Russian vote thrusts tycoon Prokhorov into spotlight

MOSCOW Tue Mar 6, 2012 8:02am EST

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MOSCOW (Reuters) - Billionaire Mikhail Prokhorov can claim a victory of sorts in Russia's presidential election, he may have done enough to win a permanent role in Russian politics despite finishing third with less than 8 percent of the vote.

Prokhorov, who entered politics only last year, was the sole liberal candidate in Sunday's election, providing a focus for some of Russia's middle class which has become increasingly disillusioned with the domination of Vladimir Putin.

They have driven mass protests against Putin, who won a six-year presidential term at the election the opposition said was rigged in his favor, and handed Prokhorov second place in voting in Russia's two main cities, Moscow and St. Petersburg.

"If there was anything surprising about the election it was how well Prokhorov did," said Roland Nash, chief investment strategist at Moscow-based Verno Capital.

"He has now established himself as the liberal reform candidate for the opposition. Within a managed democracy he is the legitimate liberal ... it is useful for Russia to have a lightning rod for the middle class."

Critics say that is where Putin wants him.

Opposition politicians say Putin used Prokhorov to shunt anger that had poured onto the streets into a safe channel in the vote and blunt the protests' power in its aftermath.

Positive election-night coverage of Prokhorov on state-controlled television has done little to dispel such impressions. Nor has Prokhorov, who is unlikely to have been able to enter the presidential race without Putin's approval.

During the election campaign, the 204-cm (6-foot-8) metals tycoon tried to straddle the divide between Putin and the protesters, criticizing the prime minister but echoing his view that the protesters were short on strategy and ideas.

His warnings that Russia will fall irrevocably behind other countries if Putin fails to improve democracy and reform the economy appeal to urban, middle-class protesters who fear Putin will lead the country into stagnation.

Tens of thousands of protesters have turned out several times for rallies in Moscow and St Petersburg to complain about electoral fraud since a December 4 parliamentary election and to voice dismay that Putin could rule for years to come.

The strong results in the two cities helped propel Prokhorov past nationalist candidate Vladimir Zhirinovsky into third place nationwide, behind Communist Party leader Gennady Zyuganov.

FIRST PUTIN, THEN PROTESTERS

Dogged by suspicions his reincarnation as a politician is little more than a "Putin project," Prokhorov, 46, is trying hard to prove he is his own man.

He was one of three losing candidates who met Putin at his residence outside Moscow on Monday for what amounted to conciliatory talks after the campaign.

Hours later, however, he took a step in the opposite direction, mounting the stage at an opposition protest for the first time. He called the election "dishonest" but not illegitimate, and did not mention Putin by name.

"You want changes - I will do everything I can to make that happen," he told the crowd, plugging his plan for a party "free from any chiefs. Your party, independent of political views."

Prokhorov had left by the time helmeted riot police closed in and detained outspoken Putin critic Alexei Navalny and many others, but later criticized the police action.

On Facebook and Twitter, he said it been a peaceful protest and that "the use of force and detention of opposition politicians could have been avoided."

In contrast to opposition leaders such as Navalny, whose name Putin cannot seem to bring himself to mention, Prokhorov and the prime minister seem to get on.

Putin gave Prokhorov's presidential bid his blessing in front of the nation last year, calling him a "worthy rival" on a televised answer-and-question session. On Monday, Putin voiced support for Prokhorov's plan to create a political party.

The party could fit into Putin's plans for a limited liberalization of the electoral system. Putin tightened control over politics as he consolidated power during his 2000-2008 presidency, but now faces pressure to relax his grip.

Since the protests erupted in December, Putin and President Dmitry Medvedev have promised to let more parties gain the official registration they need to run.

Prokhorov, who led a Kremlin-backed pro-business party last year for a few months but quit in a conflict with the Kremlin, is trying again.

On his campaign website, more than 70,000 people have clicked a blue box marked 'Join Mikhail Prokhorov's party'.

"It's all just beginning!!!" Prokhorov wrote in his blog on Monday.

"ELECTORAL GHETTO"

But some political analysts say Prokhorov's liberal politics, his riches and his reputation are a mix that blunts his chances of ever becoming a powerful independent force.

"Prokhorov is in an electoral ghetto and cannot get out of it," said Nikolai Petrov, an analyst at the Carnegie Moscow Center.

He is one of the "oligarchs" who made fortunes by snapping up assets in a controversial wave of post-Soviet privatizations in the 1990s, buying Arctic mining giant Norilsk Nickel with another businessman at a knock-down price.

Ranked Russia's third-richest man by Forbes magazine with a fortune of $18 billion, Prokhorov's business empire ranges from gold and aluminum assets to the New Jersey Nets basketball team in the United States.

Many Russians associate him with the Alpine ski resort of Courchevel because of an incident in 2007 when the French police suspected he was arranging prostitutes for guests and detained him. He denied any wrongdoing and was later cleared.

"Prokhorov has several weak spots that can always be pulled at if he suddenly starts to broaden his electoral support too much," Petrov said, suggesting the longtime Soviet KGB officer Putin would drag out dirt on Prokhorov if he felt threatened.

Putin could also use Prokhorov's business interests as a lever. The tycoon needs a green light from a state commission chaired by the prime minister for a London listing of Polyus Gold, in which he owns a 37 percent stake.

Prokhorov has said he expects approval, and a sales trader at a Western bank in Moscow said he could breathe easily.

"Prokhorov helped Putin. He helped make the elections look legitimate. ... I think his business will be fine," the trader said on condition of anonymity.

Prokhorov dismisses the idea that he is on a short leash and portrays himself as being in the driver's seat, pressing Putin to conduct reforms.

Fending off speculation he could be rewarded for his role in the election with a top post, even prime minister, he says he will not even consider it unless Putin opens up the political system and gives the government freedom to act independently.

"Prokhorov's candidacy has not unfairly been treated as a stunt, but he is a serious guy and could get more involved in politics, said Liam Halligan, chief economist at Prosperity Capital Management in London.

"Someone of his wealth, his calibre, is not going to be someone's puppet for long."

(Additional reporting by Megan Davies and Lidia Kelly; editing by Elizabeth Piper)

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