Former Oil Tycoon Warns West About More Russian Sanctions

Mikhail Khodorkovsky, who spent 10 years in a Russian jail on fraud and tax evasion charges, says further sanctions against Moscow over Ukraine would play into the hands of nationalists trying to isolate Russia.

Speaking to the BBC in Zurich, he urged the west to instead focus on trying to stabilize Ukraine and make it more democratic.

Richard Sakwa is a professor of Russian and European politics at the University of Kent in England, and author of "Putin and the Oligarchs: The Khodorkovsky-Yukos Affair" (excerpt below). He joins Here & Now's Jeremy Hobson to discuss the relationship between Russian President Vladimir Putin and Khodorkovsky, and also how Putin views the world right now.

By Richard Sakwa

Personal Life

At the World Economic Forum in Davos, on 2–5 February 1996, Khodorkovsky overheard the
conversation in which international financier George Soros warned Boris Berezovsky that if the Communists returned to power the liberal economy and democracy would be destroyed. He advised the oligarchs to emigrate. Berezovsky instead joined with his arch-enemy, Gusinsky, to save Yeltsin. Presidential elections were due in June, and it was clear that Yeltsin’s re-election campaign was floundering. Yeltsin enjoyed no more than 4% of support, while Gennady Zyuganov, at the head of the Communist Party of the Russian Federation (KPRF) held 35%. Alexander Korzhakov, Yeltsin’s confidant and powerful bodyguard, and the siloviki called for the Communist Party to be banned and the elections to be cancelled. A fortnight after the Davos meeting Khodorkovsky was one of the group of business and media leaders who went to see Yeltsin and offered not only money but also experienced political strategists. Yeltsin gave one of his famous long pauses, prompting Khodorkovsky to wonder whether ‘the tsar was thinking about whether to send us all to the execution block’. In the event, an ‘analytical group’ was created and Chubais was brought in to mastermind Yeltsin’s re-election.

Uncertain of the outcome, a group of top oligarchs on 27 April 1996 issued the notorious ‘Appeal of the Thirteen’, urging Yeltsin to come to terms with Zyuganov. ‘Society is divided,’ they argued.

The rift that divides us into reds and whites, ours and theirs, runs through Russia’s heart. […] We entrepreneurs of Russia, propose to […] all those in whose hands real power is concentrated that they pool their efforts in searching for a political compromise that can prevent acute conflicts that threaten Russia’s basic interests and its very existence as a state.

Whoever won the election would have to implement policies ‘categorically rejected by a large part of society’, and the ‘mutual repulsion of political forces was so great’ that it could lead to ‘civil war and the break-up of Russia’. The letter warned that for many ‘the word “democracy” has become all but synonymous with an anti-state attitude’, but ‘we cannot allow the great ideas of freedom, civic spirit, justice, law and truth – the main elements of true people’s rule – to be discredited.’ The plan was for Zyuganov to become prime minister with extended powers, while Yeltsin would remain as president as a ‘guarantee of democratic freedoms and human rights’. That was rejected, but the oligarchs made unquantified sums available to Yeltsin’s campaign and were not too concerned about democratic niceties.

The oligarchs thus announced their presence as a political force. Semibankirshchina, or the ‘group of seven bankers’, came to the fore, and by the end of the decade a ‘family’ group around Yeltsin had emerged. While the ‘bureaucratic’ component of Yeltsin’s power system favoured a postponement of the election and the ‘security’ bloc sought outright repression, the ‘oligarchic’ leg in alliance with reformists such as Chubais resolved on a frontal attack on the Communist opposition, in which perhaps a billion dollars were spent. The consequences were not long in coming. As Paul Klebnikov notes, ‘Entering into politics, he [Berezovsky] outdid everyone even here. Having privatised a vast swathe of Russian industry, Berezovsky now privatised the state.’ In a notorious interview Berezovsky claimed that the seven had been responsible for Yeltsin’s re-election and controlled 50% of the Russian economy: ‘We hired Chubais and invested huge sums of money to ensure Yeltsin’s election. Now we have the right to occupy government posts and enjoy the fruits of our victory.’ Their grip on the media was no less tight, controlling 70% of the Moscow press and radio and 80% of national television. Berezovsky put it starkly: ‘If the media had not been free or private, we would not win elections.’ The group saw themselves as ‘an embattled elite pooling their efforts to steer Russia through a difficult transition’.

No less humiliating for the authorities was an interview with Nezavisimaya gazeta in which Khodorkovsky made no bones about the relationship between politics and business: ‘Politics is the most lucrative field of business in Russia. And it will be that way forever. We draw lots in order to pick out person from our milieu for work in power.’ Potanin, head of Onexim Bank, was indeed delegated by the oligarchs to work as first deputy prime minister in charge of the economy from August 1996 until March 1997, and Berezovsky was deputy head of the Security Council from October 1996 until sacked on 4 November 1997. Oligarchs now firmly entered the ranks of the most influential politicians in the country, with Berezovsky between 1997 and 2000 consistently ranking as the top oligarch and in 1998 and 2000 listed as the fourth most influential person in the country. Of all the major oligarchs Khodorkovsky was ranked lowest, in those years placed only 25th and 60th respectively. According to Satter, ‘By 1997 a ruling criminal business oligarchy was in place.’ They included Berezovsky, the head of the LogoVaz car dealership; Potanin; Gusinsky, the head of Most Bank; and ‘Mikhail Khodorkovsky, the head of the Menatep Bank’. The investment auctions and loans-for-shares scheme endowed a small group with an enormous concentration of economic power. They soon flexed their political muscles, provoking critics to suggest that only authoritarian methods could stop them.

Excerpted from the book PUTIN AND THE OLIGARCHS: THE KHORDORKOVSKY-YUKOS AFFAIR by Richard Sakwa. Copyright © 2014 by Richard Sakwa. Reprinted with permission of I.B. Tauris.