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. Last Updated: 07/27/2016

Compromise Figure Seen Replacing Putin

President Vladimir Putin will probably name as his preferred successor a compromise figure selected by the hawkish siloviki and a more progressive St. Petersburg group -- the two factions that control the presidential administration, according to a new report by an investment bank.

"Only a compromise candidate will be able to credibly provide assurance that the current status quo of power and privileges will remain after 2008," said the report, which was written by Renaissance Capital chief strategist Roland Nash.

Nash was unavailable for comment Thursday, and a recording on his cell phone said he was out of the country until next month.

A compromise candidate would most likely have an agenda similar to Putin's, but the biggest market risk is that he might emerge from the siloviki, the Kremlin clan of mostly St. Petersburg security officers who rose to power under Putin, said the report, titled "Politics and the Presidency -- War or Peace," which was released this week.

"If the siloviki are able to nominate a candidate, then the next president is likely to push to extend state control outside of the strategic sectors of the economy and into the most dynamic sectors of the Russian economy, undermining economic recovery," the report said.

The Kremlin's most pressing concern is to find a candidate who can manage the transfer of power without politically destabilizing the country, it said.

As for Putin, who said last month that he would like to remain in politics after his second term ended, the report said he might become prime minister, the leader of United Russia or the head of a state energy company.

As prime minister, Putin could be fired by the next president, so the Constitution might be amended to sharply increase the powers of the post, the report said.

Putin also could become head of the pro-Kremlin United Russia faction, which dominates the State Duma, the report said. He could simultaneously hold this post and the post of prime minister, it said.

It would also make sense for Putin to head a state energy company because "one of the policy initiatives under Putin has been to concentrate much of Russia's hydrocarbon industry in the hands of the state," the report said.

Speculation has been swirling for months about what will happen after Putin's current -- and, constitutionally, final -- term ends, and Kremlin critics have expressed doubt that Putin will leave office. Putin himself has repeatedly said he does not believe the Constitution should be changed to allow him a third term.

Alfa Bank released a report in July that concluded Putin's remaining in office past 2008 would be the most favorable scenario for business.

Renaissance Capital's report also said that "the market would not be averse to a decision" by Putin to remain in power.

Putin is the only person that the two groups in the presidential administration would like to see in power after 2008, political analysts said Thursday.

"Putin likes everyone in the Kremlin. For them, it would be a great risk to change him," said Vladimir Pribylovsky, the head of the Panorama think tank. "Who knows how the preferred candidate would behave once he took power?"

He said that Putin's allies wanted him to run for a third term but that he feared criticism from the West if the Constitution were to be amended. "People in the presidential administration are trying to convince him that he can afford to ignore the opinion of the West now that oil prices are high," Pribylovsky said.

As a solution, the presidential administration could decide to hand Putin the posts of United Russia leader and prime minister, said Dmitry Orlov, the director of the Agency for Political and Economic Communications.

"He would be like a German chancellor," Orlov said.