How Did the Khodorkovsky's Case Change Russia?

WE FEARED THAT THE STATE WOULD BE TOO WEAK TO FIGHT OLIGARCHS: IT HAPPENED

Iosif Diskin, Co-Chairman of the National Strategy Council, one of the authors of the report "The State and Oligarchy" (2003): In fact, we showed that Russia entered the model of development we called "oligarchic modernization" even before "The State and Oligarchy". The main flaw of the oligarchic modernization is well-known. It generates weak states and weak state institutions.
We feared then that the state would be too weak to fight oligarchs. It happened. On the one hand, the YUKOS affair was correct: tax evasion, eagerness to take over the Duma and other state institutions, essentially to change the arrangement of forces in the country. All of that is very dangerous. Putting this
problem into the center of political dialogue and political struggle prevented it. From this point of view, our report accomplished its mission.
In our new report titled "Russian Economy, State, and Business" we make an emphasis on the failure of the state - when it did away with oligarchs - to draw the necessary conclusions. It did not become the conceptual leader, it ran the YUKOS affair in the manner that did not win it businesses' trust, that did not up the role of the law or trust in it. It merely left most businesses disoriented and confused and scared. And scared businesses are not a reliable partner for the state.

Yevgeny Yasin of the Supreme School of Economics: Opinions differ of course but the YUKOS affair did change the relations between the state and businesses. No matter how often we are told that this is an isolated episode, all businessmen regard it as a conflict. I'm not saying of course that businesses will call it a
conflict in public. It is not their style. Businesses will fade into the grey zone, keep away from the spotlight. It means a change in the trajectory of development of the national economy.

Liliya Shevtsova of the Moscow Carnegie Center: The YUKOS affair became a crossroads that determined the relations between businesses and the regime and, more importantly, direction of evolution of Russian regime. There were no doubts that oligarchic capitalism should be left behind. It was necessary to set up restrictions for development of the market and for businesses' attempts to privatize the state. And yet, the problem should have been solved through betterment of courts or development of civil society or else through transformation of the executive branch of the government into an arbiter setting the rules of the game. The regime chose laws of the underworld to supremacy of the law.
The blow at YUKOS neutralized business community as a political force an encouraged super centralization of power. Abolition of gubernatorial elections and the weakening of federalism were expected steps. The problem is as follows: the
more resources the leader concentrates, the more he has to share with his inner circle increasing his dependence on it. Moreover, the president is forced to waste his influence into covering up shortcomings and mistakes of the power vertical he himself built.
It follows that the stronger centralization is, the weaker the leadership becomes. The more omnipotent the regime is, the weaker it becomes.
The anti-oligarchic revolution put into motion by the YUKOS affair does not lead to elimination of the oligarchic vector at all. This is another paradox. In fact, the connection between the state apparatus and capitals becomes stronger - hence representatives of the presidential administration in the top management of the leading companies. The process leads to appearance of oligarchic bureaucrats who are not responsible for any assets but who control finances. Like Berezovsky who made use of assets without being their owner. But the oligarchic bureaucracy generates the logic that will work against it: undermining the already weak institution of private property, it helps the future ruling team to consolidate its positions to do away with the existing class of bureaucratic owners. The blow at
YUKOS became the first chord in the process of redistribution and self-reproduction of the political regime. There is only one conclusion: the presidential power is a cover for appearance of a system of oligarchic-bureaucratic dominance that dooms the country to stagnation and restricts the president's own modernization potential.

Igor Yurgens, Vice President of the Russian Union of Businessmen and Entrepreneurs: The events in the country have developed fast indeed since Mikhail Khodorkovsky's arrest. Russia began a rapid transformation from liberal democracy into state capitalism. I do not know what it will lead to but I know that using the slogans of protection of the poor, war on terrorism, and fortification of the power vertical the state is actually changing the country. Even though it does not admit it. Take the conflict in the government, for example. Liberal ministers Herman Gref and Aleksei Kudrin on the one hand and "conservative" Prime Minister Mikhail Fradkov are in a conflict...

Translated by A. Ignatkin

(Russian original from Izvestia, English text taken from The Johnson's Russia List, 26.10.2004)