Frost at the core [Russian Kleptocracy]

ON DECEMBER 15th, in a small courtroom in central Moscow, Viktor Danilkin, a softly spoken judge, is due to start delivering a verdict. Its symbolism will go far beyond the fate of the two defendants, Mikhail Khodorkovsky and Platon Lebedev, former principal shareholders in the Yukos oil company. Both men have been in jail since 2003 on charges of tax evasion. Their sentences expire next year. In order to keep them in prison, the government has absurdly charged them with stealing all the company’s oil.

Neither the first nor the second trial had much to do with the rule of law. But there the similarity ends. In 2003 Mr Khodorkovsky personified the injustice and inequality of the 1990s, when tycoons wielded enormous power over a state that could not even pay pensions and salaries on time. Seven years on, Mr Khodorkovsky is a symbol of the injustices perpetrated by corrupt bureaucrats and members of the security services, who epitomise the nexus between power and wealth. As Mr Khodorkovsky said in his final statement, “They turned, us, ordinary people, into symbols of a struggle against lawlessness. This is not our achievement. It is theirs.”

The chances that Mr Khodorkovsky will be found not guilty are slim. If he were, it would be a sign that the system of Vladimir Putin, Russia’s former president and current prime minister, was beginning to come apart. That system, which tolerates corruption and violence, has just received the endorsement of FIFA, which has awarded Russia the prize of hosting the 2018 football World Cup. But its evolution had much to do with Mr Khodorkovsky’s story.

Related items Investing in Russia: Pepsi's Russian challenge Dec 9th 2010 In the 1990s, when businessmen bribed the courts, both parties knew they were in the wrong. After Mr Khodorkovsky’s case, a judge taking instructions from a bureaucrat felt he was in the right. The Russian state not only flagrantly flouted the law for its own interests, but also sent a powerful signal to its bureaucracy that this practice was now okay.

According to Alexander Oslon, a sociologist who heads the Public Opinion Foundation in Moscow, Mr Putin’s rule ushered in a breed of “bureaucrat-entrepreneurs”. They are not as sharp, competitive or successful as the oligarchs of the 1990s, but they are just as possessed by “the spirit of money” in Mr Olson’s phrase, the ideology that has ruled Russia ever since communism collapsed. By the end of the 1990s the commanding heights of the economy had been largely privatised by the oligarchs, so the bureaucrat-entrepreneurs began to privatise an asset which was under-capitalised and weak: the Russian state.