Moscow Targets Another Russian Jewish Oligarch

Case Seen as Test Of Kremlin’s Resolve On Economic Reform

By S.A. Greene

Published August 01, 2003, issue of August 01, 2003.
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MOSCOW — It’s becoming a familiar scenario: Kremlin prosecutors go after a prominent Jewish “oligarch,” and Washington reacts with stern warnings that Russia is risking all the progress it has made during the last decade.

Just under three years ago, the target was Vladimir Gusinsky, the press baron and founding president of the Russian Jewish Congress, who was arrested, pushed into exile and has yet to return home. Now in the limelight is billionaire Mikhail Khodorkovsky, whose Yukos Oil is already the largest oil company in Russia and is set to become No. 4 in the world. With Gusinsky, freedom of speech was at stake and, ultimately, was lost: All of his old newspapers and broadcasters are now either defunct or state-controlled. With Khodorkovsky, the battle is over economic reform. Yukos has set the standard for transparency and good management, and as a result, Khodorkovsky is beholden to no one. That, apparently, makes the Kremlin uncomfortable.

“It’s possible already to say that real damage is being done to the prospects for future Russian economic growth and development by what appears to be an arbitrary, capricious and vindictive campaign against a private company,” Defense Department adviser Richard Perle told a conference at the Carnegie Moscow Center recently. American Ambassador Alexander Vershbow has made similar noises.

Indeed, the circumstances are disquieting. A Yukos founding shareholder, Platon Lebedev, was arrested July 2 in connection with a murky 1994 privatization deal. Shortly thereafter, armed investigators spent 17 hours rifling through Yukos archives, confiscating files and computers. Khodorkovsky was called in for questioning, along with his deputy, Leonid Nevzlin, who had served as Gusinsky’s temporary replacement as president of the Russian Jewish Congress. Prosecutors and investigators began dropping hints to the press about possible connections to unsolved murders, while left-wing politicians wondered aloud whether this wasn’t an excellent chance to revisit the Yeltsin-era privatizations as a whole. Russian stock markets — for the last two years among the best performing in the world — deflated. Yukos, until recently the darling of foreign investors, lost nearly a third of its market capitalization.

Officially Moscow has so far brushed aside American concerns over Yukos without comment, in sharp contrast to its angry response when it was chastised by the Clinton administration over the Gusinsky affair. Observers say Washington is unlikely to press the issue much further.

Putin, said Andrei Piontkovsky, director of the Center of Strategic Research in Moscow, “is more important to Washington than Khodorkovsky. With the Gusinsky case, Putin was seen in the West as a former spy to be viewed with suspicion. Now he is seen as an ally, and a very important one, given the problems in Iran, North Korea and so on.”

Others see a different trend, however. Not long ago, the oligarchs — a handful of individuals, many of them Jewish, all of them men, who capitalized on the chaos of early reform and privatization to build financial and industrial empires — were emblematic of everything that was wrong with Russia. Nowadays, a handful of them have come to symbolize everything that is right. Thus, while Khodorkovsky once cheated British Petroleum out of its half of a joint venture, the Financial Times recently called him one of Europe’s most transparent businessmen. Roman Abramovich, another oil magnate, was welcomed with open arms as the new owner of London’s Chelsea Football Club. Even Boris Berezovsky, once called “the godfather of the Kremlin‚” has created an image for himself as a dissident politician as he awaits extradition hearings in London.

The result is that, much as ordinary Russian Jews once served as a barometer for the state of democracy and human rights in the country, the oligarchs are becoming something of a barometer for the state of economic liberalization.

“This is certainly a barometer, and it is stuck very deeply into the soil,” said Tancred Golenpolsky, publisher of the International Jewish Gazette, Russia’s most important Jewish-affairs journal.

It’s a point not lost on Khodorkovsky. He was in America at the time of Lebedev’s arrest and took the opportunity to seek support among prominent Western business leaders. And when he returned to Moscow, he came out fighting.

“People should understand that the authorities will begin with symbolic gestures,” he said in an interview with the weekly newspaper Moskovskie Novosti. “They take someone who is more or less capable of defending themselves and press them into the ground. And then they won’t have to go after the rest, because the rest will surrender on their own. We are a test run for a huge mass of people in epaulets, who will either stay in their bases or descend on society. If we don’t hold our ground, everyone will drown.”

If there’s a problem with the oligarchs as a barometer, however, it’s that the measurements are inexact. If Kremlinologists could once be certain that the policy toward refuseniks represented the consensus of the politburo, Russia today is infinitely more complex. Indeed, the Yukos affair has led a number of analysts to question whether Putin is really in as much control as his image suggests.

“This is not Putin going after Yukos,” Piontkovsky said. “This is the old spy network that Putin brought back into power going after Yukos. On the one hand, Putin feels some solidarity with them because he used to be one of them. But he also has to be very careful not to let them get out of control, or else they will take control of him.”

Old cadres, meanwhile, bring old habits. Alfred Kokh, who helped the government organize the takeover of Gusinsky’s media empire, volunteered in a recent interview on Russian television that in attacks on oligarchs, “antisemitism is most certainly part of the game.”

“The people are being programmed in such a way that I wouldn’t be surprised if some rascal came up and said, ‘Let’s go after the Jews,’” Golenpolsky said. “The people would gladly do it. They want simple explanations, and it’s very easy to replace ‘Beat the oligarchs’ with ‘Beat the Jews.’”






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