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Business upbeat on possible Putin-Medvedev tandem

Investors and analysts see believe that the selection of First Deputy Prime Minister Dmitry Medvedev as the presidential front-runner and his will if elected to see Vladimir Putin as his prime minister is a guarantee of economic stability in Russia.

Aleksey Mironov of Fitch Rating says it removes the uncertainty about Putin’s future role.

“Balance of power will be shifted to where president Putin will be after March 2008. We regarded as very important to understand if the stay in big politics and plays very important role in Russian economy as a prime minister then it is good news and reduces uncertainty,” he points out.

Most Western businesses operating in Russia say the Putin-Medvedev combo would be good for Russia, as it would advance reforms and continue a cautious tax and spending policy. But Andrew Somers of the American Chamber of Commerce warns of increasing state control in various sectors:

According to him, “Participation of the state in the multiplicity of sectors if that happens I do not think will be good for the economy and might spook foreign investors. Everyone understands energy sector – that's a strategic sector. Every government is notoriously inefficient rather than the private sector which should maintain its own moderate course in terms of its own intervention in the economy.”

Medvedev who represents the reformist wing of Putin’s team is widely perceived combining the tough-on-spending approach of an economic liberal with support of social programmes.

Some say that will lead to problems with inflation but others say Medvedev has proved himself an efficient manager.

Yaroslav Lissovolik, economist at Deutsche Bank in Moscow believes that “this track record of the implementation of the national projects is important part of Medvedev's background as a politician, as an administrator. And there is also his experience of work in Gazprom, of managing the company which is essentially one of the main pillars of Russian economy.”

Many in the West may frown at the view that Russia is shaping its own style of democracy but for now investors only care if the country passes the test of economic and political stability – and the reaction of the stock market so far this week suggest it does.