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Reform gamble pay-off spurs Putin to raise the stakes

Russian president Vladimir Putin fired the first salvo of his re-election campaign in his state of the nation speech on May 16 and used it to report on his first three years in office.

Only three years ago as he stepped up to the lectern to deliver the most-watched speech of his young presidency, Putin was being lambasted as a dictator in the making. He was also accused of recreating Stalin's police state, after he ordered the second invasion of Chechnya, stripped regional governors of powers and drove leading oligarchs abroad into self-imposed exile. That day he launched an ambitious and radical reform programme.

It was a big gamble. Following the 1998 crisis he needed to noticeably improve Russians' lives if he was to be re-elected in March 2004. "We have reached a line beyond which we cannot go. Poverty has reached a mind-boggling scale in Russia," Putin said in the May 2000 speech.

Rejecting the temptation to return to the Kremlin's authoritarian ways was a gamble that has paid off handsomely: Russia has now put in five years of 5%-plus GDP growth.

On a snowy day in the same month that Putin called for change, thousands of Muscovites queued for hours to look around the newly opened Ikea super store in Moscow.

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