RUSSIA: What does arrest of billionaire signify?

Issue 

BY DEIRDRE GRISWOLD

The richest person in Russia, Mikhail Khodorkovsky, has been arrested at gunpoint and sits in jail. Some US$14 billion worth of stocks he held in Yukos Oil — 44% of all shares in the company — were initially frozen by government prosecutors. The government of President Vladimir Putin has charged him with fraud, forgery and tax evasion dating from 1994 to 2001 — roughly the period in which he evolved from being a moderately rich man to becoming the biggest oligarch in Russia.

The US capitalist ruling class and its government, which have had a close relationship with Khodorkovsky, have been interceding on his behalf while at the same time not wanting to damage their relationship with Putin.

The October 31 Wall Street Journal reported that "a senior Bush administration official placed a call to a counterpart in Moscow to inquire about the case earlier this week. Yesterday, a Yukos representative met at the White House with an official of the National Security Council...

"The US Embassy in Moscow has had some strong words about Mr Khodorkovsky's jailing. But until now the White House has been eager to avoid public criticism of Mr Putin... President Bush values his personal relationship with the Russian leader. The administration also badly needs Russian support for its efforts to pressure North Korea and Iran to abandon their nuclear ambitions."

The Journal discussed other factors that were holding Washington back. "Before [October 30], Washington officials said they weren't sure if the jailing was a solitary, albeit politically motivated event, or a more serious assault on Russian capitalism...

"'It raises a lot of worries that weren't there 48 hours ago', a US official said. 'But you still have to think about the whole relationship'."

US oil interests

Khodorkovsky had cultivated relations with top members of the US oil-banking-government cabal. An article in the November 1 New York Times entitled "How Russian oil tycoon courted friends in US" says he met last summer with energy secretary Spencer Abraham; was at a dinner in Russia in September with former president George Bush senior; was close with the Carlyle Group, which had retained Bush senior as an advisor until a few weeks ago; has been a Sun Valley guest of former New Jersey senator Bill Bradley, who advises the Open Russia Foundation, funded by Khodorkovsky; put former secretary of state Henry Kissinger on the board of the foundation; and has given large donations to the Carnegie Endowment for International Peace and the American Enterprise Institute.

Yukos Oil had been in talks with ExxonMobil, which was reported to be considering buying a 40% stake in the company that could have cost as much as $20 billion, according to the October 31 Wall Street Journal. ChevronTexaco is also reported to have been discussing making a major investment in Russian oil and gas through Yukos.

Now all of this is on hold. The giant US and British oil monopolies are waiting to see if another shoe will drop.

Khodorkovsky is the personification of the free-wheeling capitalists who became super-rich almost overnight with the collapse of the Soviet Union. Their immense wealth was stolen directly from the Soviet people, who had been the owners of the USSR's natural resources and means of production.

When the industries, the mines, the oil wells, and the rest of the economy were opened up for privatisation, who wound up in possession of it all? Not the workers and farmers, who had been promised a fair share of the wealth in this new capitalist "democracy".

Through every type of manipulation and fraud, the working people, the creators of all the wealth, were dispossessed and a handful of super-rich emerged in control of vast fortunes. Many of them were bankrolled from abroad. Yukos was the Russian stock most widely held among foreign investors. Khodorkovsky was the biggest, and is now the sixth, "oligarch" to have been taken down.

Weak capitalist state

Khodorkovsky and the other billionaires who have fallen were not pulled down by a workers' uprising. The state that has moved against them came to power through a counter-revolution. But it is a state that has enormous contradictions. It is enforcing capitalist property rights every day, and in that sense is a bourgeois state. But the Russian bourgeoisie has always been weak in relation to Western imperialism — one of the reasons the workers and peasants were able to carry out a revolution in 1917.

Once the workers' state and planned economy were demolished, Russia, as industrialised as it had become under the Soviet system, was in danger of being overrun and turned into a colony of Western monopoly capital.

Conditions of life for the people worsened catastrophically. Whatever hope the masses may have had for a better life was completely shattered. Naked, vicious capitalism destroyed their job security, wrecked their medical system, forced women into prostitution and young people to go abroad for jobs, and threatened to sell off their natural resources to the highest bidder.

The process of capital investment from abroad to take over Russia's resources, which was cautious at first, reached a gallop. "In the first half of this year", wrote the October 31 Wall Street Journal, "Russia reported a net inflow of capital for the first time since the collapse of the Soviet Union." But then the Putin government became alarmed. "After the Yukos investigations began this summer, that trend reversed, with more than $7 billion leaving the country in the third quarter."

Some reports in Russian and US newspapers link the Putin administration to another group of business people, rivals of Yukos who are centred in Petersburg. Their connections appear to be more to areas of energy exploitation that are still state-owned, like the pipelines that carry the oil, not to ports for export, but to industrial centres for Russia's use. This grouping, however, also has many connections to US and European oil companies.

The oil imperialists of the US and Britain have a century of experience in dealing with bourgeois governments in countries that are trying to retain some independence. They know when to wheel and deal, when to flatter and when to threaten. But they are very nervous about what could happen down the road in Russia if there is no capitalist stability.

On September 24, an article by Dmitry Slobodanuk in Pravda reporting on a US-Russian energy summit in St. Petersburg concluded with this warning: "During the Russian-American energy summit the USA was also warned that the last resort may be used: it was said that the natural resources may be nationalised and all extracting companies will thus become sub-contractors of the government. One of the Russian experts say[s] that Vladimir Putin is deliberately running high political risks as he understands that America's support will help him crush the oligarch elite once and for all and make his authority successive. However, it should be mentioned here that Vladimir Putin will have to do it even if he doesn't win approval of George W. Bush. The game is already on and the stakes are really very high."

That was confirmed in the October 31 Wall Street Journal. "Most foreign investors won't read past the headlines and will see the renationalisation of Russia, which is everyone's worst fear", commented William Browder, managing director of Hermitage Capital Management in Moscow, on Khodorkovsky's arrest.

It's an even greater fear among Russia's robber barons, who know how they are regarded by working people. "'So far, this is just happening with Yukos, but it's a trend, and without a doubt, it will continue', said one powerful Russian businessman. 'The thing that we forget', he added, is that 'we have a Communist populace'", reported the November 1 New York Times.

[From Workers World, weekly paper of the US Workers World Party. Visit .]

From Green Left Weekly, November 19, 2003.
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