MOSCOW -- Russian President Boris Yeltsin stunned his own people and the world on Friday when he chose the last day of the 20th century to resign early after eight years as leader of the world's largest country.
The decision ushered in a new era, marking the end of a decade in which Yeltsin dominated Russia after leading it from communism and tentatively toward the free market.It propelled Prime Minister Vladimir Putin into the post of acting president for three months and dramatically improved his chances of becoming the official head of state in the next millennium in an early election due on March 26.
Putin, 47, is already Russia's most popular politician, largely due to the military campaign in rebel Chechnya.
"I have contemplated this long and hard. Today, on the last day of the outgoing century, I am retiring," Yeltsin, 68, said in a broadcast on state-owned ORT television.
Yeltsin's move and the announcement typified his approach to power. He strode across the domestic and world stage as a burly, growling and larger-than-life figure who delighted in surprising but suffered several bouts of ill-health.
He left hopes for prosperity for many Russians dashed, although democracy seems to be firmly established.
"Russia must go into the next millennium with new politicians, with new faces, with new clever, strong, energetic people. But we who have already been in power for many years, we must leave," Yeltsin said.
Russia's markets soared on the news but calm reigned.
President Clinton, whose close personal ties with Yeltsin led to their meetings being termed the "Bill and Boris show," hailed Yeltsin's "historic tenure" while recalling the fact that relations had recently turned chillier.
"Under his leadership since 1991, the Russian people have faced the unprecedented challenge of creating new institutions and building a new life after decades of corrosive communist rule," said Clinton, whose own term in office ends next year.
He looked forward to "working with Acting President Putin."
British Prime Minister Tony Blair said Yeltsin had made the world "more stable and more secure" while French President Jacques Chirac sent him a warm letter of salute.
German Chancellor Gerhard Schroeder, whose country is Russia's biggest creditor, said Yeltsin had led his nation from communism and developed democracy and a free market.
Yeltsin, who had been due to stand down in June at the end of a second term, named Putin acting president until the poll, which a Kremlin source hoped he would win in the first of two possible rounds.
Making his first comments after becoming acting president, Putin promised a steady course and a focus on the economy.
"Russia will not change its foreign policy. It will continue building up the armed forces and military reforms, focusing not only on providing them with modern arms but also on solving their social problems," RIA news agency quoted Putin as saying.
He also said the government would focus on the economy, which has halved in size since the collapse of the Soviet Union.
With Putin in the Kremlin, Yeltsin would be less likely to face any probe into his time in office, something he might have faced had opponents taken control.
Yeltsin handed control of the huge nuclear arsenal to Putin by giving him the briefcase with the codes to launch missiles.
Putin's rise began in August 1999 when Yeltsin entrusted the government to him as Russia's fifth prime minister in 18 months.
"We believe that if an election is held within three months Putin has a good chance of winning in the first round," the Kremlin source said.
Putin, a former spy and head of the main successor body to the Soviet KGB security police, saw his ratings in opinion polls soar on the back of the Chechnya offensive. His status was confirmed in a vote this month to the State Duma lower house of parliament when parties backed by Putin did well.
Yeltsin spoke slowly and firmly in his resignation address.
"Having seen the hope and belief with which people voted in the elections to the Duma for a new generation of politicians, I understood that I have done the main work of my life.
"Russia will never return to the past. Russia will now only move forward, and I must not prevent this natural historical movement," he said.
But he asked Russians to pardon him for his failures.
"I want to ask you for forgiveness, because many of our hopes have not come true, because what we thought would be easy turned out to be painfully difficult," Yeltsin said.
"I ask (you) to forgive me for not fulfilling some hopes of those people who believed that we would be able to jump from the gray, stagnating, totalitarian past into a bright, rich and civilized future in one go," he said.
Yeltsin took office with high hopes for a new era of democracy, but his two terms have been marked by plunging living standards for some and huge wealth for others.
Poor health has sidelined him and made him a less effective leader than the burly former construction worker and regional Communist Party boss who burst onto the world stage in 1991.
In the most enduring image of him in his heyday, Yeltsin leaped on to a tank to face off troops leading a hardline Communist coup in 1991 to restore the Soviet Union.
After the coup collapsed, Yeltsin was the confirmed leader of the democratic revolution but soon faced the difficulties of turning a monolithic centrally controlled former Soviet state into a modern nation run on democratic and market lines.
He won wide powers in a 1993 referendum, but his democratic credentials were blackened after he used tanks and troops to crush a hardline coup by parliamentarians.
With his health rapidly failing, Yeltsin launched a war against Chechen separatists in 1994 which ended with Russia's defeat in 1996.
The country was hurt by a financial crisis in 1998 that for many Russians discredited market reforms.