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November 04, 2003
Khodorkovsky
Posted by jbholston at 10:18 PM

Both Business Week and the NY Times commented in recent days on L'Affaire Khodor. Business Week's main article is sympathetic to Putin, although their editorial (interestingly) is not.

BW:

Khodorkovsky is being punished because he broke the pact that Putin struck with the oligarchs in 2000 soon after he came to power: If the oligarchs steered clear of politics, Putin would allow them to keep the lucrative assets they amassed during the chaotic rule of Boris Yeltsin.

...But before the prosecution of Yukos even started, the government had trouble getting its laws through parliament -- particularly laws that would have raised taxes for oil companies. "It was Khodorkovsky blocking tax proposals in the Duma relating to the oil business that was the final straw," says Christopher Granville, chief strategist at United Financial Group, a Russian investment bank. That, in turn, reflects a more fundamental problem: the excessive wealth and influence of the oligarchs. "This isn't some paranoid KGB fantasy," he says.

The Times piece points out the tight connections Khodorkovsky developed among the power elite in Washington, particular Republicans in power and in business (but not only Republicans);

Mr. Khodorkovsky's steady efforts to win access to other influential Americans have paid off. Last July, he met with Energy Secretary Spencer Abraham to discuss America's oil policy. Former President George H. W. Bush traveled to Russia in September and spoke at a dinner attended by Mr. Khodorkovsky.

...The Carlyle Group, an investment bank that retained the elder Mr. Bush as an adviser until a few weeks ago, has a close business relationship with Mr. Khodorkovsky. Although Mr. Bush was in Russia as a Carlyle representative, the bank said, his visit had nothing to do with oil deals and he did not meet privately with Mr. Khodorkovsky.

Last summer, too, Mr. Khodorkovsky traveled to a meeting of business leaders in Sun Valley, Idaho, as a guest of a former senator, Bill Bradley, a New Jersey Democrat. Mr. Bradley also advises the Open Russia Foundation, a Russian philanthropy based in Britain that is bankrolled by Mr. Khodorkovsky.

Henry Kissinger, secretary of state in the Nixon administration, is on the foundation's board, a position he said he accepted at the invitation of Lord Rothschild, another board member. Mr. Kissinger said he had only met Mr. Khodorkovsky twice, briefly and in a group.

Combined, the two stories reaffirm that this is a late-stage move in a game orchestrated years ago.

Putin agreed to a Faustian bargain with the oligarchs, whereby they could keep the billions they stole during the broken privatization process as long as they steered clear of politics.

That bargain was, I believe, designed not so much to protect Putin as to protect Russia. Putin knew that once the Oligarchs could also buy the government, Russia would devolved to an entirely undemocratic and despotic third world country.

All of which is not a very deeply buried, or distant story. So why have the media promoted the Yukos' line alone?

The articles make clear that this partly because the media have been co-opted by the powerful and wealthy DC-based entities whose allegiance to Yukos etc has been bought over many years.

Once a young Washington Post reporter gets a call from Jim Baker (or whomever) at Carlisle, suggesting that the real story in Russia is the collapse of free markets as Putin chases Oligarchs ... they're not likely to spend much time investigating the roots of this affair.

Particularly when the think tanks -- and Congressional insiders -- on whom they often rely for information are also Khodor clients;

Through Yukos, however, Mr. Khodorkovsky has given handsome sums to American organizations, including a $1 million donation to the Library of Congress and a $500,000 pledge to the Carnegie Endowment for International Peace, a think tank that is home to some of the most often quoted analysts of Russian affairs.

Carnegie notes that Yukos's contributions amount to less than 3 percent of its annual budget. Anders Aslund, a Russia expert at the foundation who has criticized the Russian government in its standoff with Mr. Khodorkovsky, said Yukos's backing is disclosed on the Carnegie Web site. He added that while the donations are significant, they do not affect his assessment of Mr. Khodorkovsky.

The American Enterprise Institute, another Washington think tank that has weighed in on Mr. Khodorkovsky's behalf, declined to address financial dealings with Yukos, citing the institute's policy not to comment on such matters.

Fiona Hill, a Russia analyst at the Brookings Institution, said many think tanks, needing money for Russia studies programs, had courted Mr. Khodorkovsky zealously. She said that Brookings, however, decided not to accept his donations.

"The think tanks were all joking about who wanted to take money to fund the Mikhail Khodorkovsky chair of good corporate governance," Ms. Hill said. "There were still questions about his business dealings and whether he really made the transition from being a robber baron and now wore a white hat."

Others in Washington said that influence is not so easily purchased and that Mr. Khodorkovsky had traction in the United States because of an authentic commitment to corporate and political change in Russia.

"What distinguishes Khodorkovsky is that he recognized that the rule of law was necessary to legitimize his company," said Steve Biegun, who is a national security specialist on the staff of Senator Bill Frist of Tennessee, the Republican leader, and has met several times with Mr. Khodorkovsky.


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