If you believe what you are told about Russia in virtually all the world media at this moment, President Vladimir Putin is an isolated savage fighting a last-ditch battle against the forces of advancing civilization, out¬numbered, out¬gunned and doomed. If Putin — and a handful of his advisors — represent the last of the Mohicans, then who exactly are the advancing redcoats, and are they the civilizing force we’ve been told they are?
So far, Mikhail Khodorkovsky, the chief shareholder and CEO of oil company Yukos, has positioned himself in the domestic and foreign media as the force of civilization that Russia badly needs. Much of Prime Minister Mikhail Kasyanov’s cabinet has allied itself with him. It’s peculiar then that,unlike the redcoats of the original Fennimore Cooper story of the American Indians versus the British and French invaders, this Russian claims that it is in his country’s interest that he should sell effective control of one of Russia’s largest oil assets to an Americar oil company.
It is stranger even that ExxonMobil should believe Khodorkovsky when he told them to visit Kasyanov to ask if he would approve such a deal, the value of which is roughly estimated to be about $25 billion. Khodorkovsky also claims that he received Putin’s approval for a sale to an American oil company. That Putin has changed his mind since then is obvious. But why would ExxonMobil go to Kasyanov if it already understood that Putin was the man in charge?
The answer is that Khodorkovsky and his mostly American advisors believe they can lay siege to the Kremlin and force Putin to surrender if they can demonstrate — mostly via the press, but also through fireside chats with the likes of Henry Kissinger, whom Putin met in New York — that there is no support for Putin’s opposition to Yukos. Khodorkovsky is figuring that the Americans, the media and the Russian politicians he has on retainer are enough to topple Putin. Although the Kremlin walls are thick ones, that’s the firepower the Yukos redcoats are betting on.
And so, last week Khodorkovsky stoked speculation on the Russian stock market and fed the ever-obliging Financial Times the line tha the ExxonMobil deal was only a whisker away. Khodorkovsky’s minions misread Putin’s remarks to the New York Times in an interview published on Oct. 6 and tried to cast last week’s police raids on Yukos as a sign that Putin was close to surrender. Khodorkovsky has been buying press coverage for so long, he’s forgotten that everyone in Russia — except himself — believes everything they read to be false.
What Putin said was clear: “we have a category of people who have become billionaires overnight, as we say. The state appointed them as billionaires.” The corollary was that the state would decide what is to happen to them next, not the media, which — Putin added — have been “subjugated — in the same way that the oligarchs behaved with natural resources.” Asked specifically what he intended to do about Khodorkovsky’s proposed sale to ExxonMobil, Putin drew the distinction between foreign investment in new oil projects and foreign shareholding control of Russian oil assets. If he was the last of the Mohicans, this was no forked tongue — he was speaking confidently and categorically. He was reminding Khodorkovsky that he, like Mikhail Fridman and German Khan of Tyumen Oil Co. and Abramovich of Sibneft, have failed to invest in long-term oil prospecting or new oilfield production outside the areas that were developed by the Soviet state. That task has been left for international companies to undertake, while the Russian oligarchs awarded themselves huge dividends and leveraged their companies with mounting debt. The state has so far refrained from taxing that dividend outflow as most other European and American governments do — through capital-gains or dividend-remittance taxes. Putin knows that he doesn’t have a single minister in the cabinet, and certainly not a prime minister, or even a presidential chief of staff, who would countenance such proposals and who can be trusted not to betray the president’s orders. At least, not for the time being.
And so, all Putin has been able to do is to pursue his policy with the only means available to him. If it takes a prosecutor and a policeman to inform Yukos, ExxonMobil and the world that, in Russia, as everywhere else in the civilized world, it will be the government that must decide on what terms Russian natural-resource assets can be swapped, pledged or sold, then that’s who must deliver the message.
“We favor foreign capital involvement in Russia’s economy,” Putin told his U.S. interviewer. “ExxonMobil is operating in the Far East, in Sakhalin, it is involved in investing a lot of money there, and we will support their further activities there. As regards purchasing part of the Yukos company, again this is a corporate matter, but once again we are talking about a possible major deal here, and I think it would be the right thing to do to have preliminary consultations with the Russian government on this matter.”
Only a fool would imagine that when Putin spoke of the government, he meant Kasyanov.
And so, when Putin chose to speak next on the same subject — at the Yekaterinburg summit meeting with German Chancellor Gerhard Schroeder on Oct. 9 — Putin was addressing all the fools. According to a wire-service report, “the president stressed that the gas pipeline system of the Russian Federation was ‘the offspring of the Soviet Union,’ and only Russia could ‘maintain it in working condition, even regarding its parts outside the country.”We will not divide Gazprom,’ Putin said. He added that the European Commission should have no illusions on this account. ‘In the gas sphere, they will have to deal with the state,’ the president stressed.”
What Putin said about the gas sphere applies no less forcibly to the oil and the mining spheres, to Yukos, Norilsk Nickel, Russian Aluminum and Siberian Ural Aluminum; to Khodorkovsky, Fridman, Vladimir Potanin, Oleg Deripaska and Victor Vekselberg.
This is not surrender talk from the last of the Mohicans.
However, it is a disgrace and shame to Western media like the Financial Times and of virtually all the Russian media, the Russian parliament and Kasyanov’s cabinet that Putin has been made to appear to be waging this fight for a national-resource and investment policy, virtually unsupported and apparently alone. If the truth were to be known, Putin has been getting the support and technical advice he needs from those who are not so vain or corrupt that they want to disclose their names. Khodorkovsky has bought the silence of the Communist Party and of others in the parliamentary election race who might have debated the resource-policy issues as they deserve to be. But the Kremlin knows that there is a broad and deep popular resentment against the oligarchs that will favor the policy Putin has been maintaining in recent weeks. He knows the economics of this resource policy have been tested and proven from Japan and South Korea to France, the United Kingdom, even California. Whatever lineup popular Russian resentment produces in the new State Duma will not affect the fact that, after the presidential election next spring, Putin will be the government, and Khodorkovsky will have lost.
Thus, there is no point now in Putin or his trusted circle of advisors responding directly to Khodorkovsky’s publicity campaign. Whoever will be stronger after the election, he won’t be. And when that is clear, the Duma deputies for whom Yukos has paid will turn tail.