Mikhail Khodorkovsky is being taught a lesson - but only he knows what it is," one Russian commentator said wryly in July when the Kremlin's harassment of Yukos, the big Russian oil company, and of Khodorkovsky, its chief executive, was just beginning.
Now everybody knows what the lesson was. Khodorkovsky, the most respected businessman in Russia, had seemed too rich and powerful for anyone to touch. But the truth was, he had become too rich and powerful for the state to leave untouched. The arrest of Khodorkovsky in October and the impounding of his controlling block of Yukos shares, the source of his $7bn fortune, have damaged the international reputation of Vladimir Putin, and rightly so. It has also poisoned relations between state and business in Russia and it may accelerate Russia's move towards more authoritarian rule. But it has not been without its uses. It has reminded the rest of the world that Russia is a country with limited property rights, no independent judiciary to speak of, and a president accountable to nobody once elected. It is a country in which arbitrary imprisonment and seizure of property have happened before, are happening now, and will happen again. It is a country fighting a losing battle against an almost unbroken tradition of bad government.
Putin's apologists say that Khodorkovsky and his associates broke laws in the course of building their fortunes. Doubtless they did. So did anybody who started a business in modern Russia, and the earlier they started it, the more laws they broke: Russian laws are there to be broken. Such is the quantity and the poor quality of them, especially those regulating business, that nobody could obey them all even if they wanted to. From the state's point of view, that is a satisfactory outcome: it means that everyone is a criminal, and everyone is at the mercy of the state if it chooses to investigate them. Whatever laws Khodorkovsky did or did not break, law-breaking is the excuse for his arrest, not the reason for it.
As for the reasons, here is one: the hounding of Khodorkovsky played well with the Russian public. Poor people everywhere are prone to believe that they are poor because the rich are rich. Russia has more than its share of poor people who think that way, and they want to be revenged on Khodorkovsky and the other "oligarchs" who seized wealth cheaply and often criminally from the Russian state in the chaos of the 1990s. Opinion polls show that in the days after Khodorkovsky's arrest, Putin's trust rating rose sharply.
Russian governments usually act to please themselves, not the public. But the approach of Duma elections in December gives a rare incentive to play to the gallery. Putin was worried that the Communists might win more seats in parliament than his party, United Russia. Harassing big business is a way of reaching out to Communist voters. It is open to question whether Putin was merely indulging, or actively sharing, the popular hatred of the oligarchs. In either event, Khodorkovsky probably hastened his own end by starting talks to sell 40 per cent of Yukos to ExxonMobil. The thought that he would walk away with billions of dollars was more than the Kremlin could stand.
Demagoguery was thus a factor in the Yukos affair, although not, it appears, demagoguery based on antisemitism. Khodorkovsky is Jewish, as are Vladimir Gusinsky and Boris Berezovsky, two other tycoons chased out of Russia by Putin. But Putin is not known to harbour any antisemitism, nor has he used even coded language to encourage it in the public mood. Antisemitism is always there at the margins of Russian politics, and one tycoon told me two years ago that he thought Putin would exploit it if ever he thought it politically necessary. But it seems that the demagoguery of envy has been more than adequate.
Berezovsky and Gusinsky crossed blatantly from business into politics, using their wealth and media power to cajole the Yeltsin governments into doing what they wanted. Putin hated them for it. Khodorkovsky was a more private operator. He donated to political parties, seeded parliament with MPs loyal to Yukos, and gave money to think tanks and civil society causes. But his greater discretion did not in the end protect him. His wealth was too great, and so was the respect he commanded in the west. The more the world wanted Russian oil, the more it f?ted Khodorkovsky. This combination of independence and influence made him, in Putin's eyes, too much of a rival.
Here we get to one of the primary causes of the Yukos affair: Putin's determination to keep a monopoly of political power. The message is that Putin has come to resent not only actual challenges to his power, but potential challenges too. He can rig elections by excluding objectionable candidates on legal technicalities or denying them access to state-run television. But Khodorkovsky would have been strong enough to overcome those obstacles, had he chosen to run for office, or to sponsor others to do so.
Putin does not act alone, of course. He has stuffed the Kremlin with KGB veterans and ex-generals. Now they run his office, control his diary and guard his children. They tell him what is going on in the world and what he should do about it. They have a homogeneous worldview, rooted in Soviet-era values, and Putin is captive to it. He will be all the more so now that the Yukos affair has cost him the trust of Russian business. For big business, Putin will never again be the first choice of president: and that makes big business a threat.
It goes without saying that the ex-KGB men clustered around Putin are more authoritarian and less open to the west than the Yeltsin-era holdovers whom they have been replacing. Less often remarked is that they are also, by and large, not much good. Their secret service skills have not transferred very well to national politics - though they may grow more useful if politics grows more authoritarian. Putin's most effective officials and ministers have remained the ones he inherited from Yeltsin. Among the best of them was Alexander Voloshin, the Kremlin chief of staff, who resigned when Khodorkovsky was arrested. Voloshin could persuade people to do what the Kremlin wanted. Without him, the Kremlin will have to make more use of force.
The ex-KGB men around Putin are greedy for power and money. If Yukos is controlled by the state, its assets and profits will be at the disposal of the state's high officials. These officials will not have to settle for a mere portion of those revenues which they can capture in taxes and bribes. They can cloak this greed in other language: they can say that Russia's oil production is a "strategic asset," which the Russian state must control as an instrument of power, which should not have been privatised in the first place. And yes, there may be something in that argument, but only in theory. The worst companies in Russia are the ones that the state controls. Gazprom, the state gas monopoly, has been mired for years in sleaze. Russian interests cannot be served by making its oil companies more like Gazprom.
The correction to Putin's reputation aside, the one good thing that might come out of the Yukos affair would be a rallying of business and democratic lobbies in opposition to the emerging police state, on a scale which gives Putin pause for thought. But there is little sign of that happening. Power no longer seesaws between the men with guns and the men with money, as it did in the Yeltsin days. It appears to belong securely now to the men with the guns, and the uniforms, and the epaulettes. They sat out the Yeltsin years, loyally and dully, in government service. Now they want their reward.
