Analysis: Billionaire's exit shows Kremlin grip on Russian

MOSCOW Fri Sep 16, 2011 12:48pm EDT

Russian billionaire Mikhail Prokhorov gestures during a news conference in Moscow September 14, 2011. REUTERS/Denis Sinyakov

Russian billionaire Mikhail Prokhorov gestures during a news conference in Moscow September 14, 2011.

Credit: Reuters/Denis Sinyakov

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MOSCOW (Reuters) - The sudden political exit of billionaire Mikhail Prokhorov in a feud with the Kremlin has sent a warning that politics and business still do not mix well in Russia.

It has also set back hopes that the metal tycoon's entry into politics in June as the head of the small Right Cause party heralded more freedom in Russian politics, and has raised questions over Prokhorov's future in business.

"His main mistake was that he went into politics. Oligarchs should not do this," Dmitry Rogozin, Russia's ambassador to NATO, told Kommersant newspaper.

Prokhorov, who made his fortune in precious metals and owns the U.S. New Jersey Nets basketball team, quit as leader of Right Cause on Thursday after a split in the party which he blamed on Kremlin maneuvers behind the scenes.

Many political analysts said that although his emergence in politics three months ago must have been blessed by the Kremlin, he had become too ambitious and gone beyond the role he was supposed to play.

In his two terms as president, from 2000 to 2008, Vladimir Putin reduced the political influence that the powerful businessmen known as oligarchs gained in the 1990s under President Boris Yeltsin and told them to stay out of politics.

"In our country the amount of money you have is not important. Even if you have 100 billion (dollars) it will not save you from the authorities if they find you objectionable," said Anton Orekh, a commentator on Ekho Moskvy radio.

He drew parallels with the fate of former oil tycoon Mikhail Khodorkovsky, who was arrested in 2003 after openly showing political ambitions. His business empire was broken up by the Kremlin and sold off, and he is still in jail.

"He (Prokhorov) turned out to be too inexperienced in this intrigue, blunt and even naive ... He thought he would be an exception to the rules. But the rules of our political game were not thought up to make exceptions," Orekh said.

"They don't allow anyone to be an exception. Khodorkovsky did not understand this in his time. Now Prokhorov has not understood this -- and for God's sake don't let him share exactly the same fate as Khodorkovsky."

FALLING FOUL OF THE KREMLIN

Few politicians doubt Prokhorov, who Forbes magazine rates as Russia's third richest man with a fortune of $18 billion, had the tacit approval of President Dmitry Medvedev and Prime Minister Vladimir Putin to enter politics.

Prokhorov's role was widely seen as a safety valve for limited criticism which could show that the world's largest country and biggest oil producer was moving away from what is often called a managed democracy and attract votes from more radical parties in a parliamentary election on December 4.

As an oligarch, he is unpopular with many Russians who have not benefited from the transition to capitalism since the collapse of the Soviet Union and is unlikely ever to have mass support. But he quickly fell out of favor after saying he wanted to be prime minister or even president.

Right Cause's manifesto accused the presidency of being an all-powerful monarchy and Prokhorov demanded limits on the number of seats any party can hold in parliament -- a risky remark because Putin's United Russia has a two-thirds majority and is the only party capable of mustering such support.

Prokhorov, 46, accused Vladislav Surkov, the Kremlin's main political strategist, of being a puppet master who made real politics impossible in Russia.

"His mistake was that he got mixed up in a Kremlin project and thought they would give him independence," Sergei Mitrokhin, leader of the liberal Yabloko party, told Kommersant.

"Surkov would not have provoked such a scandal against the wishes of the leadership."

Prokhorov has a lot to lose if his business empire is affected. He owns a 17 percent stake in RUSAL, the world's largest aluminum producer, and a 30 percent stake in Russia's top gold producer, Polyus Gold.

Many political analysts and commentators say Prokhorov is unlikely to be punished as severely as Khodorkovsky was but the prospects of the Kremlin reducing its tight control of the political scene have receded.

"Prokhorov went too far and the Kremlin reined him in. Anyone who thought the rules had changed must think again," said a Russian official who declined to be named.

(Additional reporting by Guy Faulconbridge and Steve Gutterman)

(This story corrects the spelling of New Jersey in paragraph four in previous story)

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