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Excerpts from the JRL E-Mail Community :: Founded and Edited by David Johnson

#14 - JRL 7270
WPS Monitoring Agency
July 30, 2003

Author: Mavra Kosichkina

Nearly the only sign of a summer calm this year is the absence of analytical programs on TV. This calm was not broken last week even by the refusal of the Moscow City Court to change the preventive punishment for Menatep head Platon Lebedev. Thus, as [Yezhenedelny Zhurnal] has noted, the court ignored Vladimir Putin's statement about "twisting hands" and "putting into cells", let alone Prime Minister Mikhail Kasianov's announcements concerning inadequacy of such a measure as arrest in this case. By the way, the prime minister has been reprimanded by the General Prosecutor's Office for his incorrect behavior and pressure on the court.

Deputy chief of the PR department of the General Prosecutor's Office Natalia Vishnyakova has recommended to Kasianov "to watch his mouth", as the newspaper [Vremya Novostei] has put it. However, Vishnyakova has not stated if the General Prosecutor's Office plans to make the prime minister answerable. The newspaper says in this connection, "The warning has been made, but the subpoena has not reached its addressee yet."

Meanwhile, all participants of the scandal surrounding YUKOS have reached such a tense stage in this affair that a hazard has appeared "to transform the critical situation into a vulgar farce", as [Vremya Novostei] says. The General Prosecutor's Office has announced that it considers he case of YUKOS an ordinary one. According to Veshnyakova, this is "an embezzlement of a very large sum". She has stressed that the matter concerns "not a sack of potatoes, since the state has been robbed of several hundreds of millions of dollars". The other day, Lebedev was also charged with tax evasion. As is known, it is a serious accusation in the West, and it is usually used by the justice as the last argument where there is no evidence of other accusations.

YUKOS, in turn, has responded with a strict announcement: "All the activities of the General Prosecutor's Office are demonstrating the fact that law enforcement agencies have chosen the track of instituting more and more proceedings connected with the oil company YUKOS, since it is unable to produce any proofs of the charges preferred earlier." YUKOS has also heeded the fact that the investigations are conducted in the closed regime: "The references to a non-existent commercial secret made by the General Prosecutor's Office sound ridiculous: it is not clear what kind of commercial activities are performed by the General Prosecutor's Office and why it keeps this commercial secret so piously."

Why does the General Prosecutor's Office treat Kasianov's announcements as pressure on the court and does not react to practically identical announcements made by Putin? This question is raised by the newspaper [Kommersant]. Nikolai Vardul, Editor of the Economics Department of the newspaper, even says that prosecutors actually ignore the opinion of the head of the state by the absence of their reaction to his announcements.

According to the author, this fact can be explained only by means of extreme nervousness of investigators. "If the General Prosecutor's Office had distinct proofs of Lebedev's guilt, it would find a chance to impart them to the president, and in this case reprimands of the prime minister would be unnecessary, since the president would explain everything to him." Vardul states that the General Prosecutor's Office is nervous because it understands that it does not have much time, since the president has already expressed his opinion about this conflict and is waiting for a response.

The journal [Vlast] proposes some other arguments proving that the time of the attacking side is limited by the "summer political calm". The journal writes, "There is no doubt that after the parliament's vacation is over, there will be attempts to introduce amendments into the laws on police, security service, and prosecutors' offices." These amendments will be aimed at limiting "indiscriminate purges in the economic sphere".

The fate of the amendments will depend not only on how many deputies "Khodorkovsky has bought". [Vlast] asserts that not only he but also Chief of the Presidential Administration Alexander Voloshin will declare the mobilization. The journal says, "In fact, consideration of the amendments will set the tonality of the election campaign: it will either develop under the motto of stabilization of law and speeding up the economic growth, or under the "Rob the Robbers!" slogan.

Meanwhile, the press is also commenting on another announcement by YUKOS that the General Prosecutor's Office should see to it that laws are observed, but it "has taken a hostage and begun to blackmail private business instead", as [Yezhenedelny Zhurnal] has quoted.

[Nezavisimaya Gazeta] has recollected previous sufferers of the fight between business and law enforcement agencies: former head of the Media-Most holding Anton Titov and former vice president of Aeroflot Nikolai Glushkov. The paper states that taking colleagues of disfavored tycoons hostage is becoming a universal technology. Experts have confirmed this point of view.

For instance, Dmitry Oreshkin (the Mercator group) is of the view that Russian security structures are just unable to gain the necessary goal by legal methods because of their lack of professional skills. That is why it has to resort to the tested expedients "from the Soviet repertory". Oreshkin says, "Since the situation before the election will be even tenser, we'll see some more such things. The government will have to stake on the card of fighting tycoons, since it has no other trumps.

Political analyst Igor Bunin shares this point of view in general, although he does not agree with the "political hostage" formulation. He says, "A political hostage is a person seized in the street who has nothing to do with this situation." Meanwhile, in Russia the entire political elite may be subjected to persecution for political reasons. Bunin states, "There was a long period in Russia, when there were no rules or laws. Therefore, everyone is under the Damocles' sword of prosecution of the General Prosecutor's Office." Besides, Bunin states that the government has no other methods of influencing business. "There is market economy in the country, but the government s using methods left from the authoritarian regime."

[Yezhenedelny Zhurnal] says that the case of YUKOS has demonstrated that the private business of raw materials is not private in its usual meaning. In other words, it is not registered as property of those to whom it actually belongs. It is sort of leased on conditions of full loyalty and double annuity. The first part of this annuity is legal and is allocated to the budget. The second one is spent on "funding the political order in general and projects administrated by Kremlin managers in particular."

That is why the transparency YUKOS is so proud of has caused only annoyance in the Kremlin. It not only hinders the "trustful relations" but also can be interpreted as aspiration to withdraw from the agreement and to "re-register the concession agreement into full- fledged property".

Besides, as the journal notes, the state has practically returned its unlimited powers. "The nation has obeyed to the reflex of an ostrich because the hopes of the early 1990's were stultified by the raging of corruption and fraud." The Russian society has realized: "We have not only lost the status of a great state. We have proved to be failures, as was in case of socialism."

That is why the "Putin new state" has received a carte blanche for manipulations dulling this national inferiority complex, a sort of carte blanche for Russia's renaissance."

[Yezhenedelny Zhurnal] says that this is the cause of the fact that the charges preferred to YUKOS do not correspond to the scale of repressions to which the company has been subjected.

In any case, according to the weekly [Argumenty i Fakty], law enforcement agencies do not intend to concede, and settling the matter quietly is out of the question. After a discussion at a fairly high level of security structures, there appeared information about five items of the ultimatum given to YUKOS:

1) to keep a distance from politilcs;

2) to stop funding all political parties (United Russia is not on the list of parties funded by the oil company);

3) not to try to put its proteges to electoral lists in the Duma election;

4) to find a way of publicly repenting, as Mr. Potanin has done;

5) not to leave the country in the near future.

In the view of [Argumenty i Fakty], the government's prime task today is to create conditions for a mobilization policy of economic growth that is to lead to doubling the GDP by 2010. The weekly warns that oligarchs may respond by collapsing the country's growth on the international stock market. Judging from reports of media, the collapse has begun already: capitalization of Russian enterprises has decreased by $15 billion for the past two weeks. No less than $3 billion have been deposited abroad during this period.

There are some other outcomes. In the view of the newspaper [Vedomosti], "the clouds approaching large business after the beginning of the large-scale attack on YUKOS are gradually becoming one of the basic factors determining the economic climate in Russia". The threat of reconsideration of results of privatization, as well as the very methods, by which security agencies are acting, may lead to complete discrediting of participants of the "elite fray" and even "liberal economic reforms in general, which is even worse".

As is known, Russia will face new serious reforms in the near future: reforms of the gas system, railroads, and the housing utilities sector, since it is impossible to put them off anymore. However, as the newspaper says, "the task of reformation will be heavily complicated without people's trust, vestiges of which could be lost in the course of the tiff between security agencies and oligarchs."

In the opinion of [Vedomosti], a denial to uphold the liberal concept of reforming the gas industry by the ministry under German Gref could be regarded as the first sign proving a change in the atmosphere. "The protracted duel between the gas monopolist, which is guided by the St. Petersburg team, and the Economic Development Ministry ended in a factual surrender of the ministry's liberals last week." Gazprom finally blocked the initiative of dividing the monopoly into competing companies: "Nothing of the kind is planned even in the remote future."

The "non-discriminatory access" to the pipeline could be forgotten as well: a transport company, fully controlled by Gazprom has been created instead of an independent operator. For accessing its infrastructure the gas monopoly has already demanded $2.4 billion from independent producers. Now that Gazprom has been given "permanent control over transportation," [Vedomosti] is stressing, independent producers are being deprived of their last stimuli for investing in the oil production industry.

Creation of "a super giant OJSC Russian Railways" has been precipitated in the Ministry of Railways, another structure the St. Petersburg team is controlling. As the latest reports have it, creation of the new structure, including the process of handing over the ministry's property into ownership of the newly formed company, will be completed by October.

The newspaper reminds us "that the period of disposal of property is considered the most risky because assets are withdrawn." As reported by [Vedomosti], Railways Minister Gennady Fadeyev has already provided his subordinates with instruction: "Nothing could be disposed; be beware of leasing, etc."

According to the newspaper, the new situation is different from what we saw a month ago, mainly because "the oligarchs who have recently been considered the chief potential heirs of the assets belonging to the Ministry of Railways, now have many other concerns. It would be unjust not to take advantage of the moment."

Information about results of the widely advertised transaction of merging the assets of Tyumen Oil Company with British Petroleum is undoubtedly the news linked with the conflict surrounding YUKOS: as a result, the new Russian-British company TNK-BP has been registered at the Virgin Islands.

It means the process of forming the company (with the total value of $18 billion) will be completed in August, but BP has been unambiguously commenting on its choice of the place of registration: "The British laws we are familiar with are in force on the islands, which enables reducing our risks." This information hardly needs any comments.

Meanwhile, a Kremlin-based source of [Vedomosti] admitted that the place where taxes are paid is the most crucial factor the transaction has for the Russian authorities: "If a company registered at the Virgin Islands becomes the center of profits, this is bad news."

According to [Vedomosti], the government was more frank; an undisclosed White House official noted: "This transaction has no legal flaws, but is very incorrect ethically. Acting such, the company gives the law enforcement agencies extra pleas for laying claims on causes which have no formal relation to the registration."

Boris Berezovsky, who has been the chief opponent to the authorities until lately attempted interfering into the conflict between the power and the oligarchs. With [Kommersant] he owns, Boris Abramovich published a real manifest entitled "A New Redistribution," dealing with the problem "on whereto Putin's regime is leading the country."

Berezovsky opened his letter with a statement that "a creeping anti-constitutional state coup" has been implemented in the country beginning from spring 2000. In the author's opinion, consequences of this coup could be compared with the tragedy, which had occurred in Russia at the start of the 20th century.

In other words, Russia is nearly on the edge of a civil war, Berezovsky is warning. Results of a poll done by ROMIR, in compliance with which 77% of the population are saying that results of privatization must be revised, proves this.

According to the author, this "irresponsible part of our society" simply cannot imagine the aftermaths of a similar action. In this aspect, "President Putin is matching the major part of his nation," Berezovsky remarked.

In the opinion of Boris Abramovich, the most adequate and responsible part of the nation, i.e. the elite must resist this threat. In order to avoid cataclysms, the elite must realize the disaster threatening it, be able to self-organize, "but most importantly - act." Since "inaction always and everywhere gives the authorities a carte-blanche for arbitrary rule."

The London-based exile is ready to prompt which actions must take those who are immediately involved in the events: "Not waiting until the power indulgently consider another your complaint, each line of which conveys cowardice, use one's constitutional right for meetings, demonstrations, pickets."

Civil society, reminds us Berezovsky, not only consists of "clubs of people fond of nature, pets and beer, but primarily civil institutes, which may control the power and be opposed to it by their strict actions." This is, the author stresses, the advantage of democracy in comparison with a totalitarian regime.

Results of the ROMIR's poll do not make it clear who'll participate in actions Berezovsky is proposing: the oligarchs alone (and even the associated forces) won't cope with the organization of "meetings, pickets and demonstrations." Similar "mass actions" would undoubtedly create extremely exotic impression.

As a supplement to his manifest, the disgraced oligarch published "the criminal portrait of V. Putin as reported by various national and foreign media agencies between 1990 and 1999," containing nine items.

As chief editor of the Moscow office of Radio Liberty Elena Rykovtseva explains in [Moskovskiye Vedomosti], the major part of the compromising materials Berezovsky's article contains had been taken from "edition [Stringer] as of 2000, which has small circulation and reputation."

In his bygone publication [Stringer] had referred to newspapers [Moskovsky Komsomolets] and [Versiya]. As it turned out in the verification of these references, both [MK] and [Versiya] had warned their readers when declaring these facts that the materials hadn't been verified and their authenticity had been dubious. Moreover, both editions had used "a document of unknown origin, containing information which had been partially defaming the main personage."

Unlike them [Stringer] had published the entire anonymous "reference," which had appeared in the "ranking offices" after Putin had been appointed head of the Federal Security Service.

"Now that three years have passed Berezovsky copied it from [Stringer] and printed it with [Kommersant]. Isn't is an infamy for a decent newspaper?" writes Elena Rykovtseva. In the author's opinion, "the problem is not that in itself the publication of compromising materials for head of state may arise fury and avenge and, during the election campaign, may make the newspaper the chief object in the exercises of detecting the editions violating the new amendments for the legislation the Central Electoral Commission will be practicing." The dubious quality of information is what really matters: "If the compromising materials were worthwhile, it would be possible to run the risk. However, publication of rotten and unsubstantiated discreditable materials ruins the reputation of this edition."

It is indicative that the editorial office of [Kommersant] considered it necessary to provide this article by its owner with the following prologue: "This material has been published by request of Boris Berezovsky, owner of the publishing house Kommersant. Argumentation, spelling and punctuation have been intact."

This information bomb failed to explode. As Alexander Golts noted in [Yezhenedelny Zhurnal], all representatives of the large business are asking themselves a question traditional for Russiać "What to do?" Berezovsky alone attempted answering it, but his recommendations are unlikely to be in demand.

On the one hand, as has been said before, the major part of the Russian population "has been observing the round-up against the oligarchs with satisfaction, ingenuously hoping to be involved in the dispossession of them which is to follow."

On the other hand, "the dispossessed are not extremely active: "The Russian bourgeoisie has been behaving not as courageous Berezovsky is teaching, but as the mighty Lenin had been saying - hiding its head into the sand, not even attempting to withstand its interests."

Only a few editions mentioned Berezovsky's statement: "Politicians claiming to the role of the mouthpiece of the party of capital are very cautious at criticizing the outrage of the Prosecutor's Office." In view of Alexander Golts, "this all resembles a surrender."

No wonder: as Olga Romanova says in [Vedomosti], the circle of those who have been recently considered untouchables has been narrowing fast: "The oligarchs are like hairs during the spring tide in one of Nekrasov's poems, saving their lives one by one or in small groups at the islands, with the Prosecutor's Office playing the role of Grandfather Mazai and pulling them into a cage." It would be nice if the "hairs" are let free abroad.

Romanova suggests that it would be nice to leave in August: "As a matter of fact, our common guarantor must set out on a long foreign trip, first to Malaysia, which would most likely be accompanied by a time difference and bad mobile communications, the latter sometimes disabling a guarantor to reach a prosecutor on the phone."

As mentioned above, postponing the case of "hairs" until September is unfavorable: a Russia-US summit meeting will begin in addition to the Duma election campaign: "One never knows what embarrassing questions could be asked."

So, we must be in a hurry; for some of us the summer lull is prime time.

(Translated by Kirill Frolov and Andrei Ryabochkin)

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