Mikhail Kasyanov's broadside on Thursday came as Putin went into summit talks with US President George Bush.

Kasyanov, sacked by Putin exactly a year ago, also said he might run for president in 2008 as a candidate for an
opposition united front of "democratic forces".

Democratic values must be the basis for Russia's development, Kasyanov told a news conference, listing among them a division of power, an independent judiciary, an independent media, a market economy and a free climate for business to work in.

"I have reached the view that not one of these values is being implemented or respected. The direction has changed. It's not the right one. The country is on the wrong track," he said.

Kasyanov's criticism of Putin's record was all the sharper because
it echoed the words of Bush, who called on Russia on Monday to renew a commitment to democracy and the rule of law.

Putin's second and last Kremlin term expires in 2008.

Russian democracy

The emergence of the 47-year-old Kasyanov as a figure who could unite the demoralised liberal opposition comes amid Western concern that Putin is pursuing increasingly authoritarian policies that jeopardise economic reform.

Kasyanov called his news conference to mark the first
anniversary of his dismissal by Putin to make way for the more compliant Mikhail Fradkov.

"I have reached the view that [democratic values are not] being implemented or respected. The direction has changed. It's not the right one. The country is on the wrong track"

Mikhail Kasyanov,
Former Russian PM

But he was clearly aware his remarks would sting Putin, who was likely to clash with Bush over the state of democracy in Russia at their summit talks in Slovakia.

Putin politely rejected Bush's criticism on Tuesday, saying democracy had to be adapted to the "realities of Russian life", and that Moscow would pursue democracy in its own way.

Kasyanov, closely associated with big business during his time as finance minister under former President Boris Yeltsin and as prime minister under Putin, made no direct reference to the dismemberment of oil giant YUKOS and the jailing of its main owner, Mikhail Khodorkovsky.

But he said he would keep links with business and suggested the YUKOS affair had hurt foreign investor confidence in Russia.

"The country needs investment," he said. "We will consult Russian and foreign investors, help them to overcome the risks which, unfortunately, are growing," he added.

Political challenge

Kasyanov, while suggesting he would run for president in 2008, would not be pressed into being too precise about the tactics he would use to further his political ambitions.

But he said: "I am ready to help in the process of consolidation
of democratic forces. All democratic forces must
unite."

"His [Kasyanov's]activities will be unwelcome in the Kremlin. The preference for the ruling group will be for a strong candidate [for the 2008 elections] from within their ranks"

Christopher Granville,
United Financial Group

Commentators took Kasyanov's political challenge seriously.

Christopher Granville, chief strategist at United Financial Group, said Kasyanov, with a record of four relatively successful years under Putin, posed a more credible threat to Putin loyalists than the fragmented liberal opposition.

"His activities will be unwelcome in the Kremlin. The preference for the ruling group will be for a strong candidate from within their ranks," said Granville.

Sergei Markov, head of the National Civic Council of International Affairs think-tank, said Kasyanov was a flawed candidate but had staged his move at just the right time for a liberal opposition leader to emerge.

He drew a parallel with Ukrainian President Viktor Yushchenko who was fired as a relatively liberal prime minister and later came back to win election as president.