Yukos Case a Paradigm for the Wrong Approach

By Vladimir Gryaznevich

It's the first anniversary of Mikhail Khodorkovsky being put behind bars on pre-trial detention.

His imprisonment has become a symbol of contemporary Russia not only because of his exclusive role as Political Prisoner No. 1, but also because his example is a highly visible case of Kremlin policy's style - using power and strength to achieve its goals.

The officially declared goals are not all that important - any regime promises stability and prosperity. The differences lie in the means employed to achieve them. As is well known from world history, including Russia's history, the means in many cases dictate the end result that is achieved - it just all depends on the wishes of the higher strategists. The means employed by the Kremlin in Khodorkovsky's case over the last year give little cause for optimism. And in addition, they suggest to the regional administrations that they adopt similar faulty methods. The administration of St. Petersburg has not been untouched by this.

One of the most negative consequences for Russia of the "Khodorkovsky affair" has been the rapid degradation of the court system. It has reached the point where a few days ago Valery Zorkin, the head of the Constitutional Court, said that court reform had failed. In his opinion, it has led to total corruption of judges and their dependence on the government.

By the way, President Vladimir Putin too, de facto acknowledged this during his public appearance on the events in Beslan. Only he did not name the reasons behind such a rapid degradation of this third arm of power. But the reason is simple: "a fish begins to stink from the head." Seeing how in Khodorkovsky's case the General Prosecutor's Office fulfills the orders of the Kremlin to install 'the dictatorship of the law,' other bureaucrats and judges interpret this as an indication that anything is allowed and act accordingly.

Bureaucrats in the regions have already ceased to treat judges as an independent branch of power. In Smolny there was sincere incomprehension when journalists and several deputies of the city's Legislative Assembly protested about the annexing of the institution of justices of the peace to executive power. "You see it will be simpler to support justices of the peace by providing them with all they need," they said as they decided to create a department within the administration for the justices of the peace.

The foundations of the Russian economy are harmed not only by the destruction of independent judges but also by facilitating the directly dependent relationship between business and the administration. The cynicism of the authorities as they bankrupt and seize Yukos completely is just symptomatic of their whole attitude, and we can especially see it in the shameful handling of Yuganskneftegaz.

Yevgeny Yasin was right to say in Yezhenedelny Zhurnal that "One year after the arrest of Mikhail Khodorkovsky the economic atmosphere of the country has seriously changed for the worst. With the circle of trust reduced, leading bureaucrats and entrepreneurs eye each other with suspicion. The latter, making themselves appear friendly, show readiness to work in partnership on projects of social responsibility, but do not intend to invest large amounts. The risks have grown. The proof of this is the renewed outflow of capital." The large foreign companies behave much braver (certain that if in trouble, they will be protected by their governments), and they continue to invest in Russia. But you can't base a whole country's economy on them. This is not to mention the multi-party political system. How can we speak of opposition parties, when, according to Irina Khakamada, entrepreneurs are afraid to finance parties other than those loyal to the Kremlin for fear of losing their businesses.

The relationship between business and the administration is getting worse not only at the federal level, but also at the regional one. The St. Petersburg administration, seduced (or forced) by the federal trend, risks crossing the line in rationally assisting business. If it is just about justifiable for gas station operators to pay their taxes in St. Petersburg (which Governor Valentina Mativiyenko made the foundation of her 'social partnership between business and government' policy), the standardization of bread prices raises some doubts.

Current plans by Smolny to eliminate trading points at bus stops seems to be nothing less than crude arbitrariness, not based on any convincing analysis that it will benefit either the city or the citizens. The bureaucrats' arguments for their decision just don't stand up to criticism. And all this is going on after Smolny said it is taking steps to improve support for small businesses. Just one of these steps will do so much harm to entrepreneurs that no support program will be able to compensate.

I have to again agree with Yasin: "Putin's proposal [regarding the appointment of governors] of Sept. 13 completes the picture in putting the definitive touch to the way the elite intends to rule. A prosperous Russia as a civilized democratic country will not develop from this, even if the authors are certain that it will. They just don't have the imagination to make sure of it."

Our imagination draws a sorry picture. The oil factor will soon run out of steam and then no power vertical will be able to help Russia. Economic growth cannot occur in conditions when the government behaves like a greedy knight - fighting inflation not by stimulating production but by reducing the amount of money in circulation. And entrepreneurs fear the security services more than they fear their competitors.

Vladimir Gryaznevich is a political analyst with Expert Severo-Zapad magazine. His comment was first broadcast on Ekho Moskvy in St. Petersburg on Friday.

(From The St Petersburg Times, 1.11.04)