Georgie Anne Geyer

Yukos Case Puts Sharper Focus on Putin's Grand Plan

SHANGHAI, China -- Last year at this time, I was in Moscow, where the talk of the town was that Russia's richest man, the suave and sophisticated Mikhail Khodorkovsky, was in jail for supposed tax fraud. But at that time, he was said to be rather relishing the situation.

Khodorkovsky, after all, was no average oligarch among the men who, upon the fall of communism in 1991, had swiftly and often dishonestly taken over the old state enterprises. He was both unusually clever and, eventually, innovative. By last summer, he had made his Yukos oil company, with the $8 billion he personally controlled, into a new kind of progressive Russian capitalist giant.

The story then was that this young man from the Far East, who had started out as an across-border trader with China, also had political ambitions, and that he was not altogether displeased with his imprisonment. It would be good on his resume when he ran for president, his friends said.

But when I was again in Russia over the last New Year's, the case didn't look so promising. Khodorkovsky, who had told The New Yorker magazine that he was trying with his good works to make up for his earlier wheeler-dealings, found himself imprisoned with common criminals, and his political ambitions began to sour with that reality.

By late winter, the Khodorkovsky case had become the cause celebre of the rich oligarchs against the security state of Vladimir Putin and his former KGB agents, and it began to take on a Dostoevskian tone. Mikhail Khodorkovsky began sending penitential letters, deep with a sense of that obsessive Russian guilt, to President Putin, begging for his freedom.

For his part, Putin began displaying Khodorkovsky, on those occasions when he was allowed to come to court this spring, in a cage, occasionally with one or another of the other Yukos officers -- all formerly immensely rich men who were also behind bars as the company's stock went down, and down, and down.

Finally, the Russian government bound them up in the typical Soviet straitjacket: Last week, the government pressed Yukos to pay the first half of nearly $7 billion in back taxes at the same moment that it froze all of Yukos' assets. So very Russian!

There's been a lot of talk of bankruptcy this week, and Yukos' top executives who are still free said the company, which produces about 2 percent of the world's oil, might run out of money by mid-August. But as a matter of fact, none of this was, as in Dostoevsky's novels, very real. The only reality is that the government of President Vladimir Putin, which he likes to call "managed democracy," is out to take over any and all of the wealth of the oligarchs that it can and put it in the hands of Putin's cronies.

In referring to the overnight "white sale" of government assets in the '90s which brought the Khodorkovsky syndrome to Russia, Sergei Pepelyayev, a Yukos attorney, said: "It appears that the objective is either to break up the company, to destroy it or to replace the owners. It's a kind of de-privatization."

A year ago, there was talk about what warning the case would raise for foreign money -- would it still feel safe in Russia? By Christmas, many were still convinced that it would blow over, that some deal would be made. Now no one believes that. As Bob Dole wrote recently in the Financial Times: "The heady days of glasnost and privatization that supposedly heralded a 'new Russia' have given way to an environment that reeks of political repression, social regression and re-nationalization of key industries."

Is this possible? Could the Russian state take back those big industries that fell so carelessly -- largely because of American economic advice and intervention after the fall of communism -- into the irresponsible hands of the few? Surely there is little question of one thing: Vladimir Putin and his security administration intend to build the "new Russia" on their terms, which will look a lot more like the old Russia.

Perhaps among the only realists is Mikhail Khodorkovsky's mother, Marina, who was quoted recently: "I know the country I live in. Every morning I wake up, the first thing I do is turn on the radio fearing to hear the worst. From the very beginning, I knew it was going to end in tears." A friend of Khodorkovsky spoke of the famous prisoner's real sin: "He forgot what country he lived in."

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