Investors "shouldn't fear Russia power change"

By Michael Stott and Anastasia Onegina

MOSCOW (Reuters) - Foreign investors should not fear next year's change of president in Russia because current pro-market policies are firmly established and will not change, a top Kremlin aide told Reuters.

"A sudden change of strategy is not possible. The strategy is accepted by society," Arkady Dvorkovich, the head of the Presidential Experts Department, said at the Reuters Russia Investment Summit.

Russia faces parliamentary elections in December, followed by presidential polls in March 2008, when President Vladimir Putin must stand down after serving two consecutive terms.

Dvorkovich noted that Putin's administration had overseen a period of rapid growth and increased stability which had won support for pro-market policies among the Russian people.

"I think that for now we have been able to modify people's psychology and investors' psychology and for that reason now people would simply be incapable of accepting a different (economic) policy and strategy," he said.

Because of Putin's high popularity, the candidate supported by the president was likely to win in elections next March, Dvorkovich said.

"In previous elections, including those of parliament at different levels, people voted for parties which supported Putin's strategy," he said. "That means that, with a high probability, they will support the person who continues to offer (the same strategy). That's the basis for our certainty".

Nonetheless, Putin's successor would face big challenges.

"The two biggest problems which exist are corruption and the demographic collapse," he said. "These problems have a complex character and no easy solutions. The next government will need to concentrate on them."

Dvorkovich did not rule out some changes in the priorities and focus of economic policy in the next government after Putin leaves office in May.

"Different accents and different priorities are possible, including that the relative weight which is given to the state and private sectors could change," he said.

"If we see now that the importance of state companies is growing, it is very likely that in future, when the middle class and the small and medium sized businesses are becoming broader, that more importance will be given to the private sector."

Dvorkovich, who studied at Duke University in the United States after graduating in Russia, is an economic liberal who was appointed as deputy to Economy Minister German Gref at the age of 29 before taking up his current post in April 2004.

Although the government and the state Duma (parliament) are considering possible limits on foreign investment in so-called strategic sectors of the economy, Dvorkovich insisted that foreign players had little to fear.

"From the point of view of foreign investors Russia is one of the most open countries in the world," he said.