IT HAS always been a question of how, not if, Vladimir Putin would retain power in Russia when his second, and (according to the constitution) final presidential term runs out in March 2008. This week Mr Putin lifted the veil. At a congress of the pro-Kremlin United Russia party, he graciously agreed to head its party list at the general election in December. He added that he may become prime minister if the party wins the election and the president is a man he can work with. United Russia is sure to win and, since Mr Putin will hand-pick the president, he will presumably get along with him. So this charade has only one meaning: Mr Putin is staying on, probably for a very long time.

This is part two of Mr Putin's game plan. Part one came three weeks ago when he appointed an unknown technocrat, Viktor Zubkov, as prime minister and hinted that he might become president. Mr Zubkov has three main qualifications: he has no visible political ambitions, is quite old (66, to Mr Putin's 54) and is personally loyal (he was Mr Putin's deputy in St Petersburg's mayoral office.)

Now Mr Putin has a couple of options. He could take a short break from the Kremlin and move into the prime minister's chair, leaving Mr Zubkov (or another pliant candidate) to look after the Kremlin for a while. Mr Zubkov would then step down, perhaps for health reasons, and Mr Putin would automatically return as president without breaking the letter of the constitution. His other, more complicated option, is to use United Russia's dominance of the Duma, the lower house of parliament, to change the constitution and devolve real power to the prime minister, turning the presidency into more of a ceremonial job. This would also allow him to stay in power without the appearance of breaking the constitution.

Either plan has risks. His popularity may not transfer easily to somebody like Mr Zubkov, who uncannily resembles the Soviet-era collective-farm director that he once was. Any more colourful candidate could renege on a deal. The idea of two power-centres in Russia, even for a short time, poses problems, particularly when rivalry between factions in the Kremlin is intensifying.

In the short term foreign investors are taking comfort from Mr Putin's move. Western leaders may hold their noses, but they will continue to deal with Mr Putin much as they do now. In the longer term, Mr Putin's plan does not bode well for the economy or for political stability. More important, it will do nothing to make it easier to solve any of the country's huge problems, such as the state of the army, rampant corruption, a health-care crisis or a looming demographic crunch.

In the words of Lilia Shevtsova, a political analyst at the Carnegie Moscow Centre, the plan “eliminates politics” and closes down the channels of social mobility for many aspiring Russians. By staying in power after 2008, Mr Putin may have made himself, in effect, a Kremlin hostage; he has also overridden one of the big achievements of the Yeltsin era: a voluntary transfer of power from one political leader to another.

Kremlin ideologues like to describe Russia as a “sovereign democracy”, whatever that means. Elsewhere it would be called an autocracy. It has nothing in common with a real democracy, which implies competition for power. Mr Putin likes to talk about his country's revival and greatness. Yet, for all his talk, he treats his people with contempt, reducing the political process to a Byzantine and meaningless guessing-game. “Isn't it fun? The president appears in public, stretches out two closed hands and asks cunningly: where is the sweet? That is the only question deemed suitable for the population,” Lev Rubinshtein, a Russian essayist, wrote this week.

Disconcertingly for critics, the vast majority of the Russian population seems to like the game and to support Mr Putin, whose popularity rating is consistently above 70%. The lack of independent television is only one reason for this. The bigger point is that Mr Putin's rule has coincided with a spectacular rise in oil prices, leading to improved living standards for millions of Russians. As one United Russia delegate who pleaded with Mr Putin to stay in power put it this week: “Vladimir Vladimirovich, you are lucky! And while you are the president, luck follows Russia. For tens of millions of people you are a token, a symbol of Russia's successful development.” Yet luck, like oil money, tends to run out sooner or later.