Friday, February 09, 2007

Mikhail Khodorkovsky: Victim of the New Soviet Union

On Monday of this week, the Russian Prosecutor General levied new criminal charges against Mikhail Khodorkovsky. The new charges mean it is likely that Khodorkovsky will remain imprisoned at a Siberian labor camp past 2008, when he is currently up for parole. Khodorkovsky has been incarcerated since July 2003 after being charged and then convicted of tax evasion, stealing and sundry similar charges.

What is really going on here?

Russian President Vladimir Putin, a former KGB officer, has been ruthlessly stamping out all forms of opposition. He is re-nationalizing companies and closing down independent television stations and newspapers. He now appoints provincial governors who used to be elected. While he has been in office, more than 40 journalists have been assassinated. Under his watch, none of these crimes has been prosecuted. He is confiscating foreign business interests in Russia, using the pretext of violations of meaningless environmental laws. Such a tactic was used to partially confiscate the $20 billion Sakhalin oil project, after Royal Dutch-Shell had invested billions in the project.

When he was an active KGB officer serving in the Leningrad (now St. Petersburg) district, one can only imagine what crimes Putin committed or witnessed. The recent polonium murder of Alexander Litvinenko in London is an example of the type of KGB-sponsored actions that were frequent in the old Soviet Union and have now been resurrected in the new Russia.

Putin is going out of his way to make sure that a man like Mikhail Khodorkovsky spends more time in the gulag. Why is he such a threat?

Men like Khodorkovsky are a threat to dictators everywhere because they are independent. Khodorkovsky was a double threat to the dictator, a man independent in his thinking and independently wealthy. Khodorkovsky was not just the wealthiest man in Russia at the time of his arrest in 2003, but he was the architect of Yukos, the second largest oil company in Russia. Under his leadership, Yukos became the first large Russian company to report accounting figures using internationally accepted “GAAP” (Generally Accepted Accounting Principles) standards. By doing so, Khodorkovsky raised the standard for other corporations to follow in Russia, a standard that would facilitate modern capital markets and greater foreign investment in Russia. Khodorkovsky brought in Western managers to modernize Yukos’ business practices, including U.S. citizen Steven Theede, who was brought in as Chief Financial Officer of the company, and became its Chief Executive Officer after Khodorkovsky’s arrest.

All of the business steps Khodorkovsky took resulted in Yukos’ oil production growing at a nearly 20% annual rate during the last three years before his arrest and the Russian government's confiscation of Yukos. The proof of his Western managerial style was in these results.

Based on the public information available, Khodorkovsky’s actions are those of a highly competent, intelligent and successful business executive. His rise was a remarkable sign that Russia had changed, that the old Soviet Union was giving way to a new Russia that was more free and more Western than it had ever been before.

One of the charges against Khodorkovsky is that he unfairly acquired the assets that formed the base of Yukos during the corrupt privatizations of the 1990s. This may be true, but it is irrelevant. In a Communist society, no one “owns” the industrial plants, equipment and resources. The state was not the owner; it was the confiscator of property that had been formerly owned by private individuals prior to the Revolution. Such property would lie fallow until men like Khodorkovsky stepped forward to make it valuable. This process is similar to the appropriation of land by the Homesteaders in the United States in the 1800s. Vacant land was occupied by settlers who farmed it, and it became theirs. That was the same status of the property that had been abandoned by the Communists when the Soviet Union collapsed in the early 1990s.

That men such as Khodorkovsky stepped forward to appropriate such property, and make it far more valuable than it had ever been under the Communists, we should all be thankful. By doing so, he created wealth that he enjoyed and all those who did business with him enjoyed. That wealth was created, after having been dissipated by the Communists before. By doing so, he also helped bring the rule of law through modern business practices and accounting standards to Russia.

Stated in simplest terms, the proof of Khodorkovsky’s moral right to the property that formed the base of Yukos is the fact that he made it productive. He was a Homesteader.

Moral leaders in the West have said little about Khodorkovsky’s imprisonment (under horrible conditions, he was recently slashed by a fellow inmate). In the United States, leaders such as President Bush, who himself excoriated American businessmen and imposed punishing new rules on them such as Sarbanes-Oxley, have been incapable of taking a moral stand in support of Khodorkovsky. Instead, Bush, speaking of Putin, utters such grotesque inanities as, “I looked the man [Putin] in the eye. I found him to be very straightforward and trustworthy. // I was able to get a sense of his soul; a man deeply committed to his country and the best interests of his country.” With statements like that backing him up, it is no wonder that Putin feels morally empowered to stamp out the independent minds in Russia.

I wish Mikhail Khodorkovsky well. May justice prevail.


Nicholas Provenzo said...

Thanks for the reporting, Galileo. Your post only adds credence to the fact that while the Soviet Union may have collapsed, Russia itself never truly repudiated authoritarianism.

And one thing that strikes whenever I read something that describes Putin’s various machinations is how our esteemed President looked him in the eyes and got a sense of his soul, and from this soul-gazing came to the conclusion that this ex-KGB officer was a real peach.

We all can make mistakes assessing other people’s character, but good grief, there are mistakes, and then there are mistakes . . .

Galileo Blogs said...

Thanks for your comment, Nick.

As for our dear President, his comment about looking into Putin's soul was quite telling. It is amazing just how many Google hits came up when I typed in "Putin's soul" when I was looking for the exact quote. A lot of other people were also struck by Bush's statement.

I think it is yet another sign of Bush's Christianity. Christianity divorces moral worth from actions on several levels. First, it preaches self-sacrifice, which is impossible to practice. It also says we are all "sinners", regardless of our actions. Then it says that the only thing you have to do to redeem yourself, regardless of your actions, is to make a declaration of belief in Jesus.

So, for a Christian, it is important to attempt to look into people's souls because what is in their soul is more important than their actions. If Bush even gave Putin's KGB resume a minute of thought, he probably quickly forgave him for whatever crimes he committed.

Putin definitely played Bush like a violin. By Putin giving the *appearance* of being reasonable, etc., Bush was only too willing to believe that this was a reflection of Putin's true soul.

The bottom line of all this foolishness is that it makes Bush into an incredible *gullible* President. He is taken for a sucker by Machiavellian Putin, cynical Chirac and, most likely even such inconsequential people as Maliki of Iraq.

Such a foolish and gullible man makes a very dangerous leader of our country.