Billionaire Prokhorov to Challenge Putin

Billionaire Mikhail Prokhorov plans to challenge Prime Minister Vladimir Putin for the Russian presidency in March elections after the biggest anti-government demonstrations in a decade emboldened Russia’s opposition.

“This is the most important decision of my life,” the owner of the New Jersey Nets basketball team told reporters in Moscow today.

Prokhorov, 46, Russia’s third-richest man with a fortune Forbes magazine estimated at $18 billion, said that he’ll seek to build support from the grassroots level and that he opposes “revolution” and “populism.” He quit as leader of the Right Cause party on Sept. 15, accusing President Dmitry Medvedev’s administration of blocking the group’s preparations for parliamentary elections in December.

That Dec. 4 vote, in which Putin and Medvedev’s United Russia party retained its majority, was neither free nor fair, observers from the U.S. and Europe said. Thousands of Russians took to the streets in the week since the contest to protest the results after reports of ballot-stuffing.

An opposition crowd of 25,000 people rallied in central Moscow on Dec. 10, according to police, in the city’s largest anti-government protest since Putin first became president in 2000. A same-sized demonstration occupied Red Square today in support of United Russia, authorities said.

Stocks, Ruble

Russia’s benchmark Micex Index (INDEXCF) of 30 stocks fell 2.4 percent at 6:05 p.m. in Moscow, extending last week’s 7.3 percent decline, the biggest in almost three months. The ruble weakened for an eighth-straight day against the dollar, falling 0.4 percent to 31.5808.

Prokhorov may have the backing of ousted Finance Minister Alexei Kudrin, who told the Vedomosti newspaper in an interview published today that he supports the creation of a new right-of- center party, a topic he has discussed with Prokhorov. Kudrin was the second longest-serving minister in the government when he resigned Sept. 26, citing disagreements with Medvedev over spending policy.

Prokhorov is seeking to be an “integrator” who can unite Russia’s liberal opposition, the billionaire told the Interfax news service in an interview after his news conference.

Mass Liberal Party

The statements by Kudrin and Prokhorov today reflect the growing need for a “right-liberal” party, said Olga Kryshtanovskaya, a sociologist who studies the country’s elite at the Russian Academy of Sciences and has been a member of the ruling party since 2009.

“I don’t rule out that Putin will move closer to the right,” she said. “Many people will welcome creating such a party and will join under Kudrin’s banner. People in the right flank have longed for unification.”

Russia needs a new party to accommodate “annoyed” city residents, Vladislav Surkov, Medvedev’s first deputy chief of staff, said of the protests in an interview posted on the Ekho Moskvy radio station’s website on Dec. 6.

Prokhorov in June became head of the Right Cause party, quitting three months later after falling out with the Kremlin on how the party should develop. He then said that his one task would be to oust Surkov.

People including those who protested on Dec. 10 won’t believe that Kudrin and Prokhorov can present an alternative to United Russia, Mikhail Kasyanov, a former prime minister under Putin who now opposes the government, said in an interview today.

‘Manipulation’ Concern

Kasyanov’s Parnas party was barred from taking part in the Dec. 4 elections because it had violated federal rules, including the submission of names of registered members who are deceased, the Justice Ministry said then. Kasyanov was also disqualified from running in the 2008 presidential election.

“You could do that before the Duma elections so that people would vote for the Right Cause in protest rather than for the Communists,” Kasyanov said. “But the situation is such now that people do not want to take part in manipulation.”

The initiative may be a ploy to benefit Putin by legitimizing the March vote through the appearance of genuine competition, said Sergei Markov, a former United Russia lawmaker who heads the Institute of Political Studies in Moscow.

“There are two possibilities here, either it’s something agreed with Putin to bolster the legitimacy of the presidential elections after the recent protests or Prokhorov could be jumping on the bandwagon of the protests,” Markov said by phone in Moscow. “Prokhorov is a glamorous oligarch and he’s got plenty of money to spend on promoting himself.”

Vote Fraud Investigation

Medvedev yesterday ordered an investigation into the allegations of fraud in the parliamentary poll as the swelling resentment threatened to weaken Putin’s presidential bid.

Putin served the maximum two consecutive terms from 2000 to 2008, when he stepped aside in favor of his protégé Medvedev. Putin said in September that he’d appoint Medvedev prime minister if he wins in March.

Parliament lengthened the presidential term to six years from four years after Medvedev came to office, giving Putin the opportunity to prolong his stay in power to a quarter century.

Prokhorov said both Putin and Medvedev declined to meet with him to discuss his presidential bid and that he’ll spend 10 percent of his campaign criticizing Putin and the rest laying out his proposals. He also said he isn’t afraid of suffering the fate of jailed former Yukos Oil Co. billionaire Mikhail Khodorkovsky.

Khodorkovsky was Russia’s richest man when he was arrested at gunpoint on the tarmac of a Siberian airport in October 2003. He was sentenced to a total of 13 years in two separate convictions for fraud, tax evasion and oil embezzlement as Yukos was dismantled and sold at auction to cover more than $30 billion in back taxes. Khodorkovsky, who denies any guilt, says he was targeted by Putin for financing opposition parties.

‘Putin Project’

Prokhorov’s presidential run is “a special Putin project that aims to simulate a Mikhail Khodorkovsky in the election” and give the illusion of democracy, said Alexei Mukhin, head of the Moscow-based Center for Political Information.

Still, Putin is determined to garner the minimum 50 percent of the vote he needs to avoid a runoff, Mukhin said.

Vladimir Putin is the dominant figure, he’ll win the presidency for sure, but making it only on the second round would be a huge setback for him,” Mukhin said. “He’ll do everything to avoid that.”

‘Game-Changer’

Prokhorov said he’ll need about a month to file all the paperwork and collect the 2 million signatures needed to be included on the ballot as an independent.

His entry may be a “game-changer” if he manages to pass those hurdles and be certified by the Central Elections Committee, which is controlled by Putin, said Lilit Gevorgyan, a London-based analyst at IHS Global Insight.

“He could certainly act as a channel to vent out the frustration of many young professional voters who can’t bring themselves to vote for Communists or nationalists for the sake of not voting for Putin,” said Gevorgyan. “It could even result in a runoff election.”

Stanislav Govorukhin, the film director Putin tapped to lead his presidential campaign, declined to comment on Prokhorov’s candidacy or Putin’s strategy for addressing the protesters, when Bloomberg reached him by phone.

Dmitry Peskov, Putin’s spokesman, said the premier is aware of Prokhorov’s political intentions, adding that it’s every Russian’s right to run for president, news services including state-run RIA Novosti reported.

“Prokhorov’s task is to help Putin get elected,” said Boris Nemtsov, a former deputy prime minister under the late President Boris Yeltsin. “A billionaire would never have taken such a risk if he hadn’t had an agreement with Putin.”

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Brad Cook at bcook7@bloomberg.net

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