Putin to stay in power, but risks remain

By Michael Stott - Analysis

MOSCOW (Reuters) - President Vladimir Putin has clearly signalled he will keep a grip on power after his term ends next year but to do so he will need to overturn long-held conventions on how power is exercised in Russia.

Putin sprang another of his trademark surprises on Monday, accepting an offer from the country's biggest political party United Russia to head its slate for parliamentary polls in December and suggesting he might be a future prime minister.

In a country hunting for clues about Putin's future after his second term ends in 2008, the president's words were seized on as solving the mystery of how he would stay in power without office. The constitution bars a third consecutive term.

"Putin has once again shown his ability to change the country's political system without amending the Constitution," the financial daily Vedomosti said in an editorial comment.

Investors hailed Putin's signal he would keep power as a sign that the policies which have led Russia through an unprecedented eight-year economic boom would continue. Stock prices rose.

"We believe the news should be fairly positive for the market, as this makes it more likely that there will be greater continuity in government policy," said Roland Nash, head of research at Moscow investment bank Renaissance Capital.

FAST GROWING ECONOMY

Despite rampant corruption and growing limits on domestic press freedom and opposition politics, foreign investors have reaped rich rewards from the fast-growing economy, which has made Russia one of the world's most attractive markets.