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The richest man in Russia behind bars

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    Slippery prop for democracY By CONSTANTINE PLESHAKOV MOSCOW -- The arrest last weekend of Mikhail Khodorkovsky, the richest man in Russia and the owner of the
    Message 1 of 1 , Nov 1, 2003
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      Slippery prop for democracY

      By CONSTANTINE PLESHAKOV

      MOSCOW -- The arrest last weekend of Mikhail Khodorkovsky, the
      richest man in Russia and the owner of the oil giant Yukos, shocked
      the international business community, enraged domestic opposition
      groups and sent Russian currency and bonds into a frightful free fall.

      Yet the arrest of Khodorkovsky, who had gained power with the
      consensus of the financial oligarchs that basically ruled Russia at
      the end of President Boris Yeltsin's tenure, was anything but
      unexpected. Russian President Vladimir Putin has spent the last three
      years purging his initial benefactors. Two of them, Boris Berezovsky
      and Vladimir Gusinsky, have fled to Europe, closely chased by
      Moscow's demands for extradition, and are now involved in bitter but
      fruitless polemics with the Kremlin.

      The few moguls in Russia that remain unscathed by the purge keep low
      profiles -- while, according to rumor, transferring considerable
      portions of their fortunes to overseas bank accounts.

      Khodorkovsky's plight is spectacular: the richest man in Russia
      behind bars. The official charges filed against the oil magnate focus
      on tax evasion and are, in all likelihood, true. When wild capitalism
      arrived in the early 1990s, Russia's rich never paid taxes -- and
      very few of them bother to donate to the state budget now. An
      intricate system of double-entry bookkeeping as well as thriving
      corruption make the Russian "haves" practically tax-exempt.

      Nowadays, just a handful of haves declare their income truthfully. In
      a couple of centuries, historians doing research on the emergence of
      the market economy in Russia will spend years wondering how, for
      example, a Moscow TV anchor man in 2003 could afford a summer house
      in Malta when his annual income was merely $5,000 -- barely enough to
      rent a shabby one-bedroom apartment in Moscow.

      But tax evasion is not the worst thing one could say about the new
      rich. Khodorkovsky and other moguls amassed their fortunes in the
      most disreputable way: While the Soviet economy was falling apart
      like a house of cards, they quickly and quietly grabbed the valuable
      pieces. The so-called privatization process in Russia left the
      populace penniless while feeding bullion to the happy few, turning
      them into Russia's first generation of Robber Barons.

      So Khodorkovsky is not an innocent lamb or an idealistic martyr, but
      basically an unscrupulous, tax-evading, big-time swindler. If he gets
      a jail term, it will be well-deserved.

      Still, Putin, who has obviously orchestrated Khodorkovsky's purge, is
      no Robin Hood. Khodorkovsky was arrested not because he was a Robber
      Baron, but because he was a Robber Baron on the wrong side of the
      barricades.

      Putin is doing very little to bridle all-pervasive corruption, but he
      is doing everything to guarantee his re-election in March and, before
      that, the victory of his party in December's parliamentary election.
      Khodorkovsky was reckless enough to announce his own political
      ambitions and to start financing a number of opposition groups. That
      was a sure way to incur Putin's wrath.

      True, under Putin, Russia has done better economically than under his
      predecessor Yeltsin, and Putin enjoys impressive popularity with the
      voters. But the overall picture is not rosy enough, particularly
      outside bigger cities like Moscow and St. Petersburg, to guarantee
      his continued tenure in the Kremlin.

      A new law, hastily crafted for the parliamentary election to
      accommodate Putin's wishes, significantly limits media coverage of
      election campaigns and thus undermines the chances of the opposition
      parties and candidates. Khodorkovsky's money could have bought for
      the opposition badly needed political advertisement. Putin didn't
      want that to happen.

      Also, Khodorkovsky owns one of the biggest oil companies in the
      world. As Russia's fragile economic growth totally depends on oil and
      gas revenues, Putin wants to have better -- if not total -- control
      of the industry to fill the state treasury with something more
      tangible than his own re-election fliers.

      The outcome of the confrontation is far from clear. Will Khodorkovsky
      be given a show trial? Will he be allowed to leave the country and
      join the club of permanently exiled Robber Barons in the
      Mediterranean? Will he strike a deal with the government and linger
      in his homeland minding his own business?

      And what impact will this have on the upcoming parliamentary
      election? Will Khodorkovsky's arrest doom the opposition, or will it
      spur some voters to support it? What about the presidential election
      next March? Will Putin's vengeance backfire on him and lead to the
      emergence of a popular alternative candidate (he has no serious
      competitors so far)?

      Regardless of the eventual result, the picture looks sad. When
      Russian democracy first emerged (around 1986-1989), it was nurtured
      by a Nobel Peace Prize winner (Andrei Sakharov), several law and
      economics professors, a number of outstanding writers, actors and
      newspapermen. Fifteen years later its survival seems to depend on the
      outcome of a legal battle between a shady tycoon and a former KGB
      operative.

      Constantine Pleshakov, formerly of the Russian Academy of Sciences,
      is a freelance writer in Moscow.

      The Japan Times: Nov. 2, 2003
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