Putin Foe Navalny Claims Fraud as Putin Ally Keeps Moscow

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Acting Moscow Mayor Sergei Sobyanin served as a deputy prime minister for Russia in 2008 to 2010. Close

Acting Moscow Mayor Sergei Sobyanin served as a deputy prime minister for Russia in 2008 to 2010.

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Photographer: Vasily Maximov/AFP via Getty Images

Acting Moscow Mayor Sergei Sobyanin served as a deputy prime minister for Russia in 2008 to 2010.

Russian President Vladimir Putin’s ally won Moscow’s mayoral election over opposition leader Alexey Navalny, who claimed the ballot was rigged even after getting more votes than polls predicted.

Sergei Sobyanin, appointed in 2010, got 51.4 percent of the vote, exceeding the 50 percent barrier needed to avoid a runoff, according to official results released today. Navalny finished second with 27.2 percent, capturing almost twice the share of votes predicted by state-run pollster VTsIOM.

The race pitted the Russian authorities against an opposition candidate in Moscow for the first time since allegations of voter fraud sparked a wave of protests in 2011 and 2012 in Europe’s biggest city. Navalny, 37, a leader of the anti-Putin demonstrations, has campaigned on an anti-graft platform that’s mobilized a grassroots movement.

“Such results increase the likelihood of mass street protests later today,” Vladimir Osakovskiy, chief economist for Russia at Bank of America Corp. in Moscow, said in e-mailed comments. The “very narrow margin of first round victory gives the opposition more reason to talk about ‘another stolen election,’” and will “add to market pressure on concerns over political risks,” he said.

Photographer: Vasily Maximov/AFP/Getty Images

Alexei Navalny, Russia's oppposition leader, speaks to the media on mayoral election at his campaign headquarters in Moscow on Sept. 8, 2013. Close

Alexei Navalny, Russia's oppposition leader, speaks to the media on mayoral election at... Read More

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Photographer: Vasily Maximov/AFP/Getty Images

Alexei Navalny, Russia's oppposition leader, speaks to the media on mayoral election at his campaign headquarters in Moscow on Sept. 8, 2013.

Evening Rally

Navalny supporters plan to protest this evening in Moscow’s Bolotnaya Square, the site of earlier opposition rallies, Ekho Moskvy radio reported. The opposition candidate published exit polls that gave him 36 percent and Sobyanin 46 percent.

“We regard this as a clear falsification,” Navalny said in televised comments. “I call on the Kremlin to hold a second round as should happen.”

In a blog post, Navalny called for Sobyanin to meet with him for talks where he plans to demand a partial recount focusing on voting stations where the acting mayor received a suspiciously high number of votes and on ballots cast from home. Sobyanin invited the opposition leader to meet at a news conference today, gazeta.ru reported.

The benchmark Micex Index (INDEXCF), which has fallen 1.8 percent this year, 1.8 percent to 1,448.37 as of 2:44 p.m. in Moscow. The ruble was little changed at 33.2765 per dollar.

Yekaterinburg Victory

Direct gubernatorial elections were restored after tens of thousands took to the streets in the biggest demonstrations of Putin’s rule. He won 48 percent of votes in Moscow in his re-election last year, less than anywhere else in the country.

In a separate mayoral election, a Putin-backed candidate lost in Yekaterinburg, Russia’s fourth-largest city, to an anti-drug activist. Yevgeny Roizman, supported by billionaire Mikhail Prokhorov, won 33 percent of the vote, compared with 30 percent for United Russia candidate Yakov Silin in an election that doesn’t require a runoff.

Photographer: Andrey Rudakov/Bloomberg

Russia's opposition leader Alexey Navalny and his wife Yulia shelter beneath an umbrella during a pre-election rally for Moscow's mayoral election in central Moscow on Friday, Sept. 6. Close

Russia's opposition leader Alexey Navalny and his wife Yulia shelter beneath an... Read More

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Photographer: Andrey Rudakov/Bloomberg

Russia's opposition leader Alexey Navalny and his wife Yulia shelter beneath an umbrella during a pre-election rally for Moscow's mayoral election in central Moscow on Friday, Sept. 6.

Turnout for the Moscow vote, which featured another four candidates, was 32 percent, according to the Central Election Commission. The low participation was responsible for Navalny’s unanticipated surge in support, according to Alexander Oslon, president of the Moscow-based Public Opinion Fund.

“That worked to Navalny’s advantage because his backers are enthusiastic and motivated,” Oslon said. Navalny was projected to get 15.7 percent in a Sept. 2 VTsIOM poll.

‘Great Result’

Since taking over as mayor from Yury Luzhkov, who was forced out, Sobyanin, has sought to ease Moscow’s traffic congestion and revamp infrastructure such as public parks. He served as a deputy prime minister in 2008 to 2010 as Putin completed a four-year stint as premier before reclaiming the presidency.

“It’s a great result,” Sobyanin, 55, who resigned in June to call the ballot, said in televised comments. “We’ve met the test of fair elections: hard-won votes are worth far more than a few percentage points.”

Moscow, a city of 12 million people, has a $50 billion budget and accounts for about a quarter of Russia’s gross domestic product, official data show. The city plans to sell as much as 160 billion rubles ($4.8 billion) of debt by year-end to trim borrowing costs, according to the Moscow finance department. Its ruble bonds due June 2022 yielded 7.98 percent today, data compiled by Bloomberg show.

Ritz Dinner

Navalny, who raised about $3 million for his mayoral campaign, has pledged to reduce corruption, make Moscow’s government more efficient and rein in illegal immigration, a theme Sobyanin has also pursued.

He courted bankers from OAO Sberbank and Deutsche Bank AG at a dinner at Moscow’s Ritz Carlton hotel and last month won the backing of 38 Russian Internet entrepreneurs, who endorsed his candidacy in a manifesto that called for the rule of law to be upheld and government officials held accountable.

Navalny has also sought to challenge Sobyanin’s credibility, asserting in August blog postings that two of the acting mayor’s daughters own apartments worth $3.5 million and $5 million. Sobyanin said the property holdings are legal.

Navalny’s participation in the Moscow ballot had been in doubt after a court in the city of Kirov sentenced him in July to five years in prison for defrauding a state timber company, a verdict denounced by the U.S. and Europe. He was released a day later pending appeal after thousands protested in Moscow and other major cities. If upheld, the conviction would preclude him from ever holding public office.

While analysts including Gleb Pavlovsky, head of the Effective Policy Foundation in Moscow, have suggested Sobyanin may become a candidate to replace Putin in 2018 elections, the Moscow mayoral battle may prove to be a launch pad for an assault by Navalny on the higher echelons of power.

The low turnout in Moscow doesn’t invalidate Navalny’s showing, according to Luis Saenz, head of equity sales and trading at BCS Financial Group in London.

“Navalny did quite well and the Kremlin needs to take notice,” Saenz said in e-mailed comments.

To contact the reporters on this story: Jake Rudnitsky in Moscow at jrudnitsky@bloomberg.net; Henry Meyer in Moscow at hmeyer4@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net

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