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Russian President Vladimir Putin answers a question about Mikhail Khodorkovsky after his annual news conference in Moscow, Russia, Thursday, Dec. 19, 2013.Alexei Nikolsky/The Associated Press

Russian President Vladimir Putin sent two messages on Thursday by announcing he plans to free his country's most famous political prisoner. The first is that he is once more in complete control of his country. The second is that he badly wants the world to come to the Winter Olympics in Sochi.

Mr. Putin's declaration that he was ready to pardon oil tycoon Mikhail Khodorkovsky after a decade behind bars came a day after Russia's parliament passed an amnesty bill that will see other critics freed from prison, including two members of the anti-Putin punk band Pussy Riot, as well as 30 Greenpeace activists. The high-profile prisoner releases will help quiet mounting international criticism of Russia's human-rights record ahead of the Olympics in February.

Releasing Mr. Khodorkovsky shows how supremely confident Mr. Putin is once more in his own power. Two years after the Kremlin was jolted by mass protests against Mr. Putin's decision to run for a third term as President, he is again the master of Russia's political landscape, able to play the "good tsar" and free the man once considered his most dangerous political opponent.

But Mr. Putin doesn't give things away for free. Every step the ex-KGB agent makes is made carefully, calculated to gain something he wants.

On Tuesday, Mr. Putin offered cheaper gas prices and a $15-billion cash injection to neighbouring Ukraine, which is in the midst of an economic and political crisis. In exchange, Mr. Putin will expect Kiev to reject advances from the European Union and instead join a Moscow-led trading bloc, moving the former Soviet republic a little closer to its former master.

The "pardon" offered to Mr. Khodorkovsky is similarly tactical. Mr. Putin is letting his long-time nemesis out of prison because he has become worried that international criticism of his rule might spoil the show he wants to put on in Sochi. The Olympics, which begin Feb. 7, are the first to be held on Russian soil since the 1980 Summer Games in Moscow, which were boycotted by dozens of countries protesting the Soviet Union's invasion of Afghanistan.

Mr. Putin's return to the Kremlin, after four years as prime minister, has been marked by increasing confrontation with the West. He has clashed with the United States over Syria and battled the EU for influence in Ukraine, while blaming "foreign agents" for stirring up the mass protests in Moscow and other cities during his re-election campaign last year.

Mr. Putin's sudden leniency towards Mr. Khodorkovsky came a day after the United States announced it was sending only a low-level delegation to Sochi. In a further snub to Mr. Putin – who this year signed a law banning "propaganda" promoting gays and lesbians as normal – the official U.S. representatives include a pair of high-profile gay athletes.

Prime Minister Stephen Harper, French President Francois Hollande and German President Joachim Gauck have also made it clear they won't be going to Sochi.

The Kremlin is clearly bothered by the pressure. In addition to the prisoner releases, Mr. Putin has said that Russia's "anti-gay propaganda" law won't apply in Sochi during the Olympic period. Designated "protest areas" will be also established in the city, in an effort to counter charges the Kremlin squelches freedom of speech.

Mr. Putin spent much of a marathon press conference Thursday making conciliatory noises towards the West. He praised National Security Agency whistleblower Edward Snowden, who was granted temporary asylum in Russia, but urged viewers to remember that the NSA's work was "necessary" and "mainly directed at fighting terrorism." He also praised the White House for its new openness towards Iran, a long-time diplomatic ally of Moscow.

The style in which Mr. Putin made his bombshell announcement about Mr. Khodorkovsky betrayed who the real audience was. The Kremlin boss made no mention of the jailed tycoon during the four-hour press conference that was televised live across Russia. But after the broadcast ended he took an off-stage question about Mr. Khodorkovsky from a Kremlin-friendly journalist, surely knowing his response would be picked up by international news organizations.

Mr. Putin said he had received a signed appeal for clemency from Mr. Khodorkovsky, and that he intended to grant the request. "He has already been in detention more than 10 years. This is a serious punishment and [in Mr. Khodorkovsky's letter] he is referring to humanitarian circumstances as his mother is ill," Mr. Putin said. "I think given the circumstances we can take the decision and very soon the decree to pardon him will be signed."

Mr. Khodorkovsky's lawyers reacted with confusion, initially denying there had been any request for pardon, with its implied admission of guilt. The Khodorkovsky Centre later said it would not comment further "until his legal team can meet with Mikhail Khodorkovsky."

Once Russia's richest man, the 50-year-old Mr. Khodorkovsky has been in jail since October 2003, when the energy tycoon was arrested shortly after he criticized Mr. Putin in a televised encounter and began funding opposition political parties. He was convicted of tax evasion and fraud and sentenced to seven years in jail. As that first prison term neared an end, Mr. Khodorkovsky was tried and convicted on new charges in 2010.

At the time of Mr. Khodorkovsky's arrest, it was seen as evidence that Russia was taking an authoritarian turn under Mr. Putin, who had then been in power less than four years. A decade on, there's little doubt who rules Russia.

Asked during the press conference who might one day succeed him as President, Mr. Putin dodged the question. "I won't say who my successor is," he said, laughing. "There's nothing to say right now."

Follow me at @markmackinnon