Yukos Drama No Earthquake in Russia

UPI ANALYSIS

By Martin Sieff

WASHINGTON, Nov. 4 (UPI) --Does the Russian government's dramatic actions against Yukos oil oligarch Mikhail Khodorkovsky mark a dramatic U-turn away from democracy and capitalism as many melodramatic U.S. pundits have claimed? Not really.

Behind the drama of uniformed commandos seizing the richest man in Russia and putting him under arrest lie more complex realities than a childish cowboy fairytale of black versus white and good against evil.

Russia's government was not impeccably democratic previously under President Vladimir Putin and if anything far less so under his predecessor Boris Yeltsin, under whom Khodorkovsky and his fellow dozen or so oligarchs made their vast concentrations of capital and personal wealth. If anything, it is Putin., a lawyer by training as well as former secret police officer by vocation, who has labored long and hard to create a framework of predictable and reliable business law in Russia. Investment conditions for international businessmen have been far more favorable under him than under his usually inebriated and incompetent predecessor.

Nor did the Russian government's moves against Khodorkovsky come either as a bolt from the blue or as some outrageous and unpredictable U-turn from previous policy. Over the past three and more years, Putin moved less dramatically, but equally forcefully and relentlessly against two previous oligarchs - Boris Berezovsky and Vladimir Gusinsky. And in both cases, the motive was not jealousy of their wealth or opposition to the private acquisition of large fortunes, but to their efforts to use that wealth to fund political offensives aimed at undermining Putin's own power.

As analyst Nikolas Gvosdev, executive editor of "The National Interest" magazine told UPI, "Putin has sent a message to the next level of management in Russian business that you are free to make money in Russia, provided you stay out of politics.

There is no question that Khodorkovsky refused to stay out of politics. He was funding 100 parliamentary candidates fiercely opposed to Putin and his supporters in the coming parliamentary elections. And he had made little secret of his own ambitions to succeed Putin as president when his term in the Kremlin runs out in 2008. Khodorkovsky was also defying and seeking to use his vast wealth to undermine major policies of state finance and energy security. He opposed and was seeking to block the Russian government's plans to cooperate cautiously with the Organization of Petroleum Exporting Countries. Khodorkovsky wanted to maximize crude oil sales to the West as quickly as possible. Putin and his government, by contrast, have been developing a policy of careful cooperation with Saudi Arabia, seeking to keep global oil prices strong to maximize the foreign exchange earnings their country desperately needs, without sending those prices sky high.

But Khodorkovksy, misled by his vast wealth and the uncritical favor and protestations of support it had brought him in the West, had forgotten one of the most enduring truths of Russian history for half a thousand years. Whenever a boyar, an over-mighty merchant or financial magnate, defies or clashes with a powerful ruler or czar, it is always the boyar who loses.

Public opinion polls in the week since Khodorkovsky was arrested bear this view. Putin's popularity, previously shaky, has soared since he moved against Khodorkovsky. The oligarch's fall set off tidal waves of worry in Russia's business community and on its stock exchange, but it played well with the overwhelming majority of the Russian people.

As one contributor to the pravda.ru web-site noted, there should have been little surprise in this. After all, Russia is a country with 13 - perhaps one should now say "twelve and a half" billionaire oligarchs, and 30 million people under a very law poverty line.

Putin's dramatic action against Khodorkovsky, forcing him out from the leadership of his gigantic Yukos conglomerate may yet backfire. It could, as some pundits have predicted, set off a new wave of capital flight from Russia. But then the oligarchs, unlike the great late 19th century American giants of industry to whom they have been much compared, have specialized in pumping hundreds of billions of dollars worth of their wealth out of Russia for years already.

"Putin has gambled that his action will not affect the smooth running of the Russian economy," Gvosdev said."  But far from seeking to re-impose communism or some radicalized form of populist socialism under a new tyranny, Gvosdev continued, Putin has been striving to create and maintain a free market and politically relatively tolerant environment where over-mighty oligarchs as well as the state cannot choke out all dissent. "Putin has been working to set up a system of managed pluralism in Russia where various businesses are free to pursue their interests but must respect the agenda that has been set down by the Kremlin."

Such a system is not North American or Western European full democracy. But it is not communism or a tyrannical state either.