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Thursday, May 22, 2014

Former Oil Tycoon Warns West About More Russian Sanctions

Mikhail Khodorkovsky, the former owner of one of Russia's largest oil companies, is pictured on April 27, 2014 in Donetsk, Ukraine. (Brendan Hoffman/Getty Images)

Mikhail Khodorkovsky, the former owner of one of Russia’s largest oil companies, is pictured on April 27, 2014 in Donetsk, Ukraine. (Brendan Hoffman/Getty Images)

Mikhail Khodorkovsky, who spent 10 years in a Russian jail on fraud and tax evasion charges, says further sanctions against Moscow over Ukraine would play into the hands of nationalists trying to isolate Russia.

Speaking to the BBC in Zurich, he urged the west to instead focus on trying to stabilize Ukraine and make it more democratic.

Richard Sakwa is a professor of Russian and European politics at the University of Kent in England, and author of “Putin and the Oligarchs: The Khodorkovsky-Yukos Affair” (excerpt below). He joins Here & Now’s Jeremy Hobson to discuss the relationship between Russian President Vladimir Putin and Khodorkovsky, and also how Putin views the world right now.

Book Excerpt: ‘Putin and the Oligarchs’

By Richard Sakwa

Personal Life

Richard Sakwa (Courtesy)

Richard Sakwa (Courtesy)

At the World Economic Forum in Davos, on 2–5 February 1996, Khodorkovsky overheard the
conversation in which international financier George Soros warned Boris Berezovsky that if the Communists returned to power the liberal economy and democracy would be destroyed. He advised the oligarchs to emigrate. Berezovsky instead joined with his arch-enemy, Gusinsky, to save Yeltsin. Presidential elections were due in June, and it was clear that Yeltsin’s re-election campaign was floundering. Yeltsin enjoyed no more than 4% of support, while Gennady Zyuganov, at the head of the Communist Party of the Russian Federation (KPRF) held 35%. Alexander Korzhakov, Yeltsin’s confidant and powerful bodyguard, and the siloviki called for the Communist Party to be banned and the elections to be cancelled. A fortnight after the Davos meeting Khodorkovsky was one of the group of business and media leaders who went to see Yeltsin and offered not only money but also experienced political strategists. Yeltsin gave one of his famous long pauses, prompting Khodorkovsky to wonder whether ‘the tsar was thinking about whether to send us all to the execution block’. In the event, an ‘analytical group’ was created and Chubais was brought in to mastermind Yeltsin’s re-election.

Uncertain of the outcome, a group of top oligarchs on 27 April 1996 issued the notorious ‘Appeal of the Thirteen’, urging Yeltsin to come to terms with Zyuganov. ‘Society is divided,’ they argued.

The rift that divides us into reds and whites, ours and theirs, runs through Russia’s heart. […] We entrepreneurs of Russia, propose to […] all those in whose hands real power is concentrated that they pool their efforts in searching for a political compromise that can prevent acute conflicts that threaten Russia’s basic interests and its very existence as a state.

Whoever won the election would have to implement policies ‘categorically rejected by a large part of society’, and the ‘mutual repulsion of political forces was so great’ that it could lead to ‘civil war and the break-up of Russia’. The letter warned that for many ‘the word “democracy” has become all but synonymous with an anti-state attitude’, but ‘we cannot allow the great ideas of freedom, civic spirit, justice, law and truth – the main elements of true people’s rule – to be discredited.’ The plan was for Zyuganov to become prime minister with extended powers, while Yeltsin would remain as president as a ‘guarantee of democratic freedoms and human rights’. That was rejected, but the oligarchs made unquantified sums available to Yeltsin’s campaign and were not too concerned about democratic niceties.

The oligarchs thus announced their presence as a political force. Semibankirshchina, or the ‘group of seven bankers’, came to the fore, and by the end of the decade a ‘family’ group around Yeltsin had emerged. While the ‘bureaucratic’ component of Yeltsin’s power system favoured a postponement of the election and the ‘security’ bloc sought outright repression, the ‘oligarchic’ leg in alliance with reformists such as Chubais resolved on a frontal attack on the Communist opposition, in which perhaps a billion dollars were spent. The consequences were not long in coming. As Paul Klebnikov notes, ‘Entering into politics, he [Berezovsky] outdid everyone even here. Having privatised a vast swathe of Russian industry, Berezovsky now privatised the state.’ In a notorious interview Berezovsky claimed that the seven had been responsible for Yeltsin’s re-election and controlled 50% of the Russian economy: ‘We hired Chubais and invested huge sums of money to ensure Yeltsin’s election. Now we have the right to occupy government posts and enjoy the fruits of our victory.’ Their grip on the media was no less tight, controlling 70% of the Moscow press and radio and 80% of national television. Berezovsky put it starkly: ‘If the media had not been free or private, we would not win elections.’ The group saw themselves as ‘an embattled elite pooling their efforts to steer Russia through a difficult transition’.

No less humiliating for the authorities was an interview with Nezavisimaya gazeta in which Khodorkovsky made no bones about the relationship between politics and business: ‘Politics is the most lucrative field of business in Russia. And it will be that way forever. We draw lots in order to pick out person from our milieu for work in power.’ Potanin, head of Onexim Bank, was indeed delegated by the oligarchs to work as first deputy prime minister in charge of the economy from August 1996 until March 1997, and Berezovsky was deputy head of the Security Council from October 1996 until sacked on 4 November 1997. Oligarchs now firmly entered the ranks of the most influential politicians in the country, with Berezovsky between 1997 and 2000 consistently ranking as the top oligarch and in 1998 and 2000 listed as the fourth most influential person in the country. Of all the major oligarchs Khodorkovsky was ranked lowest, in those years placed only 25th and 60th respectively. According to Satter, ‘By 1997 a ruling criminal business oligarchy was in place.’ They included Berezovsky, the head of the LogoVaz car dealership; Potanin; Gusinsky, the head of Most Bank; and ‘Mikhail Khodorkovsky, the head of the Menatep Bank’. The investment auctions and loans-for-shares scheme endowed a small group with an enormous concentration of economic power. They soon flexed their political muscles, provoking critics to suggest that only authoritarian methods could stop them.

Excerpted from the book PUTIN AND THE OLIGARCHS: THE KHORDORKOVSKY-YUKOS AFFAIR by Richard Sakwa. Copyright © 2014 by Richard Sakwa. Reprinted with permission of I.B. Tauris.


  • Richard Sakwa, author of “Putin and the Oligarchs: The Khodorkovsky-Yukos Affair.” He is a professor of Russian and European politics and head of the School of International Relations at the University of Kent.



Well, the former Russian oil tycoon Mikhail Khodorkovsky is warning against further sanctions on Moscow for its role in the crisis in Ukraine. In an interview with the BBC, he urged the West to focus on helping Ukraine become more democratic and stable, which he said could also boost the kind of political change that he wants to see inside Russia.

MIKHAIL KHODORKOVSKY: (Through translation) Some people, in my opinion these are normal people, understand that we live in a global world and that Russia on its own outside this global world. The others think that Russia will live better separated from the West with an iron wall. The current breakup of relations between Russia and the West is precisely what they are trying to achieve.

(Through translation) So my vision of the problem is that tangible help to Ukraine is much more important than sanctions against Russia.

HOBSON: Now to remind you, Khodorkovsky was once Russia's richest businessman until he locked horns, if you will, with President Vladimir Putin. He then spent 10 years in jail on fraud and tax evasion charges, but Putin pardoned him last December, and Khodorkovsky is now living in exile.

Our next guest knows a lot about this. He's written a book called "Putin and the Oligarchs: The Khodorkovsky-Yukos Affair." Richard Sakwa is a professor of Russian and European politics at the University of Kent in England. He's with us from Kent. And professor, what do you make of these comments today because Khodorkovsky hasn't really said that much publicly since he was released.

RICHARD SAKWA: Well, two things. As for what he's been saying, he has been involved in Ukrainian events. He went to - after the overthrow of President Yanukovych, he went in March and made a very passionate speech on the Maidan in defense of the movement for (unintelligible), and the following day he made an important speech at the Kiev Polytechnical Institute.

So he's been deeply involved in the Ukrainian developments, and he's taken it very, very personally. As for what he's actually been saying, I think they're extremely sensible because what his fundamental argument is, that while all the geopolitical and other stuff going on, sanctions between the United States, Russia and European Union, what we tend to forget is the fate of Ukraine itself.

And as far as he is concerned, we really need to focus on that, and I think he's spot on in arguing, making that point.

HOBSON: But it does sound like he's holding back from being terribly critical of Russia. Is he worried about retribution if he is too critical of Putin?

SAKWA: No, it's not that. I spent two hours with him last night discussing precisely, or in large part, this issue. He would certainly be critical, but what he understands is that contrary to much of Western misinformation about what is going on in Russia, it's a far more fragile, far more complex position than we're sometimes given to believe.

And he fully understands. I mean, he'd certainly make the criticisms if they were necessary, but he understands that Putin himself is, while he's got many - we can criticism him on many points that the system itself is far more shapeless, far more complex and that there are different forces playing out.

And he identified in particular the forces of Russian (unintelligible) or nationalism, which is absolutely one of those key elements, which is always burning away in the background. And the more you, as it were, prod the Russian bear in the eye with a sharp stick, the more these people are going to get upset.

I mean, I've spoken to many people in Russia today, and they say look, if the West continues in this way blaming for a situation that wasn't our fault, then, you know, we're willing to eat cabbages for 10 years, hunker down just as we did against Napoleon, just as we did against Hitler, and we'll do if we're really forced into that position.

HOBSON: But does Khodorkovsky support what President Putin did in Crimea?

SAKWA: No, he doesn't, though Khodorkovsky, as an intelligent man, understands why he did it, and that's a very important distinction. The point is that what happened in Crimea was the result of a number of previous movements and instances, which really did put Russia on its back foot.

Again, I've spoken to many people who are even of a relatively liberal persuasion and argue: What else did you expect him to do? Here we have the West, which in the association agreement with the European Union introduced all sorts of security clauses, which effectively opened the door to NATO membership. And if it's NATO membership, then Russia would indeed lose access to the Sevastopol naval base, which is absolutely crucial, in the Crimea.

So we have to see it from their perspective, as well. It's a disastrous situation from all sides, and this is why we constantly say that let's all step back a bit instead of endlessly escalating sanctions as if Russia's responsible for the mess Ukraine has got into. The West bears a huge amount of responsibility for that, as well.

HOBSON: You have written a book all about Putin and the oligarchs, and let's talk about what he has done within Russia. And I have heard stories about the oligarchs driving through Moscow, for example, in their black limousines, in motorcades and the traffic, the terrible traffic, just moving out of the way for them. Why do the people, the ordinary people in Russia, put up with this system?

SAKWA: Yes, now that's a very good point. I don't think they've had much choice. But in 2011, and 2010 as well, there was the development, for example, of a popular protest movement called the blue buckets movement. So people would put a blue bucket on their car and pretend to have one of those, you know, flashing blue lights.

And so that was quite an inventive and witty way of responding to this. But it's absolutely dreadful, and it reflects the traditional gulf between the state and society, between the elite and the people in Russia, which really has to be transformed and transcended.

And I think it gradually will do because what Putin has done, those 10, 15 years now of stability, is allowing, if you like, a more self-conscious middle class or bourgeoisie or intelligentsia to emerge, which are no longer concerned about simple survival, simple standards of living but are now actually making, putting forward more and more political demands.

At the moment, of course, all of this has been undercut by the wave of patriotism, which has welcomed Putin's actions in, you know, regaining Crimea. But that won't last very long if their economy declines. But as I say, Putin has delivered certain public goods. This sort of attitude, of course, is dreadful, the way his high-handed official-dom, and it really is something which has to be dealt with.

HOBSON: Richard Sakwa, his new book is "Putin and the Oligarchs: The Khodorkovsky-Yukos Affair." You can read an excerpt at This is HERE AND NOW.


HOBSON: This is HERE AND NOW, and if you're just joining us, we're speaking with Richard Sakwa. He's a professor of Russian and European politics at the University of Kent in England. He's also the author of the new book "Putin and the Oligarchs: The Khodorkovsky-Yukos Affair." That's about the relationship between Russian President Putin and the former billionaire oil tycoon Mikhail Khodorkovsky.

Professor, I want to get your thoughts on how Vladimir Putin views the world and Russia. What do you make of what he's doing with regard to China, this week just signing a $400 billion natural gas deal, trying to forge closer ties with his neighbor China.

SAKWA: Well, what's good for the goose is good for the gander, as it were. Sauce for the goose is sauce for the gander in the sense that since the Ukrainian crisis has blown up, the European Union backed and shrewdly pushed by the United States, has been talking about energy diversification, that they should move away from sourcing gas above all from Russia, well, Russia is doing the same thing, saying if that market is no longer so stable and reliable, then we have to find new markets.

So I think it's exceptionally dangerous for all concerned pushing Russia to the East. There's a lot of people in Moscow who are very concerned about it, of course, because China will be overtaking the United States within, what, five, 10 years as the world's largest economy, and it'll be overshadowed, and Russia always likes to be independent and needs to play, as it were, as an independent role between the great powers.

But yes, it's a hugely important move, and it ties Russia in with China for the next generation or two. So in geopolitical and geoeconomic terms, this is a fundamental turning point, and in fact the days in which we live now is - we see a new realignment, if you like, the development of a stronger transatlantic partnership, which excludes Russia, which I think is catastrophic, and which begins to line up about new dividing lines in the world.

So we've failed to build an inclusive piece after the end of the Cold War, which would bring Russia in. The European Union has mismanaged its affairs catastrophically in losing sense of the European continent, taking control of its own destiny.

Yes, Russia's always a prickly customer, difficult to deal with, but on the other hand that makes it even more incumbent upon us to work harder to establish decent relationships with the country, and we have failed magnificently.

HOBSON: Why is the failure the West's fault, though? Why isn't the failure on the part of the Russians for not playing ball?

SAKWA: Yeah, no, that's a very good question and I think absolutely valid. But Russia wanted to play ball. Putin came to power at the beginning, the most pro-European, pro-Western leader Russia's ever had. He wanted to join, I mean even talked about joining, closer links with European Union, even of joining NATO. But NATO said no. Why? It's quite clear that there could only be one top dog in NATO, and that's the United States.

If Russia joined, it would be an entirely different ball game, where the United States would have to share its hegemonic leadership with another country, and it just simply wasn't accepted to do that. It wanted a Cold War order based on U.S. hegemony. And this - well, Russia couldn't by definition accept it, and therefore it was pushed out.

Yes, on the other hand there's huge governance issues within Russia, as well. We know about corruption. We know about the way that elections are not free and fair. There's all sorts of difficulties, but all of this should be kept in perspective. The communist system collapsed just over two decades ago. Russia is not an overwhelmingly repressive coercive system.

We talk about this endless, overheated language of a dictatorship and so on. It isn't. It's a complex system, desperately trying to establish internal order and to find its place in the world. So indeed it was incumbent upon us to make allowance for it, but criticize it when it has to be criticized, of course. That doesn't - that goes without saying.

But at the same time, to, as it were - I mean Russia was the first to phone Bush after 9/11. It gave up the listening post in Lourdes, endless things.

HOBSON: But it's also been on the opposite side of the West on issues like Syria and Iran.

SAKWA: Well, I disagree with that again. On Syria, the Russian view - line in my view has been the most sensible one. What on Earth would it have been good to send Tomahawk missiles raining in, killing innocent people in Damascus as the British and the United States at one moment looked as if they wanted to do last August?

It's still not entirely clear who did the gas attack, but even then provoking a civil war, the West has also a large responsibility for it because Bashar al-Assad, of course again not a leader we particularly like, but it was all part of the geopolitics. The Gulf Council, the Sunnis wanted him out because he's allied with the Shiites and with Iran.

So again it was - Syria is another great victim for this geopolitical contestation, just as Ukraine is today. So we must step back, and we're beginning to understand that we are also playing those games also. I mean, Russia is playing a game which can be criticized, lots of issues, as you quite rightly emphasize, but at the same time we must give up this idea that we are intrinsically benign, good and such like.

We are not. We are deeply implicated in these wars. We have blood on our hands. We supported Saddam Hussein for 10 years in his monstrous war against Iran in the 1980s, and then suddenly when he turned against us, he suddenly became a demon and a devil. We have got to understand that we have made one mistake after another after the end of the Cold War, Europeans, as much as the United States, that we've failed to overcome this logic of conflict to establish an inclusive peace, and therefore we're reaping now the whirlwind.

And indeed we did come within a whisker of a major nuclear superpower - well, no longer superpower, but a nuclear confrontation over Ukraine. This is a warning, and we must stop the war mongers and the hawks in London and Berlin and elsewhere, having the voice dominating and talking of this endless retribution. We must understand our own deficits and be a bit more humble in the world.

HOBSON: But is it acceptable to be supportive of Assad? You say he's not a person we particularly want to be in power. He's also a person who has, in order to hold on to power, killed thousands, maybe more than 100,000 Syrians, and it does appear that the evidence points to his regime as being behind that chemical attack.

SAKWA: Well, (unintelligible) begs to differ with that in articles in the London Review of Books. Even with that, though, absolutely 162,000 minimum have died. Millions are in exile. It's absolutely awful. But if you remember when the demonstrations began in February of 2011, Bashar al-Assad put forward some ideas for reform in the first two months, and then it - none of this was accepted, that in a sense that the West was just desperate to - well, and its allies in the Gulf, of course, who really hated the Bashar al-Assad regime, which we then became, as it were, the tail was wagging the dog in this particular case and that we delegitimized those reforms immediately.

One has to say that the State Department team are absolutely unprofessional in the way they've got a hotbed, if you can put it, of neoconservatism, of the Democratic, as well as the Republican sort, and it simply didn't want to listen. And they quickly used the massacre in (unintelligible), which of course was unforgivable, dreadful, then to arm.

And what we arming? Mujahedeen of the worst sort, the jihadists who - and indeed even the moderates who weren't allowed to take part in the first Geneva talks. So as in Afghanistan, we're feeding the mujahedeen, which will have massive blowback against the West in due course.

HOBSON: A lot of strong views there, some that many in this country may disagree with. We welcome your thoughts, listeners, at Richard Sakwa, professor of Russian and European politics at the University of Kent in England. Thank you so much for joining us.

SAKWA: Thank you.

HOBSON: And again we've got an excerpt from Richard's book, "Putin and the Oligarchs: The Khodorkovsky-Yukos Affair" at This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.

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