Time to Turn West and Play by the Rules

Stephen Schmida, Moscow regional director of the Eurasia Foundation, July 18, 2003

It is a sight that a few years ago would have been unthinkable: liberal human-rights and civil-society activists publicly defending a Russian oligarch against attacks on his business empire. On Wednesday, more than a dozen prominent Moscow NGO leaders and journalists issued a public statement regarding the Yukos scandal, reminding the government that "independence of business and freedom of information" are fundamental principles of democracy. In Russia, this is the equivalent of Amnesty International and Human Rights Watch coming to the defense of Bill Gates and Microsoft during the U.S. anti-trust trial in the 1990s. So why are human-rights and NGO activists taking such an interest in the fate of Russia's most successful company -- an entity that hardly needs the meager protection that these groups can provide?

A cynic might point to enlightened self-interest. Many NGOs, including Eurasia Foundation where I work, receive support from Yukos or its associated foundation, Open Russia. However, most of the groups that signed the appeal do not receive any funding from Yukos and many that do receive support from Yukos are absent. Thus, there must be more to this than protecting a source of funding.

Although few would defend the corrupt privatization processes of the mid-'90s that created Yukos, it seems that many in the liberal elite feel an allegiance toward Yukos and similar companies that have become successful by the adoption of Western, transparent practices. The rise in Yukos stock value shows that if institutions truly adopted international standards instead of merely mimicking them, then Russia could grow at a rapid pace and join the West.

Thus, on a societal level, the current crisis surrounding Yukos and those elements attacking it is really only the latest iteration of Russia's age-old dilemma: Is Russia part of the West or not? On the one hand, there are the elements attacking Yukos. They clearly believe in the arbitrary use of state power, including the judiciary, as an instrument for achieving political goals. This is historically how power has been used and abused in Russia. On the other hand, there is Yukos, arguing for fair and equal enforcement of the law. This is how state power is used in the West. Viewed in this context, it is only natural that NGO leaders and other members of the liberal elite ally themselves with Yukos.

The real irony of this conflict is that President Vladimir Putin and Yukos CEO Mikhail Khodorkovsky appear to share very similar dreams for Russia. Both have articulated clear visions for Russia as a Western country, integrated into the world economy and playing an important and constructive role in world affairs. Since they are working toward the same important goal, Putin should heed the appeal of the NGOs and move to stop the arbitrary attack on Yukos. Such a decisive act will send a strong signal that Russia is taking firm steps toward the community of Western nations where it belongs.

See: http://www.themoscowtimes.com/stories/2003/07/18/006.html

"Fear of property repatriation has consumed the Russian elite like Mikhail Khodorkovsky, owner of Yukos Oil. Khodorkovsky spent the weekend hobnobbing with businessmen like Bill Gates at an exclusive conference in Idaho."

See also: Moscow tells rich Russians: Don't worry - http://www.iht.com/articles/103240.html

Mikhail Khodorkovsky

Ranked 1st among the World's Wealthiest under 40 years of age

Wealth: $7.2 billion

Age: 39

Company: Yukos

Title: CEO

Country: Russia

"He muscled his Western partners aside in the late 1990s to gain control over Yukos, then bulked it up into Russia's second-largest oil company."

Fortune - http://www.fortune.com/fortune/40under40/global/snapshot/0,15802,1,00.html