As the head of Russia’s biggest company Khodorkovsky was the only businessman who felt he could stare down the state. In fact, in 2003 he was nothing less than the most powerful businessman in Russian history. Neither under Yeltsin nor the tsars had a tycoon ever openly flouted the supreme interests of the Kremlin in such a way before. And all this on barrels of oil that many officials felt they had given to him for $350 million in exchange for loyalty.
The President had not ‘liquidated’ the oligarchs as a class. Their wealth grew exponentially during his first term. In 2000, zero Russians featured on the Forbes billionaires list, by 2003 there were seventeen. Should Putin be unable to show himself stronger than the richest of them, it would have left him vulnerable to them all. ‘Khodorkovsky was playing politics in the way it had been played before,’ observed Sergey Aleksashenko, the former deputy head of the Central Bank, ‘And he expected to get the same results as before.’ With the arrogant swagger of a kingmaker, boasting of his hired deputies, Khodorkovsky wanted to be the new Berezovsky.
Putin was considered weak. This is why Putin felt he needed to do something that would be so damaging to Russia’s reputation and so contested within the Kremlin itself. The endgame for Khodorkovsky risked being the endgame for Putin if he botched it. There is an expression in Russia – if a pack of wolves is following you in the forest, remember you only have to kill one, otherwise they will devour you.
Reflecting frayed nerves inside the government, the Kremlin-linked pamphleteer Stanislav Belkovsky published a ‘paper’, which argued that the oligarchs were not only increasingly powerful but also were plotting to stage a constitutional coup. First, they would buy up the Duma, then turn Russia into a parliamentary republic, before overturning the FSB security elites once and for all as they gloriously installed Khodorkovsky as a new, all-powerful, prime minister. This ‘research’ reflected real unease. When Belkovsky published his ‘analysis’, Putin was still considered to be just another president. It read:
In circumstances where the country has virtually no real political parties, where the institutions of civil society are weak or in the pocket of the powerful, where the systems of mass communication and the media are under the control of the oligarchs, such a radical transformation of the system of government is not in the interests of Russia or the Russian people. It would mean that oligarchs would be even further freed from any constraint connected with the objective interests of the nation. Such a weakening of the influence of the President would mean power flowing directly into the hands of big business, which would be freed from any real mechanism of control… we are in fact talking about the prospect of an oligarchical coup in Russia.35
It was a warning to the tycoon. Khodorkovsky may not have been positioning himself for the presidency per se, but he was positioning himself as the leader of pro-American and liberal forces in Russia. He was so politicized that he had to make a declaration in 2003 that he was not intending to stand in the 2004 presidential election. Charles Krause, his American former spokesman, who was glued to Khodorkovsky at the time, explains his motives like this:
‘He never intended to run for president. That’s a complete fabrication. I saw him say repeatedly “I have a Jewish surname I can never be President.” But if you ask whether he intended to have some form of public life after 2008 when the Putin era was supposed to end, I think that he was.’
The authorities felt under attack – and they were. Khodorkovsky had started publicly insulting Putin – accusing his government of being corrupt and incapable. On 19 February 2003, the shadow-boxing between the richest and the most powerful two men in Russia came into the open – in a meeting broadcast nationally. Putin had summoned the country’s most powerful businessmen to the Kremlin to discuss with them the challenge of mounting corruption. Khodorkovsky had prepared a slideshow of opinion polls on the topic and its content as he revealed it in the domed hall – was explosive.
• Slide Two: 27 per cent of Russians thought corruption was the most serious threat to the nation.
• Slide Three: 49 per cent of Russians thought corruption had spread to the majority of state officials including ‘the highest levels of federal power’.
• Slide Four: 32 per cent of Russians felt that the leadership was powerless to tackle corruption; 29 per cent of Russians felt the leadership chose not to tackle corruption; 21 per cent of Russians felt the leadership neither wished nor is capable of tackling corruption.
• Slide Five: Independent auditors suggested 30 per cent of the state budget was being lost to corruption.
• Slide Six: 72 per cent of Russians thought it was a waste of time to pursue a complaint through the official justice system as it was corrupt or they could not afford the bribe.
• Slide Seven: Amongst students, low-paid jobs such as tax inspectors were more popular than professions as they were viewed as having huge potential for corruption.
‘Please…’ interrupted Putin. ‘Let us not apply the universal presumption of guilt to our students.’ At this Khodorkovsky then made one final, immense accusation:
‘We need to make corruption something that is universally ashamed of. Let us take for example the purchase by the state oil company Rosneft of the firm Northern Oil… Everyone knows the Northern Oil deal had an ulterior motive. I must tell you that corruption is spreading in this country. You could say that it started right here. And now is the time to end it.’
Khodorkovsky had not just said that in the Kremlin itself – he had said it on camera. This was the greatest mistake made by a man carried away by his own performance and convinced that he had the power to insult anyone, without any consequences. He had underestimated Putin, who glacially defended Rosneft before smiling, like a coiled, poised snake:
‘But some companies like Yukos have got themselves fantastic, excessive reserves of oil. I think the real question is: how did they get them? The ball is in your court. And another matter. I believe that Yukos has got into a few problems with tax affairs. You may claim that you are dealing with those problems. But the question that needs to be addressed is, how did they arrive in the first place?’36
Watching the TV at home with his wife, the former KGB general hired by the oligarch to run his security operations burst out, ‘We are finished!’37 Just days later, the tycoon summoned his men and warned them that tough times lay ahead. He had gone to war.
Capturing General Yukos
Khodorkovsky was growing even more brazen as his business plans were becoming ever more grandiose. The tycoon was bragging to Western oil executives about those in his pay in the Duma. He was discussing his own pipeline plans to China; indifferent to the Kremlin view that this was foreign policy and not a matter for businessmen. He wanted to turn Yukos into the biggest conglomerate in the country by far. He wanted to swallow the oil firm Sibneft. He wanted to merge with a Western oil major. With a company so large, so integrated into global capital, he believed he would then be powerful to the point of being untouchable.
As long as Khodorkovsky continued like this, Putin had a rivaclass="underline" Putinism was not going to be secure. His final crime was that Putin came to believe he was preparing to sell a majority stake in Yukos, the crown jewels of Russian hydrocarbons, to the American oil titan ExxonMobil. This would have put him – and the best part of Russia’s oil – out of the Kremlin’s reach. There were those inside the government who felt furious and even betrayed. The way they understood ‘loans for shares’, was that these men had been awarded resources in order to become the loyal capitalist class that Russia lacked. They reasoned to themselves that, at a time when only foreigners could have coughed up the real value of these mega-complexes, it had been reasonable to award them to trustworthy Russian businessmen. And now Khodorkovsky wanted to sell to the Americans. Days before Putin sent the FSB to get him, he told one Western executive, ‘I have eaten more dirt than I need to from that man.’38