SPIEGEL Interview with Russia's Richest Man: 'I Am an Extremist'

In a SPIEGEL interview, Russia's wealthiest man, self-confessed "extremist" and party animal Mikhail Prokhorov, discusses Moscow's dependence on natural resources, his interests in German energy and the fading era of oligarchs.

SPIEGEL: Mikhail Dmitriyevich, your voice sounds a little hoarse.

Prokhorov: I apologize. I only slept for four hours. I returned from a business trip to Moscow late yesterday evening, then I went out.

Norilsk nickel mine: Prokhorov made a huge profit -- an estimated $7 billion (€5 billion) when he sold his shares in the mine, based north of the Arctic circle, a year and a half ago, shortly before markets collapsed.
REUTERS

Norilsk nickel mine: Prokhorov made a huge profit -- an estimated $7 billion (€5 billion) when he sold his shares in the mine, based north of the Arctic circle, a year and a half ago, shortly before markets collapsed.

SPIEGEL: Is this what the life of Russia's richest man is like: traveling and parties?

Prokhorov: I work hard and I party hard. We had guests constantly when I was a child. As a result, I love company, and sometimes even loud company.

SPIEGEL: And you can afford it. Were you pleased when Forbes placed you at the top of its list of Russia's wealthiest people, with an estimated fortune of $9.5 billion (€6.8 billion)?

Prokhorov: As a businessman, I see money as a tool to implement my strategy. It's a benchmark of success as well. But the main thing is that everything I do gives me pleasure, and that I get to share this pleasure with others. That's my business principle as well as my life philosophy.

SPIEGEL: How does the government's growing influence on the Russian economy fit into your entrepreneurial philosophy?

Prokhorov: In the current global economic crisis, nationalization is certainly not a phenomenon that's restricted to Russia. In fact, I would even venture to say that of all countries, ours is strongest at promoting the market economy.

SPIEGEL: Excuse me?

Prokhorov: It's true. The government could easily do more and acquire, let's say, up to 30 percent in companies that are globally competitive. But that would be under the condition that private shareholders could buy back those shares when the crisis is over. Many companies in debt are now asking the government to acquire shares. However so far, the government has been tough on this issue and turned them down.

SPIEGEL: The circumstances were reversed a few years ago, when the oligarchs lent money to the government and were considered king-makers.

Prokhorov: The term "oligarch" hasn't been appropriate for a long time. At the time, the economy had considerable influence on politics. Those days are over.

SPIEGEL: That's something Russian Prime Minister Vladimir Putin likes to demonstrate. What were you thinking when he paraded aluminum entrepreneur Oleg Deripaska in front of cameras like a first-grader, just because he hadn't paid wages on time?

Prokhorov: This crisis is like a state of emergency, in which some decisions have to be made very quickly and outside of standard operating procedure -- using manual controls, if you like. It's like a fire alarm -- so of course, emotions are running high. Government leaders in other countries are taking similar steps. They too want to preserve social stability. Besides, the nonpayment of wages is a criminal offence in Russia.

SPIEGEL: Are we under the wrong impression, or do businessmen who don't listen to the Kremlin face an unpleasant choice: Either exile in London or they are sent to Siberia, as was the case with the imprisoned former oil magnate Mikhail Khodorkovsky?

Prokhorov: Please consider that the Russian market economy is young and that the elite is still forming. This is a painful process but at least it's not a violent one. Especially considering that Russia is the only large country that has lost its elite twice during the 20th century: during the October Revolution in 1917 and in 1991 when the Soviet Union came to an end. We need to work on overcoming the divide between the people and the economic elite. Businesspeople -- and that includes me -- are certainly not free of sin. In any case, that is also mirrors the condition of the whole of society.

SPIEGEL: But you personally are not exactly contributing to social cohesion by wearing €200,000 ($280,000) watches or, as rumor has it, offering to buy the Villa Leopolda on the Côte d'Azur for close to half a billion dollars.

Prokhorov: Glamour was in style all over the world for 15 years and now modesty is far more fashionable. And I am not going to buy the villa in question. But of course, I have nothing against wealth. The more wealthy people we have, the better it is for Russia. And because many Russians are still poor, being rich also comes with certain responsibilities. Nevertheless, it wasn't just a select few who did well in the boom years. There are fewer mentions of the fact that millions of ordinary Russians were able to improve their standard of living too.

Graphic: The Russian Crisis
DER SPIEGEL

Graphic: The Russian Crisis

SPIEGEL: But now the global crisis is jeopardizing this. Why is Russia more strongly affected than other emerging economies, like China or India?

Prokhorov: Because about 30 percent of our companies are not competitive. And because we place too much emphasis on fighting inflation instead of stimulating demand. The fact that the ruble is tied to the price of oil prevents us from pursuing other important goals: preserving our gold and currency reserves, and achieving export revenues to better our budgets.

SPIEGEL: How can Russia change this?

Prokhorov: We don't have to reinvent the wheel, we just need to develop an innovative economy that utilizes our own competitive advantages -- such as our raw commodities. It isn't enough to simply take the oil, gas, copper and nickel out of the ground and sell it. Using modern technologies, we should also be processing these resources so that we can move farther up the value-added chain. President Dmitry Medvedev and Premier Putin understand this need -- better than many businesspeople actually.

SPIEGEL: Can you cite an example of innovation from within your own business?

Prokhorov: Yes, in fact it's one from Germany. We spent more than €20 million ($28 million) to purchase Optogan, a Dortmund-based company that develops state-of-the-art luminous diodes. It was founded by students of Zhores Alferov, a Russian Nobel laureate in physics. We are now building two production plants, and we expect to be pulling in orders worth around a billion dollars soon. The investments are relatively small but the profits and the impact are gigantic.

SPIEGEL: You have suggested that Russian companies take advantage of the crisis to expand overseas. How is this supposed to work, given that many are weighed down by a mountain of debt?

Prokhorov: We should have used the $200 billion (€143 billion) of Russian currency reserves, that we used to shore up the ruble, to improve our position in the world market. This is a good opportunity, foreign companies can now be had at relatively low prices, even in areas that have previously been closed to Russians before the crisis -- such as information technology. The window of opportunity is wide open.

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