Monday, May 3, 2010

Putin's fight for contol of Russia's oil

http://www.epolitix.com/latestnews/article-detail/newsarticle/putins-fight-for-contol-of-russias-oil

Tony Grew

In October 2003, troops carrying machine guns boarded Russian oligarch Mikhael Khodorkovsky's plane on the runway of a Siberian airfield.

Kordokovsky, the richest man in Russia, was the owner of Yukos, at the time the country's biggest oil firm.

Within hours he was hauled back to Moscow wearing handcuffs and a black canvas hood over his head.

Vladimir Putin had flexed his political might and changed the political course of Russia.

BBC journalist and Russia expert Martin Sixsmith's book, Putin's Oil, is a vivid account of what led to Khodorkovsky's arrest, its dramatic aftermath and far-reaching consequences.

ePolitix.com: I was expecting your book to be somewhat dry and academic – in fact it reminded me of a Tom Clancy novel.

Martin Sixsmith: I was interested in the human clash between these two men, Putin and Khordokovsky, rather than the nitty-gritty of the financial background.

It is also a clash between two ways of seeing Russia and its future.

From 1990 they had ten years of trying to be like us – it didn't work.

That is when the oligarchs got very rich.

In 2000 the country was nearly bankrupt and there was ethnic violence and disorder on the streets and a few people getting very rich.

In 2000 they changed their minds and have gone in the opposite direction, which is a centrally-governed state with a very strict, harsh authority in Moscow.

In 1991 when Communism ended you were in Russia as a reporter. Were people hopeful they could change Russia and was their lack of experience of capitalism the reason they ended up in such dire straits?

The brief answer is yes and yes. After 74 years of Communism people were fed up with it. It was an awful place. The guys who were in charge were pretty young, Western-leaning, liberal and spoke English with American accents.

They said they could make things better and the people went along with it, they did not really know what capitalism was, but it was different.

McDonalds had opened in Moscow, they liked it, they liked the hamburgers but could not afford them. Yeltsin and his guys, who I knew and kind of liked, they were very well-intentioned.

The West has a lot to answer for because we sent over these hard-nosed economists, who said to Yeltsin, 'you have a very small window and if you do not change to capitalism overnight the Communists are going to come back and you will be strung up'.

Yeltsin was not a man for the detail so he thought 'OK'. They introduced this barmy system where they liberalised prices, which then shot up.

Everybody got made redundant, massive factories were closed down and the whole thing just imploded.

The West pushed them down this road and then did not give them the help to get out of it.

By 1996 Yeltsin has to go to the oligarchs and ask them to bail him out, otherwise he said he would lose the election and the Communists would be back.

The oligarchs gave him the money but with conditions attached.

Where do people like Khordokovsky and the other oligarchs come from in a Communist system?

These are extremely bright guys, seven or eight guys who at one point claimed they owned one quarter of Russia's economy, and they did.

Most of them were wheeler-dealers, slightly on the edge of the legitimate economy under Communism.

Most of them Jewish, actually. Khordokovsky was atypical because he was a young Communist. He later claimed he joined on purpose because he would need the contacts to make a big success of himself.

So by 1996 they owned all the newspapers and TV stations, so when Yeltsin was in trouble they asked for access to the crown jewels of the economy – the energy sector, the metals sector, distribution, transport. Up until then the Communists had blocked all that.

Yeltsin was in such a pickle in 1996 he just signed on the dotted line and he was incredibly re-elected. It was not a rigged election but it was amazing how he turned it round. He had the press and lots of money, of course.

Later, when Putin comes in, he puts pressure on the oligarchs. What did he want, was he just an old-style Communist wanting to renationalise everything?

No, he was not, but he recognised the country was falling apart and something had to be done pretty quickly.

He had learned the lesson of history – for the last thousand years Russia has been an autocracy based in Moscow.

They have had brief experiments with reform and they have all gone wrong. It was always a terrible disaster when they tried to become like us.

Putin sought to restore order to the economy and turn it around, and part of that was to try and look at the deals done by Yeltsin with these very powerful oligarchs.

He sat down with them and said 'you and I know this was a bit dodgy, but I do not want to tear it all apart, my aim is to improve the well-being of the country'.

Putin attempted a deal where they would keep out of politics, and they had been very influential over Yeltsin and expected to do the same with Putin, which did not happen.

Most said OK. Berezovsky was furious, he thought of Putin as his creation, so he got out.

Berezovsky continued to finance political parties. There was a moment on national TV where he waved his finger at Putin, which is just not done in Russia.

Of course after lots of clashes with Putin, Berezovsky ended up fleeing to London, claiming political asylum here in 2001. Why do these Russian billionaires come to London?

It is interesting because after the Russian Revolution everyone fled to Paris. Now it is London - it is partly because the British government has a fairly relaxed asylum policy, and they feel safe here.

They feel that the education system is good and London is accessible to get back to Russia. But a lot of them have gone to the US or Israel.

There is a brilliant moment in the book where you describe the arrest of Khordokovsky at an airport.

Well that was a very Russian thing for Putin to do, not only arrest him but show we are arresting him, show who is the boss, we are the state.

Will he ever be released from prison?

The received opinion is that he is going to go down for another 20 years, I think there is a possibility he could be released, because Medvedev (the current President of Russia), who is a lawyer himself, keeps saying we need a legal system that can be respected.

But it would be a political decision as well. It is not absolutely clear he is innocent!

It is not a terrible thing he might go to jail. Of course he was selected for this treatment and others were not, so it is selective justice.

Putin puts forward an image of the semi-naked strongman, not something our politicians would do. Does that appeal to the Russian mind set?

Russian history will judge him extremely well, in contrast with Yeltsin and Gorbachev, who are hated.

Putin is popular because if your country is falling apart, there is nothing to eat, the lights go out at 10pm, you are not going to be happy about it.

He has restored order and he is a strong man, the image of him on horseback is right.

He has got the economy back on its feet, you do not get shot in the street like you did under Yeltsin.

His opponents may see his actions as those of a tyrant, but the Russians think he did the right thing.

Russia now has its oil and gas resources back under its control. That has allowed Putin the political clout he needed on the international stage and he has restored order.

Russians like Putin because he is strong, he is not drunk every night like his predecessor, and I saw Yeltsin, he was like that, he stank of vodka. They want someone who does not drink, is physically strong.

Do the Russians have an inferiority complex and think we do not respect them enough?

I would say it is more a fear of vulnerability, if you look at the last thousand years they have been invaded from every side you can imagine.

In the 13th century they were invaded by the Mongols who stayed around for 250 years and set back their development for a quarter of a millennium.

That deep-seated fear of foreigners is still there.

The funny thing about Russia is we think of them as tough guys, strutting on the international stage, with menacing rockets.

They do not see it like that, they see it as having to remain vigilant.

Finally, you worked for Labour ministers from 1997 to 2002. Would you go back if they asked you now?

It would depend who the minister is. I worked for a range of ministers over those years, from the awful to the very, very good.

Are you going to name names?

Well the awful one was Stephen Byers, a disaster for himself and the Labour party. Then there is a whole string of good ministers. I worked with Frank Field, Harriet Harman and most of all Alistair Darling.

He is a man who you would trust with your mortgage. He may be a bit dull, Scots Presbyterian but he is a man with great integrity and he is not in it for himself but for the good of the country.

He is a man who believes what he says and he sometimes says things that get him into trouble, but you can trust him.

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