International Papers

Putin vs. the Oligarch

The dramatic arrest Saturday of Russian oil tycoon Mikhail Khodorkovsky turned journalists into Kremlinologists. Khodorkovsky, Russia’s richest man (the eighth-richest in the world, according to Britain’s Daily Telegraph), will be held in an overcrowded Moscow jail until late December, at which time he will be charged with tax evasion, embezzlement, forgery, and fraud related to the privatization of state assets in the 1990s. He faces up to 10 years in prison if found guilty. (For more on Khodorkovsky and his Yukos Oil Co., see this September “Foreigners” column.)

Almost everyone hypothesized that Russian President Vladimir Putin was behind the arrest. The most common theory was that Khodorkovsky’s recent foray into politics—he has funded opposition parties—attracted the president’s ire. Writing in Canada’s Globe and Mail, political scientist Juliet Johnson said Saturday’s events represent “just the latest example of a creeping authoritarianism in Russia that threatens the political and economic reforms of the past decade.” Putin wasn’t concerned that Khodorkovsky’s intervention could affect his chances of maintaining control over the Duma or winning the March 2004 presidential election—that’s already in the bag—the arrest is simply part of his “long-standing efforts to manipulate public opinion, transform the once-fractious Duma into a rubber-stamp for presidential policy, and assert control over regional politics.”

An op-ed in the Moscow Times declared: “A coup d’etat has taken place in Russia. The law enforcement agencies have seized power. Everyone knew the coup was coming. And President Vladimir Putin did nothing to stop it.” The piece praised Khodorkovsky’s decision to stay in Russia rather than flee into exile, as other oligarchs have done. By doing so he “won this round in his psychological bout with the authorities. … [B]y allowing himself to be detained he has for now retained his freedom of choice and his freedom to carry on fighting in the war between business and the authorities. Not that he stands any chance of winning.” Elsewhere in the Russian press, Nezavismaya Gazeta called Khodorkovsky’s detention “a blatant declaration of war on civil society. As a result of this war, whatever its outcome, our country, economy, policy and social stability will suffer enormous damage.” (Translation courtesy of BBC Monitoring.)

Writing in Spain’s El País, veteran Moscow correspondent Pilar Bonet identified another motivating factor: the social discontent caused by the Yeltsin-era privatization deals and the poor’s hatred of the newly rich. The Guardian struck a similar note when it observed, “In moving against the oligarchy, this time in the form of Mr Khodorkovsky, the Russian leader will pick up votes ahead of parliamentary elections in December and also potentially rid himself of a wealthy political foe before the presidential poll in March next year.”

A Moscow Times editorial said that Putin had “good reason to be concerned about the excessive influence of big business, whether it be Khodorkovsky blocking tax increases for oil companies and lobbying for private pipeline projects or metals magnate Oleg Deripaska prolonging dubious tolling schemes and attacking the government’s position on WTO accession.” Still, the way to address such concerns is not to cut backroom deals or to use “carrot-and-stick tactics,” but rather to reinforce the rule of law by strengthening the regulations that control monopolies or lobbying. The Financial Times suggested another way to end the recriminations and move the country toward normalization:

It is time for a statute of limitations to cover the alleged economic crimes of the chaotic 1990s, excluding cases involving suspected violence. Instead, the state should focus on using tax laws to curb Mr Khodorkovsky and his kind, including possible windfall taxes. Such moves would also help to head off popular demands for a renationalisation of oligarch wealth. They would help Russia to become both richer and more democratic.