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The BBC's Steven Rosenberg describes what happened in court
A Russian appeals court has upheld opposition leader Alexei Navalny's conviction for embezzlement, but suspended his jail sentence, allowing him to go free.
However, his conviction is likely to prevent him running in the next presidential election.
Navalny was sentenced to five years in July but released pending the appeal.
He has always denied the charges, which relate to his time as an adviser to the governor of the Kirov region.
His conviction bars him from running for elected office. Navalny has said in the past he would like to stand for president.
First he is jailed. Then he is released to run in the Moscow mayoral election. Now Alexei Navalny's prison sentence has been suspended. What's going on?
If we assume that it is the Kremlin that decides the outcome of key court cases - the authorities deny this, but that is widely believed to be so - then the decision not to send Russia's most prominent opposition activist to prison may reflect Moscow's desire not to make Alexei Navalny into a political martyr. The last thing President Putin needs is a Russian Mandela.
Two years ago an opinion poll by Levada Centre showed that only 6% of Russians had heard of Navalny. That figure has now risen to 51%. What's more, Navalny's strong showing in the recent race for mayor (27% of the vote) suggests his popularity is growing. It is unlikely that locking him up would reverse that trend.
But even a suspended sentence can cause Mr Navalny difficulties - preventing him from running from office.
But it appears his five-year sentence would rule him out of running for the next presidential election, due to take place in spring 2018.
Navalny accused the authorities of prosecuting him for political reasons and said he would appeal against the sentence.
While on bail, he stood for mayor of Moscow, coming second.
'Fabricated, political'In court, the anti-corruption campaigner could be seen taking a photo with a mobile phone bearing a sticker which mocked Russia's current President, Vladimir Putin, as a thief.
While the Kremlin denies exerting pressure on courts and judges, it is widely believed to do just that, the BBC's Steve Rosenberg reports from Moscow.
The change to a suspended sentence may reflect the authorities' concern that a five-year prison term would make Navalny a political martyr, our correspondent says.
In July, Navalny was found guilty of heading a group that embezzled timber worth 16m roubles ($500,000; £330,000) from the Kirovles state timber company while working as an adviser to Kirov's governor, Nikita Belykh.
Speaking at his appeal hearing, he said: "I think the political motivation of this case is evident to everybody."
Co-defendant Pyotr Ofitserov, who was jailed for four years, also had his sentence suspended on Wednesday.
Navalny took 27% of the mayoral vote in Moscow against the Kremlin-backed incumbent, Sergei Sobyanin, who officially scraped through on the first round with 51% - a result the opposition leader disputes.
Navalny built up his original following outside the political mainstream, using social media to highlight corruption which he identified with Mr Putin and his allies.
Since Mr Putin returned to power as president last year, other leading lights of the informal opposition have also been prosecuted, raising suspicions that the Kremlin is using the legal system to disable its enemies.
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