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DANCES WITH
BEARS
Putin is not the last of the
Mohicans
By John Helmer
If
you believe what you are told about Russia in virtually
all the media of the world currently, President Vladimir
Putin is an isolated savage fighting a last-ditch battle
against the forces of advancing civilization,
out-numbered, out-gunned, doomed. If Putin - and a
handful of his advisors - represent the last of the
Mohicans, then who exactly are the advancing redcoats,
and are they the civilizing force that we've been told
they are?
So far, Mikhail Khodorkovsky, the
chief shareholder and chief executive officer of oil
company Yukos, has positioned himself in the domestic
and foreign media as the force of civilization that
Russia badly needs. It's peculiar then that, unlike the
redcoats of the original Fennimore Cooper story of the
American Indians versus the British and French invaders,
this Russian claims it is in his country's interest that
he should sell effective control of one of Russia's
largest oil assets to an American oil company.
Stranger even that ExxonMobil should believe
Khodorkovsky when he told them to visit Russian Prime
Minister Mikhail Kasyanov, to ask if he would approve
such a deal, whose value is roughly estimated to be
about US$25 billion. Khodorkovsky has been telling his
Yukos board members, including several Americans, that
the key decision-maker for such a deal is Putin, and
that in two meetings early in the year, Khodorkovsky
claims, he received Putin's approval for a sale to an
American oil company. That Putin has changed his mind
since then is obvious. But why would ExxonMobil go to
Kasyanov if it already understood that Putin was the man
in charge?
The answer is that Khodorkovsky and
his mostly American advisors believe that they can lay
siege to the Kremlin, and force Putin to surrender, if
they can demonstrate - mostly via the press, but also
through fireside chats with the likes of Henry
Kissinger, whom Putin met in New York - that there is no
support for Putin's opposition to Yukos. Khodorkovsky is
figuring that the Americans, the media and the Russian
politicians he has on retainer are enough to topple
Putin. Although the Kremlin walls are thick ones, that's
the firepower the Yukos redcoats are betting on.
That Khodorkovsky made a bad miscalculation that
the US artillery would come through for him was obvious,
even to his American lawyers and board members, several
weeks ago. The Americans told him then that if the
merger between Yukos and Sibneft were implemented - that
merger was ordered by the Kremlin when it refused to
allow Sibneft owner Roman Abramovich to sell out to a
foreign oil company - then the combined company would be
too big, too costly, and too risky to swallow for an
American oil company.
After Putin's recent
meetings in the US with ExxonMobil, Washington factotum
Kissinger, and President George W Bush himself, it
should have been clear to Khodorkovsky that Putin was
not budging.
And so, last week Khodorkovsky
stoked speculation on the Russian stock market, and fed
the Financial Times with the line that the ExxonMobil
deal was only a whisker away. Khodorkovsky's minions
misread Putin's remarks to the New York Times, in an
interview published on October 6, and tried to cast last
week's police raids on Yukos as a sign that Putin was
close to surrender. Khodorkovsky has been buying press
coverage for so long, he's forgotten that everyone in
Russia - except himself - believes everything they read
to be false.
What Putin said was clear. "We have
a category of people who have become billionaires
overnight, as we say. The state appointed them as
billionaires." The corollary was that the state would
decide what is to happen to them next, not the media,
which - Putin added - have been "subjugated ... in the
same way that the [oligarchs] behaved with natural
resources." Asked specifically what he intended to do
about Khodorkovsky's proposed sale to ExxonMobil, Putin
drew the distinction between foreign investment in new
oil projects, and foreign shareholding control of
Russian oil assets.
If he was the last of the
Mohicans, this was no forked tongue - he was speaking
confidently and categorically. He was reminding
Khodorkovsky that he, like Mikhail Fridman and German
Khan of Tyumen Oil Company, and Abramovich of Sibneft,
have failed to invest in long-term oil prospecting or
new oilfield production outside the areas that were
developed by the Soviet state. That task has been left
for international companies to undertake, while the
Russian oligarchs awarded themselves huge dividends, and
leveraged their companies with mounting debt. The state
has so far refrained from taxing that dividend outflow
as most other European and American governments do -
through capital gains or dividend remittance taxes.
Putin knows that he doesn't have a single minister in
the cabinet, and certainly not a prime minister, or even
a presidential chief of staff, who would countenance
such proposals, and who cannot be trusted not to betray
the president's orders. At least, not for the time
being.
And so, all Putin has been able to do is
to pursue his policy with the only means available to
him. If it takes a policeman in a ski-mask to inform
Yukos, ExxonMobil and the world that in Russia, as
everywhere else in the civilized world, it will be the
government that must decide on what terms Russian
natural resource assets can be swapped, pledged, or
sold, then that's who must deliver the message.
"We favor foreign capital involvement in
Russia's economy," Putin told his US interviewer.
"ExxonMobil is operating in the Far East, in Sakhalin,
it is involved in investing a lot of money there, and we
will support their further activities there. As regards
purchasing part of the Yukos company, again this is a
corporate matter, but once again we are talking about a
possible major deal here, and I think it would be the
right thing to do to have preliminary consultations with
the Russian government on this matter."
Only a
fool would imagine that when Putin spoke of the
government, he meant Kasyanov.
And so, when
Putin chose to speak next on the same subject - at the
Yekaterinburg summit meeting with German Chancellor
Gerhard Schroeder on October 9 - Putin was addressing
all the fools. According to a wire service report, "the
president stressed that the gas pipeline system of the
Russian Federation was 'the offspring of the Soviet
Union', and only Russia could 'maintain it in working
condition, even regarding its parts outside the
country'. 'We will not divide Gazprom', Putin said. He
added that the European Commission should have no
illusions on this account. 'In the gas sphere, they will
have to deal with the state', the president stressed."
What Putin said about the gas sphere applies no
less forcibly to the oil and the mining spheres, to
Yukos, Norilsk Nickel, Russian Aluminium and Siberian
Ural Aluminium; to Khodorkovsky, Fridman, Vladimir
Potanin, Oleg Deripaska and Victor Vexelberg. This is
not surrender talk from the last of the Mohicans.
However, it is the disgrace and shame of much of
the Western media, including the Financial Times, and of
virtually all the Russian media, the Russian parliament,
and of Kasyanov's cabinet, that Putin has been made to
appear to be waging this fight for a national resource
and investment policy, virtually unsupported and
apparently alone.
If the truth were to be known,
Putin has been getting the support and technical advice
he needs from those who are not so vain or corrupt that
they want to disclose their names. Khodorkovsky has
"won" the silence of the Communist Party and of others
in the parliamentary election race who might have
debated the resource policy issues as they deserve. But
the Kremlin knows there is a broad and deep popular
resentment against the oligarchs that will favor the
policy that Putin has been maintaining in recent weeks.
He knows the economics of this resource policy have been
tested and proved from Japan and South Korea to France,
the UK, even California. Whatever lineup the popular
Russian resentment produces in the new State Duma will
not affect the fact that, after the presidential
election next spring, Putin will be the government, and
Khodorkovsky will have lost.
Thus, there is no
point now for Putin, or his trusted circle of advisors,
to respond directly to Khodorkovsky's publicity
campaign. Whoever will be stronger after the election,
Khodorkovsky won't be. And when that is clear, the Duma
deputies whom Yukos has in its pocket will turn tail.
(Copyright 2003 Asia Times Online Co, Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication
policies.)
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