RA in the WSJ: Russia’s Jailed Bellwether

Tomorrow will mark the fifth anniversary of the arrest of Mikhail Khodorkovsky. Today Robert Amsterdam has an opinion article published in the Wall Street Journal in commemoration. Also see an article published earlier this week about the case by the New York Times. khodorkovskywsj102408.gif

Russia’s Jailed Bellwether A CEO’s fate shows Moscow’s true colors By Robert R. Amsterdam Five years after his arrest on Oct. 25, 2003, Mikhail Khodorkovsky is in a Siberian prison, his eligibility for parole denied by Russian courts. The former Yukos CEO’s Kafkaesque trial, conviction and banishment to the gulag have been accompanied by the rise of a corrupt cadre of state officials who have reshaped the country’s politics and quietly generated enormous personal wealth. Since Mr. Khodorkovsky’s arrest, Russia has been moving away from free-market principles, away from public-sector reforms, and away from the rule of law. Even for those who may have believed the Khodorkovsky case had some basis in law, illusions were dispelled by the inability of the state to engineer a credible trial. Matters were not helped by the state’s fencing of Yukos assets, or by the unconscionable treatment of the accused.

Yet the Kremlin’s impunity when it comes to waging political cases against its perceived opponents and seizing property may not persist. With the global liquidity squeeze, credit crisis and falling oil prices, the Russian stock market has lost two-thirds of its value in the last few months. Capital flight has mounted as political risk assessments go through the roof. All is not well for authoritarian capitalism today.President Dmitry Medvedev has a real challenge before him if he aspires to shift Russia from hubris and antagonism to restraint and cooperation. Warm words and a few large business deals will not mollify the world’s now-entrenched worries about Russian state institutions and the officials running them.The recent war in Georgia may have been a political boon domestically for Mr. Medvedev and Prime Minister Vladimir Putin, but their popularity will be tested in tough economic times. Russians are wondering how the leadership will solve their pressing day-to-day concerns.When Mr. Medvedev spoke in February of a “Four I’s” program — to develop institutions, infrastructure, innovation and investment — many outside observers were heartened by his refreshing candor. The same went for the president’s pronouncements regarding the scourge of “legal nihilism” in Russia and the urgency of combating it. Mr. Medvedev further highlighted corporate raiding and the harmful effects of a high prevalence of state officials on company boards.The president’s words were an admission that Russia could no longer avoid tackling its corrupt public administration and lack of faith in the rule of law. But what’s happened since then? Not enough, at least not yet.Now is the time to build from the pre-Yukos era — the early Putin reforms — to rekindle the movements toward the rule of law and economic reform which were put on ice in 2003. Otherwise, the Medvedev promise will ring hollow.An important first step is freedom for Russia’s political prisoners, including Mr. Khodorkovsky, whose imprisonment continues to command the world’s attention because it is through the Yukos affair that Russia’s current trajectory started.Russian authorities have treated the Khodorkovsky case recklessly, as if the investigation and trial would be beyond public scrutiny. The list of abuses committed by investigators and judicial authorities is so long that it almost precludes discussion of how the Yukos management could have possibly stolen the proceeds of more oil than the company actually produced. The authorities have also played hardball with anyone who dares to support Mr. Khodorkovsky, even locking up one of his lawyers and denying that person treatment for AIDS and cancer. That person is now terminally ill but remains in detention, charged with money laundering, embezzlement and tax evasion.The result is that the Kremlin has, wittingly or not, turned Mr. Khodorkovsky into a bellwether of where Russia is headed. A respected and credible world power cannot keep political prisoners. Until this is understood, Mr. Khodorkovsky’s fate will continue to deliver a stinging indictment of those presently in command in Russia.Mr. Amsterdam, an attorney in London, represents Mikhail Khodorkovsky.