Putin’s Party Fails to Get Majority: Exit Poll

By Ilya Arkhipov and Henry Meyer - Dec 5, 2011 2:31 AM GMT+0700

Premier Vladimir Putin’s party failed to win a majority in parliamentary elections, according to exit polls and early results, dealing the Russian leader his first electoral setback since he came to power a decade ago.

United Russia’s backing fell to about 47 percent from 64 percent in 2007, the Central Election Commission said on state television after about 26 percent of votes were counted. The party, whose results were estimated at 45.5 percent and 48.5 percent by two exit polls, expects to retain a majority in the State Duma. Official results are due tomorrow.

“This is a personal defeat for Putin,” saidDmitry Oreshkin, an independent political analyst based in Moscow. “He understands that his popularity is falling and it’s falling increasingly fast.”

Putin, 59, who plans to return as president next year to give him potentially almost a quarter-century in power if he runs again in 2018, lost support as stalling wage growth and the government’s shortcomings in curbing corruption repel voters.

The loss of United Russia’s two-thirds majority, which allowed it to change the Constitution singlehandedly, is the first time the party’s support fell from one nationwide election to the next since it was set up 10 years ago. Putin next year may be forced to make unpopular cuts in social spending and raise the pension age to balance the budget.

‘Coalition Bloc Agreements’

“Given the new composition of the Duma, on individual issues and on certain questions, we will have to enter into coalition bloc agreements,” Medvedev told supporters at the party’s campaign headquarters today. “The party performed honorably. And the breakdown we get in the Duma reflects the real balance of political forces in the country. This is democracy in action.”

Speaking after the president, Putin said voters “maintained” United Russia’s “role as the leading political party.

‘‘It’s the optimal result,’’ he said. ‘‘With this result, we can guarantee the stable development of our state.’’

United Russia may still keep more than half of seats in the 450-member State Duma, the lower house of parliament, Boris Gryzlov, the party’s leader in the legislature, said at the group’s campaign headquarters today.

The party got 45.5 percent, according to an exit poll of 80,000 people by the Public Opinion Foundation and 48.5 percent according to an exit poll of 250,994 people by the state-run All-Russian Center for the Study of Public Opinion.

‘Slightly Negative’

United Russia’s ‘‘results are obviously lower than expected, so the market could potentially interpret this as slightly negative,” Ivan Tchakarov, chief economist at Renaissance Capital in Moscow, said in a telephone interview today. “But not massively so.”

The ruble advanced 2.1 percent to 30.851 per dollar last week, its biggest weekly gain since Oct. 30. The Russian currency has fallen 0.9 percent against the greenback overall this year, heading for a fourth consecutive yearly loss.

The yield on Russia’s only ruble-denominated Eurobond, due in 2018, has fallen 55 basis points, or 0.55 percentage point, since it first traded March 1. The debt yielded four basis points less Dec. 2, at 7.192 percent.

‘Smashing’ Parliament’s Unity

The premier, who will run in March presidential elections, warned last week against “smashing” the parliament’s unity and suffering the political paralysis afflicting Europe and the U.S. as Russia seeks to avoid contagion from the euro region’s debt crisis.

“If United Russia fails to get a majority then the government will have to rely on support from the LDPR to get legislation through,” Chris Weafer, Moscow-based based chief strategist at Troika Dialog, Russia’s oldest investment bank, said by e-mail. “This would slow, if not prevent, any unpopular legislation including cuts to social spending or changes to the retirement age.”

In the Russian capital, Europe’s largest city, United Russia got 27.5 percent, just ahead of the Communists’ 25.5 percent, according to the Public Opinion Foundation exit poll.

“This represents a growing defiance,” said Masha Lipman, an analyst at the Carnegie Moscow Center. “People just wouldn’t vote for United Russia because the government wanted them to.”

Above the Threshold

Three other parties scored above the 7 percent threshold for proportional representation in the legislative body. The Communists are set to garner between 20 percent and 21 percent, with between 13 percent and 14 percent for the Just Russia party, which campaigns for increased social spending, and between 11.5 percent and 14.5 percent for the nationalist Liberal Democratic Party, or LDPR, according to the exit polls and provisional results.

Opposition parties complained of violations during the election, including ballot stuffing and misuse of absentee voting. Before the poll, the opposition also accused authorities of detaining their candidates and activists and seizing campaign material.

“Some violations were registered but according to observers, there weren’t any abuses that could have influenced the outcome of the vote,” Gryzlov said.

Putin would get 31 percent in a presidential election, compared with 8 percent for Communist leader Gennady Zyuganov and 7 percent for President Dmitry Medvedev, according to a Nov. 18-21 Levada poll. A third were undecided.

‘Venal and Detached’

“Dissatisfaction with the level of wages and a distrust of power as venal and detached from people are directly reflected on United Russia’s approval rating,” Grigoriy Kertman, the chief analyst for the Public Opinion Foundation, said before the election.

Real wages increased an average of 15 percent a year between 2000 and 2008, according to data compiled by Bloomberg. Including declines for much of 2009, growth has averaged 1.5 percent since.

Russia placed 143rd of 182 surveyed countries in Transparency International’s 2011 Corruption Perceptions Index. Russia is the world’s most corrupt major economy, with higher levels of graft than in Pakistan, Cameroon and Niger.

During Putin’s first two terms as president, he worked to centralize power and increase state ownership of the country’s biggest companies. Buffeted by a booming global economy, Russia’s economic growth averaged 7 percent a year during his 2000-2008 tenure.

Gross domestic product of the world’s biggest energy exporter will increase 4.1 percent this year after 4 percent last year, the government estimates.

“Of course popular discontent is boiling over but Putin will continue to keep power in his hands,” said Mikhail Kasyanov, a former prime minister under Putin who is now an opposition figure.

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 editor responsible for this story: Balazs Penz at bpenz@bloomberg.net