Putin installed as Russia's second elected President

Vladimir Putin pledged to create a strong and prosperous Russia yesterday when he was sworn in as Russia's second democratically elected President in a ceremony in the Kremlin.

Mr Putin immediately showed he would make no immediate radical changes by appointing Mikhail Kasyanov, a financial technician, as his acting prime minister. He said: "I hope that the core of the present government will be maintained." Mr Putin, 47, drove to the Kremlin through empty streets cordoned off by the police, and then strode across a red carpet into St Andrew Hall, its walls glittering with fresh gold paint, where he was sworn in as President on a red-coloured copy of the constitution.

Boris Yeltsin, who astonished the world last New Year's Eve by appointing Mr Putin as acting president, formally handed over power to his successor. Mr Yeltsin, the central figure in ending Communist rule in 1991, bowed out in a short speech in which he said Russians could be proud that power was being handed over "without coups, putsches or revolutions".

Mr Yeltsin looked puffy and at times slurred his words. At one stage he stopped speaking for a few seconds and Mr Putin's eyes briefly swung towards him in unspoken alarm.

Russians are relieved to see the back of Mr Yeltsin, who presided over an unprecedented collapse in living standards, but yesterday's ceremony was a triumph for him as much as Mr Putin. A year ago polls showed Mr Yeltsin had the confidence of only 2 per cent of Russians and was likely to be succeeded in the Kremlin by a political opponent.

With great political skill Mr Yeltsin promoted Mr Putin, a former KGB career officer from St Petersburg known for his loyalty to the Kremlin, to be Prime Minister last August. He was able to capitalise on the renewal of fighting in the Caucasus and the explosion of bombs in apartment buildings in Russia, to invade Chechnya. As the architect of the war Mr Putin became the most popular man in the country. He easily won the presidential election on 26 March.

"We have proved that Russia is becoming a really democratic modern state," Mr Putin said yesterday. "A peaceful hand-over of power is a most important element of political stability of which we have all been dreaming." He recalled the traditions and history of the Russian state, a theme also evoked by the blue 19th-century uniforms, reminiscent of the Russian triumph over Napoleon in 1812, worn by the soldiers making up the honour guard. Mr Putin rapidly fulfilled the expectations of those who see him as the candidate of those who wish to maintain the status quo in Russia by appointing Mr Kasyanov, 42, anexperienced administrator, as his acting prime minister. He will almost certainly be confirmed by the Duma.

Mr Kasyanov, who was first deputy prime minister, has been handling the economy and relations with foreign creditors. Western creditors will be encouraged by his appointment since, as Russia's main debt negotiator, he is the "devil they know".

Mr Kasyanov, a highly intelligent official who speaks excellent English, is also close to Boris Berezovsky, the best- known of Russia's financial oligarchs. The Russian press has also accused him of corruption. The weekly Versiya nicknamed him "Misha 2 per cent", alleging he had been paid by bankers for inside information. Mr Kasyanov denies the charges.

On taking the oath of office Mr Putin said Russians wanted "a better life, a prosperous and strong Russia". Unlike Mr Yeltsin he may be in a position to provide this. There has been substantial economic growth in recent months thanks to the collapse of the over-valued rouble in the financial crash of 1998. Russian manufacturing industry now stands a chance of getting back on its feet.

But he must also decide if he is able to negotiate an end the war in Chechnya, where 8,000 Russian soldiers have been killed or wounded, and without which Mr Putin would not now be President of Russia.