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MOSCOW, June 13 (Reuters) - Russia could face mass street protests within five years if the government does not change its economic policies and carry out democratic reforms, former Prime Minister Mikhail Kasyanov said.

Kasyanov, whose government was dismissed in 2004 after he fell out with then-President Vladimir Putin, is trying to register an opposition party to run in a parliamentary election in December and a presidential vote next March.

Setting out his plans in an interview, Kasyanov said President Dmitry Medvedev had missed his chance to carry out liberal reforms and the economy was heading in a dangerous direction under Putin, who is now prime minister.

The climate for foreign investors is awful, the economy is over-reliant on oil and gas, corruption is rife, competition is limited and the population is declining, he said.

"We must prepare people for changes in this country … this is the last chance to decide the situation by constitutional, parliamentary means. After this the problems will start to ripen," Kasyanov, 53, told Reuters.

Asked what would happen if changes did not come, he said: "There will be change but not through parliamentary elections. This situation has not arisen yet but I think it will in three, four or five years — during the next six-year presidential term. People’s anger against the authorities is growing."

He said Russia had little tradition of nationwide uprisings, despite the 1917 Bolshevik Revolution that followed centuries of Tsarist rule.

But he said young people in large cities were increasingly frustrated with unemployment, a lack of open debate and absence of genuine democracy, and believe they have no control over their futures because any dissent is immediately crushed.

"We are doing everything we can to prevent a revolution. We are not street revolutionaries," he said.

But he added: "Will it be possible to change the situation by constitutional means or will it already be impossible to do so? If not, then Russia will be on the path of a ripening situation like what we see today in North Africa."

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Kasyanov, who was prime minister for almost four years, has created the Party of People’s Freedom with Boris Nemtsov, a deputy prime minister under late President Boris Yeltsin, and Vladimir Ryzhkov, a leading liberal politician.

He expects the Russian authorities to decide whether to register the party by June 22 and says the decision will help show whether democracy has a chance in Russia. He was unable to contest the 2008 presidential election because a court ruled that some of the signatures backing his candidacy were invalid.

The Kremlin allows some marginal opposition but Putin has made clear he will not allow an open challenge to stability and Kasyanov said the prime minister, widely seen as Russia’s paramount leader, appeared to be tightening the screws.

"Russia is at a crossroads and the path it takes will be decided now, including with our party registration," he said.

Calling for changes in the economy, he said: "All the reforms of the 2000s must be started all over again … The model must be broken."

Medvedev hosts an annual forum in St Petersburg this week to promote Russia as a place to invest. Many Russian officials credit Putin with restoring stability to the economy after the chaotic first decade after the Soviet Union collapsed in 1991.

But some foreign investors fear stagnation if Putin returns to the presidency next year and question Medvedev’s ability to carry out reforms if he remains president.

"The situation for foreign investors just makes me smile. It’s awful," Kasyanov said.

He called for measures to reduce reliance on oil and gas, which makes Russia heavily dependent on global energy prices, demanded reform of the gas sector, pension reforms and more press freedom, and said corruption must be wiped out.

He also called for more demonopolisation, a level playing field for all investors, and government spending cuts, something he made clear was unlikely as elections approach.

"The whole of industry is not working, because there are monopolies and a lack of competition," Kasyanov said.

Kasyanov said he believed Putin would return to the Kremlin next year but it would make little difference if Medvedev stayed on because he was simply part of the system created by Putin, who steered him into the presidency after being barred by the constitution from a third successive term.

"He (Medvedev) is not a political figure," he said. "After three years in power, there has been no liberalisation."