Last Friday, Russian prosecutors asked for a new, 14-year new prison term for the former YUKOS oil company CEO Mikhail Khodorkovsky and his business partner Platon Lebedev. The two are Russia’s most famous political prisoners. They have already spent seven years in jail for alleged tax violations, an accusation most legal expert find spurious.
Mikhail Khodorkovsky, at one point the richest Russian according to Forbes, transformed the formerly state-owned YUKOS into an exemplary western-style corporation, importing Western technology and management. He invited American business executives to run YUKOS, while its stock skyrocketed 4,400 percent in four years. Indeed, YUKOS brought the Russian Treasury billions in taxes.
Khodorkovsky became a leader of modern Russian charity, funding his Open Russia Foundation, which promoted computer literacy and study abroad. He also made donations to the Library of Congress and hobnobbed with policy wonks at an Aspen Institute seminar.
He proposed private pipelines to be constructed to carry oil for shipping to the United States and China—something the Kremlin angrily rejected. But he made his ultimate mistake by publicly accusing Vladimir Putin’s associates of corruption—and supporting the “wrong” politicians.
The punishment was swift—and severe. Supporters of Russian Prime Minister Vladimir Putin opened the 2003 legal case against the independent-minded businessman, taking apart YUKOS. YUKOS stock plummeted and its assets were sold in a fire sale to cover the alleged tax debt while conveniently transferring YUKOS assets to a state-owned company Rosneft below market value. Rosneft is chaired by Igor Sechin, a Putin confidant and deputy Prime Minister.
After Khodorkovsky has already served seven years in a Siberian GULAG, he was slapped with new charges. If found guilty in the second trial, he will face at least seven more years in a labor camp. This is an excessively long-term by Russian standards. Obviously, someone is afraid of Khodorkovsky more than of a homicidal maniac.
Both Khodorkovsky and Lebedev stand accused of embezzling 350 million tons of oil—something that is absurd and physically impossible. The accusation is so bizarre that the current Minister of Trade Victor Khristenko, former Prime Minister Mikhail Kasyanov, former Minister of Economy German Gref, and the former Russian central banker (and former Yukos Chairman of the Board) Victor Gerashchenko testified in court on behalf of the accused.
If this trial were held on merits, conducted by an independent judiciary, without the state pressuring prosecutors and judges to convict, both defendants would have already been released. But this is a Russian political case, and someone wants the defendants to rot in jail.
The current trial will demonstrate whether Russia has changed under President Dmitry Medvedev’s presidency. It probably has not. This trial will determine not only the defendants’ fate, but in a sense, the future of Russia as a modern, law-abiding state.
For Medvedev, release of Khodorkovsky could have signaled his independence and willingness to transform the current corrupt and authoritarian regime, of which he is often a harsh critic. This is a regime in which business competitors and political enemies not only get imprisoned but die in jail, as did the attorney Sergey Magnitsky, on whose behalf and in whose memory the U.S. Congress is considering sanctions against Russian officials. Khodorkovsky’s release could signal the top leadership’s desire to have independent courts and judges in Russia. But don’t hold your breath.
President Medvedev regularly calls for modernization and innovation, for the creation of a “modern” law enforcement system, and an end to corruption in Russia. He even suggests renaming the Soviet-era “militia” and calling it “police.” But rebranding alone will not change a rotten product.
Pardoning or amnestying Khodorkovsky could raise Medvedev’s personal popularity in the West. The U.S. Senate, as well as the parliaments of Germany, Great Britain, Italy, and the European Parliament repeatedly protested the unlawful imprisonment of the Russian businessman, and are likely to continue doing so.
Moreover, the natural resources-exploiting, energy-exporting economy of Russia is reaching its limits—a fact not lost on Russian leaders and experts. For successful growth Russia needs to transition to a post-industrial development model. Medvedev recognizes that his strategy of economic reform depends on talented businessmen like Khodorkovsky. In this context, Khodorkovsky’s release could play a major role in improving Russia’s image, modernizing its the legal system, and attracting foreign investments. It would become a pivotal domestic and foreign policy event.
If, on the other hand, the prosecution’s call for a 14-year sentence for Khodorkovsky and Lebedev is met in full, the hope for change will vanish. A long prison term will mean that little has changed in Russia and that little is going to change in the coming decades. In this case, Khodorkovsky will spend a total of 14 years in prison, and Putin, a total of 24 years at Russia’s helm.
