8 years in office. Medvedev became premier in 2012 after stepping down as president to make way for Putin’s return to the Kremlin. He will take a new position as deputy chairman of the Security Council, reporting to Putin.

Putin later nominated Mikhail Mishustin, 53, a low-profile technocrat who heads the Federal Tax Service, as his successor, the Kremlin said. Mishustin will address the State Duma, the lower house of parliament, on Thursday when lawmakers meet to consider his candidacy.

The reshuffle shocked even some top officials, with the Duma speaker interrupting a meeting with legislative leaders to confirm the news, according to a person familiar with the session. It came after Putin outlined a raft of proposed constitutional changes in his state-of-the-nation address Wednesday, aimed at strengthening the roles of parliament and other government bodies.

Putin and Medvedev appeared on state television in a choreographed announcement to tell ministers of the premier’s departure and the resignation of the government.

‘Fundamental Changes’

The reforms set out by Putin will mean “fundamental changes” to the constitution “and the balance of power,” Medvedev said. “In these circumstances, I think it would be right for the government to resign,” he said.

Putin, 67, said the government hasn’t fulfilled all of its tasks, though “I want to express my satisfaction at what was achieved. Not everything was successful of course but it never totally is.”

Medvedev has been blamed for lackluster economic performance and stagnant living standards over the last five years.

Mishustin is known as a technocrat who implemented computer systems across the sprawling tax agency in a drive that cut evasion and boosted collections. He’s not seen as a political power player, however. An economics PhD and former president of UFG Asset Management in Russia, he served as a deputy tax minister for five years until 2004. He became head of the Federal Tax Service in April 2010.

The ruble briefly slipped as much as 0.6% against the dollar after the news of the resignation, before paring declines to close little changed at 61.4175.

“This is all about the transition of power,” said Alexei Makarkin, deputy head of the Moscow-based Center for Political Technologies. “The new prime minister will get to open the purse-strings and could become very popular.”

Growth is forecast to accelerate this year as government spending programs pick up, but Putin’s goal of expanding faster than 3% a year is still seen as out of reach by many economists.

Mishustin’s low political profile left some analysts skeptical of his prospects to become a major figure.

“No one can know for sure but he looks more like a technical prime minister,” said Tatiana Stanovaya, head of R.Politik, a political consultancy. “Putin has four years to go before 2024 and has time to decide.”

Medvedev, 54, served four years as president from 2008 when Putin left the Kremlin to comply with constitutional term limits. Seen initially as a standard-bearer for liberal reforms, he surrendered the presidency back to Putin at the end of his first term. He’s been among Putin’s closest political allies since they worked together in St. Petersburg city council in the early 1990s after the Soviet Union’s collapse.

“Putin needs a government that’s a driver of economic growth and Medvedev wasn’t effective,” said Sergei Markov, a political consultant in Moscow who advises the Kremlin.

Putin had also criticized the government for being slow to start a massive infrastructure-spending program last year that he had made a key pillar of his re-election campaign in 2018. Officials blamed the delays for the lackluster economic performance last year.

‘Serious Changes’

In his annual address, Putin called for measures to allow the parliament greater say in approving the prime minister and cabinet officials. The State Council, now a largely ceremonial body, would get more clearly defined powers written into the constitution. The reforms would be subject to a public vote before being approved, he said.

“These are very serious changes to the political system,” Putin said.

He later appointed a 75-member working group to prepare proposals for amending the constitution, according to a Kremlin statement. He plans to meet with the group on Thursday, the state-run Tass news service reported, citing the president’s press service.

Stanovaya, the political consultant, said Putin “is putting in place a system to limit the powers of his successor.” The Russian leader could switch to a role at the head of a strengthened State Council endowed with significant new powers, she said.

For the moment, the government will remain in place while Putin decides on replacements. While Mishustin’s nomination is subject to parliamentary confirmation, that’s a formality as the ruling party has a commanding majority.

“This is not about invigorating reform -- it is primarily about altering the rules so that Putin can maintain his leading position in the country, in one role or another,” Charles Robertson, Renaissance Capital global chief economist, wrote before Mishustin’s candidacy was announced.

(Updates with Mishustin to address lawmakers in fifth paragraph, working group in 21st.)

--With assistance from Evgenia Pismennaya, Stepan Kravchenko and Irina Reznik.

To contact the reporters on this story: Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net;Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editors responsible for this story: Gregory L. White at gwhite64@bloomberg.net, Tony Halpin

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