Is Putin's Fake Rival the Real Deal?

Everyone thought billionaire playboy Mikhail Prokhorov was just a patsy for Vladimir Putin to run against and crush. But what if he wins?

MOSCOW – From the crowd that gathered on Jan. 13 at Moscow's Central Telegraph building, just up the block from the Kremlin, you would think someone was handing out envelopes of cash. There were pensioners, housewives, college students, and school teachers packing into the entryway and spilling out onto the street, all craning to get a look at the narrow head that stuck up above the throng. Even from the back of the crowd you could see it -- the bobbing noggin of the 6 foot, 8 inch, billionaire Mikhail Prokhorov, who was there to open a campaign office as part of his race for the Russian presidency.

The strange part was that he seemed to be having fun interacting with voters, listening to their lamentations, letting them pinch the fabric of his coat. But here's the really strange part: Everyone there, except for most of the journalists, really believed he could win.          

The narrative in the press so far (except in Russia's state-run media) has labeled Prokhorov a Kremlin puppet, an assumption based mostly on experience. Candidates in Russian presidential elections going back to 2000, when Vladimir Putin first became boss, have pretty much all belonged to the so-called "constructive" (read: token) opposition. These are men like the Communist Gennady Zyuganov and the sideshow nationalist Vladimir Zhirinovsky, who have run and lost in almost every presidential race since the fall of the Soviet Union, each time with a little less heart. (They both sat out in 2004, when Putin's popularity peaked at well above 70 percent.) Now both in their late 60s, they don't campaign too hard anymore, at least not in the whistle-stop sense of the word, and the running joke about them has been the same among voters for a decade: "Comrade Zyuganov (or Herr Zhirinovsky), you have won the presidency! What is your first decree?"

"Um. Um. I decree that all presidential powers should immediately be transferred to Putin."

Candidates with a more independent pedigree, such as Grigory Yavlinksy, the head of the liberal Yabloko party, are usually kept out of the race. And sure enough, the Central Election Commission denied Yavlinsky registration last month, claiming he had forged a quarter of the 2 million signatures needed to get on the ballot. That left the dynamic duo of Zyuganov and Zhirinovsky running alongside the other leader of the constructive opposition, Sergei Mironov, who gets about as much traction claiming independence as does Putin's black Labrador. When he ran against Putin in 2004, Mironov openly supported the candidacy of his rival, and when Putin's second term in office was running out in 2008, Mironov helpfully proposed changing the constitution to allow his old friend to stay for four more years.

So what about Prokhorov? He is, at 46, by far the youngest candidate, lives the life of a jet-setting bachelor, does not belong to any political party, has never held office, and has an estimated fortune of $18 billion. He even owns an NBA team, the New Jersey Nets, making it hard to believe that he can be bought with a suitcase full of cash. As the cynic's wisdom goes these days, he could simply be after the good graces of Putin's Kremlin, which could grant him more nickel and gold mines -- the sources of most of his wealth. He could also be after a senior position in government that would allow him to lobby his interests. But whatever his motivations, Russia's opposition leaders, both constructive and unconstructive, are convinced that Prokhorov is a stooge. "He is in cahoots with Putin in these elections, there is no doubt about that," says Boris Nemtsov, one of Prokhorov's close personal friends and a leader of the popular opposition movement. "Prokhorov is tied in with the government at every stitch, like any big businessman in Russia. So Putin has every ability to grab him by the horns and twist."

The lanky bachelor, however, does not come off as a man acting under duress. At the opening of his campaign office in the Central Telegraph building, he spent hours talking to his supporters, hearing out their drab complaints about heating bills and kindergartens even as his advisors tried to drag him away. He had clearly been rehearsing, with every answer polished and precise, a little gem of rational populism. On foreign policy: integrate with Europe. On fiscal policy: tax the rich. On the economy: help small business. On Putin: He's served 12 years, it's time for him to retire.

At one point, a young businessman complained that federal aid to his region was not reaching the people in need. He asked Prokhorov to interfere. "First, what we need to do is change the entire system of power," Prokhorov said, looking down at the man, who was in a wheelchair. "Now officials depend only on their higher-ups, but they need to depend on the people, the voters. Without that shift, your problem will never get fixed." The remark contrasted sharply with Putin's style of manual control, which usually deals with petty complaints by promising to punish some guilty bureaucrat or other.

Prokhorov preaches instead that Russia's problems are systemic. As he spoke, a small chorus of grandmas murmured in agreement. "Good boy! That's the stuff! He'll do fine, that one. He'll be president," said one of them, Nina Koloskova, 74, who took pictures of Prokhorov on her cell phone. Afterward, she spent half an hour convincing me to love her candidate, too. "He speaks such beautiful Russian! All you hear from the others is slang!" One by one, a handful of other supporters walked up and joined the conversation -- a retired school teacher, a housewife, a university student. It was hard to resist their enthusiasm. "The reason we always vote for the Communists is not that we want to go back to the USSR," said Lidiya Yurina, the teacher. "We vote for them because there was no one else. But now there is Prokhorov." Perfectly earnest and in no rush, these people did not look like the hired goons who have packed pro-Putin rallies lately. These were your classic protest voters, idealistic and angry, and there are a hell of a lot of them in Russia these days.

In December's parliamentary elections, more than half of the popular vote went to the opposition parties -- a first since Putin came to power. Almost 20 percent went to Zyuganov's Communists, even though nowhere near that many people are nostalgic for Stalin's rule. Allegations of vote-rigging by Putin's party, United Russia, which struggled to win its 49 percent, stirred even more anger among the electorate. For the first time since the fall of the Soviet Union, they have begun taking to the streets by the tens of thousands, with the next mass demonstration planned for Saturday, Feb. 4. This is the energy Prokhorov is trying to channel. And regardless of whether he is doing so at the Kremlin's behest, he is off to a fairly strong start.

He packed auditoriums in Kazan and Novosobirsk last month, and has a whistle-stop tour set for at least six other cities before the March 4 elections. The managers of his businesses in 30 of Russia's regions are helping him get out the vote, and although his campaign has refused to disclose spending figures, his pockets are deeper than any other candidate, perhaps including Putin. Last month, he also dipped into his Rolodex to form a "social council" of rock stars, famous athletes, TV presenters and celebrities like the pop diva Alla Pugacheva, all of whom are backing his campaign. And on a talk show in early February, he promised to give away $17 billion of his $18 billion fortune if he defeats Putin and wins the presidency.

But according to the latest survey, which was released by the independent Levada Center polling agency on Jan. 31, Prokhorov would get a measly 4 percent of the vote if the elections were held this Sunday, putting him neck-and-neck for third place with the veteran politicians Zhirinovsky and Mironov. Considering that polls taken last summer showed that only a few percent of the population even recognized Prokhorov's name, this doesn't seem all that bad. According to the same Levada poll, however, Zyuganov, the Communist, is well ahead of Prokhorov with a projected 8 percent of the vote, while Putin would get 37 percent, sending the two of them into a run-off.

On Feb. 1, Putin admitted for the first time that a run-off vote is even possible, if highly unpleasant to think about. "A second tour would cause a prolonged battle, and that would destabilize our political situation," the prime minister told a group of election monitors. But with his approval rating now below 50 percent even in the government's own surveys, a run-off looks likely, and the bureaucracy is getting prepared. Election officials in the region of Smolensk, for instance, placed an order in January for nearly a million leaflets inviting citizens to vote in a presidential run-off. The question now is whether anyone can beat the Communist to second place.

"Our strategy is simple," says Anton Krasovsky, Prokhorov's campaign manager. "Every day, we come up with some way to get on television. Let the people see his face." To this end, Prokhorov held a press conference on Wednesday for no apparent reason, and the room was packed with reporters. Channel One, Russia's leading state-run network, whose programming is tightly managed by the Kremlin, gave the press conference more than two minutes of air time at the top of its evening news broadcast, ahead of all the other candidates -- except, of course, Putin. "I'm in politics with serious intentions and for the long haul," Prokhorov assured the channel's viewers, an estimated 120 million people in Russia alone.

Confusingly, though, other state-run channels have made Prokhorov the subject of smears. Last week, the NTV network (one of the top three channels, owned by Gazprom, with an audience of 120 million worldwide) reminded its viewers of the time in 2007 when Prokhorov was detained by police in the French Alpine resort of Courchevel on suspicion of running a prostitution ring during a holiday party for Russia's super rich. Over a soundtrack that could have come from a Freddy Krueger movie, the broadcast went on to allege that the "oligarch" had purchased an island in the Seychelles. Prokhorov denies both allegations. 

What he has not always denied is that his candidacy is a fluke, practically impossible without the tacit say-so of the powers that be. "It's not easy to pass all the barriers," he told Reuters last month. "You need to have more or less a green light to pass to the ballot.... You need to have a green light from a majority of the Russian elite." When I asked him at Thursday's press conference what this meant -- who gave him the green light and why? -- he backpedaled.

"I never got any green light," he said. "I met all the humiliating demands for candidacy that are required by the law."

And so the question lingers, as it probably will throughout his campaign. In the end, however, it won't make much of a difference on the outcome. Regardless of whether Prokhorov secretly agreed to stand as Putin's sparring partner, his popularity is on the rise, and many Russians will be content to give their protest vote to him. He is at least a newcomer, unlike the tired trio from Russia's constructive opposition, and that alone might be enough to push Prokhorov into the run-off. "And then all bets are off," says Anton Nosik, a pundit and popular blogger. "If he gets his hand on that scepter, he's untouchable. He'll turn into a different animal as soon as he tastes blood. And then what? You think he'll just hand back the reins? I really wouldn't bet on it."

Alexey SAZONOV/AFP/Getty Images


The Revenge of Montozy

Is Italy's "Super Mario" prime minister poisoning the love affair between Angela Merkel and Nicolas Sarkozy?

BERLIN – A few weeks ago, Europe's Teutonic queen and a dependable Roman technocrat shared a stage in Berlin and showered each other with praise.

Germany, Chancellor Angela Merkel beamed, was watching Italy's progress with "great respect," and the good work of the Italian administration would surely "be rewarded."

Merkel's homeland, Italian Prime Minister Mario Monti responded, provided all of Europe with a model of budget discipline and "the best recipe for growth." Through its dedication to market principles and reforms, Germany had become "so splendidly competitive."

"I find so many things wonderful about Italy," Merkel replied, "as I hope the Italian prime minister finds wonderful about Germany. Together, we are richer and stronger than we are apart. And I'll gladly repeat that I treasure the prime minister's work."

But it all felt a bit phony. Just that morning the German daily Die Welt had published an interview with Monti in which he had called Germany "the ringleader of EU intolerance."

Monti accused the Germans of playing by one set of rules while imposing another on its weaker neighbors. "Of central importance for Europe is an unconditional respect for the rules," Monti told Die Welt. "If the big countries break the rules -- like Germany did in 2003 [by exceeding budget deficit limits] -- they can't expect the small countries to follow them."

Since then, he has challenged one German principle after another, calling for Merkel to pony up and increase its already predominant share of the funds to rescue debt-ridden countries like Italy and Greece. From Germany's perspective, the dependable technocrat may not be so dependable after all.

How quickly things change. Merkel and her cohorts cheered back in November when Italian President Giorgio Napolitano tapped Monti to replace the buffoonish Silvio Berlusconi. "Super Mario" had made a name for himself as an über-competent EU commissioner from 1995 to 2004, winning broad respect among European leaders. And after Berlusconi -- who had responded to Italy's deepening debt crisis with more scandals than solutions -- Monti, the Germans thought, would quietly right the ship with a good dose of German-style austerity.

For a time, he did. He appointed a technocratic cabinet and passed a sweeping 30 billion euro austerity package a month later, with the Italian senate approving the mix of spending cuts, tax hikes, and an increase in the retirement age by a huge margin. Italy's soaring borrowing costs finally started to come down. Everything was going to plan.

Until he started speaking out.

Although Monti had never been a politician before, he had all the right political instincts. According to James Walston, a professor of international relations at the American University of Rome, Monti is, at heart, a "very political animal." He's expected to step down for the 2013 elections, but there's speculation that he might seek the presidency that year. Whatever his motives, he knows how to score points with the people whose support he needs to remain an effective leader.

"There is this very strong sense among a lot of Italians that they have become German poodles, or German dachshunds, or whatever canine metaphor you prefer to use, and Germany is calling the shots," says Walston. "So he has to show Italy and to a lesser extent the world that he's his own man."

Short of wading into Godwin's Law territory, there are three things not to do if one wants to stay friends with the German chancellor. And in just two and a half months, Mario Monti has done them all. Let's have a look:

Rule #1: Don't tell Germany how to go about its business -- especially if you're from one of those no-good, free-spending PIIGS countries.

The German economy is, by European standards, booming. Unemployment is at its lowest level in two decades, and gross domestic product (GDP) grew by a respectable 3 percent last year. Italy's economy, on the other hand, is teetering on the precipice and probably poses the single greatest threat to the world economy right now.

And yet there was Mario Monti, telling the Germans it was in their "own enlightened self-interest" to chip in more of their hard-earned euros to save the single currency, which had brought "huge benefits…and maybe [to] Germany even more than others."

He followed that up with a call to double the eurozone's permanent bailout fund, the European Stability Mechanism (ESM), from 500 billion euros to 1 trillion euros. Predictably, Berlin rejected the proposal, with more than a trace of irritation -- after all, much of that extra cash would inevitably come from Germany's coffers.

"The problems did not emerge in Germany," said Finance Minister Wolfgang Schaeuble. "We are doing more than all the others and while the European unification has yielded great advantages for us, this does not mean that solidarity is a one-way street."

Most egregiously, in December, Monti threw his weight behind the idea that's guaranteed to draw the quickest and sharpest reaction from German leaders: the issuance of joint debt, known as Eurobonds. And he rubbed salt in the wound by saying, "I believe we have enough arguments to convince the Germans."

Advocating for Eurobonds, which would help Italy's economy, is one thing. Violating protocol by publically advancing a policy that puts Berlin up against a wall is another. The Germans were not amused. A German government official close to the negotiations, who spoke on the condition of anonymity, said it was "unfortunate" that Monti had chosen to call for an increase to the ESM and that "we have emphatically no interest in Eurobonds."

But the official added that he understood Monti's political need to distance himself from Germany in order to win popular support at home. "It's important for him to highlight the one or the other disagreement that he may have," said the official. "He's politically sensible."

Rule #2: Don't steal Germany's powerful friends.

It's bad enough that Monti was taking a public stand against German orthodoxy. It was worse when leaders around Europe started listening.

Just days after Monti pushed for the ESM to be doubled -- and Merkel's chief spokesman rejected the idea -- International Monetary Fund Managing Director Christine Lagarde echoed Monti's call.

"We need a larger firewall," said Lagarde (in Berlin, no less). "Without it, countries like Italy and Spain that are fundamentally able to repay their debts could potentially be forced into a solvency crisis by abnormal financing costs."

Granted, Lagarde wasn't calling for a doubling of the fund, as Monti had. But then European Central Bank President Mario Draghi, who had pleased the Germans by insisting that his duty was simply to maintain price stability, agreed with Monti that the fund should be boosted, further irking the Merkel administration and drawing yet another stern rejection from her team. Now there's even talk of a 1.5 trillion euro bailout fund.

At least Merkel was still able to push through her top priority -- a fiscal pact that will compel participating nations to adopt strict deficit limits -- at a Jan. 30 EU summit in Brussels. But Monti could claim victory there too; he succeeded in carving out an exemption for countries with crushing national debts -- countries like, say, Italy.

Rule #3: Don't ever try and break up Merkozy.

Much has been made of the alleged romance between play-by-the-rules Merkel and playboy Nicolas Sarkozy, the French president. The centaur-like Merkozy, with the German chancellor's head and the French leader's heart, has captivated the world and come to represent renewed cooperation between the sometimes quarrelsome neighbors.

And who came along to break them apart? You guessed it.

In his Berlin appearance with Merkel on Jan. 11, Monti insisted multiple times that Italy had to join with Germany and France in plotting the eurozone's future. And given Monti's standing among Europe's elder statesmen, Merkel had no choice but to open up the former duopoly and invite Monti to a tripartite summit a week later (which the capricious Sarkozy soon canceled). It was bad enough that the Franco-German romance was about to become a ménage à trois. The reality, for Merkel, might be even worse: Merkozy might be supplanted by Montozy.

The problem, according to a Sebastian Dullien, a Berlin-based economist and senior fellow at the European Council on Foreign Relations, is that Merkel and Sarkozy never really quite saw eye to eye on Europe's central policy decisions. Instead, Sarkozy felt compelled to go along with Merkel or risk ostracism -- for lack of another viable ally.

"I never had the feeling that Merkel and Sarkozy were that much on the same page," says Dullien. "I always had the feeling that Sarkozy was keen on keeping the AAA rating, and that his calculation was that the best step to take in order to hold onto that was to follow Germany and to form a coalition with Merkel. If you look at what they decided, it was always what Germany had proposed."

But now, with Standard & Poor's having downgraded France to AA+ and Monti thrusting himself into the foreground, Sarkozy suddenly has another option -- one whose interests are more aligned with his own. France's borrowing costs, though lower than Italy's, are nearly twice as high as Germany's. Joint Eurobonds that would level the playing field hold much more appeal for France than for Germany. Likewise, France's economy grew at half the speed of Germany's in 2011, so Monti's repeated calls for growth measures resonate with France.

"The way of looking at the whole crisis, the French view and the French problems, the French view of spending, is much closer to the Italian one," says Walston. And Italy's success in winning France over to its side was not lost on the Monti administration. "La Merkel should take notice," a Monti adviser triumphantly told La Repubblica, "that we are now two."

* * *

Still, Monti's arrival on the scene could help Merkel manipulate German public opinion to her advantage. Though European integration remains popular in Germany, bailouts of the country's profligate neighbors are not. By adding his respected voice to the mix and shouldering some of the decision-making burden that had previously fallen almost entirely to Merkel, Monti could help remove some of Merkel's responsibility for unpopular choices in the eyes of German voters.

"She's caught between two fires," says Walston, "because she has to look after big German banking and European interests at the same time as looking after her electorate. She can use Monti's pressure in a way to sell her needs to the German people."

For now, Merkel remains the towering figure in Europe, without whose consent little can be achieved. In spite of her increasing isolation, she still has been able to push through her main priorities, culminating in the Brussels fiscal pact. And Germany remains the undisputed economic leader -- and, increasingly, bankroller -- of the continent.

But Monti holds the card that will keep mighty Merkel from undermining his authority: He is not Silvio Berlusconi. European leaders' desperate desire to avoid Berlusconi or his allies return to power may be enough to give Monti license to score a few points with Italian voters. "Berlusconi is planning a comeback," says Walston, "and so the rest of Europe is very keen to keep Monti in power."

All told, Walston believes Monti has made life more complicated for Merkel. "If you have a relationship between equals, you're going to have differences of opinion. If you have a doormat, it's easy: You just walk on it. Monti's not a doormat."