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A Mystery to the West

The forcible actions taken against the YUKOS company, which was already preparing to join the ranks of transnational corporations, cannot fail to shock Western society. Senior executives of a large company - a company the West had been accustomed to consider a model of new, civilized ways of doing business in Putin's Russia - have suddenly been sent to the Matrosskaya Tishina prison.

The forcible actions taken against the YUKOS company, which was already preparing to join the ranks of transnational corporations, cannot fail to shock Western society. Senior executives of a large company - a company the West had been accustomed to consider a model of new, civilized ways of doing business in Putin's Russia - have suddenly been sent to the Matrosskaya Tishina prison. Yet only recently, YUKOS president Mikhail Khodorkovsky had been welcomed with open arms in capital cities around the world, and invited to invest in Western economies.

Some influential voices in the West are already calling for Russia's membership of the G-8 to be suspended, and trade sanctions to be imposed on Russia under the still-unrepealed Jackson-Vanik amendment, and negotiations over Russia's accession to the World Trade Organization (WTO) to be extended, and for the value of creating a common economic territory between the EU and Russia to be questioned.

President Vladimir Putin - whose name is linked to the recent successes of the Russian economy, and whose first term in office was described in the West as no less than "Russia's great modernization" - is now soothing Western investors with promises to continue reforms, on the one hand; while on the other hand, he is heeding the advice of his long-term colleagues from the security and law enforcement agencies, who evidently don't like the president's pro-West policies. This is immediately reminiscent of the zig-zags in Putin's foreign policy during the Iraq crisis - when the security people were apparently ready to lead Russia into confrontation with America.

Four years ago, when Putin took over the reins of government from Boris Yeltsin and brought the oligarchs to heel, there was applause from the West. At the time, many considered that the selfish interests of the tycoons were an obstacle to transparency and openness in the Russian economy. Western politicians and business executives could only wish Putin success in his battle against corruption. However, once this campaign gradually turned into a battle against independent media, the creation of a strict hierarchy of governance, and the demolition of many democratic transformations from the Yeltsin era, the leading Western politicians became more critical of Putin's policies.

Some of the actions of the security and law enforcement agencies are easily explicable in psychological terms. Nowadays, they have a sense of being the masters of the country. From their point of view, Russia was extremely humiliated in the 1990s, losing the status of an empire and becoming totally dependent on the West, politically and economically. But now the economic muscles of Putin's Russia have grown strong. In the Kremlin, they believe the nation may be capable of attempting another historical leap forward, using all its economic resources to restore its lost status of a great power. Moscow is now successfully servicing its foreign debts, and building up military might has become a new, important priority in policies for modernizing Russia. Against this backdrop, the Kremlin is less enthusiastic about talk of Russia having to join the WTO.

The security and law enforcement people are deliberately getting rid of anyone who attempts to oppose the policy of Russia's national revival, as they understand it; the first to go were oligarchs Boris Berezovsky, Vladimir Gusinsky, Rem Vyakhirev, Boris Jordan - and now Mikhail Khodorkovsky; soon it may be the turn of Anatoly Chubais.

Khodorkovsky was literally told the following: "Yeltsin and Chubais essentially gave you, as a former Young Communist League activist, a state-owned oil company as a gift - and you have made a personal fortune as a result; now you want to share the profits with the Americans rather than with the state, but we will not permit that." Still less were the security and law enforcement people willing to accept the fact that Khodorkovsky, in line with accepted rules of the game for a modern economy, had become a player at the global, international level, with an ambitious individual strategy that frequently differed from the regime's geopolitical plans. And oil - especially after September 11, 2001 - had become the dominant factor in Russian diplomacy.

At any price, the Kremlin needs money to implement the upcoming national objectives. The lion's share of profits from the oil and gas sector must, according to the president's circle, be transferred into the state treasury. Henceforth, Gazprom, LUKoil, and YUKOS must primarily serve state interests rather than corporate interests, especially in foreign policy. Of late, there have been a multitude of signals about the proposed de-nationalization of natural resources, particularly in the energy sphere; they have been proceeding from Dmitry Kozak and Sergei Glaziev who, some Western politicians assume, could under the arising circumstances head the Russian government following the elections.

Russian political consultants have already compared the present events with events of 1996, when the security ministers headed by Alexander Korzhakov, Yeltsin's bodyguard, were removed by oligarchs with Berezovsky and Chubais at the head. The security ministers have been obtaining revenge for seven consecutive years. Their time has come - oligarchs are to face further reprisals, which can unfortunately damage the liberal and reforming forces. However, appointment of St. Petersburg lawyer Dmitry Medvedev to Alexander Voloshin's position has showed that Putin is concerned for his reputation in the West. Viktor Ivanov, the main oligarch-hunter hasn't received a promotion. Mr. Medvedev will keep a certain balance between the security ministers of St. Petersburg and the reformers. This appointment has to some extent soothed the Western capitals.

How tough will the West's response to the pessimistic scenario be? To the great extent, the response will depend on how the Russian elite and society perceive the changes on the whole. The latest public opinion polls indicate that harsh forceful actions not only fail to arouse a tempest of protest in Russian society but, on the contrary, strengthen authority of power and such politicians as Vladimir Zhirinovsky. However, the West has been shocked by a single assumption that the liberal forces could be ousted from the next Duma and, consequently, the government.

In the near future, politicians and business leaders from the global powers are likely to make many attempts to appeal to Putin directly, trying to persuade him into "maintaining the outlined course of the reforms." Over several past years, Vladimir Putin has gained considerable trust in the global arena primarily as a person of deeds. The Western colleagues will be trying to persuade Putin that Russia can actually attain the status of a great power only by playing according to the rules of globalization, and only by means of integrating itself into the global economy, rather than isolating itself. In his turn, Putin is most likely to attempt reassuring his foreign colleagues saying that "the case of Khodorkovsky" is a mere episode in his struggle against the notorious corruption and that the struggle against the oligarchy will, on the contrary, contribute to long-term Western interests on the Russian market.

The only conclusion left to draw is that despite the fact that Putin's first term in office is ending, he still remains a mystery for the West.

Author: Nick Muessig

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