Moscow's sleepy political summer has been stirred by a Kremlin attack, initiated by President Vladimir Putin's closest aides, on Russia's leading oligarch and the country's richest man -- Michael Khodorkovsky, the principal shareholder of the oil company Yukos. Of course, there is nothing new in such battles. Elements within Russia's political power structure have periodically waged war on the country's business elite -- either to rein in the political ambitions of the oligarchs or to grab a bit of wealth for themselves -- ever since the Soviet collapse.
What is different now is that this war -- a defining feature of the era of former president Boris Yeltsin era -- was supposedly settled by Putin early on in his administration, when he offered the oligarchs a deal: keep your wealth, we won't investigate how you got it, but stay out of politics. Why has that deal apparently collapsed? Equally unclear is why Khodorkovsky, the oligarch who has gone the farthest in making his business modern and transparent, the target of attack?
During Putin's first term, the Kremlin "power structures" (now dominated by former KGB cronies of Putin from St. Petersburg) failed to gain control over the country's key financial and economic institutions. None of the real wealth of Russia has come their way. But this does not explain why they attacked Khodorkovsky rather than some other businessman with a shady past.
One clue as to why they attacked Russia's richest man is the fact that Khodorkovsky is the first oligarch to help the country's liberal parties as opposed to the ruling party of power, to support independent mass media, and to provide money to lawyers and legal assistants. Moreover, they also feared that Khodorkovsky was preparing to enter politics. He was beginning to support the idea of Russia becoming a parliamentary, not a presidential, republic and was gaining influence ahead of this year's Duma elections.
Such activity crossed the line drawn by Putin. The logic of Russia's presidential regime dictates that only the leader is permitted to control political institutions. All other attempts to shape the political atmosphere and influence events, especially by a powerful oligarch, violate this logic. Putin feared that the return of oligarchic political influence would bring back the chaos of Yeltsin's rule. So Khodorkovsky was targeted.
No doubt, Putin is now likely to behave like a peacemaker. He is not interested in reinforcing the power of his Kremlin aides. He also realizes that big business is crucially important for Russia's modernization. He simply wants the oligarchs to stick to their sphere of activity and to leave politics to him.
But the problem won't go away. Today's anti-oligarch war has exposed Putin's failure to deliver the "dictatorship of law" he promised when he took office. The attack on Khodorkovsky clearly demonstrates that prosecutors and courts can readily be manipulated by the politically powerful. That revelation has undermined much of the good Putin has achieved in office, for it has made foreign investors wary once again of doing business in Russia.
Foreign investors aren't alone in worrying. Frightened by the attack on Khodorkovsky, Russian businessmen worry that success will bring harassment from the Kremlin. Some are removing their assets from Russia. Roman Abromovictch, for example, just acquired London's Chelsea football club -- a witty way to join English society, no doubt, but an investment unlikely to offer the kind of financial returns he could make in Russia if his confidence in the country were undented.
This "anti-oligarch" war has not damaged Putin's popular standing because most Russians perceive the oligarchs as alien and corrupt. They object to vast differences in wealth and think large accumulations of it must be the product of theft, not work and risk. The current generation of big business in Russia will be considered illegitimate for a long time.
The oligarchs would help their own cause by becoming more socially active and spending their money on philanthropical pursuits. In fact, most oligarchs have started charities and foundations. But their activities are insignificant, primarily because Russia's megarich tend to be more concerned with their reputations in the West than at home. Worse still, Russia's bureaucracy would likely perceive such activity as a threat, and so spare no effort to hinder Russia's businessmen from civilizing themselves.
Sooner or later Putin will have to choose between the bureaucracy and business. He will hardly want to depend on his siloviki (those in the Kremlin power structures). He understands the worldview of the ex-KGB men in the Kremlin very well and is unlikely to approve of revisiting how property and wealth are divided in Russia. After all, a new division of wealth could occur only in the wake of a revolution that would disturb his hold on power.
Yet Putin knows that he must curtail the political ambitions of the oligarchs if Russian business is to be modernized. Otherwise, they will continue to use the state to generate huge rents for themselves at the cost of distorting the rest of the economy. But neither the Kremlin's power elite, the bureaucracy, nor the oligarchs seem capable of reforming themselves. Each wants to shape the state to serve its interests alone.
So the summer attack on the Russian oligarchs may turn out to be a litmus test that reveals not only Putin's ability to control the oligarchs, but also the retrograde interests of his closest aides. Sadly, in this clash of titans, postcommunist Russia's main values -- liberty and private property -- hardly get a mention.
Lilia Shevtsova is senior associate at the Carnegie Endowment for International Peace. Her latest books include Putin's Russia and Yeltsin's Russia. Myth and Reality.
Copyright: Project Syndicate
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