Why not read what a group of experts has to say regarding the Yukos affair instead of listening to several biggoted Russianphobes and conspiracy theorists? I am not asking you to open your minds to the point your brains will fall out. Here are excerpts from the article.
Experts on the Yukos affair and impact (Updated)
The group includes Dale Herspring, Eric Kraus, Ethan Burger, Vladimir Frolov, Gordon Hahn, Andrei Tsygankov, Vlad Sobell, Edward Lozansky, Donald Jensen and Peter LaVelle.
Gordon Hahn, scholar at large - The view exists that the Yukos takeover is more about the struggle for property than power. Keeping in mind that the two are often inseparable, especially in Russia’s state klepto-capitalist system, it is unlikely Putin would have gone after Khodorkovsky if he had not followed in the footsteps of Berezovsky and Gusinsky, becoming equally involved in politics as in business. After all, it was only after Khodorkovsky began to fund the communist and democratic opposition to the ‘centrist’ Kremlin and Yedinaya Rossiya and politically activated the beneficiaries of his philanthropic work under the foundation ‘Otkrytaya Rossiya’ that the Kremlin went after him.
Vlad Sobell, senior economist, Daiwa Research, London - It is clear that something like the Khordorkovsky/”Yukos affair” was bound to happen. It was simply inherent in the logic of Russia’s transition.
On the one hand, we see a massive concentration of economic/financial resources in Russia’s energy sector, with added geo-political benefits for those controlling it. On the other, an unbridled lawlessness and vaporization of the state, where nothing could resist the raw power of money. It was impossible to expect Russia’s oligarchs and their foreign allies not to attempt to buy the collapsed superpower wholesale. Khodorkovsky/Yukos simply pursued this logic most daringly.
Equally, it is inconceivable that the state would not fight back. However, corrupt and inept Putin’s regime may have been, it represents an electorate, who rightly feel that it, and not the oligarchs and foreigners, should be the ultimate arbiters of the use of Russia’s resources.
By standing up to the challenge, Putin has endowed this electorate with a meaningful voice for the first time in Russia’s history. He has also emancipated it internationally by insisting that, despite its manifest flaws, it will be Russian, and not foreign, judicial system, which will deal with the issue.
The damage inflicted on Russia has been exaggerated. The so-called “capital flight” is merely a net financial outflow under the conditions of a staggering surplus on the current account – the cash Russia is earning simply cannot be fully absorbed domestically. In 2004 foreign direct investment (FDI) – a more reliable pointer of sentiment – increased by 40%.
Andrei Tsygankov, professor of international relations, San Francisco State University
The trouble is not that Khodorkovsky is about to be convicted. Evasion of taxes and the ease with which a large part of stolen state assets was about to be sold to foreign companies was hard to tolerate. The trouble is that other old oligarchs remain unaccountable, and some new state-connected ones are emerging with ability to decide the fate of Khodorkovsky and the old ones. As a matter of principle, prosecuting oligarchs and changing balance of power in favor of the state is both viable and legitimate. State-dominant capitalism is not always a bad idea as the example of East Asian export-promoting model teaches us. Oligarchical/neocolonial capitalism of Latin America does not look particularly attractive.
The question, of course, is how can the state guarantee property rights protection when it takes on oligarchs. How can it guarantee that chosen means do not jeopardize the objective or restoring governance and ability to design a viable modernization strategy? The answer, unfortunately, is that it cannot; such guarantee simply does not exist. Not under the conditions of the corruption-ridden post-communist transition. Not in Russia with its centuries-long traditions of society stealing from the state and the state stealing from society (kormleniye). At this stage of Russia’s development liberal capitalism and rule of law are not available options. The real choice is between bad oligarchs and bad state bureaucrats, and nothing else is on the table. It is therefore unfair to blame Putin for taking on oligarchs and to present the matter as if liberal capitalism was ever in the picture. Whether Putin’s actions are going to move Russia closer to liberal capitalism is hard to say. Those who see transition from oligarchical authoritarianism to bureaucratic one may be proven right. Still, if, after changing the balance of power, Putin manages to gain control over growing appetites of his court and moves to establish greater transparency, the overall impact of the “Yukos affair” is going to be rather positive.
Your point regarding the creation of new “within the regime” oligarchs, now out of control, is very serious. However, I do not believe that this outcome is worse than what might have happened had the Yukos affair has never occurred. The rules of the game have changed and financial power is no longer omnipotent.
Edward Lozansky, president, American University in Moscow
When the Russia's $15 billion man decides to challenge in a big way the country’s president, one should expect an ugly fight with both sides getting badly bruised in the process.
While the judge reads 1,200 pages of evidence and testimony, let us try to summarize the main points of this case or, as Russians would say, figure out the “dry residue” (sukhoi ostatok).
Even the most loyal supporters of the former Secretary of the Communists Youth League turned capitalist Mikhail Khodorkovsky would not deny that he was one of the key players in the process through which state assets were looted at rigged auctions for knock-down prices. Poor swindler Kenneth Lay of Enron could only dream of such deals. As this was not enough, Yukos and Menatep have created one of the most sophisticated tax evasion schemes through numerous tax haven shells. And there was more:
The “accidental” death of Stephen Curtis, managing director of Group Menatep, who started to sing and decided to provide information to the British National Criminal Intelligence Service; large scale corruption of the Duma deputies to pass the laws favored by Yukos, including substantial “contributions” to communist party and its deputies.
The list can go on and on but the most striking point is how Yukos was able to manipulate Western public opinion and even some governments to present itself as a victim of political persecution. Money talks and tens of millions of dollars were spent by Yukos to hire western PR and lobbying firms, for contributions to the leading western think tanks and NGOs, etc. All of them started a large-scale campaign to defend Khodorkovsky and to trash his main opponent in the Kremlin.
One should give a credit to the Amnesty International, which refused to classify Mr. Khodorkovsky as a political prisoner despite strong pressure from his paid advocates.
The Kremlin’s behavior has also been far from perfect and sometimes clumsy. Permitting Khodorkovsky bail, and a large one at that, would have certainly been a more reasonable approach - but we are told that Russia’s legal system is not ready yet to accept the Western standards for such cases. In any event, if I were to grade both sides of this affair I’d give Yukos an “F” and Kremlin a “C”. The oligarchs got the message and the tax collection has significantly improved. Also, the chances that other oligarchs will try to purchase political power are greatly diminished. Hopefully, the Russian justice system also learned a thing or two from this trial and will adopt in the future a more transparent judicial process.
As for the West, it should concentrate on the well-known pragmatic issues of cooperation with Russia and try to avoid being cynically manipulated by those who are paid by the stolen money for the benefit of the thieves.
Donald Jensen, director of communications, Radio Free Europe/Radio Liberty
The Khodorkovsky Affair has been the quintessential example of how politics works in post-Soviet Russia, displaying the nature of political power, its strengths and its limits. The case also highlights the extent to which the mixture of political power and money, especially elite competition for it in a system of feeble property rights, is the central dynamic. Circumstances and Putin's own policies have shaped that dynamic, to some extent, but have little to minimize its fundamental importance. As Vyacheslav Kostikov wrote this week, the affair has been a "mirror" of the incoherent regime and "ineffective state."
But let us turn to what has actually happened: First, the Russian economy has almost certainly more monopolized now than under Yeltsin. Second, Putin's much exaggerated war against oligarchs has claimed three high-profile victims: Gusinsky and Berezovsky (both of whom were targeted by Yelstin-era holdovers Voloshin and Surkov and were comparatively easy to pick off-- their empires depended more on their entrepreneurial cleverness than their hold over any of the economy's lucrative resource sectors). Then Khodorkovsky, who offended Putin by his political independence, but whom, once wounded, became tempting to many other predators beyond Putin's control. If the so-called siloviki had wanted to expand their attack, as Lilia Shevtsova pointed out two years ago, they were unable or unwilling to do so. (By the way, the current split between Sechin and Miller are over the spoils of that attack,) Abramovich and Deripaska, also with ties to the Yeltsin Family, have been untouched. With or without Putin's support, meanwhile, current or former chekists, bureaucrats and Kremlin courtiers have profited. The Khodorkovsky trial has done little to stop this corruption and may have encouraged it.
A key new development since those proceedings began is the more explicit, sanctioned involvement of favored oligarchs in Russian foreign policy. Last October, for example, Deripaska accompanied Putin to Tajikistan. If things work out, the Rusal head will soon have in that country a profitable combination of power plants, aluminum production facilities, and access to cheap labor, all brokered through Putin and tied into a deal to write of Tajik debt and give Moscow a permanent military base. Even under Vladimir Putin, life for Big Business can be sweet.