Political Scandals Heat Up in Russia

Money, intrigue, lies, betrayal—and election season is only just beginning.

Russia’s political-scandal season has reached a boiling point. On Thursday, September 16, Mikhail Prokhorov, Russia's third-richest man (estimated personal net worth: $18 billion), was ousted from the helm of The Right Cause, his own June-launched political party. By week’s end, the scandal epitomized Russia’s centrally managed, sclerotic and brittle political system and the deteriorating political climate in which it heads into the 2012 elections.

When Vladislav Surkov, President Dmitry Medvedev's deputy chief of staff, issued the order to rebel against the party founder, the metals magnate found he had no shortage of turncoats within the ranks. Dissenters, led by political strategist Andrei Bogdanov and party boss Andrei Dunayev, blamed the rift on Prokhorov's “dictatorial leadership style.” They also bemoaned the appearance of anti-drug activist Yevgeny Roizman on the party’s list.

Kremlin-controlled Russian TV channels also changed their tune quickly. Coverage of The Right Cause, ostensibly a pro-Kremlin center-right party, and its boss, previously both pervasive and positive, turned to bashing. Stories about Roizman’s court convictions and questions about the way Prokhorov gained his wealth proliferated.

Last Wednesday, Prokhorov called a hasty press conference where he warned of the impending mutiny against him. The tycoon blamed Surkov for orchestrating his downfall. Accusing Surkov of trying to "privatiz[e] the political system," Prokhorov promised revenge. He threatened that he would be requesting a meeting with Prime Minister Vladimir Putin and President Medvedev—to tell them "what happened to the party, how, and show them the necessary documents." Putin already signaled that he has no intention to meet with the oligarch.

Faced with the Kremlin-orchestrated rebellion at last week’s party congress, Prokhorov stepped down as party leader. Indeed, he resigned from the Right Cause entirely, saying it had become a Kremlin-controlled puppet party and urging his former followers to resign en masse in order to begin a new political movement.

Moscow’s influence runs deep indeed. This election season, the Kremlin went out of its way to prevent a true liberal, center-right party from running in the Duma elections. In the summer, the Justice Ministry prevented the PARNAS, a party headed by veteran 1990s democratic politicians Mikhail Kasyanov, Vladimir Milov, Boris Nemtsov and Vladimir Ryzhkov, from registering. It also barred Garry Kasparov, the former world chess champion, from running for the Duma.

For a time, it appeared that Mr. Prokhorov’s entrance into the political arena was an attempt by the Kremlin to have a controllable “liberal” candidate, but the control proved to be short-lived. After Prokhorov’s outburst, and his accusations that the Kremlin micromanages politics, he is decisively at odds with those who until now provided him with political cover.

It has been years since a billionaire attacked the Russian political establishment. But Prokhorov has good reason to worry about his wealth—and possibly his health. Past attacks did not end well. Consider Mikhail Khodorkovsky, the head of YUKOS oil company until he fell out of favor with Putin. The company was swiftly expropriated from him, and Khodorkovsky remains in jail, serving a second lengthy sentence handed down via kangaroo-court-style proceedings.

Prokhorov is currently president of Onexim Group, a private investment firm with roughly $25 billion in assets. He is also owner of the New Jersey Nets. Despite this poor choice in sports franchise, he remains one of the richest men in Russia. Having survived a decade under conditions dictated by Putin, it is not clear whether Prokhorov will weather the current political turmoil. He might fold—or, if he keeps fighting, he may wind up losing everything he’s got. Some observers even suggested he might be sent to the gulag. While this is always an option, I doubt the Kremlin needs a new Khodorkovsky.

In keeping with the Obama administration’s desire to “reset” relations with Russia, the White House has toned down its criticism of political freedom violations there. Yet, as The Heritage Foundation and others have long warned, the administration’s bet on Medvedev as the principal diplomatic interlocutor and Russia’s agent of democratization will leave the United States in a weaker position vis-à-vis Moscow.

The Prokhorov affair reveals that Medvedev’s rhetoric of modernization does not include a true political liberalization. Regardless, with the rise of the pro-Putin All-Russia People’s Front, the country will become more politically centralized. Whoever occupies the White House after the November 2012 election will have to deal with this new Russia—which very much looks like the Old Russia.