Putin choice as PM dismays those seeking a new direction

Russia's new President, Vladimir Putin, sent a letter to the State Duma yesterday, officially nominating the former finance minister, Mikhail Kasyanov, as Prime Minister.

His choice showed that he did not intend to make an immediate break with the policies of his predecessor, Boris Yeltsin, and was likely to disappoint those concerned at the influence of the so-called oligarchs over the Kremlin.

Observers had predicted that Mr Putin would put forward Mr Kasyanov for confirmation by the lower house of Russia's parliament after he reappointed him Acting Prime Minister on Sunday. Once inaugurated, the new President was obliged by the constitution to accept the resignation of the entire cabinet. However, only a minute after doing so, Mr Putin asked Mr Kasyanov, who had been performing the role of premier for four months, to carry on.

In a further sign that hisstar was rising, Mr Kasyanov stood shoulder-to-shoulder with President Putin for theVictory Day parade through Red Square on Tuesday.

Journalists gathered from early morning outside the State Duma yesterday to watch for the presidential courier, bringing the letter of nomination. As the hours ticked by and no letter appeared, some started to speculate that Mr Putin had changed his mind. But when the letter finally arrived in the middle of the afternoon, it contained no surprises.

Mr Yeltsin, who in the last years of his rule frequently changed prime ministers, had turbulent relations with the old Communist-dominated State Duma. But the new parliament is more loyal to the Kremlin and will almost certainly allow Mr Putin to have his preferred Prime Minister.

With his background in the KGB rather than economic management, President Putin needs a cabinet head who understands the technicalities of the economy. As Finance Minister, Mr Kasyanov, 42, was Russia's main debt negotiator and very successful too.

Earlier this year, for example, he managed to persuade the London Club of commercial creditors to write off 33 per cent of the debt that Russia inherited from the Soviet Union.

The fact that Mr Kasyanov, who speaks fluent English, is known in the West will reassure some foreign investors. Likewise his familiar face will give confidence to many Russians, who are tired of shocks and changes and long only for stability and predictability.

But Russians and foreigners hoping for a clean up after the corruption of the Yeltsin years may be concerned by reports that Mr Kasyanov is linked to Russia's main "oligarch" or crony capitalist, the media tycoon Boris Berezovsky.

Mr Kasyanov denies corruption and says that he met and still meets the various "oligarchs" only in the normal course of his work. Since both Mr Kasyanov and Mr Putin owe their rise to Mr Yeltsin and his circle, it may be some time before they can develop independent policies.