Russia

At home, Putin emphasized the importance of the rule of law, encouraged property-ownership, sponsored legislation facilitating the purchase and sale of land, but set his face against what he saw as the abuse of press freedom. When the media magnate Vladimir Gusinskii refused to suppress lampoons of Putin appearing in his papers, he was pursued; when he fled to Greece, extradition proceeding were instituted on the grounds that he had committed fraud. The President, Russia’s representative figure, was not considered to be a suitable subject for mockery in Russia’s present sensitive state.

In 2001, 28 per cent of Russia’s budget had to be earmarked for debt-repayment. Recovery from the disastrous Yeltsin decade was slow, but at least it had begun. In 2002 both GNP and the balance-of-payments situation improved. Foreign investment was also rising and 700 American companies were doing business in Russia, though its best trading partners were Germany, India, Japan, which consumed enormous quantities of Russian-caught fish, and Cyprus. However, the country’s demographic decline was giving rise to concern. The population had fallen to 143 million and was still in decline. Moreover, part of the decline was associated with a ‘brain drain’. This was doubly damaging because it lost the country much expertise as well as energetic people in their prime.

There were periodic reminders that Russia had lost its superpower status. The Vatican decided the time was ripe to take a higher profile in Russia, and four new dioceses were created there; Ukraine defied its larger neighbour by declaring Russian to be a minority language, even though at least half its subjects spoke it; ³¹ and Russia’s isolation in Europe increased with the enlargement of both NATO and the European Union eastward.

On coming to power, Putin had emphasized the importance of the state as a guarantor of order and a driving force for change, and he made the defence of the state his first priority in office. The measures he took to this end were certainly authoritarian, but they were not directed towards a restoration of an all-encompassing state sector nor to the suppression of democracy as some suggested. His pursuit of billionaire oligarchs like Vladimir Gusinskii, a former theatre director, of Boris Berezovskii, once a mathematician at the Academy of Sciences, and Mikhail Khodorkovskii, chemistry graduate and former Komsomol activist, suggested that they might have been. Certainly these people and their like were highly unpopular, and widely thought to have stolen public property. But while their unpopularity facilitated Putin’s attempt to bridle them, it did not occasion it. The fundamental reason was that these plutocrats threatened the state.

Had privatization spawned several hundred wealthy oligarchs there might not have been a problem, but only a handful of incredibly wealthy billionaires emerged. There was very little competition: the common interests of the owners encouraged the formation of cartels. ³² Between them, the billionaires enjoyed virtual control of most of Russia’s major industries: oil, gas, aluminium, banking, communications, copper, steel and coal; and control of these implied control of the entire economy. If a few industrial oligarchs wielded more power than the state, the state could not fulfil its primary functions of guaranteeing the rule of law and defending the general good.

This posed a fundamental problem. The fact that some of the billionaires had been buying into politics and that Khodorkovskii, head of the huge oil company Yukos, had blithely concluded an agreement to build a strategic pipeline from eastern Siberia to China without reference to Moscow, ³³made it an urgent matter to address. The mayhem associated with the rise of the oligarchs was a warning of what unbridled free enterprise could lead to. Furthermore, Yeltsin’s re-election had demonstrated how effective money could be in securing a virtual media monopoly for one candidate and in distorting the democratic process. At a very early stage, therefore, Putin had called some of the bigger players together and promised to steer clear of business provided they kept out of politics. Gusinskii and Berezovskii, who may have seen political influence as a defence against prosecution for serious crimes, fled abroad. The rest complied — except for Khodorkovskii, by now reputed to be the wealthiest Russian of all. He decided to defy Putin. The state prosecution service now poured resources into an investigation of the man, his companies, and their activities.

On 27 October 2003 a police special unit met Khodorkovskii’s plane as it landed on a Siberian airfield, disarmed his bodyguards and arrested him for tax evasion and fraud. ³⁴ Shortly afterwards the British government granted political asylum to both Berezovskii and one of his associates, Akhmed Zakaev, a proponent of Chechen sovereignty.