Lavish bonuses could provoke unrest - Putin ally


* Ruling party lashes out at bonuses at state-linked firms

* Warns of threat to social and political stability

* Biggest car maker cancels all bonuses for 2009

By Simon Shuster and Vlasta Demyanenko

MOSCOW, March 26 (Reuters) - Russia's ruling party warned on Thursday that excessive corporate bonuses could provoke social unrest capable of rattling the country's political system.

Russia's leaders are grappling with a deepening economic crisis and are worried about unrest as millions of Russians face unemployment and wage cuts after a decade of explosive growth.

"We have to see the risks to political stability. The effects of the crisis could widen the social divide, which is already significant," said Boris Gryzlov, the parliamentary leader of Prime Minister Vladimir Putin's United Russia party.

"In connection with this, I want to say that now is not the time to pay bonuses worth millions to state companies or enterprises in which the state has a stake," Gryzlov told a party meeting on the crisis.

The comments will put bonus payments under the spotlight in Russia after billions of dollars in payouts to senior executives of Wall Street banks and insurers provoked a wave of public anger in the United States.

U.S. officials including President Barack Obama have pressed insurance giant AIG and banks receiving state bailout money to halt big bonus payments to senior executives. Lavish packages for heads of troubled businesses have also raised outrage elsewhere, including in Britain and France.

Russia earned a reputation during the boom years of Putin's eight-year presidency as a goldmine for bonuses, with some top managers earning six- and seven-figure salaries in a country where the average wage is just $500 a month.

But with oil prices at around one third of last year's prices, austerity -- and now political disapproval -- is starting to cool the bonus fever.


Russia's state-controlled VTB bank decided in November to stop paying bonuses, spokesman Maxim Luniov said, adding that social and political considerations had played a role in the decision.

Hours after Gryzlov's speech, Russia's largest car maker, AvtoVAZ , in which the state has a stake, said it agreed with his remarks and was cancelling bonuses for 2009.

The state is a major investor in Russian companies -- controlling leading firms in the energy, banking and transport sectors -- so a ban on bonuses could hit many managers.

The Kremlin has sought to target issues that could spark social discontent -- such as widespread corruption -- as polls show growing concern among the population about the crisis.

A survey carried out by state pollster VTsIOM showed that 64 percent of Russians want the government to cut its own management costs first in the budgets of the next few years.

Putin's government has maintained high approval ratings in recent months but Gryzlov -- who is speaker of the lower house of parliament -- warned that enemies abroad were trying to use the crisis to undermine political stability.

"We already see the graphic appearance of political extremism. I am speaking of attempts from within and from without -- and probably together -- to undermine the country," he said. "We already see attempts to shove the flag of discontent into people's hands, but this flag sometimes turns out to be the flag of another country."

(Editing by Mark Trevelyan)



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