The Yukos case was of vital national importance for Russia. It was not just a business dispute, a legal battle or a clash of personalities; it was a battle between two diametrically opposed, mutually exclusive ideologies, from which only one could emerge victorious and become the master of the nation’s future.
The schism in the Kremlin could hardly have been clearer. On the one hand, liberals like Prime Minister Mikhail Kasyanov were backing business and enterprise, a free-market economy and good relations with the West; on the other, hardline Siloviki such as Igor Sechin and Viktor Ivanov were attempting to return Russia to a centralised, statist model where strategic industries were controlled by the government and used to challenge the West rather than cooperate with it.
On 8 July, Kasyanov gave a press conference in which he denounced the trumped-up charges against Lebedev. ‘It isn’t right to arrest [him] for these alleged economic crimes,’ Kasyanov said. ‘There are enough real crimes being committed that actually threaten people’s lives … this is producing an adverse effect on the country’s image and a negative impact on the mood of investors.’ An anonymous government source, most probably the Kremlin’s chief economic adviser, Andrei Illarionov, was quoted by newspapers as saying ‘the sensible part of the presidential administration and the government believes that [this case] is inflicting damage on the Russian economy. Regardless of what happens to Lebedev, the negative consequences of what is happening now are already obvious.’
The ‘damage’ included a $20 billion fall in the Russian stock market in the space of two weeks; the ‘negative consequences’ would grow and grow until the international community would lose faith in the reliability of Russia as a place to invest. The newspaper Novaya Gazeta warned that Putin was now in thrall to the former KGB men who made up the Kremlin Siloviki. Referring to the Siloviki as ‘KGB Inc.’, the newspaper said they were exhibiting the security services’ traditional mistrust of the West and that ‘Khodorkovsky’s Western-friendly beliefs’ were perceived as particularly threatening. By crushing Yukos, they claimed to be combating Western influence. The Yukos arrests had triggered a showdown that would determine not only the fate of the country’s business model, but the future of Russian democracy.
On 3 July, I was summoned by the Russian State Prosecutor. I was told I was being questioned solely as a witness, but the threat was palpable. Afterwards, when I was asked by journalists if I was planning to leave Russia, I said I wasn’t. ‘I do not plan to leave Russia. I should have travelled to London today, but I decided to stay right here … I am not hiding and I don’t plan to become a political émigré. If it’s a choice of forcing me out of the country or putting me in jail, then they’ll have to put me in jail.’
A month later, FSB troops raided Yukos’s offices, seizing documents and computers. In September, they stormed into the boarding school for orphans that the Open Russia foundation ran outside Moscow. Armed men in masks ripped out the IT system and seized the children’s laptops. I asked for a meeting with Putin to seek an explanation, but was told this was not possible. In the past, I had been granted access to him whenever I needed it, even after our relationship had soured, so his refusal to see me now was the clearest possible signal that things were serious. I had instead a meeting with the FSB director, Nikolai Patrushev, whose offer to me of a ‘compromise’ settlement with terms he knew would be completely unacceptable confirmed that the crisis was reaching a head. I told my colleagues and fellow directors at Yukos that they should leave Russia while they still could, but that I had taken the decision to stay. At the beginning of October, I was a guest of the US–Russia Business Council in Washington, DC, and used the occasion to tell the world about the critical struggle between democracy and tyranny, between liberal reform and a return to repression and isolation, that was being played out in my homeland:
You have no doubt heard that one of the reasons for all this happening may have been my political activism … But the question before us right now is much bigger, a much more far-reaching choice: is Russia going to become a democratic country for the first time in our thousand-year history, or are we going to continue along our thousand-year path of authoritarianism? Russia has no hope of becoming a modern society in the economic sense without becoming the same in the democratic sense.
I paused, and then sought to clarify the stakes:
So, right now is a critical moment for Russia. Russian society is about to resolve the question of which path our country is going to follow. Which model of development are we going to choose for our country: the authoritarian one, or the model of a civilized modern state? I very much hope that we will make the right choice. And foreign investment is a great help to us in this. When we meet to celebrate the next ten years in 2013, we will already know the answer to the question of which path Russia took. I very much hope – and this is in all our interests – that Russia will have taken the right path.
I was arrested on 25 October 2003, on a scheduled airport stopover during a business trip to Siberia. On my last day of freedom, I had been asked by a journalist in Tomsk what lay behind the Kremlin’s attack on Yukos and I tried to explain that this was a proxy battle between two factions of powerful men with very different visions for Russia’s future. ‘We are being attacked not because of something we did. It is the very existence of an independent force like Yukos that they see as a threat to them. And by “them” I mean those [politicians] who are still stuck in the old ways of thinking. I don’t want to get into naming names, but I firmly believe this whole affair is the result of a struggle for power taking place between the different factions in Vladimir Putin’s entourage.’
The proceedings against me became a political trial of strength between two ideologies; I was supported by the remaining liberals in the Kremlin, including Kasyanov, Voloshin and the chief economic adviser Andrei Illarionov, who believed in the values of free-market economics. They staked their credibility on exposing the ludicrousness of the trumped-up charges against me and against Yukos, but they were outmanoeuvred by the Siloviki. The politically motivated guilty verdict in my trial, and the prison sentence which I later discovered had been personally decided by Vladimir Putin,8 signalled the rout of the Kremlin liberals: to a man, they either resigned or were fired, and – with their departure – what may turn out to be the last chance of a liberal future for Russia was gone. From now on, strategic industries would be controlled by Putin’s cronies; they would be used for their personal enrichment, to challenge the West rather than to strengthen cooperation with it, and certainly not for the good of the Russian people. Putin’s mission to ‘make Russia great’ would lead to a new toughness in international relations; Moscow’s rhetoric would become ever more strident and Russia’s neighbours would be held to ransom by cutting off – or threatening to cut off – oil and gas supplies. The Kremlin would become tougher in its attitude towards domestic opposition; the spectacle of my show trial would deter independent figures from entering the political arena; and ordinary citizens who tried to protest or organise opposition would find themselves on the wrong end of police batons.
The events of October 2003 confirmed the triumph of the Siloviki. Spurred on by Sechin and Viktor Ivanov, Putin would move to reimpose the deadening model of state control that had darkened Russia’s past, subordinating the position of business, subverting democratic freedoms and individual rights. Not only would Yukos be destroyed, but also its charitable foundation Open Russia, along with many other charities and non-governmental organisations that aroused the suspicion of the Kremlin. Civil society would be reduced to a minimum; the press, including, in time, social media, would be brought under state control; a meaningful parliament and gubernatorial elections would be abolished. At the end of Yeltsin’s term in power, business did not depend directly on the Kremlin; after Yeltsin, it became a necessary condition for the normal functioning of any company.