President Vladimir Putin is to pardon one of his best known opponents, oil tycoon Mikhail Khodorkovsky, after a decade in jail in what may be a gesture to critics of his human rights record before Russia hosts the Winter Olympics.

Putin made the surprise announcement that he would soon free Khodorkovsky, once Russia’s richest man, after a marathon news conference yesterday in which he exuded confidence that he has reasserted his authority in the face of street protests.

He said two members of the Pussy Riot protest group would also be freed, but it was the about-turn on Khodorkovsky, who was due for release next August, that grabbed most attention, lifting Moscow share prices on hopes it may mean investors have less cause to fear falling foul of Kremlin politics.

Khodorkovsky, 50, fell out spectacularly with Putin a decade ago. His company, Yukos, was broken up and sold off, mainly into state hands, following his arrest at gunpoint on an airport runway in Siberia on fraud and tax evasion charges in 2003. He became a symbol of what investors say is the Kremlin’s abuse of the courts for political ends.

The Kremlin denies this but Putin has singled Khodorkovsky out for bitter personal attacks and ignored many calls for his release. Last week, however, he said: “He has been in jail already more than 10 years. This is a serious punishment.”

Saying Khodorkovsky’s mother was ill and that he had asked for clemency, he added: “I decided that with these circumstances in mind... a decree pardoning him will be signed.”

In comments published in the New York Times late last month, Khodorkovsky said his mother was facing cancer for a second time after many years of remission and that they might never see each other again outside of a prison.

An early release had not been expected and there had even been speculation that new charges might be brought against him, as they were before his sentence was extended in 2010 after a second trial for theft and money laundering.

Freeing Khodorkovsky and the two women from Pussy Riot, jailed over a protest against Putin in a Russian Orthodox Church but now covered by a broader amnesty, could ease criticism of the President before the Olympics in February.

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