The Kremlin, the Oligarch, and 'The Thaw'

Many Kremlin-watchers point to oil tycoon Mikhail Khodorkovsky's October 2003 arrest as the point when it became crystal-clear where Vladimir Putin's Russia was headed. Opposition leaders are now saying that Khodorkovsky's fate has again become a litmus test -- this time for President Dmitry Medvedev.

In a trial that begins today, Khodorkovsky and his business partner Platon Lebedev are facing new charges of embezzling and laundering more than $20 billion.

Critics say the case -- like Khodorkovsky's 2005 trial in which he was convicted of tax evasion and fraud and sentenced to eight years in prison -- is a fabricated and made-to-order affair to make sure that he stays in prison for the foreseeable future.

After serving half of his eight-year sentence, Khodorkovsky is eligible to apply for early release. He has already been denied parole once, but the Kremlin apparently doesn't want to take any chances. A conviction in the new trial could lead to an additional sentence of at least 15 and as many as 27 years.

In a recent interview with Vladimir Kara-Murza of Radio Free Europe/Radio Liberty's Russian Service, Aleksandr Osovtsov, a member of the opposition group Solidarity, said the new trial will put Medvedev's recent overtures to the liberal opposition and pledges to establish an independent justice system to the test:

For Medvedev the situation is very interesting. Because while this is the second Khodorkovsky trial, it is the first one for Medvedev as president. All this is a test of all his talk about how freedom is better than the lack of freedom, and [his promises to] make courts more independent. It is a moment of truth. If there is another guilty verdict then nobody among those who hoped and counted on changes from Medvedev will have any more illusions about this. Whether Medvedev likes it or not, the Khodorkovsky and Lebedev trial has become the only factor whether or not his declarations will be trusted.

Khodorkovsky's mother, Marina Khodorkovskaya, also says she is placing her hope in Medvedev:

I hope that our new president -- who isn't a Petersburg bandit, but a person from a good academic family who is a lawyer by education -- will not behave in such a lawless manner like those previous comrades.

According to Khodorkovsky himself -- as well as his supporters and independent observers who have followed his case closely -- the main instigator of the Kremlin's campaign against him was First Deputy Prime Minister Igor Sechin. After Khodorkovsky's Yukos oil company was broken up, the majority of its assets were taken over by the state-run oil giant Rosneft, which Sechin chairs.

Opposition politician Vladimir Ryzhkov says anybody placing their hopes in Medvedev will be severely disappointed. Speaking to Andrei Shary of Radio Free Europe/Radio Liberty's Russian Service, Ryzhkov said whatever Medvedev might want to do, he isn't the one calling the shots:

The transfer of authority [to Medvedev] was strictly cosmetic. Vladimir Putin is still in charge. And by all appearances, the people who made the decision [to initiate a new criminal case against Khodorkovsky and Lebedev] are the same people who made the decision several years ago to destroy Yukos.

Anybody who followed Russia in the 1990s knows that Khodorkovsky -- like all the oligarchs of that period -- was no angel. He used his connections in former President Boris Yeltsin's Kremlin to acquire and expand his business empire on the cheap, evade taxes, and undermine the interests of minority shareholders.

But what set him apart in the early part of this decade, was that he decided to go straight. When I interviewed Khodorkovsky in March 2000 he said he planned to bring "efficiency and transparency " to his Yukos oil company's operations.

At the time I was skeptical (and I wasn't alone in that assessment). But the funny thing was that Khodorkovsky made good on his promise. The company paid its delinquent taxes, posted healthy profits, and paid stockholders hefty dividends. He won plaudits in the West and became Russia's richest man. Yukos became known as one of Russia's best-run companies.

And this unexpected success, combined with Khodorkovsky's desire to dabble in politics, proved to be his undoing. The last thing Putin's Kremlin wanted was to have a newly clean and politically independent entrepreneur roaming the countryside.

And the very last thing the Kremlin needs now is a political martyr walking the streets as the economy tanks and the legitimacy of the regime is coming under threat.

Cross-posted on RFE/RL's The Power Vertical

 

Comments

[maxsmith]

Persecution of Khodorkovsky is a well-calculated part of a larger political process. After failed 1991 coup, the KBG lost their control over the USSR and for the first time since the 1917 revolution it became possible to develop and run large businesses in Russia. A number of young entrepreneurs, many in their 20s, used that opportunity to transform their businesses in major financial groups. They became rich, powerful “oligarchs”, who employed top KGB brass. Khodorkovsky and Smolensky http://en.wikipedia.org/wiki/Alexander_Smolenskyy ), for instance, each had a former Deputy KGB Chairman serving as their security directors and Konanykhin www.konanykhin.comm) employed a former KGB Chairman.
Needless to say, the KGB could not tolerate a situation when they were subordinated to new young masters of Russia and staged its comeback to power by methodically destroying oligarchs. Alex Konanykhin, at the time the youngest and the most influential oligarch, who by age of 25 controlled Russia’s largest bank, was the first to fall a victim of the KGB comeback. In his book Defiance www.DefianceTheBook.comm), he described how he was kidnapped by the KGB in 1992, escaped, and had been targeted by the assassins and KGB successor agencies for 12 years thereafter, until receiving political asylum in the USA.
Konanykhin’s fate prompted other oligarchs to pledge loyalty to the former KGB officials who were restoring their grip over Russia. The few, who dared to oppose the KGB, were destroyed. Gusinsky http://en.wikipedia.org/wiki/Gusinskyy