Putin promises to protect an anxious Russia's economy

Financial disorder seen as challenge to his dominance

MOSCOW - In a nationally televised show of unruffled resolve, Russian Prime Minister Vladimir V. Putin vowed yesterday to protect an increasingly anxious country from a return to economic chaos.

Putin used a congress of his ruling United Russia party to expound on the country's financial well-being, cutting an image of a strong, self-assured and focused leader. But behind Putin's determination to maintain a smooth front lurks an uncomfortable truth: Pressure on the Russian government, and on Putin himself, is growing by the day. Today's financial uncertainty widely is regarded as the first serious challenge to Putin's dominance in Russia.

The profound importance of economic stability to Russia's financially traumatized populace is difficult to overstate. People still have fresh memories of the ruble devaluation of 1998, which sparked a run on the banks and empty shelves at the grocery store. One of the chief selling points for Putin, who came to power as president in 2000, has always been his image as a guarantor of prosperity and economic stability.

These days, however, more Russians are feeling the pinch. Smaller banks have been shuttered. Layoffs are roiling companies around the country. The ruble has slipped steadily against the dollar in past weeks, rattling many Russians enough to convert their rubles savings to other currencies - or remove them from the bank altogether.

The crisis goes straight to Putin's Achilles' heel, raising the long-muttered question of whether it was keen policy, or simply the good luck of coinciding with record-breaking oil prices, that allowed him to preside over a period of growth and prosperity.

"We will do our best to prevent a recurrence of the past meltdown in our country," Putin said yesterday.

"We are doing everything possible in order to protect the deposits of our citizens and to secure the legal interests of those who invested their own money in housing construction, so that there are no more shocks of 1991 and 1998," the prime minister added.

The government repeatedly has vowed to avoid a ruble devaluation, and Putin repeated those promises yesterday. In fact, the prime minister suggested creating a financial center in Russia and growing the ruble into a regional currency.

But when it comes to their pocketbooks, Russians are hard to placate; they've received promises in the past and wound up losing their savings.

In his speech, Putin appeared eager to take the power out of those fears by naming and dismissing them.

He offered the country sweeping promises to "pursue the monetary policy prudently, maintain a predictable rate of the national currency, consistently fight inflation and secure the fulfillment of social obligations."

There was a time when Russia's leader could afford to make big promises.

With oil booming all the way up to $147 a barrel last summer, Russia luxuriated in a budget surplus and stockpiled one of the world's richest reserves. The Kremlin is used to having money to spare.

But the government has been dipping deep into the reserves in an effort to stabilize a free-falling economy. The reserves dwindled more than $20 billion last week alone, falling to $453.5 billion.

While Putin was seeking to calm Russians' fears through state-run television, his finance minister warned reporters that the budget will probably slip into the red next year.

Criticism already was stirring among political opponents of Putin, who still dominates in Russia despite his replacement as president early this year by Dmitry Medvedev.

Communist Party leader Gennady Zyuganov told Interfax that the cash distributed by the government to big banks has failed to help the real economy or trickle down to the street level.

"This is a glaring example of the absence of effective control over the banking community on the part of the executive," he said. "The fact itself that the prime minister . . . devoted his report at the congress entirely to ways of steering the country out of crisis attests to enormous difficulties the Russian economy and financial sector are currently facing."