Russia revels in Trump victory, looks to sanctions relief

By Andrew Osborn and Christian Lowe

By Andrew Osborn and Christian Lowe

MOSCOW (Reuters) - Russia's parliament erupted in applause after a lawmaker announced that Donald Trump had been elected U.S. president and Vladimir Putin told foreign ambassadors he was ready to fully restore ties with Washington.

Moscow is hoping that improved relations could yield an elusive prize: the lifting or easing of Western sanctions.

Rolling back those sanctions, imposed by the United States and the European Union to punish Moscow for its 2014 annexation of Ukraine's Crimea and support for separatists in eastern Ukraine, could spur investment in Russia's flat-lining economy.

That might make it even easier for Putin, who is casting around to plug holes in the state budget inflicted by low oil prices and sanctions, to win a fourth presidential term in 2018 by allowing him to show he has returned the economy to growth.

"Clearly the chances of sanctions being lifted on Russia have risen substantially," Charles Robertson, Renaissance Capital's global chief economist, said of Trump's victory. "That would improve the investment climate for Russia."

Russia's rouble currency and stocks gained on the Trump election victory. Meanwhile, Ukraine's dollar-denominated bonds tumbled to multi-month lows, reflecting pessimism about what a Trump presidency means for the divided and indebted country.

Stung by what it said were false U.S. allegations of Russian hacking and sharp policy differences over Syria, Ukraine, and NATO, the Kremlin had been bracing for more of the same if the White House had been won by Hillary Clinton - a politician Putin once accused of stirring up protests against him and who state media portrayed as an anti-Russian warmonger.

Few in Moscow had believed the U.S. Republican candidate would win, apart from a group of Trump-supporting nationalists who gathered in a Moscow bar decorated with a triptych of Putin, Trump and French Front National leader Marine Le Pen.

The election was a matter for the American people, the Kremlin said repeatedly, though Putin hailed Trump as "very talented" during the election campaign.

In state media he was cast as a plucky political maverick.

Once it became clear he had won, state TV ran a clip of a Russian doppelganger of Trump taunting a cowed Clinton lookalike.

Margarita Simonyan, the boss of RT, the Kremlin's English-language TV news channel, said she would drive around Moscow with a U.S. flag to celebrate.

A GRAND DEAL?

Russian glee was tempered however by a recognition that Trump's pre-election promises might be diluted, that he would have to contend with Congress, and that better U.S.-Russia ties promised by his White House predecessors Barack Obama and George W. Bush had come to nothing.

There was no doubt, however, that the prospect of sanctions relief was at the top of the Kremlin's wish list with Kirill Dmitriev, head of Russia's sovereign wealth fund, saying Trump's win would unlock major joint trade and investment opportunities.

Any movement on U.S. sanctions against Russia could have a knock-on effect on EU sanctions.

The 28-nation bloc's measures have already started to look wobbly, with some member states finding ways to circumvent them, others saying it's time to discuss moving on and some business groups in countries such as Germany lobbying against them.

Until Trump's win, U.S sanctions looked rock solid. But if the business magnate signalled he was ready to do a deal that could see them softened, EU unity would come under further potentially game-changing strain.

A Trump victory could also pave the way for a potentially broader U.S.-Russia deal that Moscow hopes might smooth differences over Syria, unwind major NATO and Russian military build-ups, and revive a moribund peace deal on eastern Ukraine.

Russia is seeking formal recognition from the world that Crimea, part of Ukraine, is now Russian territory, something it has only got so far apart from a handful of nations. It also wants Kiev to do more to implement a peace deal covering eastern Ukraine where pro-Russian separatists hold sway.

In Syria, where Russia is helping President Bashar al-Assad fight a war with air strikes and military assistance, Moscow wants the West to drop ideas about regime change, abandon help for what it says are hardline Islamists, and drop talk of possible no-fly zones.

"For Russia the key point is Ukraine. If Trump says that America does not care about Ukraine, then that is all that Russia wants to hear right now," Georgy Bovt, editor of the Russkiy Mir magazine, which promotes Russian language and culture, told Reuters.

"On Syria it will be easier to reach a deal. I think that on Assad, Russia will be willing to compromise because Ukraine is more important for Russia."

TOUGH TALKING

Under Obama, the prospect of co-operation on either issue had disappeared. Under Trump, Moscow thinks there's a chance.

"I think we can suggest, with some humility, that Russia will try to take advantage of this result," Masha Lipman, an independent political analyst, told Reuters.

"But if we are in for any kind of rapprochement, it will take concessions on both sides."

Much has been made in Russian and Western media of the perceived similarities and differences between Putin and Trump, who have never met.

Both are fond of tough talking and some Russian politicians have suggested the pair might be able to forge a close working relationship similar to the one the Russian leader enjoyed with former Italian Prime Minister Silvio Berlusconi.

Trump has said he might even meet Putin before his inauguration. Putin's spokesman said there were currently no plans for such a meeting.

People familiar with both men's leadership styles advised caution however, saying both were relatively thin-skinned when it came to criticism and prone to making strong statements that could offend one another.

Andrey Kortunov, director general of the Russian International Affairs Council, a think-tank close to the Russian Foreign Ministry, told Reuters the fact that Trump was an untested politician would also be a worry for the Kremlin.

"He's a loose cannon and you never know what to expect from him," he said.

Ironically, there were also concerns that the two men might be too alike.

"The problem is that both of them, Putin and Trump, are macho," Sergei Markov, a Kremlin-connected analyst and former pro-Putin lawmaker, told Reuters.

"They could try to take the measure of each other. We can't let that happen."

(Additional reporting by Polina Devitt, Jack Stubbs, Alexander Winning, Katya Golubkova and Maria Tsvetkova in Moscow and Alessandra Prentice in Kiev; Editing by Pravin Char)