Mikhail Khodorkovsky: IN HIS OWN WORDS...

Left Turn 2

2005-11-12T18:17:00.000-08:00

My article “Left Turn” elicited broad discussion, in the course of which several questions of paramount importance were raised and require immediate response.

1. Are there modern, competent opposition forces in Russia today with leftist or left-liberal views?

2. What is the practical economic program of the “left turn”?

3. Does the country have sufficient potential manpower to ensure a left turn and the realization of its political and economic program?
And finally:

4. Prisoner Khodorkovsky and comrade, do you really think that a change of power in Russia will ease your lot?

That question, whether explicit or implied, has rained down on me from the right-liberal circles that unexpectedly provided the Vladimir Putin regime with its main ideological support. I will begin by answering that last (in every sense of the word) question.

Nightmare 2008

It is pleasant to think that tens and hundreds of Russian politicians and administrators dream of becoming president in 2008. Controlling Gazprom, Rosneft, arms exports and the three main national television channels all at one time. Making billions of dollars, holding receptions in the Kremlin, Petergof and Strelnya, going hunting with the president of France, fishing with the president of the United States, and after that you can boast about it on television and sleep easy. At least until the end of the constitutional term of your presidency. And longer still. That is a reflection of the parasitic thinking of the Russian political elite in our days. The only issue that really concerns that elite is how to get something tangible out of the country called Russia. The question “What did you do for Russia?” is not worth asking.

Personally, Russia has given me a lot. In the 1970s and 1980s, it gave me an education I can be proud of. In the 1990s, it made me the richest (according to Forbes) person from the former USSR. In this decade, my property was taken away and I was imprisoned, giving me the opportunity to receive a second education, this time human and humane. And I can say that the people who are getting ready to run Russia in two and a half or three years will have to understand that their parasitic approach is not working any more, because the country is no longer competitive and the reserves of endurance laid up in the Soviet Union have run out.

Thus, by 2008, the Russian Federation will come up against a set of objective problems – and I emphasize that they are objective problems, which exist regardless of our willingness to think about them: a deterioration of the national infrastructure that will threaten a systemic technical catastrophe; a demographic crisis; the shrinking of the population of the country by almost 1 million persons per year will lead, among other things, to the Chinese population of a number of regions in Siberia and the Far East (which consists mainly of illegal immigrants) will be almost equal in number with the Russian population; citizens of the People's Republic of China will dominate various sectors of the Far Eastern economy, from wholesale trading to new investment projects in raw materials; the paralysis of a number of sectors in heavy industry, especially aircraft construction, manufacturing outfitting and the construction of agricultural equipment, which will lead to the loss of about 3 million jobs, in addition to the negative effects on the structure of the economy;

a systemic crisis in the defense industry and the hi-tech sector that is emerging from it and now consuming the remains of Soviet design developments and attempting to absorb the third wave of Western technology but that has long ago lost its any understanding of independent creative development;

the transition from the cessation of rejuvenation of science to its physical extinction; basic science no longer uses personnel under 30, which makes its existence a chronicle of narrowly declared death;

the practical loss of control by Moscow over the domestic situation in the North Caucasus, especially Chechnya and Dagestan, were the activity of Wahabis and other extremist is rising sharply; the crisis in the Caucasus is connected to a considerable extent with the unprecedented unemployment ad the absence of any development program in the North Caucasus; the whole of the participation of the federal center in the fate of the region amounts to periodic financial handouts that are stolen on the spot, inciting a battle between state-criminal clans to steal every last budgetary ruble;

the collapse of the Russian Armed Forces, which today do not represent the modern army of Russia but a disintegrating piece of the forces of the long non-existent state of the USSR;

the paralysis of the security system, which has been put out to pasture, busy providing cover and engaging in other particular forms of economic activity, and unable to solve the real problems in the blazing Caucasus or in other regions of Russia; no one even talks about the law enforcement system stopping the monstrous illegal immigration in the East of the country.

Those aren't all the problems either. Do you still want into the Kremlin, dear successors to Putin?

A new social elite should take over the country when Putin leaves (at the legal time, not a day sooner and not an hour later), one that comprehend power as long-term and maybe ignoble (at first) construction and not as wholesale division and redistribution. In that elite, the dominant question will not be “What do you need that for?” We don't need that, kind sirs, the country does. Otherwise it will ever become a modern developed and respected state, but more likely fall apart within our generation, and we, citizens of Russia, cannot reconcile ourselves to the ruin of our state, and we don't want to and we don't plan to.

But, to solve the terrible problems listed and one not listed here, a traditional mobilization of the people is needed. And not penal mobilization but creative mobilization, using the intellectual resources of the tens of millions of our fellow countrymen based on a single national idea. The people are used to the authorities being endless far from them, that they are not answerable for anything, that the so-called elites needn't give a damn about them but they should again feel that Russia is our common country that thinks about and cares for everyone who lives in it and for which they are answerable. That leads first of all to qualitative changes in state and social policy, a rebirth of democratic methods of ruling the country, including state paternalism as an instrument for the unification of the state and people, as an acknowledgment of the fact that the state and economy exist for the people.

Yes, democracy prohibits the implementation of the ideal liberal model of everyone for himself. Yes, the voter will demand a concession of part of the oil riches falling from heaven for the use of those who, because of their health, education, age or other reasons cannot attain personal success by themselves in modern society without its (society's) help.

That is why a left turn is also necessary. To breach the pathological, existential alienation between the elites and the people, the authorities and those they rule. And not, as some theoreticians of “Putin's stability” suggest, so that the opposition, winning the parliamentary elections, would let Khodorkovsky out of prison. Without a breach of that alienation, no single national idea is possible, and without a national idea, there will be no salvation and rebirth of the country. If someone doesn't like the word “left,” let him find another word. The essence of the turn does not change because of it.

In addition, a left turn is unavoidable because a new “left” cycle in Russian national politics started long ago.

And none of the trick that are used to stop it from showing itself, or the rapidly multiplying attempts at propagandistic (election campaign) stimulation will accomplish anything except long-term separation of the state and people. The sooner the leftist energy has the chance to come to the surface and take on its share of responsibility for the present and future of Russia, the more constructive and less dangerous it will be. If the current ruling elite is democratically transformed, we will have a peaceful transfer of power. If they delay it, and all the more so provoke the less responsible part of the elite to an extremist scenario in hopes of justifying their authoritarianism, the consequences for the country will be regrettable and absolutely unpredictable, and stability, industrial development and a worthy place in the world can be forgotten for a long time to come.

Program 2020

The political and economic program of the future ruling elite of Russia (that program can be called social or social-liberal and it will be accurate, although only partially) covers 12 years. That is a sensible term for its implementation. There is no need to think of 12 years as three presidential terms. The program can be effectively implemented only with a change in the Russian state and political model, specifically with the transition to a presidential-parliamentary republic. Where the president is the moral leader, the guarantor of the unity of the country, the supreme commander-in-chief, the immediate head of the security agencies and the center of the formation of domestic policy. The entire complex of economic and social issues will be handled by the administration formed by the State Duma and responsible to the parliament for the results of its work.

In addition, a rebirth of genuine federalism is necessary, a transition to the election of regional heads and members of the Russian senate, creation of genuine local self-government with all the necessary authority and means, including financial. Only then will we have a responsible regional elite that will be interested in long-term regional development, the “cultivation” of its territory. The bureaucrat sent by the Kremlin to a region to feed off it (and to feed his high-placed comrades off of it) by definition doesn't give a damn about long-term development. Moreover, only under federalism, the understandable and interconnected distribution of rights and responsibilities, will we able to reach agreements with “problem” regions, mainly the national republics, to neutralize growing or emerging separatism.

The goals of this program, which can be reached in their basic form by 2020, are as follows:

1. Increase the population of Russia to 220-230 million, which will allow Eastern Siberia and the Far East to be assimilated by the forces of the Russian people and avoid a partition of the country from the Chinese influence on the Eastern regions. The program to counter depopulation should propose first the establishment by the state of understandable strategic guideposts for new generations and, second, direct financial incentives for childbearing that would at least guarantee the minimum living standard for every newborn (which would cist about $10 billion per year).

2. Achieving the following structure in the national economy:
40 percent “economy of knowledge”
40 percent oil, gas, metal, licensed production
20 percent agriculture, including processing and trade.

The transition from the economy of the oil pipeline to the economy of knowledge will permit the GDP in Russia to be increased by three and a half to four times, to $4-5 trillion. I will note that the size of the GDP is cited here only as an indicator, not as the ultimate goal of development. Reaching those goals entails, in part, the establishment of an effective system of special economic zones for hi-tech production; development (establishment) of the necessary modern technical infrastructure – at first at least in technical parks; the formation of venture funds with a share of state capital to ensure the attractiveness of investment in priority areas; formation of a system of state and state-and private grants for education and research, systemic protection and encouragement for the innovative activities of creative young people and entrepreneurship on the level of state policy.

3. Preservation of the territory of Russia and strengthening of its present borders, including the indirect implementation of significant investment programs in Eastern Siberia and the Far East. Reaching this goal entails the establishment of large-scale centers of business activity in the Asian part of Russia. The volume of investment programs, which could be financed either as by private capital or as part of a mechanism for private-state partnership, will reach $200 billion in the course of 10-15 years.

4. The establishment of new armed forces in Russia, practically from zero. We can no longer live with the leftovers from an army of a long gone, as I said above, state. The volume of startup investment in the establishment of a new army is about $50 billion.

5. Restoration of systematic education and basic science as a system for the reproduction of intellectual potential of the nation. Russia cannot live on imported scientific achievements and not only because of national pride. If we don't have our own strong science, we not only cannot establish an economy of knowledge, but we will lose the best young brains. They will go to the West (and not only the West. India, the modern world center of offshore programming, will take them into its wide embrace.) Without the intellectual potential of the future generations, there will be no rebirth of Russia, much less a Russian breakthrough. Such a program will require the attraction of two and a half to three times more financing for basic science than today's level.

6. Cardinal modernization of the national communal infrastructure and the establishment of new transport communications – roads and railroads – mainly in the east and south of the country. That will require about $80 billion in investments, both state and private, in the course of ten years.

7. The establishment of a historical and mental tradition of Russia system of social protection, including high-quality free medical service, and high-quality, mandatory basic education for all the population and free higher education for half the young people, the guaranteed replacement of social benefit granted earlier or their actual monetary equivalent.

Implementation of the program will require about $400 billion in state investment and about $500 billion in private investment. The latter will be easier to attract. It will reach the country just as soon as the obviously ineffective phantom “vertical of power” is removed, full-blooded federalism is restored and a responsible elite appears that is ready to take on responsibility and give guarantees. The state investment is harder. Where to get it?

Three Sources

1. Changes in the rules for the use of income from raw materials. The Kremlin forecasts Central Bank reserves for 2008 at $300 billion. That is $140-billion growth in three years. The Stabilization Fund as already accumulated $50 billion. It will accumulate another $100 billion in three years with a small change in the cutoff price. Thus the state has $60-70 billion in free resources per year. Resources that can and should be used for investment in the economy proper.

2. Legitimization of privatization – through a special compensatory tax – will bring about $30 billion into the federal budget and extra-budgetary targeted funds.

3. Additional budget revenue that arises from changes rates of economic growth. Growth at 12-15 percent per year, which is completely attainable with changes to the structure of the economy and the model of its management, will bring additional annual revenue on the level of $20 billion into the federal budget.

Thus, there are enough financial sources to guarantee the necessary level of investment on the part of the state as well.

Legitimization of Privatization

It cannot be said that the privatization of the 1990s was absolutely economically ineffective. Yes, many of the largest enterprises in Russia were sold for symbolic prices. But it shouldn't be forgotten that the main goal of that privatization was not the rapid engorgement of the budget from the sale of those objects, but the establishment of the institution of effective ownership. The task was completely fulfilled.

I remember what YUKOS was like when I entered it in 1996. And the company was in relatively satisfactory condition in comparison with the other state oil giant. Nonetheless, oil production was falling by 15 percent per year, debts to contractors amounted to about $3 billion, salary payment was six months behind and employees were either grumbling unheard or complaining loudly, the stealing at every turn was frightful. When I left YUKOS (in 2003), salaries had reached 30,000 rubles per month, there were no delays in pay and tax payments on all levels reached $3.5-4 billion per year, and that was when oil cost $27-30 per barrel, and not $60 as now. That is, thanks to that same privatization, real management was established, which simply did not exist in the era of the “red directors.”

Nonetheless, privatization was ineffective politically and socially. Because more than 90 percent of the Russian people did not think that it was just. That means that the results of privatization were not acknowledged by our fellow countrymen and, in those circumstances, permanent and unceasing redistribution of property is unavoidable.
I suggest, instead of reinventing the wheel, using a highly successful method for legitimizing privatization that was used by the British Labourites (Tony Blair's cabinet) at the end of the 1990s with infrastructure companies privatized in the 1980s. They imposed a so-called tax on non-core income from favorable market conditions. The size of the tax in our circumstances could be the actual annual turnover that the company had in the year of its privatization. To account for funds stolen by the directors at the time through front companies, the volume of production has to be multiplied by the market prices, thus not being deceived by the absolutely useless Russian-standard accounting. I know how to do that. I, like many others, had to dig through mountains of the criminal schemes that inundated the economy from 1993 to 1995. That parameter clearly reflects the condition of the company in the period of privatization and takes into consideration all parameters determining the capitalization at the time: world prices for raw materials, the quality of the management, the level of political risk in Russia, etc.

In other words, everyone who wants to take the question of the legitimacy (justice) of his large industrial property should pay a tax in the size of the company's turnover at the time of its privatization to a special target fund (for example, the fund for the stimulation of the birthrate, from which benefits are paid for newborns). With the payment of that tax, the owner receives a “safe conduct letter” from the state and society and his property is considered legal and honest.

Legitimization should be the result of a conscious pact between the state and owners and big business. Business that intends to live and work in Russia for a long time should make that pact guided by the immutable principle that it is better to give up part today than everything tomorrow. A one-time tax plan and its simple accounting give the legitimization procedure transparency and exclude corruption and selective application of normative acts in the process.

By my preliminary calculations, the quality of which is limited by the conditions of a common cell and he prison zone, legitimization of privatization will bring in $30-35 billion within three or four years.

Opening the Floodgates

My critics say that there is no personnel in the country to undertake massive transformation. In the process of reforms, everything will fail or be stolen.

I disagree completely. Representatives of the current ruling elite will be judged separately. I have the experience of building Russia's largest corporation, YUKOS. And that company was raised from its late-Soviet ruin to the level of a world giant with $40-billion capitalization first of all thanks to personnel policy.

In all areas we chose:
a) the best;
b) when possible, the young (up to age 35).
If we, like the Kremlin today, had relied on the abilities of job seekers who would toady up to the boss, YUKOS would have long ago ceased to exist. All that has to be done is to develop personnel selection criteria. There has always been talent in Russia, there still is and it will remain in excess! The Kremlin selects people by the federal criterion of complete loyalty and manageability, and that is why the result is the ineffectiveness of that archaic “vertical.” Incompetent people cannot be completely manageable – that is the destiny of the incompetent and self-seeking. If the floodgates of vertical social mobility were opened and we hired the smartest, most educated and, therefore, most ambitious, those problems with professionalism would not arise. I am touched by the discussion in Kremlin circles about personnel: we have no specialists, we are suffering, we are dying, but we still won't let anybody into our circle, we will die but we won't let professionals in from outside our Koffeeklatsch! The result is there for all to compare. YUKOS from 1995 to 2003 and today's Kremlin. So don't be afraid. The personnel is here and it always will be. We will bring in new generations for real collaboration and those generations will build the Russia of the future. And those people of the future will not steal from themselves.

If there is a time to fear that they are about to steal something, no movement forward, no investment, no development can be possible.

Modernization as Salvation

The current political elite in Russia is looking for its salvation in the refusal to modernize and attempts, as one story in the days of Brezhnev went, to rock the broken down car in the dead end to make it look like its moving. “Where are we now?” No answer. The people keep quiet.

I'm not arguing: for many bureaucrats and those who live off the sales of prestigious raw materials, it is a good lifestyle. For the next three or four years, until the alarm clock goes off, and it is time to leave for the beaches of the still hurricane-free Maldives.

But for Russia, a real modernization project is necessary. Without it, the country will simple not survive the new century. It won't be able to meet the objective historical challenges. The outline of that project is already visible. There, just beyond the left turn.

A Turn to the Left and the Authorities’ Good Intentions

2005-09-02T11:17:00.000-07:00

As passed through his lawyers
September 2, 2005

Reports circulating in the media claim that one of these days President Putin is going to address the public on television, announcing a “turn to the left” – a substantial upgrading of social policies, involving in particular an additional allotment of 115 billion rubles for a number of different welfare projects.

It is a pleasure to see the country’s leader occasionally subscribing to civil society’s recommendations and those of some of its members whom he sent to prison. But I must emphasize that the President’s leftist effort is limited by the incompetence of the bureaucracy, and the hierarchy that cannot provide for effective use of oil wealth, let alone high growth rates.

The amount of 115 billion rubles equals a little bit more than $3.5 billion. A little bit less than $25 per capita. The “royal” gift comes to “the dear Russians” in times when the government is essentially eliminating free secondary and higher education, limiting infrastructure and research investment, maintaining a low level of pension and welfare, and cutting back on free medical care. In other words, it is slashing its obligations by 300-400 billion rubles (corrected for inflation) every year. What does a one-off gift of 115 billion mean against this background?

This is done in times of historical peaks in oil prices (over $70 per barrel), when the Central Bank’s reserves exceed $150 billion (4.5 trillion rubles), and the stabilization fund has accumulated over one trillion rubles. Why? Is this measure an admission of the bureaucracy’s inability or unwillingness to transform and change their development policies?

There are no reasons to doubt Vladimir Putin’s good intentions. But is his bureaucracy capable of translating them into reality?

An Appeal to the Electorate, to All Russian Citizens

2005-08-31T11:15:00.000-07:00

Statement by Mikhail Khodorkovsky
Released by his lawyers
August 31, 2005

Dear Friends!

I am very grateful to all regions, all voters and all Russian citizens who have voiced their readiness to nominate me for the State Duma and for regional parliaments. I am especially grateful to Tomsk and Novosibirsk regions, to which I am bound by long years of cooperation. Everyone who was not afraid to show support for prisoner Khodorkovsky today has demonstrated that civic courage and true human dignity have not disappeared from Russia's regions despite speculations of cynical and well-fed Kremlin mouthpieces. I know this from the thousands of letters I receive. Now I have seen another clear-cut proof of this. This is why I am really happy. Your position helps me carry on living and fighting in a prison cell.

Support of several Russian regions is a great honor for me. However I have decided to run for a seat in the State Duma in Moscow, in the Universitetsky constituency No 201 of the capital. Because I am struggling not for access to the deputies' canteen or an office at Okhotnyy Ryad [where State Duma is located], but for the right of every Russian citizen to say out loud that the present Kremlin regime is a spent force and its days are numbered. The disintegrating and decomposing Putinism must be replaced by a new generation of leaders who are concerned not with securing a disgraceful spot at the government trough, but with Russia's destiny in the third millennium.

Waging our common struggle, I am counting on the live energy, talent and courage of the Russian regions. However, for my words to be really heard throughout Russia and the world, I need to run in the election in Moscow. I am sure that all those who feel sympathy with me will understand me.

I promise that, as soon as I am released from prison, my first trips will be to Tomsk, Novosibirsk and Ulyanovsk. Brothers and sisters, thank you for everything. We are marching towards victory together and we shall win.

Mikhail Khodorkovsky
Matrosskaya Tishina pre-trial detention centre

Mikhail Khodorkovsky Responds to Questions Surrounding Hunger Strike

2005-08-24T11:13:00.000-07:00

August 24, 2005
As passed through his lawyers

When did you embark on the hunger strike?

I started it late in the night on August 19, when I learned that my friend Platon Lebedev was put into an isolation ward.

Why did not you make your hunger strike known on Monday, August 22?

I hoped that common sense would prevail and Platon (whose poor health is well-known) would be returned to his cell. Had that happened, I would have ended my hunger strike immediately.

Why did not you send a notification of your hunger strike to the head of the detention center, as the rules suggest?

I have no claims to the DC administration. It was not the DC administration that decided to put Platon in a punishment cell, and so my hunger strike is not a protest against the detention center measures. That’s why I sent no notifications.

Mr. Kalinin, Head of the Federal Punishment Administration Service, said that you were not on a hunger strike and you get sufficient food packages. Is it true?

Much has been said about the true value of Mr. Kalinin’s words. I won’t repeat. I will add only that my 15 neighbors (most of them are 20-25 years old) will never starve while I am in the same cell.

"I have started a dry hunger strike to support my friend Platon Lebedev."

2005-08-23T11:09:00.000-07:00

On August 19, 2005, the anniversary of the GKChP (State Emergency Committee) failed coup, my close friend Platon Lebedev was transferred to a 3 square meter isolation ward.

This act of repression was formally linked to Lebedev’s refusal to take a daily walk, but everyone understands it was a mere pretext. Platon is seriously ill and he has not been able to go out into the exercise yard for more than a year. Obviously, my friend has been flung into an isolation ward as a revenge on me, convict Mikhail Khodorkovsky, for my articles and interviews.

Let the Kremlin think they are demonstrating their power. This is an act of weakness in fact. As they cannot engage in an open political discussion with me, they are resorting to their only remaining weapon – isolation wards and group cells.

I have started a dry hunger strike to support my friend Platon Lebedev. He knows he is not alone. Each countryman of mine whose heart beats with passion for freedom and fairness must know: we stand together.

Interview (8.4.2005)

2005-08-04T10:50:00.000-07:00

"I am sure the sentence will be reversed."
Vedomosti Daily
August 4, 2005

Mikhail Khodorkovsky is, for now, in Matrosskaya Tishina jail awaiting the ruling on his appeal against the nine-year sentence delivered on May 31 by the Meshchansky Court of Moscow.

Q: Did you expect such a sentence? Do you think it will be commuted? Are you going to ask for the President's pardon?

A: I was told as early as the middle of April that I would be given the maximum sentence. Of course, hope dies last, but I think I was less optimistic about the outcome than all my relatives, friends and colleagues. I am sure that the sentence will no only be commuted, but I think it will also be reversed by the Supreme Court of Russia -- in about 3-4 years time. Until then, I'll be inside if I have to.

Q: Can you comment on the course of the trial, the action of all the parties, including the judges?

A: No comment on the performance of the Prosecutor General's Office. I think they are ashamed to go into a trial with the kind of case that they have put together. It's another question that the prosecutors knew that the decision would be taken at the Kremlin and that proof was irrelevant. As for the judge, Irina Kolesnikova, she is to be pitied because she had her hand forced.

What could you expect from her? Being a lawyer she understands that she had to act as she did out of fear of her superiors. And believe me, to live with such a burden on one's conscience is worse than being in jail.

Q: What is the lesson of the YUKOS case for the owners and heads of other major Russian companies?

A: I think there are two lessons.

First: You shouldn't imagine that money is a magic wand that enables you to solve any problem. Money is just one element of comfort, but no more.

Second: If you want to be treated in accordance with the law and justice, you should build a state in which justice and law prevail and form a corresponding social environment. Don't count on some exceptional treatment - make the rules, follow them and uphold them.

Q: Do you think a similar fate may be in store for other oligarchs? How should they act to avoid it?

A: I don't think the Kremlin is going to make short shrift of other big businessmen. For Putin the YUKOS case is enough, and for the people around him Yuganskneftegaz and other assets of the looted company are enough. The government doesn't have enough clout, or energy, or confidence to attack another national corporation. The Kremlin itself now says that the application of the law to the YUKOS case is highly selective and it offers business something like a non- aggression pact, but as far as I can see it from my cell, mutual trust between the state and the entrepreneurs is no longer there.

And no pacts can be of any avail until there is a change of power and big business takes several decisive steps to meet society, in particular, initiates legitimization of privatization.

Until privatization is legitimized, the fight for possession of big chunks of property in our country will continue. Taking part in that fight will be semi-privatized law courts, the security bodies and the prosecutor's office. And I wouldn't be too sure that in the near future none of the so-called oligarchs -- big or not so big -- will not be jailed or killed. The Kremlin is not the only player. He who is happy with the current rules of the game will have to follow them and can at any time become a victim. It's impossible to get an "individual" guarantee.

Q: Some readers of Vedomosti think that the YUKOS case was good for the country's economy in that big business is abandoning minimization of taxes and the oligarchs no longer think that they are running the country. Do you agree with this?

A: As for me, personally, I gave up minimization of my own taxes long before the YUKOS case. I have never thought of myself as running this country. I am convinced that government should be separated from business, which doesn't mean that business has no right to defend its political interests. It means that business shouldn't rule the country, but neither should the government engage in business. However, today we see that executive power bodies are motivated by private business interests just as much as in the 1990s. The YUKOS case made no difference. If anything, cynicism has increased, as it became evident that present-day Russian capitalism is based on brute force. Whatever you might say, I am not aware of any positive consequences for society of what has been done to YUKOS and to me personally.

Q: Did you count on the support of society or some of its strata? To what extent have these expectations come true?

A: I was aware that a wealthy man of Jewish origin could not be too popular in Russia. And I am amazed to see how many ordinary people in various regions of Russia have supported me. Teachers, doctors, workers, students, pensioners. During the year and a half that I have been in Matrosskaya Tishina, I have received a lot of letters of solidarity and support. Many people who until recently thought of themselves as my ideological adversaries -- including in the camp of the CPRF and Motherland -- have recently, at the most difficult time for me, joined the camp of my allies and entered into a substantive dialogue with me. The liberal circles and the intelligentsia have consistently supported me, for which I am grateful to them and forever will be.

Only 5-7 professional liberals turned their backs on me. They were the ones who two years ago sounded off in various society gatherings that "the year 1937 is coming" and then, on a signal from the Kremlin, made a U-turn and started arguing in a very profound way that a 9 year sentence would do me a lot of good. But I am not interested in these people. I am not, of course, speaking about paid-for provocateurs on television. Everyone who wants to be a villain in public, can do so thanks to the Kremlin-controlled media.

It is far more difficult -- and dignified and correct -- to cultivate the human side of you and to oppose a superior force. "And in my cruel age I praised freedom and pleaded for mercy for the downtrodden." This is an article of faith of a Russian intellectual.

You can't put it better than Alexander Sergeyevich [Pushkin] did.

Q: Do you agree with Leonid Nevzlin that Roman Abramovich should take much of the blame for the savaging of YUKOS?

A: I don't. Most probably, Leonid was reacting on an impulse.

Roma Abramovich is not a St. Peter, to put it mildly. But the organizer and driving force behind the YUKOS case was Igor Sechin, one of his rivals in the scramble for influence on Putin. The row over YUKOS marred Roman's reputation in the West, and this is the most important thing for him now. Surely, Abramovich did nothing to help me and my partners, but then, of course, he is Putin's friend, not mine. We shouldn't have counted on him.

Q: Deputy head of the president's staff Vladislav Surkov said recently that the YUKOS case was not a political one and was not about redistributing property, that it was the result of a "sum of factors." Was he really trying to convince you that "power, like love, could not be bought"?

A: I agree with much of what Slava Surkov says. For instance, that the opinion of 140 million ordinary Russian citizens should be decisive in determining state policy. Although the Kremlin by no means always takes it into account today I am glad that Slava, unlike myself, has still not been jailed. I hope he won't be jailed in the future. And I agree with the bit about the "sum of factors." One of these, called YUKOS, cost $40 billion, but now it costs nothing and is encumbered with debts. You can't buy people's affection, but you can earn it. Not everyone succeeds in doing it.

Q: What are your personal hopes for the future?

A: First, I pin my hopes on my social activities, which I will continue wiith my funds in support of Russian poetry and philosophy and the alliance in aid of Russian prisoners. I am absolutely free in this work from any external commitments and this is what fills me with optimism. I know now that you can feel free even if you are in jail.

Secondly, I link my hopes with the generations who will, in several years' time, break through the gray ranks of bureaucratic mediocrity to take power in Russia. Then all of us will be released from a "prison."

A turn to the left (8.1.2005)

2005-08-01T10:45:00.000-07:00

(First published in Russian in the newspaper Vedomosti)

It is generally accepted nowadays that authoritarian trends are returning in this country. Furthermore, these trends are so lacking in creativity that one is reminded of the days of Chernenko. No one would disagree with that. But I do disagree with many of the analysts both in Russia and abroad who are somehow linking these trends with President Vladimir Putin and his group of “Leningraders”.

Authoritarianism was relegated to Russia’s history in 1996 at the time when Boris Yeltsin became president for a second term of office.

I can remember that dreary January of 1996 very clearly. At that time most liberals and democrats (and of course, without delving into the meaning of those words too deeply, I considered myself to be in both of those categories) felt disheartened because of the landslide victory by the CPRF in the Duma elections of 1995. But I was even more disheartened because so many members of Yeltsin's organization were willing to stand in line to greet Gennady Zyuganov and, as they smiled subserviently, waited to be forgiven for their fling with democracy and to be presented with newly minted purchasing cards enabling them to buy merchandise from a special store.

At that point, neither I nor those who thought as I did had the slightest doubt that Zyuganov would win the upcoming presidential election. And this was not because it looked as if Yeltsin was seriously ill or drinking too hard or had lost interest in being in power. At that point we were not familiar with the political jargon of the day, but we nevertheless could feel that there had been a change and that there was something that one could call a national agenda.

In 1990 and 1991, when everyone was becoming aware that the soviet system had lost its relevance and was no longer viable, the whole country dreamed of being free. Everyone dreamed of having the right to be one’s own person, to be able to think, speak, read, see and listen, even to go abroad. They dreamed of not having to attend Party or political meetings every week, or having to work on communal vegetable gardens, or having to account for every action to the head of their block. We were looking forward to democracy, believing it would miraculously resolve all our difficulties in the decades to come without any effort on our part. [We believed] that by using the magic recipe of democracy the Soviet Union would become a huge, wealthy and tidy version of Switzerland or even Finland in about a year. We all thought that is how long it would take. But by the mid-1990s it had become evident that the miracle of democracy was not working – freedom did not bring us happiness. We were simply incapable of being like the bourgeois Swiss - honest, moderate and neat. The country and our people were confronted by very different problems such as justice. Who should get hold of Soviet Socialist property which three generations had created by their own blood and sweat? Why did people who were neither known for their brains or education make millions while academicians and heroes, pilots and cosmonauts found themselves living below the poverty line? Doesn't that indicate that Soviet Socialism which had been simultaneously so blessed and so maligned had not been so bad after all?

The sense of national dignity: why had the world respected us when we lived in the "bad" Soviet Union, or at least they had feared us? Yet now in the age of freedom we were being looked down upon as being stupid and penniless?

There was the question of morality in politics: we had not liked the Central Committee of the Communist Party of the Soviet Union and the Central Committee of the Young Communist League because they were cynical and had secretly received favors that they did not deserve. But we certainly did not deserve rulers who were ten times more cynical and a hundred times more devious than the party overlords who, looking back, seem like nice retired country grandfathers and grandmothers compared with the new group.

There was fear of an uncertain future and a lack of goals: we had been thrown out of a dilapidated old Zaporozhets vehicle and were promised a Mercedes, but instead we were simply tossed out on a muddy road at the end of the world. Where are we? In what corner of the world? And is there some constant source of light for us there?

Only Gennady Zyuganov could answer all these questions convincingly at that point, whether we liked it or not. That is the reason why in March 1996 along with thirteen other leading businessmen (that is to say they were leading by the standards of the time) I signed a letter that has almost been forgotten by now, entitled “Breaking the Deadlock”. The intent of the letter was very straightforward and it is important to add that we really believed in it. Boris Yeltsin should remain as President of Russia as the guarantor of fundamental freedoms and human rights. But the leader of the Communist Party of the Russian Federation would serve as prime minister and would have broad powers. This is what we proposed because economic and social policy had to become more leftist because, the letter said, a "post-election war" was inevitable. We had to turn towards the left so that we could reconcile freedom with justice for the few winners and for the many who felt they had lost out in the wide-ranging liberalization process.

As everyone now knows, this Yeltsin-Zyuganov partnership compromise never came into being even though it was justifiable from a historical point of view. There are people who, unlike me, had close ties with the Kremlin and they know why that never came about. Yeltsin's closest advisers, who did not want to share anything with anyone even if it would have avoided an extended period of instability, should probably be the ones to take the blame. Or perhaps Gennady Zyuganov should be blamed. He was either unwilling to compromise in any way since he was absolutely certain that he would win or, like many of those who agreed with his philosophy and his writings, he simply decided against taking over power in Russia because he feared that the burden would be too great for him to carry.
Thus they decided on a different strategy. Millions [of rubles] were poured into a machine to manipulate public opinion that would culminate in a Yeltsin victory. Without a doubt, this was an authoritarian strategy. The values of the late 1990s were formed at that time and chief among them was the concept that the end justified the means. If we need to win, bar Communists from appearing on television, and work out later whether it was right or wrong to do that. Bring in General Lebed who could gain 15 percent of the votes that would have gone to Zyuganov and then forget about him. It was at that juncture that journalists started moving from being formers of public opinion to becoming the servants of their owners, and when independent public institutions became the voice of their sponsors. We have known since July 1996 that "money wins out over evil" and only money can do that.

In 1996, the Kremlin already knew that it was becoming impossible to extend the existence of the right-wing Yeltsin liberal regime by democratic means: if all things were equal, Zyuganov would be unbeatable. Then it became clear that the regime could not remain in power in 2000 unless there were compromises on democracy. At that point, Vladimir Putin came on the scene. It fell to Putin to take on the burden of the second Chechen war. He then had to develop a strategy that would ensure "stability in power and stability in the country".

In the summer of 1999, at a time when Yeltsin's health was raising ever more doubts and questions, the new generation of Kremlin leaders decided that the regime could only survive by means of a scam on a huge scale. We had to pretend that we were answering all the key questions of the agenda that had been frozen since 1995 but in real life, where there is power, property and money, we continued to act just as we had done in the past. This scam was the principal element of the Putin-2000 project which was the logical extension and outcome of the Yeltsin-1996 project.

The contradiction between expectations and reality began to rise to the surface in 2005. One sign of this was the January demonstrations against the replacement of benefits by monetary payments. "The Putin majority", even though poisoned by television and inspired by calls to "eliminate opponents", suddenly realized that it was simply being used whereas no one was even planning to change the government’s strategy.

We are once again facing these same hard questions that remained unanswered in the past. The agenda has not changed. But the people’s desire to achieve justice and see change come about has become more entrenched and more pronounced. No one should be misled by the fact that the price of oil has reached 60 dollars a barrel. Social upheaval takes place not when the economy is on the verge of collapse, but when it is time to distribute the results of an economic recovery. It does not happen when all are more or less equally poor. It happens when one percent of the rich and nine percent of those who are fairly well off are removed both materially and psychologically from the 90 percent of the poor and (and this is even more important), from those who have been humiliated [by events]. More than two million signatures were collected in May and June of 2005 in support of a general strike by Russian teachers. Is further proof needed that stability in this country is an illusion and that the "crisis has come to a head"?

Russians have become much more aware than they were ten years ago and we should not ignore this. They have been cheated repeatedly and refuse to be deceived again, even if it is by means of very clever and complex strategies. In that sense, the fate of the Successor-2008 project is not so easy.
Kremlin spinmeisters are aware once again that they can only continue on this course by means that are not democratic. They are more than ever convinced of this. They are convinced that the left would win if there were an honest and fair election. The screws are therefore being tightened, a monopoly is being placed on television air time and electoral law is being changed so that all parties except those that are 102 percent controlled by the President's administration will be barred from taking part in the elections. And national referendums will be banned so that no one would by any mischance be able to discover what kind of ideas and values people really support.
However, opinion polls that matter (including the latest poll by the Levada Center) leave no doubt that people are adopting leftwing values: 97 percent of Russians are in favor of free education; 93 percent feel that pensions must not fall below a level providing for a minimum standard of living; and 91 percent are claiming that savings people made before the reforms should be restored. At the same time, 81 percent want a return to the direct election of governors; 59 percent are in favor of restoring the institution of single-mandate deputies. In essence, this is an agenda for the next Russian administration: state paternalism and democracy, freedom and justice together, all lined up on the same side.

This means that the left is bound to win, despite all the gimmicks. And [they will win] democratically, as expressed by the will of the voting majority. And they will do this by any means possible. Whether it is by means of elections or not, or even after the elections have been held, a turn to the left will be inevitable. And as a result, those who are now seen as the direct successors to the current administration will no longer be viable.

Of course the Kremlin may still believe that they can block the path of history by resorting to authoritarianism all over again. [They can] Impose even greater control on the country, close down the uncensored newspapers and radio stations that are still in existence, seize the assets of those who do not toe the line, etc. But the resources of the post-Soviet authoritarian days in Russia are gone. First of all, authoritarianism is opposed by people who are not afraid that their assets will be seized because they have no assets in any case. They are prepared to choose for themselves, not as they are told by the official media, but based on their own feelings. Secondly, an authoritarian project needs leaders like Lenin and Stalin, or even Trotsky. People like that are utterly convinced that they are right; they are motivated by ideology and the power that was given legitimacy by that ideology. They are people who are prepared to die and to kill to have this power. There are no people like that in the Kremlin today: Russian leaders nowadays want only contentment for themselves and for the rest of the Russian people. And those Russians are too entrepreneurial and too bourgeois to imagine them in the role of bloody butchers and executioners. I say this as a person who has just been sentenced to serve nine years in prison.
In most formerly socialist countries, the left-wing forces came to power in the mid-1990s and they linked freedom with justice. As a result, the power structure in these countries steered clear of the awful crisis of legitimacy, the crisis that usually marks the start of all revolutions. But the post-Soviet area did not turn leftwards in time, because those in power thought they could avoid having a basic discussion of the real national agenda by seducing people with a false sense of stability. The result was the "rose revolution", the rallies on Maidan, Kiev's main square, and the "yellow tulips" uprising. And now the Ukrainian authorities that have arisen from the rallies on Maidan are raising the issue of revising privatization so there is no reason to feel you have been cheated and to hold your head in your hands: if the question of the legality of the privatization process had been raised by the ruling power structure five or six years ago there might not have been an orange revolution.

Let me point out with reservations that the much-touted legalizing of the privatization process does not mean nationalization of the economy in which major enterprises fall under the unlimited control of bureaucrats who are not accountable to anyone. On the contrary, the result of legalizing the privatization process will be to consolidate a class of actual owners who would be perceived by the people not as bloodsuckers, but as legal owners of legitimate assets. This means that large owners need to turn leftwards as much as the majority of the people who are still insisting that the privatization of the 1990s was unfair and was therefore illegal. Legalizing the process of privatization will become a justification for property ownership and people’s attitudes towards that ownership, perhaps genuinely for the first time in Russian history.
The next Russian administration will have to include the Communist Party of the Russian Federation and the Motherland Party, or the historical successors to these parties.

The left-wing liberals, including Yabloko, Ryzhkov, Khakamada and others should decide whether to join the broad social-democratic coalition or to remain grumpy and without relevance on the political sidelines. In my opinion, they have to join because only the broadest composition of a coalition in which liberal-socialist (social-democratic) views will play the key role can save us from the emergence, in the process of this turn to the left turn, from a new ultra-authoritarian regime.
The new Russian authorities will have to address a left-wing agenda and meet an irrepressible demand by the people for justice. This will mean in the first instance the problems of legalizing privatization and restoring paternalistic programs and approaches in several areas.

These issues will have to be addressed even if the next president is the liberal Mikhail Kasyanov or a successor appointed by Putin, for example, Sergei Mironov. If this is not done, the state will explode and the energy of the protest will burst through the weak shell that protects the authorities.
A leftward turn is as necessary as it is inevitable to the fate of Russia. And Vladimir Putin won't have to put himself out too much to allow a peaceful leftward turn to take place. All that he would have to do would be to retire in accordance with the Constitution and ensure that democratic conditions for the holding of the next election were in place. That alone would guarantee a prospect of sustained democratic development of the country without upheaval and the risk of disintegration.

The author is a private individual who is a citizen of the Russian Federation and is now held in Correctional Facility No. 99/1 in Moscow.

"My living space from now on is the territory of freedom" (5.31.2005)

2005-06-07T15:47:00.000-07:00

Despite the obvious lack of evidence of my guilt and a mass of evidence that I was not involved in any crimes whatsoever, the court has decided to send me to the camps.

I do not intend to harshly criticize the esteemed judge Irina Kolesnikova. I can imagine what sort of pressure she was under from the initiators of the “Khodorkovsky case” while she was preparing the verdict. Scores of government functionaries, or just plain self-interested intermediaries, were ready to bring any amount of money to the court just to make sure I was sent to Siberia.

When it comes right down to it, Kolesnikova is not the problem. The problem is that the judiciary in Russia has turned completely into a mindless appendage, a blunt weapon of the executive. Actually, not so much of the executive branch of power as of several economic groups with criminal ties. Millions of our fellow citizens have seen today that despite our country’s top leadership’s statement about the need to strengthen due process, there is nothing to pin our hopes on for now. This is a shame and a stain on our country, and its misfortune.

I do not admit guilt, and consider that my innocence has been proven. This is why I will appeal the sentence handed down to me today. For me, it is a fundamental matter of principle to attain truth and justice in my Motherland.

I know that the sentence in the criminal case against me was ultimately decided in the Kremlin. Some people in the president’s entourage insisted that only an acquittal could bring back society’s trust in the government, while others insisted that I be locked up for a long time, in order to deprive me of the will to live, to be free, and to fight.

I want to say thank you to the former, and bring to the attention of the latter that they have not won.

They will never be capable of understanding that freedom is an internal state of a person. It is precisely those who wish me ill, the ones who have dreams at night of a Khodorkovsky rabidly thirsting for vengeance, who are doomed to spend the rest of their lives trembling over the stolen assets of YUKOS.

It is they who are profoundly un-free and will never be free. It is their pitiful existence that is the true prison.

I, on the other hand, have the full right to say whatever I think and to act as I deem necessary, without needing to get my plans approved by any overseers. And this is why my living space from now on is the territory of freedom. The captives are those who remain slaves of the System, who have to grovel, to lie, and to debase others in order to preserve their incomes and their dubious status in this obscene society.

I will engage in civic activities; I plan to create several philanthropic organizations, for example a foundation to support Russian poetry and one for Russian philosophy, as well as a Union for Aid to Russian Prisoners. I remain an active participant in the programs of "Open Russia". I will soon be holding an extramural press conference at which I will discuss the highest-priority steps. This will be the first press conference from jail in post-Soviet history.

While I no longer have significant personal assets, there are many people willing to provide financial support for my programs because of their association with my name.

I want to say a big "thank you" to everybody who gathered here today inside and outside the courthouse, and to everybody who had supported my over the preceding year and a half. You are the decent and valiant people of Russia. I solemnly state that you can always count on me. Even though I don’t have big money any more, we can accomplish a great deal together.

I would like to say a separate word of thanks to those tens of thousands of ordinary inhabitants of Russia, from every corner of our country, who have supported me with their letters. My time in jail has shown me yet again that the Russian people are not mindless beasts of burden, as certain ideologists close to those in power assert. No, they are a righteous and noble people.

I will work together with those who want and are able to speak openly about our country, about our people, and about our common present and future. I will fight for freedom – for mine, for Platon Lebedev’s, for that of my other friends, and for that of all Russia. And particularly for that of the next generations, those to whom our country will belong in only a few years.

For them, my fate must become a lesson and an example.

Thank you to my family. They have been and remain my support, now and always. It may take many years, but I will walk out from the barbed wire and will return home. I have never been as sure of anything as I am of this.

Even though years in prison await me, I am still experiencing a great sense of relief. My life is now a clean slate; there is nothing extraneous, accidental, or superficial in it any more. I see my future as bright, and the air of tomorrow’s Russia as pure.

I have lost my place in the oligarchs’ clique. But I have gained a huge number of true and loyal friends.

I have regained a sense of my country. I am now together with my people – and now, we shall overcome together as well.

Do not despair. Truth always wins out – sooner or later.

Statement Regarding Leonid Nevzlin's interviews

2005-05-05T17:56:00.000-07:00

In reply to the requests to comment on Leonid Nevzlin’s recent public statements that I get from journalists through my lawyers, I would like to say the following:

In a free society anyone has the right to express his opinion and thus I will not comment on my friend’s and former partner’s opinion of myself, albeit I will not conceal my surprise. I do not want to become a cause of confrontation in society and I will always personally express my own opinion as, despite the special circumstances of my present situation, I am forming my position on the most important questions of Russia’s development on my own and deliver my opinion to the public as well as the mass media.

I do not plead guilty and I intend to get my freedom within the law, at the same time I ask my friends and enemies, in Russia and abroad, not to turn me into a banner of political and quasi-political projects with whose content I disagree.

Final Statement in Meshchansky Court

2005-04-12T06:46:00.000-07:00

FINAL STATEMENT OF MIKHAIL KHODORKOVSKY
Read in Meshchansky Court in Moscow on April 11, 2005

Your Honor, honorable court, honorable attendees!

I am a Russian patriot, and therefore first and foremost look upon what is taking place around YUKOS, my partners, and me personally from the point of view of the interests and values of my country.
Let us recall how this all started. Nearly 2 years ago, they arrested my friend Lebedev in the hospital. I remained in Russia after Platon’s arrest, although friends and lawyers categorically recommended that I not do this. I behaved as I did because I love Russia and I believe in its future as a strong and law-governed state.
Although I made a conscious choice – to remain in the country and not to hide from anybody, a year and a half ago armed people in masks arrested me. Since that time, they are holding me under guard, refusing to release me on bail, against the pledges of dozens of the most respected citizens of our country: leading authors, scholars, actors, public figures.
A year ago began the orderly and systematic destruction of YUKOS. The entire country knows how, by whom, and why the scandalous “YUKOS case” was organized. It was contrived by certain influential people with the aim of taking for themselves the most prosperous oil company of Russian, or more precisely, the revenues from its financial flows.
When they say that the “YUKOS case” has led to a strengthening of the role of the state in the economy, this evokes bitter laughter from me. Those people who are busily plundering YUKOS’ assets today do not actually have anything to do with the Russian State and its interests. They are simply dirty, self-serving bureaucrats and nothing else.
The entire country knows why I was locked up in jail: so that I wouldn’t interfere with the plunder of the company. In so doing, the people who organized the persecution of me personally tried to frighten the power and society with my mythical political ambitions. They openly deceived the President, other representatives of the top political leadership of the country, and Russian society as a whole. I am convinced that there is nothing hidden in our globalized,
transparent world that doesn’t become visible with time. And the court of history will put everything in its place. It is no secret to anyone that the criminal cases fabricated with respect to me and other YUKOS managers caused a great deal of harm to the domestic economy. Capital flight from the country has increased by a factor of 6, investor confidence – Russian and foreign – in our Motherland as a place to invest has been undermined. Oh well, let the full brunt of responsibility for this fall on those who engineered my arrest and are now trying to send me to a camp for a long time.
The whole world knows that the “Khodorkovsky case” that was planned by individual representatives of the home-grown criminal bureaucracy has dealt a grave blow to the reputation of Russia, of the Russian power. But nothing could stop the greedy people who had decided, no matter what, to appropriate the principal enterprises and assets of YUKOS – even the direct harm they have already inflicted and are inflicting every day on our country, our statehood.
All of Russia knows that the organs of the Prosecutor General’s Office never were able to prove even a single one of the charges leveled at me. Attempts to impute any crimes whatsoever to me turned into an outright farce, and even the prosecution witnesses essentially testified in my favor.
The court has now been presented with all the documents, all the witnesses have been questioned. And what do we see as the result? Two years of searches, interrogations of hundreds, if not thousands, of employees, the taking of hostages by way of arresting people who are not guilty of anything, including women with small children – and the prosecution was still not able to find a single document, not a single fact, not one testimony that would corroborate the existence of some kind of clandestine illicit plans, sinister secret instructions, underground meetings, i.e. nothing that would speak of criminal activity, of the existence of organized groups in the criminal sense of this word.
Likewise there is not a single document – let me emphasize, not a single one – just like there is not one word from a witness, that would point to my illicit activities, or to me and Platon receiving funds from criminal sources. Two years of inhuman labors by the Prosecutor General’s Office – and a zero result!
What is there? Legal, public documents about property, about public, official transactions, about civil-law disputes, the minutes of official operational meetings, which it is easy to obtain with even a minimal ability to use the Internet.
What else has the prosecution revealed to Russian society and the world? The fabrications of the procurators, not proven by anything or anybody, evidence only of their own criminal mentality.
I simply have nothing to defend myself from in an independent court: what these public documents of companies prove – namely, normal, stable operational activities with the aim of producing output, providing services, and obtaining legal profits – is not punishable, but on the contrary, is welcomed in all countries with a market economy, and, needless to say, is officially welcomed in Russia. In order to convince oneself of this, it is enough to acquaint oneself with the speeches of our President over the past 5 years.
What the procurators have concocted about organized groups, criminal intent, etc. is not corroborated by anybody or anything at all.
The court is essentially being asked to say that the mere creation, management, and ownership of a successful business are proof of a crime. One could do it that way, but this is, first and foremost, absolutely illegal, and second, is in contradiction to the normal vector of the development of the country. The law does not require one to contest cheap criminal pulp fiction pieced together by a group of literati from the procuracy. But in my opening statement I promised to prove the unlawfulness of the charges, which I have done with the help of my lawyers, although I was not obligated to by our Constitution, which has not yet been repealed, and the presumption of innocence established by it.
I do not want to talk about legality any more now – the lawyers have addressed that. I want to talk now about justice – a category that always has been, and remains, most important for Russia, for the Russian people. I will do without references to documents – these references were sounded in the defense speeches, and they will be in the written text of my address.

Apatit

The prosecution asserted that shares in Apatit had been stolen, that is received without payment.
All of the documents presented to the court unambiguously say the opposite.
The state received for this block of shares the price that it, the state, had itself established. Why such a price and not another one is a question not to us, but to the state. Although I do have my theory about an answer. At that time, Apatit was lying in ruins and was a constant source of social tension for the region. Therefore, the authorities were glad to give the enterprise to an owner who would save Apatit and would prevent a hungry and cold insurrection by its workers.
We succeeded in doing both the one and the other.
The documents have also confirmed that the money for investments was paid in by the investor, and was returned – only partially at that – by the private enterprise Apatit itself. And it was returned publicly, as reflected in the reports approved by its Board of Directors, the general meeting. The state received the price in full. And nobody is arguing with this.
Apatit, upon which lay the responsibility to build, purchase, design, i.e. to utilize the investment money, fulfilled or exceeded the indicators indicated in the terms of the competition – in production volumes, in preserving the number of workers of the enterprise, in preserving the production plant, in the social program – with lower expenditures and by way of other measures that had been indicated in the investment program. This brought profits to the shareholders, revenues to the region and the state, and a stable wage to the workers. Generally speaking, for preventing a social explosion one should get a medal, not an indictment. And today, this is a successfully operating and flourishing enterprise.

The NIUIF institute

The same kind of charges – and the same loose ends. Once again, the state itself adopts a decision on the sale price, and the price is paid in full to the state. The court has seen all the papers. At the same time, the price is absolutely fair if we proceed from the political and economic realities of those years.
The private enterprise AO NIUIF itself adopts a decision to change the direction and timetable for using the money of the investors. And once again, such a decision is adopted publicly, and is reflected in the reports approved by the Board of Directors and the general meeting; it returns the money. Again, what does the state – which has received what was owed it in full – have to do with this?
The Director-General of the Institute confirmed in court that the investment program was carried out with a change in the timetable and the measures, and that the objectives of the program were attained. The changes were intelligent and stemmed from market demand for the services of the institute. It is obvious that had the director acted in any other way, the institute would have become bankrupt long ago, it would have been sold for debts and turned into yet another night club, especially since the location, as the representatives of the Prosecutor General’s Office said,
is superb.
The results of the cooperation between the institute and the investor are well-known: already 10 years from the moment of privatization, NIUIF, its assets are carrying out the function of a multiple-industry scientific center, and not that of a construction site. There is a production plant, graduate students are being trained, industrial orders are carried out. Anybody who cares to can easily see this for himself.
In a country where the Academy of Sciences, if things continue to go as they are going, will eventually become a commercial real estate office, there are not that many such private scientific centers working for the interests of branches of industry. Is it just to prosecute someone for preserving the scientific base of the country? I think that neither the law nor justice demand this.

Apatit – trading policy

Without any justification whatsoever for doing so, the Prosecutor General’s Office has stuck its nose into the trading activities of the private enterprise Apatit, imposing upon it its own subjective notions about correct trading policy, effectively attempting to replace the owners and the authorized – from the point of view of Russian legislation – management bodies of this company.
Although I have been charged for the years 1999-2002, when I took no part whatsoever in the activities of Apatit, working, as the whole country knows, at YUKOS-Moscow, and subsequently being a member of the Board of Directors of YUKOS, and not of Apatit, nevertheless, I now know that none of the members of the Board of Directors of Apatit, including the representative of the state, and none of the shareholders of Apatit, including Western and Russian investors, nor the anti-monopoly organs of our country, who audited the activities of Apatit numerous times, as the court knows, made any claims against the managers of Apatit with respect to their trading policy.
Indeed, it would be surprising if they had – under their leadership, an enterprise that had been loss-making until the year 1995 became and remains profitable, pays dividends, taxes, and expands production.
Perhaps if Apatit were managed by workers of the Procuracy-General or by the people who stand behind it, things might have been even better, but to the best of my knowledge, they are not offering their management skills publicly as of yet. But what does any of this have to do with the charges leveled against me and Platon Lebedev?
The representatives of the owner of Apatit (the Board of Directors) and the hareholders at general meetings practically unanimously approved precisely this trading policy, precisely these reports. Nor do they retract their position today, either. I don’t even mention the opinion of the independent auditor invited by Apatit – the world-renowned, universally respected company PricewaterhouseCoopers, whose services have often been used by both Gazprom and the Central Bank of Russia. The opinion of the auditor likewise fully contradicts the notions of the Procuracy-General. What right do the procurators have, without knowing a thing about business
in general and this specific business in particular, to impose on the court, on the owners of Apatit, their subjective, erroneous judgment, one that contradicts the objective state of affairs, as well as the opinion of the owners of the enterprise, its Board of Directors, managers, and auditors? To present the illiterate reports of prosecutors on what from the point of view of economics and the law are incorrectly put questions?
I never interfered in the activities of the Prosecutor General’s Office and do not intend to interfere in the future. And I therefore hope that the prosecutors will do me and the entire country the same courtesy, and stop sticking their noses into the process of managing industrial enterprises. And especially those that have learned how to work well without their interference.

Most

Once again an empty charge of transferring the funds of YUKOS and two other companies to enterprises of the Most Group without consideration.
The court has been provided with contracts – that had intentionally been concealed by the prosecution and were found by the defense – according to which this money was provided. The contracts are public, and they prescribe the return of the money.
The money, it turns out, was transferred in exchange, in part, for the interest-bearing promissory notes of the Most bank, one of the largest commercial banks of Russia at that moment. That is, the prosecution intentionally attempted to conceal these contracts, knowing that they clearly show an ordinary placement of the temporarily surplus funds of enterprises. The contracts are official, not challenged by anybody. All of the funds provided under these contracts to enterprises of the Most Group were returned by the borrowers. All of this, once again, is available on the Internet.
By the way, knowing this, the Prosecutor General’s Office did not make claims against the managers of these enterprises and on this subject, nor, in fact, did the owners, either.
After all, I was a shareholder in YUKOS – a person more interested than anyone else in the success of the company – in other words, in there not being any theft and misappropriation. So it is beyond comprehension how someone could have invented the charge that I had misappropriated my own money.

Not carrying out a court decision by an official of a commercial organization.

There never existed, and there does not exist, a decision of an arbitrage court with respect to the Wallton company that has not been carried out. And a court decision that was not carried out with respect to a second enterprise – Volna – appeared in the year 2004 exclusively through the efforts of the Procuracy-General. It was precisely the Prosecutor General’s Office that attained – using ways and means that only it comprehends – the annulment of the amicable agreement between the Russian Federal Property Fund and Volna, when Platon and I were already in jail.
Neither I nor Lebedev have ever been employees of these organizations. The Procuracy-General itself has confirmed this to the court.
Wallton existed until the year 2002, and Volna – again, as became known to the court – exists to the present time, i.e. more than 10 years. Claims were not made of either the organizations themselves or their workers. This is all now known for certain to the court. So what was maliciously not carried out and by whom? What right do they have to charge us?
Now I will proceed to the modern-day analogue of the notorious Stalinist Article 58 -

Corporate tax evasion.

This is a pure lie from start to finish.
I will remind you that our law prohibits the distortion of reporting, or, in simple terms, fraud.
And this is just. If the authorities knew everything, then everything else is the problem of the authorities, and not of the taxpayers. I am charged with evading the payment of taxes from an organization by way of transferring interest-bearing YUKOS promissory notes. The absurdity of these charges has been established in court. The court has received all the documents confirming the absence of this crime.
In granting reduced payments, the authorized state bodies of the ZATO [Closed Territorial-Administrative Formation] did not merely know that the companies would not have terminals for the transshipment of oil on the territory of the ZATO, they directly indicated in the decision of the local Duma that the companies’ activities should not involve the production and raw-materials resources of the ZATO. These same state bodies issued the companies licenses for trading in oil products – but without the right to unload and store them.
The reporting submitted to the tax inspectorate was monitored during the course of audits and is corroborated by all of the witnesses questioned in court – both prosecution witnesses and defense witnesses. Thus, the state bodies had a complete and accurate picture of the activities of the enterprises in the ZATO, which, by the way, the representatives of the state bodies corroborated.
The same thing concerns the payment of part of the taxes with promissory notes, which was not only done on the basis of decisions of the state bodies. We have seen these decisions in court, and the tax and financial services of the city and the district monitoring bodies knew full well of their existence and content, which can be seen directly from their reports and official documentation.
By the way, the witnesses from the ZATO assert that they informed the Ministry of Finance of the RF as well.
Consequently, there was no and could be no distortion of reporting that would deceive state bodies as to the form in which tax payments were made – and as a consequence, could be regarded as a form of tax evasion.
The authorities adopted a lawful decision, the powers granted reduced payments and the right to make a part of tax payments in promissory notes, the authorities monitored the carrying out of their decisions within the framework of various audits. No one in the given instance was deceiving the authorities – all the documentary proofs of this exist.
That decisions of this kind were adopted by the ZATO authorities not in isolation, but with the understanding and approval of the federal authorities, is also corroborated by letters addressed to the local authorities, by articles on the press by federal officials, and by the testimony of witnesses and specialists questioned in court, who told of the practice accepted in Russia of granting reduced payments to intermediaries, as well as of the lawfulness of paying taxes with non-monetary means in the year 1999 into local budgets, inasmuch as the Tax and Budget Codes were not in accord with one another, while the Constitution and an international treaty signed by Russia were in the given instance and remain on the side of the rights of the local authorities.
What do the charges of tax evasion by way of including knowingly false information in reporting have to do with any of this? What, were not the YUKOS promissory notes redeemed?
Redeemed, and with interest. Budgets of all levels received their money in full.
And the charge of embezzling funds by way of the refunding of overpaid taxes paid with promissory notes?
In the documents of the financial bodies themselves about the refund of the verpayment that are in the case materials is written in black on white: “overpayment… refunded with cashed promissory note.” Who was deceiving anyone?
Furthermore, the prosecution does not contest the fact of the overpayment with promissory notes, while the fact of the redeeming of the promissory notes is corroborated by payment orders, and by the official documentation of the financial bodies, and by the official documentation of the maker of the promissory note, and by witnesses. That is, all of the promissory notes were not only redeemed, but redeemed with interest. The refund, however, took place without interest, of
course. It is obvious that the budget was refunding, and it was refunding someone else’s property, and moreover it was refunding in part, and not in full, and, of course, on the basis of a decision of the authorities, i.e. the owner, who knew both the form in which the taxes had been paid and the sum of money actually received.
I don’t even mention that not a single document, not a single witness, of course, mentioned me or Lebedev at all in connection with this activity. Not a single kopek, of course, was received by either me or Lebedev from these operations. Everything else is the fantasy of the authors of the criminal pulp novel. Once again, all the materials are on the Internet, and anybody can convince himself of this.
But what particularly galls me is the mere fact that a bunch of officials are aggressively making illegitimate claims of me and of Lebedev, with no grounds whatsoever, merely because this, apparently, will help their careers. This is unconscionable and illegal and causes harm to the honor of the country; it undermines confidence in the authorities.

Finally, about personal tax evasion in the years 1998-1999.

I am being charged with falsification of or refusal to hand over tax reporting. I want to bring to your attention that there are not that many people in Russia who have been independently declaring income since as far back as 1994. I did this. You have seen all of the relevant papers in court.
The prosecution declared that there was evidence that I received the money in 1998-1999 not from clients for providing them with consulting services, but from Rosprom or YUKOS-Moscow as an employee. I waited for this widely advertised evidence for a year and a half, and I waited in a not very comfortable prison cell, at that. Where is it? It did not exist then, and it does not exist now.
There is no information that this money was paid to me by Rosprom or YUKOS-Moscow, there is no information about mutual obligations between myself and these organizations stipulated in a labor contract. There is nothing but the assertions of the prosecutors. The law requires evidence from them, not from me, although I was prepared to tell the court about the essence of my consulting services, to explain why consulting by internationally recognized business leaders costs as much as I was paid, or more. But it would seem that legal arguments, just like considerations of common sense, are of no interest whatsoever to the prosecution.
I understand them; all in all, they do not have need of evidence. I refused to give the names of my clients, because people are afraid – and have every reason to be afraid – of persecution on the part of the Procuracy-General and the tax service. But so far, nobody has repealed Article 49 of the Constitution of the RF about the presumption of innocence. And I hope they never will.
I did not start to tell about my philanthropic activities in detail in court; its scale is now known to just about everybody – it is billions of rubles a year – so from the point of view of ordinary human reason, to accuse me of purposefully concealing 1 million dollars per year is quite funny.
I received exactly as much as I needed for the life of my family. I could have earned and received a lot more, but I simply do not and did not have such needs.
Unlike those modest businessmen and business-bureaucrats who are behind the YUKOS case and the corresponding actions of the Procuracy-General, I have no yachts, palaces, race cars, or football clubs. Even the house that was photographed for Komsomolskaya Pravda is not mine.
Mine is much more modest, and the photographers simply didn’t notice it – it is too small against the background of the gargantuan tract houses along the Rublevo-Uspensky Highway. And I don’t have any property abroad. You can ask the security services – they know this perfectly well now.
I was not one of those people who deliberately and cynically demonstrate a barbaric culture of consumption to the impoverished people of our rich country. I was an improper oligarch.
Apparently, this is why the power not only took away YUKOS, but is also holding me in jail going on two years already.
As has already been declared by me earlier, as the result of the sale of Yugansk [Yuganskneftegaz] at a sham auction, in accordance with agreements entered into among my partners in Group MENATEP 7 years ago already, 59.5% of the shares in GML transferred to a new trust to the benefit of Leonid Nevzlin within the framework of the appropriate legal procedure. What is of fundamental importance for me is that this is equivalent to my renunciation, without compensation, of any control whatsoever over the business and of any benefit that I might have received from the companies of Group MENATEP.
I do not have any large property left today, I have stopped being a businessman, I am no longer one of the super-rich people.
All that I have is an awareness that I am in the right and a will to be free. And also my business reputation, which allows me to raise funds for philanthropic projects. Projects from which tens of thousands of Russians receive tangible benefits – from veterans and invalids to students at the schools and gymnasia of Russia.
I had, and have, my own understanding of a worthy path for the country’s development. This path is not connected with the hopeless effort to catch up with the developed countries at the expense of trading in raw materials, but with talented youth, who want to live and work in the Motherland, in their own country, in their own cultural milieu, in a free, democratic, civil society.
I am proud of the work that I was able to accomplish over the past 15 years. It was not I who broke up the Soviet Union, it was not I who destroyed Soviet industry. My fate was to rebuild this industry. These are dozens and hundreds of enterprises. Now they are all working for the good of Russia. I take pride in this, even though I am no longer a co-owner.
I take pride in the fact that in the most difficult time for the country – when oil cost not $54 per barrel, like today, but $8.50 per barrel, when there weren’t any gold and foreign currency reserves worth hundreds of billions and stabilization funds groaning under the weight of easy money – I came into the oil industry and rebuilt a company that in 2004 – just before the beginning, or the end, of its evisceration – became the largest oil corporation of Russia, number one in the country in production and in refining, having pulled ahead even of Lukoil.
I take pride in the fact that I was one of the first in Russia to call for transparency in business.
We succeeded in making YUKOS into a transparent company and in bringing our business into the open. We thereby created standards of behavior for all Russian business. And if the shares of dozens of Russian companies are being traded on the world’s leading stock markets today, some small part of the credit for this is ours.
Yes, YUKOS has been ruined and eviscerated by our foes, by those who have locked me up in jail. Nevertheless, I consider that transparency and openness are the only way to freedom a corrupt government official, from bureaucratic abuse.
I have every reason to take pride in what I did as a public figure as well. The Federation of Internet Education created with my participation has trained 150 thousand high school teachers; we have created hundreds of computer classes in dozens of regions of Russia; together with leading colleges, we have implemented programs for training top-rank specialists in Tomsk, Moscow, and Samara. In addition to this, we have built dozens of “New Civilization” youth centers, sports complexes, swimming pools, and several lyceums for children who have lost their parents, including the Podmoskovny lyceum, where my father works. Driven by the desire to
see the country free and just, I supported independent mass media, as well as various political forces, as long as I had the chance to do so. I do not regret this one bit.
All of this was done by me not for popularity’s sake (before the arrest, few people knew anything much about the social programs I have named), but because this is what my conscience and my upbringing told me I should do. Because I consider this to be the proper and honest way to live.
I did my best to revive Russian industry, to create a civil society. I may have made some mistakes, I may have not done some things the way I should have, but I sincerely did seek to work for my country, for its welfare, and not to line my own pocket.
Everybody knows that I am not guilty of those crimes that I am being charged with. And I therefore do not intend to ask for leniency. It will be a disgrace for me and for my country if direct, barefaced deception of the court by the procurator is in essence regarded as lawful. It was a shock for me when the court and the lawyers made this clear to me. It is horrible if the country is convinced that the court is acting under the influence of officials from the Kremlin or the Prosecutor General’s Office.
I very much hope that the trial that ends today will help to change both the situation and public opinion. The public nature of the trial and the high degree of attention to it on the part of all of Russian society and of jurists throughout the world give every reason to think so. I have faith that my country, Russia, will be a country of justice and law. And this is why the court must rule on the basis of justice and on the basis of the law.
I am grateful to everyone who supported me in this difficult time, who helped me bear the hardship of prison, to live through the pillaging of a successful company to the creation of which I had devoted a significant portion of my life. Support from people of a wide range of views, generations, and professions has helped me to live through this, to rethink many things in my past, and to open a new page in my life. Hundreds, thousands of my colleagues have behaved honestly despite the hard pressure and direct threats on the part of the Prosecutor General’s Office. Many of my colleagues have been thrown in jail, essentially turned into hostages, but they have preserved their human dignity, and continue to walk the path of truth today. Thank you for everything, I am with you, I will always support you!
Thank you to everyone – politicians, journalists, cultural figures, scientists, and businessmen – who was not afraid to speak out openly in my defense. My friends, we are fighting for justice, and we will surely attain the truth! I also want to thank the tens of thousands of ordinary Russian who have supported me with their letters. In the sacred words of the Gospel, they have “chosen that good part.”
I want to express particular gratitude to my parents, who have endured everything, the whole torrent of meanness and filth that has poured out upon them. It has not been easy for these elderly people, not in the best of health, to take all this. Thank you, my dear ones, and forgive me for having brought all this worry and distress upon you.
Thank you to my wife, who has truly carried herself like a comrade-in-arms, like a real Decembrist’s wife. To all the members of my family I want to say that I love you!
I have three young children, and I want to give them a good education. I want to work, and I will work – in a new capacity now, not as an owner of an oil company – for the good of my country and of my people. No matter how the court rules.
I thank you for your attention.

"I Miss the Sun", interview to Russian Newsweek (1.31.2005)

2005-01-31T13:22:00.000-08:00

Mikhail Khodorkovsky was once one of the richest men in the world. Now he languishes in a Russian jail. Disheartened and disillusioned, he accepts that his career as a businessman is over; his career as a citizen continues. Khodorkovsky gives his first interview from jail in a move that will further inflame the Kremlin.

Did you ever think that your imprisonment would last this long?

Yes. I honestly did, I warned my friends and family, they didn’t believe me. They thought I was showing off. Unfortunately, the duration of my imprisonment depends not on the court, but on several bureaucrats and businessmen who fear that I may start avenging my own hardships and Yuganskneftegaz.

Do you have any idea as to when you will be released?

I don’t know. Maybe when the authorities only have their power, and the courts are independent, not a mechanism for redistributing property. Maybe this year, maybe never.

Why did the authorities view it as necessary to arrest you?

At the end of October 2003 President Putin was misinformed that I was planning to become the Senator of Evenkia (East Siberia), which would grant me immunity. So I was seized on a Saturday morning in a plane in Novosibirsk. I was indeed going to Evenkia, to support my friend Vassilii Shakhnovskii’s election to the Federation Council. Everyone knows this now.

In addition, I think that it was important for the organizers of the attack on Yukos to cross a metaphorical “red line”, forcing themselves and everyone else to play to the bitter end, so to speak. That’s why I was jailed.

Do you agree with a statement that your imprisonment is the Kremlin’s revenge for your increasingly active political role, including your attempts to introduce your people into the parliament?

That’s part of it. Personally, I am in favor of a strong state, but I am convinced that the power of the state should be located not in the multitude and authority of its bureaucrats. Instead, it should be in the people’s trust toward the government, in the government’s ability of solving society’s problems by attracting and consolidating the nation’s best brains, in a system of institutional and social checks and balances.

I’ve supported various political parties and institutions because I am convinced that our country needs to allow for more than one point of view, it needs a strong and independent political opposition.

However, at this point I am sure that the main reason behind the Yukos affair was the desire of four or five people to gain control over a large and successful oil company. Politics was just an excuse to persuade the government to hit back with property redistribution by any means necessary, including those that are unlawful. In the previous decade we regularly witnessed similar attacks, but never directed against such a large corporation. Such high-ranking officials have never been instruments in these attacks before either.

What is your conclusion? Is this an example of your inflexibility and adherence to principles regarding the authorities, or is this a consequence of a series of mistakes in your business and public work?

Both. With fewer mistakes, more people would understand and trust me. But I still hope to gain their confidence. If it weren’t for my principles, I would be somewhere abroad or in the relevant bureaucrats’ offices, not in jail. I didn’t want to, and in any case I couldn’t. Perhaps before I may have, but at some point I started feeling more like a citizen than a businessman.

It’s harder to speak from a prison, but I am better heard this way. From abroad I would only be seen as an oligarch, squandering his wealth and casually discussing Russia’s destiny between the sauna and tennis sessions. It is physically more difficult for me to speak, but morally, I have a right to do so.

Two years ago you were saying that the State Duma needs to approve not only the appointment of the prime minister, but also his dismissal. Do you still believe that today?

It’s a much broader question. Our country needs a concept of a new political system. This concept still has to be developed. It seems to me that the president should position himself above all political battles as a guarantor of national stability. If the government, responsible for the country’s economy and administration, is formed by parliamentary majority, the duration of the presidential term would not be such an issue. The head of state would then play the role of political arbitrator and be responsible for appointing a number of judges, the prosecutor general, the heads of the special forces.

Many people today criticise the concentration of political power in the hands of one man. But we are forgetting that this concentration is a direct product of the 1993 Constitution, written under pressure of short-term political factors. And I hope we don’t change our political system again simply to conform to someone’s petty conjectural aspirations.

What is your opinion of the Kremlin’s new political reforms, such as the presidential appointment of governors and deputies only being elected according to party lists?

The intention of the authorities is to turn all politicians into appointees thereby freezing the ruling class, making it impenetrable for outsiders. This will invariably lead to stagnation. We already saw what happened to the ruling elite in a similar process during the 1980s, and today’s Russia is even more unstable than the USSR of that time. I think these reforms are dangerous. They may lead to a situation where the only way for people to complain is through revolt, a meaningless and merciless revolt. Would the authorities be able to suppress it? I am not sure.

Do you still think that big business has to repent for its mistakes in the eyes of the people?

Yes. This concerns not only big business, but the entire ruling corporation that is responsible for making the market reforms of the 1990’s completely antisocial, undermining people’s trust in liberal values and ideas. Yesterday’s and today’s bureaucracy, which are interrelated, whatever anyone says, should not assume that an apology from business frees it from responsibility for it’s mistakes.

Have you tried to reach an agreement with the authorities about the conditions of your freedom? Not through solicitation of your lawyers, but through talks with those controlling the investigation and the trial?

I have repeatedly and openly offered my shares of Yukos to the authorities. Not as a ransom for my freedom: I was hoping that by gaining my shares, those who are interested in Yukos would not destroy the company, leaving hundreds of thousands of Yukos employees jobless and hopeless. Yet these people’s fates have been sacrificed to someone’s selfish interests, oriented on Yuganskneftegaz. I mentally said goodbye to the company in spring 2004. That Yukos managers and employees continue to work defiantly marks them out not only as professionals, but as heroes. I feel sorry for the people who have been arrested and forced to make false statements, for the people who were forced to leave the country, and for the people who keep fighting despite everything.

What was the extent of your control over the company’s actions all this time? What are the prospects of the bankruptcy case started in Texas? Will the shareholders’ lawsuits affect the buyer of Yuganskneftegaz?

After my arrest I understood that the business would be taken away, but I could never even imagine that that would happen with the destruction of the company. Being in jail, it’s hard to interpret the situation adequately enough to continue managing it. As you know, I resigned as a Yukos board member. The company’s managers and the board of directors are responsible to the stockholders, so they are doing whatever is necessary to avoid any future complaints, especially from minority shareholders. The same goes for the directors of Menatep, where I held 9.5% and was beneficiary of 50%. Today this has also gone to other shareholders. Those that remain free may have changed something, but the directors are still independent, and are acting in the interest of all stockholders, according to the law.

As one of the Yukos shareholders, Menatep has repeatedly declared its intention to sue both the legal entities responsible for the so-called auction and the companies dealing with the ownership of Yuganskneftegaz. Personally, I am not planning to chase after any sums from the company or the state.

If you could address President Putin right now, what would you tell him?

Mister President, don’t let political power be devaluated and profaned. Don’t let it become a tool for property repartition in the interests of bureaucracy. This will only aggravate the problems of the 1990s.

What are your plans after liberation? Will you remain in Russia?

I don’t want to leave. I don’t see myself as a businessman anymore, I think that stage of my life has come to an end. However, I would like to continue with my educational and social projects through the “Open Russia” foundation, with my university project. I hope I can do this.

What do you do when not dealing with your lawyers and the court?

I read books, trying to stay in shape intellectually. I get many books, so I read a lot. I get stacks of newspapers, magazines, but sometimes I would rather not know or hear any news… I answer letters, people write me often, both from Russia and from abroad. There are almost no “bad” letters, everyone is empathetic, some people ask for help. I cannot exercise much; there is not enough room and only one hourly walk allowed daily.

Who are your neighbors in jail?

There are different people in jail, everyone has their problems, but so far I have found common language with everyone.

Are you satisfied with the conditions?

Well, it’s a closely confined cell, the conditions are tough. But there are pluses in a high security jail: the cell is 12 square meters, a few neighbors, a refrigerator, a television. The monthly meetings through a glass screen are especially hard. I miss my family — my wife, children, parents. I am very sorry for them. And I miss the sun.

Speech by Mikhail Khodorkovsky in Meshchansky Court (1.12.2005)

2005-01-12T14:30:00.000-08:00

I rarely make statements during the proceedings because I find there is no sense in doing so. But sometimes it is impossible to keep silent. Before the New Year, Mrs. Vishnyakova, the official representative of the Office of the Prosecutor General, made a statement about imaginary billions of dollars stolen in the YUKOS case. I kept silent.

But today in Argumenty I Fakty newspaper, Mr. Biryukov, who is the Deputy Prosecutor General and who as I understand or I may be speaking incorrectly from the procedural point of view, is also the supervising prosecutor for our case, made the same mistake. In these proceedings we have repeatedly come across incorrect claims made by the Prosecutor General's Office. I would just like to draw attention to the statements made by Mr. Biryukov and other investigators in connection with Apatit shares about the stealing of 238 million dollars from the state. Even the prosecution has given up these charges by now (I refer to the charge of stealing from the state of this or a comparable amount in Apatit shares). At this time, I do not want to point out other incorrect claims made by the Office of the Prosecutor General and the [legal] violations that my lawyers have mentioned before. These include what we consider to be the illegal methods of working with witnesses - questionings immediately before court hearings, suggestive [leading] questionings held at the Office of the Prosecutor General, sometimes with questions that were not included in the record, and questionings after the investigation had been completed. If the prosecution needs to be reminded of the facts, we have them ready. But I think that all the participants in the proceedings remember them and I do not want to waste time on that.

During the preparation for these and other proceedings, which I believe are being prepared behind the court's back and which the representatives of the prosecution have mentioned, all the documents that were embarrassing to the prosecution were seized. At YUKOS alone, 150 searches were undertaken, and documents were seized from the lawyers' offices as well. Not all of the documents. The lawyers are surprised at the careless manner in making an inventory of the documents that were seized. There is nothing to be surprised at. In my opinion, the task was not only to find dirt, but also to block the defense's access to documents in order to work with witnesses without any restrictions. Business documents are stubborn things, and now many of them are missing. In some cases, they are unavailable to us, or they may not be included in the [document] inventories, or they are simply not admitted to the proceedings by the court at the prosecution's request. For example, documents on the transfer of promissory notes are included in the case, but documents on payment [of these] are in part not admitted to the proceedings, at the prosecution's request. It is funny that Lebedev was not even allowed to include his employment and tax record in the case materials.

I remain calm in the face of these and other peculiarities of the trial although in many countries they would constitute sufficient reason to stop these proceedings and initiate proceedings against the representatives of the prosecution who have permitted such violations. I stay calm because, frankly speaking, and I don't want to offend anyone, my trust in the Russian justice system has been undermined by the court decisions in the YUKOS case which easily found all the fantasies of the tax authorities and the prosecution to be lawful and justified. For instance, the YUKOS accounts were frozen because, I am quoting the ruling by memory, the chief accountant had stolen money from YUKOS and was keeping it on the accounts of YUKOS enterprises. This is not a joke; people were not paid their salaries for November on time because of that. Another example: according to the court ruling, for a period of four years, YUKOS evaded taxes amounting to a sum that exceeded its profit for those years. After such decisions, why should one pay any attention to trifling matters?

After all, our prosecution, which today is celebrating its 284th anniversary, has extensive experience. It was the prosecution, not the "cheka" or People's Commissariat of Internal Affairs in the late 1930's that led all the public and infamous proceedings. And later, in the 1960s and 1970s, there were generally acknowledged achievements as well.

Now we come to the main purpose of my speech today - [to talk] about the natural constraints that should exist, even in such fabricated proceedings, in light of the changes that have taken place in the world. In claiming that YUKOS, a consolidated company, had sold oil at understated prices and stolen billions of dollars, the prosecution is not only influencing the court in these proceedings, which is not so important, but is also harming itself and the country. YUKOS is the company that has consolidated accounts according to international standards, confirmed by international auditors and examined by analysts from dozens of countries. These accounts show all the income received, and not only income but also expenditures - for investment, acquisition of assets such as Sibneft, Arcticgaz, and Rospan shares. This means that the money was not only received by the company but was also spent by it. It is unlikely that the prosecution officials did not understand that. Unlike my colleague and partner Platon Lebedev, I consider the prosecution officials to be sane and professional. I even think that they have a conscience, but during proceedings like these, something happens to it [their conscience].

Do not simply take my word about oil prices. A mental calculation shows that the supervising prosecutor's remarks about profits of $49 being made by YUKOS for each ton of oil after selling it for 150 dollars sound illogical. Add the $22 charged by Transneft to the more than $50 in taxes and duties actually paid and it all adds up to more than $70. Plus, there were expenses for production and in addition the company's profits were not that low. All the accounts are available on the website. Only in Baikal Finance Group's accounts can billions of dollars appear from nowhere and go nowhere, and even that is unlikely. YUKOS departments stopped the stealing of much smaller sums than that.

I would like to give one more example. Everyone remembers the five billion dollars that the Office of the Prosecutor General allegedly discovered in my personal accounts in Switzerland. At that time I said here, in court, that that was not true. I do not have personal accounts abroad and I do not even have this kind of money. These were YUKOS shares at their market valuation in the accounts of the pension fund. Now even Mr. Biryukov does not completely deny this in his article. By the way, the amount remaining in the pension fund should be returned to the shareholders after fulfilling all obligations to retired employees after 2010. Again, this information is publicly available. The destruction of YUKOS played a mean trick, not only on the retired employees, but also on the Office of the Prosecutor General as well. Where are those 5 billion dollars now? In the same place where my infamous 15 billion dollars (according to Forbes) are to be found. They are buried under the wreckage of the company. Shares now stand at zero or close to zero.

I stopped worrying about my assets or even my future long ago. I think I will be found guilty of anything, as I said even of setting fire to Manezh. But seizing and placing the company's ordinary staff members in custody, including women with small children, is too much even for today's Russia. And inventing billions that do not exist is simply dangerous. Higher-ups may believe and demand that these billions ought to to be brought to the state coffers. But they simply do not exist. Because the shareholders' income from YUKOS consists of dividends, that income is derived publicly and legally. But what is worse is that they will have to deal with international auditors, international legal advisers of the company, and Western financiers of the company who cannot just keep silent in response to such accusations if they are made. And they will have to resolve these problems, not in the Basmanny Court, but in an impartial court, and in different countries. And then again some people will feel sad for their country, and some people will be sorry for specific individuals.

If anything that I have said today from the factual point of view raises question on the part of the court or the prosecution, I am prepared to provide a detailed accounting any day with references to documents and names. But that is not my aim. I do not want the prosecution to paint itself into a corner with its noisome accusations and arrests and in consequence destroy many people's lives in pursuit of a specter. I congratulate many of the conscientious prosecution officials on their official holiday, and believe that the current problems [faced by] the Office of the Prosecutor General will surely be overcome after a truly independent justice system is established in the country. It will be painful, but everyone will win from it - the courts, the prosecutors, and society. I believe that the most important thing for everyone is not what they will gain but their own dignity. That is all [I have to say].

Statement Regarding the Petition Filed in a United States Court by YUKOS Executives (12.16.2004)

2004-12-16T17:00:00.000-08:00

In light of the current situation, I consider it necessary to express my position on the decision made by YUKOS executives.

I am deeply grieved by this development. But I cannot condemn the company’s foreign executives and Board of Directors for filing for reorganization in an American court. They have done more than one could expect them to do in their efforts to save
the company. Now they are defending their own personal reputations.

This filing will not help the company’s shareholders.

It is possible, however, to understand the executives’[motives].

It is difficult to understand the authorities who have declared that they are unable and unwilling to act in the interests of the whole nation. They have brought the company to the point of destruction and the stock market to stagnation during a time of remarkable economic conditions.

That is, of course, if one believes that the authorities are really concerned about the nation’s interests.

Prison and Peace; Personal Property and Freedom (12.12.2004)

2004-12-12T14:05:00.000-08:00

The destruction of ‘YUKOS’ is coming to an end. I have done everything I could to prevent the authorities’ dislike of me from resulting in such consequences for minority shareholders, rank-and-file staff of the company, and for the country as a whole.

Six months ago I offered to surrender the shares that belong to me to satisfy the claims made against the company.

However, a different means was chosen – the selective application of the law, the enactment and use of new, retroactive legal standards and interpretations, as well as the straightforward and public destruction of the business community’s confidence in the arbitration court and the authorities in general.

The concerted effort and complete audacity of the actions taken by taxation, law enforcement and judicial agencies, and companies connected with the government, as well as the overall pressure put on the managers and staff of the company, whose only fault was that they used to work under the direction of Khodorkovsky, leave no doubts that the trial was staged. Hundreds of people have been questioned, and completely implausible charges have been brought against many of them. Some people, including women, are being kept in prison. Why? The answer is quite obvious: Don’t interfere in the looting of YUKOS, but provide the evidence that will compromise Khodorkovsky.

It is now clear that not only political interests but other interests are involved as well, since the methods chosen to support these interests are detrimental to the reputation of the authorities and to the national economy. But those who started this do not seem to care about such trifling matters.

Today the issue is not the future of YUKOS. Most probably it will be impossible to save the company. The issue is what lesson the nation and society will learn from the YUKOS case, the final chord of which was the most senseless and destructive event for the country’s economy since President Putin’s term of office began.

Tyranny of Wealth

Yes, over the past year the $15 billion referred to by Forbes [Magazine] has shrunk practically to zero, and soon it will be absolute zero. However, I had realized that this would happen and suggested that the company and its minority shareholders should be left alone. I did so because I felt directly responsible to the 150,000 [YUKOS] employees, the 500,000 members of their families, as well as 30 million inhabitants of the cities and settlements who depend on the smooth and uninterrupted operation of the companies.

I have been concerned about tens of thousands of YUKOS shareholders who once made a decision that Khodorkovsky and his team could be trusted with their money.

And until recently one could assert that the shareholders’ decision was the right one. In 1995, when we – my team and I – joined YUKOS, the company was operating at a loss, the debt on wages had been accumulating for six months, and the outstanding payables amounted to $3 billion. YUKOS was only operating in nine regions of Russia, extracting 40 million tons of oil a year, while the volume of oil production was consistently dropping.

By 2003, YUKOS was active in a total of 50 Russian regions, while the annual oil production amounted to 80 million tons with a distinct upward trend. YUKOS was paying high wages to its employees on a regular basis: up to 7,000 rubles a month in the European part of Russia and up to 30,000 rubles in Siberia. At the beginning of the decade the company was the second largest taxpayer in the country (after Gazprom), accounting for almost 5 % of the federal budget.

I do not wish to discuss in great detail the wild imagination that invented the story of YUKOS’ tax arrears. (According to the experts at the Ministry of Taxes and Levies, YUKOS should be paying more than its revenues in taxes.) Methods such as these will be cited as a bad historical joke in textbooks on taxation law, since they prove that oil production in Russia is unprofitable. It is clear that government officials will stop at nothing for the sake of the redistribution of property.

However – though this may seem strange to many people – it will not be unbearably painful for me to give up my own personal wealth Following in the footsteps of many prisoners, both known and unknown, I must say thank you to the prison. It gave me months of [time for] deep contemplation and time to form a new outlook on many aspects of life.

And I have already realized that owning assets, especially large amounts of assets, does not make a person free at all. As a co-owner of YUKOS, I had to make enormous efforts to protect this wealth. And I had to set limits for myself so that this wealth would not be jeopardized.

There were many things that I did not permit myself to say, because speaking openly could harm those assets. I had to close my eyes and put up with many things – all for the sake of my personal wealth, preserving and increasing it. I did not control this wealth alone – it controlled me as well.

So I would like to warn young people today, those who will come to power soon: don’t envy those people who own substantial assets. You should not believe that their life is easy and comfortable. Wealth opens new opportunities, but in its turn leads to immobilizing a person’s creative potential, and to the disintegration of a person’s individuality as such. That is what this cruel tyranny shows – the tyranny of wealth.

And now I have been reborn. I am becoming an average person (economically I belong to the upper middle class) whose purpose is to live and not just own [things]. The struggle is not just to acquire property. The struggle is for oneself - for the right to be an individual.

In this struggle, ratings, bureaucratic contacts and advertising gimmicks do not matter. The only important things are oneself, one’s own feelings, ideas, talents, will, intellect and faith.

This probably means that the only possible and right choice is the choice of freedom.

Unmanageable Democraty

The YUKOS events are directly connected with the authorities. What impact will the YUKOS case have on the authorities? That is the most important question.

There is an old saying that each nation has the government it deserves. I would add that any government is the reflection of the people’s rigorous concept of the nature of power. That is why one can assert that in Great Britain, Saudi Arabia and in Zimbabwe, power belongs to the people. And the tradition of perceiving power is the basis for the stability of the state. So, talking of the ‘democratization’ of certain Arab monarchies on the basis of the Western model is as absurd as talking about the restoration of a medieval absolute monarchy in modern Denmark for example.

In this sense, Russian political tradition is artificial. Russia has always been at the crossroads of civilizations, but for the most part it is a European country. And therefore European political institutions envisaging the separation of powers can be applied in only a very limited manner in this country.

However, the other side of the coin should not be ignored. Russian people have traditionally regarded the state as a supreme power that gives them faith and hope. This power cannot be used until we cease to see it as supreme.

Russian history tells us that loss of this special, supra-rational respect for the state will inevitably bring the country to chaos, revolt, and revolution.

Importantly, ‘authority’ should not be confused with ‘governance’. Governance is carried out by officials who are by no means holy cows [saints]. A bureaucrat is merely a mortal, responsible for all [kinds of] problems and failures.

The destruction of YUKOS shows that when bureaucrats are let loose they can pursue goals other than those of the state, which is eternal and therefore powerful. They know that the state exists to serve their interests while other functions are temporarily (or permanently) abolished as unnecessary. They don’t have the slightest respect for the state, which they regard as nothing but a means to further their own ends.

That is why the YUKOS case is not a state versus business conflict, but rather a politically and commercially motivated assault by one business group (represented by officials) on another business. The state here is hostage to individuals who are vested with state authority.

In keeping with this logic, the bureaucrats have decided to abolish the [concept of] separation of powers. Under the model that we have, every politician should be the same as an official. And being in politics should be the same as having a career within the rigid hierarchy of the bureaucracy.

What is the objective here? To mobilize the nation to reach for historic new achievements?! If he were really giving his honest opinion, not a single person close to the Kremlin would agree with that. In a private, untapped discussion he would tell you quite the opposite – that abolition of the separation of powers will make it easier for the bureaucrats to milk the country and divide the loot according to their ethical standards, without any regard for the interests and needs of ordinary people. End of story.

But will this new system work? Will it lead its architects to their ultimate goals? No, it will not. These exercises in increasing “management” can in fact render the country totally unmanageable.

Why? Because it is inconsistent with the traditional rule of authority and the laws of complex systems that have been tested over centuries. Authority is always based on mutual agreement between the governed and the governing.

Motivation can take a variety of forms, from promoting Communism to mundane universal enrichment. But the motivation must be present and the same for all.

This kind of agreement cannot be provided by hazy and inane officials who follow the “Mine, mine, mine…” principle. They don’t even understand the need for agreement. That is why they are consistently destroying all the mechanisms of Russian public life: elections at different levels, competition, freedom of speech, etc.

But not a single real patriot will ever give his life for a handful of officials who care for nothing but their own personal gain. Not a single real poet will ever write a hymn of praise for them. Not a single scientist will ever aspire to great discoveries in a society in which no one gives a damn for his talent.

Very soon the only partner to this omnivorous bureaucracy will be a ferocious, amorphous crowd. The crowd will go into the streets and say, “You promised us bread and circuses! Where are they?!” Ironically waving a pack of old administrative documents will not do.

Then an unmanageable democracy will come into being, with all its innumerable disasters and suffering. This is what we should be concerned about.

What is going to happen?

I would like to participate in making our country free and prosperous.

But if the authorities decide I must stay in jail, I can wait.

As a simple, post-Soviet convict I can only pity the greedy people who have acted so cruelly and outrageously towards tens of thousands of YUKOS shareholders. There are long years of fear of the new generation of expropriators in store for these shareholders, as well as fear of real, not ‘Basmanny’ justice. Because no one but the most naïve viewer of the national TV channels still believes that this whole process is in the interests of the entire nation.

I have even greater pity for those authorities who sincerely believe that what they are doing is a good thing. The road to hell is paved with good intentions. History shows that they will eventually realize that political persecution and forced redistribution of property cannot be combined with modern economic development. The reach of the political machine will not be confined to Khodorkovsky, YUKOS or current oligarchs – it will drag down many others, including today’s architects and creators.

My persecutors know that my criminal case contains no proof of any guilt whatsoever. But that is irrelevant since they can indict me on some other charge, for instance on the Manege fire or on economic counter-revolution. I have been told that they want to put me in jail for five years or more because they fear I will seek revenge.

These clueless people think they are a benchmark for everybody else. Relax; I am not going to be a Count of Monte Cristo (or even a supervisor of an apartment building). Breathing the spring air, playing with kids who are going to a regular Moscow school, reading good books – all these things are much more important, pleasant and right than dividing up assets and settling the score with the past.

Thank God, unlike my persecutors I have realized that making big money is far from the only goal in a man’s life (and probably not that important). The time of big bucks is over for me. Now that I have disposed of the burden of the past, I am going to work for the good of the generations who will rule the country very soon - the generations who will usher in new values and new hopes.

Author: Private individual, citizen of the Russian Federation, IZ No.99/1, Moscow.
(Vedomosti, 12/28/2004)

Question and Answers with readers of the site www.khodorkovsky.ru (9.9.2004)

2004-09-09T15:13:00.000-07:00

Jailed oil tycoon Mikhail Khodorkovsky answers questions from readers of www.khodorkovsky.ru. In July-August of this year the Web-site invited questions to the jailed oil tycoon Mikhail Khodorkovsky from its readers. Over the past two months the site received hundreds of letters. A list of questions was forwarded to the entrepreneur through his defense team.

1) How is it possible to amass such an enormous fortune — $15 billion — in such a short period of time without breaking any laws?
Antonina Naumova

My stake in Yukos accounts for over 90 per cent of my fortune. Before the 1995 privatization the market value did not exceed half a billion dollars. Some may consider such a valuation as being low, but that is true, because not only the company’s potential but also the current state of affairs play a role in determining its market value.

As for Yukos, 9 years ago it was literally on its last legs, $3 billion in debt to external creditors, six-month wage arrears, a crisis in the technological chain and a moral crisis among the staff. Employees of extraction enterprises, having lost hope of being paid, were ready to take to the streets. Just try selling a company today whose staff is ready to go on indefinite strike and even revolt!

Over the past nine years under our management the value of Yukos has grown by 30 times. And this is what makes up my capital. In cash I received only dividends from the company. Their total sum did not exceed $1 billion over the years and was reinvested in the company.

That is why when such a high-placed lawyer as the prosecutor general of Russia Vladimir Ustinov says I could have repaid the so-called tax debt of Yukos — inflated by tax officials to the far-fetched amount of $7 billion — from my own wallet, he is simply suffering from the inefficiency of his economic aides. If and when Ustinov’s team is joined by professional economists, they, I hope, will point out that the unfortunate error to Vladimir Vasilyevich [Ustinov].

I would also like to say a few words about the so-called framework of the law. Yukos was privatized in strict compliance with the legislation effective in Russia in the mid-90s. Of course, those laws were not perfect.

But passing laws and formulating the rules of the game is a prerogative of the state. And if the state considers its previous actions inappropriate, it should direct its questions to its own high-placed officials. Venting its anger on people who have managed to squeeze their entrepreneurial energy into the framework of the law is hardly the most reasonable method for a responsible power.

2) When did you reconsider your position and what prompted you to focus on the problems of civic society and public interests instead of your personal interests in business and professional activities? What has served as the main impulse, the catalyst for those changes in your consciousness?
Aleksei Borisov

I have always had a propensity for public activities. And our business launched in the late 1980s, was not so much a machine for making money as a form of asserting our right to true freedom. We sought to prove to ourselves and to the country, that a Russian, a Soviet person has the right to break out of the limits of the stuffy life, where every hour and every minute is scheduled by [Communist] party cells. That he has the right to use his energy and talent for real economic and social achievement.

I am a permanent resident of Russia. And in Russia nothing has ever been done for money alone. Russians need a miracle. And wasn’t that a miracle — to boost the value of the company that you run 30-fold over a few years! To revive faith in well-being and justice, hope for a stable future among the employees of the company who had lost almost all hope by 1995!

But in the late 1990s I realized that our negative understanding of freedom, formed in the stifling atmosphere of the late totalitarian USSR, ’freedom from something’, was exhausted. The time had come for me to acknowledge my duty to society, to the country that had given us our education, to move to a positive understanding of freedom, as ’freedom for something’.

That is why we began forming public and charitable institutions, investing money in the infrastructure of the civic society, launching social programs, first and foremost, in the sphere of education. I am convinced the ideas of the next generations of Russian citizens, of the people who will shape the fate of Russia in some 10-15 years, is, in many respects, determined by the education system.

We adopted a new strategy of development for Yukos aimed at creating a ’social corporation’.

For that purpose a pension fund was set up for Yukos employees, where by summer 2003 we had accumulated about 10 per cent of the company’s shares (as I have heard, money and shares belonging to pensioners have been seized at the request of the Prosecutor General’s Office). I would like to note that the amounts accrued there are much higher than I received in dividends throughout the entire period of my work in Yukos.

We adopted a plan to increase wages, stipulating that an average wage in Yukos would reach $1,500 by 2009. By comparison, the average wage in Russia does not exceed $200 per month. And if Yukos survives, I am convinced that this plan will be implemented.

I have been in prison for over 10 months now. Having freed me of my worries about running business, prison has given me time to think, to ponder on my personal strategy. That is what I will say — if there is something I regret it is that I did not leave business earlier, in 2000-2001, so as to focus fully on my public activities.

After all, the interests of businesses and those of a civic society are different, at times, even conflicting. And in future I am set to focus on social projects. Many think Yukos will be taken away from me. Perhaps, this is indeed what will happen.

For my part, I am ready to give away my stake for the company to be spared from destruction, for the technological system to be preserved, and as a consequence, for Yukos to remain a stable corporation that pays high wages and taxes, contributing to the socio-economic stability of the country.

But in my imminent parting with Yukos I see an advantage. I will no longer have to be involved in protecting the company’s interests and my property, which means, my internal conflict of interests will be solved.

3) Could you please give a brief evaluation of the prospects of preserving Russia as a single, independent, relatively developed state within the next 30 years, provided economic liberalization continues and Russia joins the WTO?
Viktor Makarov

In a sense Russia is a developed state — in terms of its intellectual potential, the volume of its natural resources, as well as in terms of its unique role in world history. I could never agree with those who consider Russia a third-world country. Besides, the third-world doctrine, as such, has long become obsolete.

Liberal reforms have been consistently implemented in the Russian economy in the course of the past 13 years. Those reforms continue today, although many call Putin an enemy of liberalism. On the whole, under the incumbent president the course of de-regulating the economy, the renunciation of state dirigisme has been preserved.

I believe the main positive result of the liberal reforms is that millions of our fellow-countrymen have felt the taste of economic freedom. The liberal economy contributed to the liberation of many a talent that would have never developed in the administrative-command pseudo-socialist system.

However, many mistakes have been committed in the course of those reforms. To begin with, the authorities ignored the social price of reforms and the fact that social peace is a prerequisite for sustainable liberal development.

Today we pay for that omission with mistrust on the part of the overwhelming majority of the population in business and with the failure of liberal-oriented political forces in the 2003 elections, with the formation of a de-facto one-party bureaucratic parliament that has turned into an appendage of the presidential administration.

Another mistake is the neglect of the tremendous intellectual and technological potential accumulated in the defense sector of the former Soviet Union. Russia has had no consistent industrial policy aimed at stimulating the preservation and development of the military-industrial complex as a reservoir of creative forces for the country.

This, to a great extent, brought about a sharp increase in the raw materials share of the economy, deepening Russia’s dependence on crude oil prices on the stock exchange. Neglecting the problems in hi-tech industries resulted in a considerable part of the technical intelligentsia being disappointed in the liberals and joining the ranks of [nationalist] Rodina and the Communist Party, although in the late 80s and early 90s it formed the vanguard of the fight for dismantling the Soviet totalitarian machine.

Liberal reforms should be continued. Most importantly, monopolies should be reformed, small business developed, a competitive environment formed, which will imminently bring about social harmonization. With the period of domination by the business-oligarchy ending we should not allow a bureaucratic oligarchy to be formed.

Another priority issue is the development of industrial policy aimed at accelerated development of the hi-tech sector and support of fundamental and applied science. In the strategic outlook, Russia will not be able to rely on the ’oil needle’ forever. Neither does industrial policy rule out governmental investments, especially in what concerns infrastructure projects, which should not be shunned, as namely the state can set an example for business and prompt the latter to invest in certain branches and sectors of the economy.

Finally, the key issue concerns competent use of the intellectual potential of the nation. We must stop the brain drain and create conditions for the hey-day of our ’intellectual elite’. And that requires not only an appropriate economic infrastructure but also the institutions of civic society.

4) Do you think formation of a democratic society in Russia is possible with society’s mistrust in business being so high? What force could forestall the degradation of Russian society and its return to the Soviet-era mental state of an intimidated flock?
Vitaly Shevtsov

Democracy and the interests of business by no means coincide. The main goal of business is to make money. And quite often the lack of a democratic environment contributes to super-profits. Most international corporations have a rich experience of cooperation with dictatorial regimes across the globe; those regimes ensured a kind of stability those businesses could not even have dreamed of from democratic organs of power and civic institutions.

In Russia in the 1990s major business, unfortunately, did not become the standard bearer of democracy. And we share the blame for the decline of public institutions, too.

It is important to distinguish between such concepts as ’democracy’ and ’liberalism’. Nations rarely vote for human rights and freedoms. The 2003 elections, after all, can be called quite democratic, although the liberal forces were comprehensively defeated.

Being a liberally-minded person, I believe that a citizen of Russia, just like a citizen of any other country, deserves freedom as a set of inalienable rights. Those rights are given to us as a birthright, not in line with some position in some hierarchy. Those rights can never be taken away by anyone, democratically elected authorities included. In this sense, democracy too must have a limit which it cannot exceed.

The state and civic society have to guarantee that the freedom of press, consciousness, assembly, and movement cannot be taken away from a person for the sake of some group interests. For instance, the state guarantees the protection of employees’ rights in their disputes with employers. This is also a form of human rights protection.

I, together with my associates, am set to assist a full-fledged civic society and the state, too, as long as it fulfils its obligations as guarantor of inalienable rights and freedoms.

5) What would you, in retrospect, have changed about your life?
fridaysays@yahoo.com

I would have left business and focused on public activities some 3-4 years ago, so as to be independent from corporate interests. I would have devoted most of my time to studying world history and idealist philosophy. I would have spent more time with my family, my children. In other words, I would have relieved myself of the tyranny of property and directed my energy at my own intellectual development, thus enhancing my inner freedom. The freedom a person can only earn himself.

On Beslan Tragedy (9.7.2004)

2004-09-07T16:39:00.000-07:00

There is grief in our country. We are all asking questions: What should we do? How can we live with this from this day forward? When tears melt together into rage, rage before which the laws of both God and humanity fall, our rage is expected by those who want to benefit from the tears and suffering of innocent people, and who dream of a spiral of blood and hatred spinning away. It is truly a horrific injustice; it is difficult to imagine a greater injustice. You cannot explain it. You feel that you have to do something, to help out in some way, and at first you do not know how to do so. I am sure that we are all capable of finding strength within ourselves and of turning our feelings into aid, aid for those who need help right now; to help so that this would not happen again. If we do not have that strength, no ability and no answers – we can at least pray. Pray for those innocent souls; pray for God to give us the strength and the understanding and the help to find the answer. The answer which we actually have is in our soul and in our hearts. In fact, many people need our help right now; they are close to us. We only need to look around to help, and to unite together in helping, and having united all of us together, determine not to let this happen again and not to allow indifference to prevail. The hatred of some people and the indifference of others are what lead to the blowing up of apartment buildings, school and airplanes, and they are what maim our children. No security service in the world would be able to protect an indifferent people or an indifferent society. It is clear now that we face many years of living with terrorism, living with unjust deaths, and whether those years will be more or fewer depends on us alone. Either hatred and indifference will emerge, or help and solidarity. It is impossible to overcome hatred with rage – they feed on each other. By developing persistence and solidarity, cooperation and understanding, we will gain our victory – our protection for our children. That is civil society.

Mikhail Khodorkovsky

Trial Opening Statement (7.16.2004)

2004-07-16T16:36:00.000-07:00

This past year both the media and society have been actively discussing the following questions: What are the "YUKOS and Khodorkovsky cases," - a case involving a company singled out for politically motivated reasons or an average - though large - criminal case? And what does this mean for the country?

In my opinion, society has been aware of the political motives behind this case for a long time and for that reason I am not going to discuss this point here. Moreover, I do not want to make political declarations to cover up criminal charges.

I will mostly address the core of the charges.

First, I am being charged with acquiring shares of Apatit and the Scientific Research Institute of Fertilizers and Fungicides illegally. I will prove that this is simply a shoddy attempt to blame me for the errors in the privatization laws and for subsequent actions taken by government agencies.

Second, I am being charged with not giving credit to companies that were privately owned by me at that time, as the prosecution has claimed. For this reason, the prosecution has charged me with intentionally refusing to take my own money from one pocket and putting it into another.

Third, I am being charged with embezzling money from companies that I did not manage; but the prosecution insists that I was a shareholder of these companies. This means that the prosecution is charging me with causing harm to myself. The prosecution has insisted that I am guilty of conducting improper trade policies in connection with Apatit. However the shareholders do not have the power to do that. I want to point out that this "improper" trade policy has brought success and profitability to this company.

I will prove that these charges are as absurd from a legal perspective as they are from the perspective of everyday life.

I would like to point out that right now Apatit and the Scientific Research Institute of Fertilizers and Fungicides are successful Russian companies that are paying salaries, implementing good social programs, and raising production levels. In the case of the Scientific Research Institute of Fertilizers and Fungicides, it is one of the few successful Russian research centers today.

Fourth I am being charged with the fact that the owner of Media Most, Vladimir Gusinsky, took money as collateral for the assets of his media holding. He then did not return the money because his assets disappeared somewhere.

Thanks to the decision of the Strasbourg Court, the world knows now what happened to these assets and where they went. If necessary, I can prove that this charge is absurd as well.

Fifth, there are charges regarding taxes. I will prove the futility of these charges but also from the point of view of the law. This law [that was passed in the fall of 2003] stated that businesses are not at fault for errors made by the government. I will prove the absurdity of these charges also from an ethical point of view. In this way, I will show that YUKOS paid not less but more taxes than most other companies. YUKOS legally made use of tax breaks to a limited extent, and these tax breaks were within the law. From an everyday perspective, it is difficult to understand how it can turn out that a company, which is the second largest taxpayer in Russia after Gazprom and which is audited up to 500 times a year and whose accounts are confirmed by international audits and given to the Tax Ministry, sometimes in the presence of the Minister of Taxes and Levies, and which makes up five percent of the state's budget, should after four years pay much more in taxes than the industry average and even more than Gazprom. Why should YUKOS shareholders be held responsible [for this]? It is incomprehensible!

Sixth, I will prove that the Arbitration Court's infamous decision on YUKOS was against the law and directly contradicts the Tax Ministry's position, which is stated in the civil suit. The suit is demanding taxes from companies that do not exist.

In conclusion, I want to say that this demonstration of power that ignores the law, even though it tries to claim that external procedures are legal, presents the largest danger to our country.

Reponse to Birthday Greetings (7.1.2004)

2004-07-01T17:05:00.000-07:00

On Tuesday June 29th, Mikhail Khodorkovsky’s response from “Matrosskaya Tishina” was received from his lawyers by the editors of his press-center. The response illustrated his gratitude to all who greeted him with his birthday.

All of the letters that I received, both regular and emails, telegrams, greetings through newspapers are definitely of great support at this difficult time. I have received many greetings in past years too, but now there are tens, if not hundreds times more, and obviously, they are all addressed not to an oligarch, but to a person, which means so much to me. Thank you. I will try to prove, that I am deserving of your support.
Sincerely, MBK

Mikhail Khodorkovsky : Crisis of Russia's Liberalism (3.29.2004)

2004-03-29T11:59:00.000-08:00

In an open letter published by the business daily Vedomosti Mikhail Khodorkovsky contemplates the fate of Russia's liberals, its businessmen, the authorities and its people.

Russian liberalism is facing a crisis: today, there is almost no doubt about that. If someone had told me a year ago that SPS (the Union of Right Forces) and Yabloko would not clear the 5-per cent voting threshold at the Duma elections, I would have seriously doubted the analytical and forecasting skills of the speaker. Today the defeat of SPS and Yabloko has become a reality.

Two candidates officially represented Russia's liberal forces at the presidential elections. One of them, the former communist-agrarian Ivan Rybkin, instead of conducting a clear-cut election campaign staged a cheap farce, which even the LDPR representative, Zhirinovsky's personal security expert Oleg Malyshkin, would have felt ashamed of.

The other candidate, Irina Khakamada, did her best to distance herself from her own liberal past, criticized Boris Yeltsin and campaigned for the building of a social state. And then, without a hint of embarrassment (and, perhaps, not without grounds) she called the 3.84 per cent of votes cast in her favor a big success.

Politicians and experts who shortly after the arrest of my friend and partner Platon Lebedev last summer spoke of the threat of authoritarianism, of the violation of laws and civic freedoms, now compete in their ability to spout honey-sweet compliments to Kremlin officials. Not a trace is left of their rebellious liberal ardor. Of course, there are exceptions, but they only confirm the rule.

Today we are witnessing the virtual capitulation of the liberals. And that capitulation, indeed, is not only the liberals' fault, but also their problem. It is their fear in the face of a thousand-year history, mixed with the strong liking for household comforts they developed in the 1990s.

It is their servility ingrained on the genetic level, their readiness to ignore the Constitution for the sake of another helping of sturgeon. Russian liberals have always been like that.

"Freedom of speech", "freedom of thought", "freedom of consciousness" — those word combinations are rapidly losing their meaning and turning into mere verbal fillers. Not only the common people but also most of the so-called elite wearily snub them, as if willing to say: everything is clear; it is just another conflict between the oligarchs and the president, plague on both your houses, where we have been so successfully turned into fodder for worms.

Nobody knows, and, in fact, nobody cares what is happening to the Union of Right Forces and Yabloko following their December defeat. The 2008-Committee, while claiming the role of the conscience of Russia's liberals, itself readily admits its impotence and says, nearly excusing itself, yes, there are only a few of us and the timing is wrong, so there is little hope of anything, but still…

Irina Khakamada's idea to form the Free Russia party from the remnants of Yabloko and SPS has not evoked any substantial public interest except for the excitement of several professional "party-builders" who once again smell easy money.

Meanwhile, the Russian political soil generously nurtures the bearers of the new discourse, the ideology of the so-called "party of national revenge", or PNR. PNR bears the traits of the featureless United Russia, of the self-complacent Motherland, reveling in its superiority over its less successful rivals, as well as of LDPR, whose leader has once again confirmed his exceptional political vitality.

All those people — sometimes sincerely, though in most cases falsely and to order, yet no less convincingly — hold forth on the demise of liberal ideas, asserting that our country, Russia, simply needs no freedom at all.

Freedom, in their opinion, is the fifth wheel in the wagon of national development. And those who talk of freedoms are either oligarchs or scum (which is, on the whole, the same).

Against such a background President Vladimir Putin is perceived as the most devout liberal, because from an ideological standpoint he is far better than Rogozin and Zhirinovsky.

And let us think this through: indeed, Putin is probably neither a liberal nor a democrat, but he is still more liberal and democratic than 70 per cent of our country's population.

After all, none other than Putin has reined in our national demons and prevented Zhirinovsky and Rogozin (or rather not them, because in truth they are just talented political players, but to the numerous supporters of their public statements) to seize state power in Russia.

Chubais and Yavlinsky, for their part, were unable to resist "the national revenge" — all they could do was sit and wait till the apologists of nationalist values such as "Russia for the Russians" threw them out of the country (as, alas, has happened before in our history).

That's how it is. Nonetheless, liberalism in Russia must not die. For the craving for freedom has always been and will remain one of the main instincts of man, be he Russian, Chinese, or Laplander. Yes, that sweet word "freedom" has many meanings. But its spirit cannot be eradicated nor extirpated.

It is the spirit of the titan Prometeus who presented man with fire. It is the spirit of Jesus Christ who spoke as the one who was right and not like the scribes and Pharisees.

Hence, the reason for the crisis of Russian liberalism lies not in the ideals of freedom, albeit perceived differently by everyone. This is not about the system, but people, as the last Soviet prime-minister Valentin Pavlov used to say.

Those who were entrusted by fate and history to guard the liberal values in our country have failed in their task. Today we must sincerely admit that, because the times of slyness are over, and to me, here in a dungeon of remand centre No.4 this is, perhaps, a bit more obvious than to those in more comfortable conditions.

SPS and Yabloko did not lose the elections because the Kremlin discriminated against them. But rather because the presidential administration, for the first time, denied them support, putting them on a par with the other opposition forces.

And Irina Khakamada, too, secured her notable 3.84 per cent not in spite of the state machine, which simply did not notice her, but in many ways, because of the Kremlin's frantic drive to secure a higher voter turnout.

Big business (often referred to as 'the oligarchs' in the vernacular) have left the arena, driven out not by the flourishing corruption but solely because of the malfunction of standard lobbying mechanisms, which were designed to work under a weak president and the former Kremlin administration. And that's it.

Socially active proponents of liberal views, to which I believe my sinful self also belongs, were responsible for preventing Russia from deviating from the path of freedom. And, paraphrasing Stalin's well-known statement made in June 1941, we have screwed up our cause. Now we will have to analyze our tragic mistakes and acknowledge our guilt, both moral and historic. And only thus we will be able to find a solution.

It's a Beautiful Lie

Russian liberalism was defeated because it had tried to ignore, firstly, some important aspects of Russia's national and historic development, and secondly, the vital interests of an overwhelming majority of Russian people. Moreover, it was terrified of telling the truth.

I don't want to say that Chubais, Gaidar, and their kindred spirits set before them the goal of deceiving Russia. Many liberals of the first crop, the Yeltsin crop, were people who sincerely believed that liberalism is historically right, that a tired country practically deprived of freedom's delights needed a "liberal revolution". But their approach to this revolution, once liberals suddenly came to power, was too superficial, if not frivolous. They concerned themselves with life and labor conditions for the ten percent of Russians who were ready for radical life changes once they rejected state paternalism. They wound up forgetting the other ninety percent. The politicians covered up their tragic failures with lies, as a rule.

They lied to 90% of the people when they generously promised that a privatization voucher would buy two cars. Sure, an enterprising player on the financial market with access to private information and with the ability to analyze this information could turn a privatization voucher into as many as ten cars. But the promise was that everyone would be able to do it.

They kept their eyes shut to Russia's social conditions, while conducting privatization and ignoring its negative social consequences, coyly calling it painless, honest, and fair. It's well known what people think of that "great" privatization now.

They didn't force themselves to think of the catastrophic consequences of the devaluation of Sberbank [Russia's largest, state-owned savings bank] deposits. Then, it would have been possible to come up with a very simple solution — by securing deposits through government bonds that could be paid back by taxes on capital gains (or for example stocks in Russia's best companies transferred to private ownership). But the powerful liberals didn't want to waste their precious time; they didn't want to exercise their grey matter.

In the 90s, no one took up education, healthcare, and housing reforms, or targeted support of the poor and the indigent, all issues upon which an enormous majority of our compatriots depended and still depends on now.

Social stability, social peace — the only possible foundation for any long-term reformation that involves the very basics of a country's existence — were ignored by Russian liberals. They set themselves apart from the people with a chasm. Into this chasm, through media and bureaucratic channels, they pumped pretty liberal ideas about reality, manipulating information. By the way, it was in the 90s when the concept of the all-powerful Political Technologist first arose — a person who is supposed to be able to make up for the absence of real politics in one or another area with clever "virtual" throwaway products.

The election campaign of 1995-1996 showed that the Russian people had already rejected liberal government. As one of the 1996 presidential campaign's major sponsors, I, of all people, should remember quite well what a monstrous effort it took to make the Russian people "choose with their hearts".

What were the country's liberal top managers thinking when they said that there was no alternative to the default of 1998? There was an alternative — the devaluation of the ruble. All the way back in February and even June 1998 it could have been avoided by a devaluation of 5 to 10, 12 rubles per USD. I and many of my colleagues had defended this option for deflecting the looming financial crisis. But, although we had considerable political leverage at that time, we weren't able to defend our point of view and thus must share the moral responsibility for the default with the authorities, which had been irresponsible and incompetent.

Liberal leaders called themselves victims and their governments —"kamikaze cabinets". It seems to have been the case at first. But by the mid-90s, they had garnered too many Mercedes-Benzes, country houses, villas, nightclubs, gold credit cards. The image of a stoical liberalist fighter prepared to die for the triumph of the idea was replaced by relaxed bohemians who didn't even attempt to mask their indifference toward the Russian people, the voiceless "population". This bohemian image, spiced up with demonstrative cynicism, to a large degree, served to discredit liberalism in Russia.

Liberals weren't telling the truth when they said that Russian people are living better and better, because they themselves didn't know and didn't understand — and, I should note, often didn't want to understand — how the majority of people really lives. And now they have to listen to it and learn about it — I hope they're ashamed of themselves.

Even as far as declared liberalist values went, liberals were often far from honest and logical. For instance, liberals talked of freedom of speech, while at the same time doing everything possible to create financial and administrative control over the media in order to use this magical resource to their own advantage. Most commonly such actions were justified by the existence of the "communist threat," for the neutralization of which everything was permitted. And the fact that the "red-brown plague" is strong only in as far as the liberal government has forgotten its people and their problems was never mentioned.

The media was choked with praise for the "diversified economy of the future". In reality, however, Russia got strongly addicted to oil. Naturally, the profound crisis of the technological complex was a direct consequence of the falling apart of the USSR and an abrupt shrinkage of investments because of high inflation. Liberals were obliged to solve this problem — by inviting powerful, knowledgeable left-wingers into the government. But they preferred to ignore this problem. Is it any surprise, then, that millions of people in the scientific and technical intelligentsia, which was the main impulse behind the Soviet liberation movement of the late 80s, now vote for "Motherland" and the Communist Party?

They had always said — disregarding objections — that they could do anything they liked with the Russian people, that "in this country" the elite decides everything, and the regular folks don't deserve as much as a thought. Any nonsense, any insolence, any lie is going to be accepted by the people like manna from heaven, if it came from the boss. As a result, such theses such as "social politics are necessary", "everyone must share", etc, were tossed out, denied, denounced with a grin.

Well, it's time for retribution. At the 2003 election, the Russian people said to liberal officials their resolute and dry-eyed "goodbye". Even Russia's young people, whom everyone believed to be definitely impressed with the ideas of the Union of Right Forces and wholly supportive of Chubais, voted for the Liberal Democratic Party and Motherland.

That was people spitting into the chasm between the liberals in power and the country.

Where was big business at this time? Right next to the liberal government. We helped them make mistakes and lie.

Of course we never admired the authorities. But we never contradicted them, so as to not risk our daily bread. It's funny when zealous propaganda-mongers call us "oligarchs". An oligarchy is a group of people who actually hold power, whereas we always depended on the powerful bureaucrat in his ultra-liberal thousand-dollar suit. Our collective pilgrimages to Yeltsin were but a theatrical prop — we were publicly made out to be the chief culprits of the country's woes, while we didn't even realize at first what was going on. We were simply being conned.

We had the resources to challenge a game with such rules. That is, a game without any rules. But, compliant and obedient as we were, with our obsequious ability to give when we were asked to give and even when we weren't, we created both the bureaucratic arbitrariness and orchestrated justice.

We did revive industry, squashed in the final years of Soviet rule; we created over two million highly paid vacancies. But we couldn't convince the country of this. Why not? Because the country hadn't forgiven business its alliance with "the party of irresponsibility", "the party of lies".

Business at Large

Equating the liberal part of society with business circles is a traditional misconception.

The philosophy behind business is making money. But a liberal environment is not necessary for big money at all. Large American corporations which invested billions of dollars into the USSR loved the Soviet government, since it guaranteed complete stability and the freedom of business from social control. Only recently, in the late 90s, did transnational corporations begin to reject partnerships with the most abominable of African dictatorships. And at that, not all of them and not always.

Civil society more frequently gets in the way of business than aiding it — it stands up for the rights of hired laborers, protects the environment from careless intrusion, and limits corruption. All of this cuts down on profits. I speak as a former head of one of Russia's largest oil companies when I say that it's much easier for entrepreneurs to work things out with a handful of acceptably greedy officials than to coordinate their actions with a branched and competent network of social institutions.

Business does not seek liberal reforms in the political sphere, it isn't obsessed with freedom — it always coexists with the current government regime. More than anything, it wants the regime to protect it from civil society and hired laborers. As a result, business, especially big business, is doomed to fight the real, not sham, civil society.

Moreover, business is always cosmopolitan — money has no fatherland. It winds up wherever it's profitable, it hires whoever is profitable, it invests its resources only where the profit is optimal. For many (although, doubtlessly, not for all) of our businessmen who amassed their wealth in the 90s, Russia is not a place where they belong but just a free hunting ground. Their main interests and life strategies are tied to the West.

For me, Russia is my Motherland. I want to live, work, and die here. I want my descendants to be proud of Russia, and of myself, as a part of this country, this unique civilization. Perhaps, I realized this too late — I only got involved in charities and investing in the infrastructure of civil society in 2000. But better late than never.

For this reason, I have quit business. I'm not speaking for the business community, but for myself, and for the liberal part of society, the group of people I see as teammates, sharing a common idea. Naturally, there are businessmen among us, since no one is refused entry into the world of true freedom and real democracy.

Choosing the Way

What can and must we do today? I'll name seven of our top priorities.

The first: establish a new strategy of cooperation with the government. The government and the bureaucracy are not synonyms. It's time to ask yourself: "What have I done for Russia?" It's already clear what Russia has done for us after 1991.

Learn to look for truth in Russia, and not in the West. Russia's image in the United States and Europe is all very well, but it will never match the importance of respect from one's fellow citizens. We have to show, to ourselves first of all, that we are not favorites, but permanent citizens on our Russian land. We must stop disregarding — especially in such a pointed manner — the interests of our nation and people. These interests are our interests.

We must give up the useless attempts to call the president's legitimacy into question. Regardless of whether we like Vladimir Putin or not, it's time to realize that the head of state is not just a private person. The president is an institution guaranteeing a nation's stability and integrity. And God forbid that we live to see a day when this institution collapses — Russia will not survive another February 1917. The nation's history tells us that a bad government is better than no government at all. Moreover, it's time to realize that in order for a civil society to develop, it needs an impulse from the government. The infrastructure of a civil society forms over centuries, not in a week with the help of a magic wand.

It's time to stop lying — to oneself and to society. To grasp that we are adults that are strong enough to tell the truth. I respect and value Irina Khakamada, but unlike my partner, Leonid Nevzlin, I decided not to finance her presidential campaign, because I saw something false in it. For example, we cannot accuse Putin of the Nord-Ost tragedy, because it is unfair.

Leave behind our cosmopolitan perception of the world; to grasp that we live on earth, and not in the air; to accept that a liberal project in Russia can only be successful when the nation's interests are taken into account. That liberalism will take root in Russia only when it gains a strong, firm footing on the earth beneath its feet.

Legitimize privatization. We need to accept that 90 percent of the people in Russia do not consider privatization fair, and feel that those who got rich from it accumulated their wealth illegally. And while this is the case, there will always be forces — political, bureaucratic, or even terrorist — that will encroach upon private property. In order to justify privatization before a nation where the notions of Roman property law have never been strong, we must force big business to share with the people — possibly by accepting reforms in mineral tax and other sectors that will not be very advantageous to the companies.

It's better if we start these processes ourselves, to influence them and direct them, than to stubbornly resist the inevitable. What is meant to be cannot be avoided. Legitimizing privatization is not something the government needs, for it will always prefer to have a means of pressuring us. It is something necessary for us and for our children, who will live in Russia and who would like to walk the streets of Russian cities without bodyguards.

Invest in the minds of citizens and in the creation of fundamentally new social institutions not brainwashed by the lies of the past. To create real structures of civil society, instead of treating them like entertainment centers. To open doors for new generations. To attract conscientious and talented people that can form the basis of Russia's new elite. The worst thing for Russia is the continuing brain drain, because talent and intellect is the basis of Russia's most competitive asset, not the ever-diminishing fossil fuels. And talent will only accumulate in a thriving environment — that same civil society.

In order to change this country, we must ourselves change. In order to convince Russia of the need and the inevitability of liberal development, we must overcome fears from the previous decade, and from the dreary history of Russian liberalism.

For freedom to return to Russia, we must start believing in it ourselves.

Mikhail Khodorkovsky, a private person and a citizen of the Russian Federation.

The Rich Are Duty Bound to Fight (10.2003)

2003-10-10T16:24:00.000-07:00

Taken from Mikhail Khodorkovsky’s last public statement before his arrest in October 2003 and published in the newspaper Moskovskie Novosti in July 2004.

On Emigration
People often ask me why I don’t just say to hell with it all and leave the country! I’ve thought the question over quite often. I travel abroad a lot. To a great extent I feel quite at ease abroad. And still, I am not at home there. Why, I cannot understand. I care about what is going on in Russia. Of course, I also care about what is going on outside Russia, but not as much.

On ’Justice’
The favorite topic of discussion in our country is whether companies were sold too cheaply or too expensively during privatization and if it was possible to share all those assets honestly.
The answer to the latter question is both yes and no. It was possible because initially, at the time when vouchers were distributed, the property was divided more or less honestly. And yet, it was not possible because to share it honestly people had to understand and realize that shares had value.
There were no such people here 15 years ago, and unfortunately, I think there won’t be many of them in ten, or even twenty years. The main problem is in their heads.
The other question is whether it was cheap or expensive. Today, when Yukos’s value exceeds $30 billion it seems that the $2 billion paid for it at the beginning was too little for such a company.
But then, in mid-98 when the $2 billion that had already been paid for Yukos and when its market value stood at $370 million, nobody said it was sold cheaply.
Nonetheless, what happened then had quite understandable and explicable reasons.
Remember late 1995, the presidential elections were nearing, inflation was rampant, mostly due to the failure of major companies to pay taxes — the oil sector was barely paying anything to the budget at all.
At the same time, enterprises were not paying wages to their workers. Tensions were growing, and dismissing the heads of enterprises was impossible, as this would have created a real threat of a strike.
And this was the situation ahead of the presidential elections. At that moment I met with Mr. Zyuganov in Davos and he told me: “Don’t you worry, Mikhail Borisovich, we respect good managers, and with us [Communists] at the helm you will become director general of some major enterprise.” [Communist Party leader Gennady Zyuganov ran against the incumbent Boris Yeltsin in the 1996 race].
That is how things were when top government officials invited us — thirty of Russia’s leading entrepreneurs — and said: “We have to immediately ensure the receipt of taxes from the largest industrial enterprises, so we are ready to sell those enterprises to you.”
“But, to begin with, most importantly, you must yourself persuade the directors of those enterprises to hand over power to you, in other words, you are to go to them and ask them to let you privatize the given enterprise along with its incumbent director. Secondly, you will have to begin paying taxes immediately. And, thirdly, you will have to pay something for the enterprise.”
Let’s have a look at how things were. Yukos’ debts to the budget for 1996 exceeded $2 billion, while the total debt, including wage arrears and debts to contractors, stood at $3 billion.
Oil output fell from 45 million to 35 million tons per year. Can you imagine what the implications of such a drop in production were for the industry! Another point that should be taken into consideration is that the cost of production was $12 per barrel — pay particular attention to that figure.
We stabilized oil output, but as capital investments continued to decline we introduced rigid cost saving schemes. By 1997 capital investments almost reached earlier levels, while the following year we had to increase capital investments and then came 1998.
1998 brought devaluation for the entire country, but not for the oil sector. For the oil sector it meant a drop in the oil price on world markets to $8.5 per barrel, while the cost of production, as I have already said stood at $12 per barrel at the time. That means you produce oil and pay extra.
Had not it been for the crisis I would never have resorted to the measures that I resorted to, which, honestly speaking, was what helped haul the company out of crisis. I am talking about cutting staff by 30 percent, tens of thousands of people in just one year.
It is not something I am proud of but there was no alternative. The staff, that is 100,000 employees, volunteered to have their salaries slashed by 30 percent. And if you think it was fun, I can assure you it was not.
We were accused of trying to suck out all the deposits and flee, because we were reducing capital investments, laying off staff and restricting output. In 2000 and 2001 we increased capital investments, and in 2002 we reached the level. Today we have managed to reduce costs to $2 per barrel.
Another myth is that oilmen make super-profits, and it would not be a bad idea to take those super-profits away from them, and if we take them away in the form of natural rent, we will all live happily. I would be very happy if we could all be so lucky as to live well doing nothing. But, regretfully, such things happen only in fairy-tales, and we all know that.
In reality such things never happen. In 2002 the oil sector produced and sold oil worth $57 billion. It is all registered in the Central Bank’s financial statements. Taxes and duties paid — $21 billion; transportation costs — $9 billion; production, processing and distribution costs — $15 billion; capital investments — $10 billion; dividends — $2 billion.
What shall we cross out? It goes without saying that taxes and duties should remain, since they make up natural rent. I would be glad to exclude transportation. As I keep on saying, if we reduced transportation costs by building new pipelines it would be great.
Cost of production here is one of the lowest in the world, as is the cost of processing, whereas distribution costs are quite high, though that is understandable for such a large country as Russia.
As regards capital investments, we could stop making them if we did not want to produce more oil and develop new deposits.
As for dividends, here is the $2 billion everyone is after. But who will invest money in the oil industry if we don’t pay dividends?
The oil industry has to pay up to $5 billion per year in dividends. If it fails to pay, no one will give money to finance capital investments. Stealing that money is not likely to make anyone rich.
Divide this 2, 3 or even 5 billion between 140 million residents, and what will be the result? $3- $5 per month. That’s it. Meanwhile, the taxes paid by Yukos in 1998 amounted to 8 billion rubles, 127 billion in 2002, and the company will pay even more in 2003.

On Prospects
Unfortunately, the much-talked-of plan of doubling the GDP at the expense of the natural resources industries is not feasible. We could make $500 billion to $600 billion per year on the basis of old large-scale industry.
Yet, doubling growth this way is out of the question. Today we have some $400 billion. Is it a lot or a little? By 2010 the US economy will grow to 1.5 trillion, China’s — to nearly 11 trillion. Russia’s economy will be less than 10 percent of China’s.
Where do we get the money from? It may be hard to believe it, but money is in the heads of the people. In modern society raw materials decrease steadily in value, as modern technologies make it possible to reach the same results by consuming less and less raw materials.
Products are being made by people with brains; that is why we will face problems with jobs — everyone needs people with brains and nobody needs those who cannot work with their heads.
They are being substituted with robots, machines. That is the problem, because the main value today is produced by 2-3 percent of the population, referred to as the “creative minority”.
In the US they account for 7 percent of the population and for some 5 percent on average across the globe. We fail to support those people; we do not educate them properly, do not recognize them, and as a result, they either leave the country or stay in the shadows.
Each person on such a level makes $300,000 to $1 million per year with their productive capability. In other words, by losing a young man with brains, considering that in the modern world a business career is approximately 30 years, we lose $30 million at once.
What should we do if we want them to stay? Without educating them one cannot help them build a career. The second point is Russia’s integration in the world economy, because even the most talented person will not be able to fulfill their potential if there is no modern industry, no modern means of communication, modern exchange of ideas.
And finally we need to make sure that these people want to live in Russia, because if they don’t, they can easily leave because the demand for such people is tremendous across the globe.

On Conditions
What is necessary to make these people want to live in Russia? You might find this funny, but they need democracy, because these are people who don’t want to feel uncomfortable when talking to the police, these are people who want to watch whatever it is they want to watch on television, and not a single channel, they want to read the newspaper they like, and they want society to offer them the right to take part in that society, to choose the people they want to be governed by.
If they don’t get that opportunity, then only a small part of them will stay, while the rest will say, “Well, you can live however you like, but we’re going to England, America, Germany, New Zealand…” There are many countries in the world that offer these opportunities. And this is not the problem of these people, this is our problem as a Russian society.

On Conflicts of Interest
I understand quite clearly how government interests differ, if we understand the government as an official-bureaucratic apparatus on the one hand, and the interests of the business class and civil society on the other. The official-bureaucratic apparatus in its nature aims towards spreading and reproducing its power over as wide a sphere as possible. It depends on its civil servants, funded by the state budget, to ensure its own re-election. The interests of the people and of business aim at building a highly effective economy. How can this conflict be solved?
Only through elections. Yukos as a company does not and cannot have political aims. My shareholders would never allow this. About 30 percent of our employees would vote for the communists. A large part of our workforce are workers, not employees. That is why the company does not have any political aims, any factions. What I do as an individual — helping SPS and Yabloko — is my personal right. My personal money. My personal time. It has nothing to do with the company.
What is the essence of the social and civic responsibility of big business? To find the answer, we must separate the social responsibility of business from the social and civic responsibility of the people who work in business. These are not the same thing.
In my view, big business can solve one important problem — producing a mass product at a minimal price with maximum effect. Only in that case will the product be truly cheap and truly a mass product.
It’s clear that a politician and a businessman have completely different purposes. A director of a major company has a very simple purpose: maximum effectiveness. And the people he works with must share this demand. Everyone else must leave. Any mayor, even in the tiniest town, solves a different problem. He cannot lose a single person, even if that person does not suit him from an economic point of view. Moreover, he cannot and should not allow, during the development of a democratic society, for everyone in his city to think alike. On the other hand, it is in the best interests of a director of a major company that everyone inside the corporation think alike. Because it is a corporate culture that allows the company to produce a product the cheapest way possible. That is why the issues dealt with by big business and civil society are diametrically opposite. But does that mean that big business should not take any part in politics?
This is impossible, taking into account that big business intersects with political issues one way or another. Take, for example, the building of an oil pipeline to China. I believe this issue should not be delegated exclusively on a government level — it’s pure business. But politicians nonetheless raised the issue on a government level for reasons that are quite clear. Can I, as a company director, and not just as a person, calmly watch as politicians decide to route the pipeline 5,000 kilometers to Nakhodka? When I and my specialists know for certain that a pipeline to Nakhodka will be unprofitable, and the government as well as society will have to finance the oil production? Should I be silent in this situation? I believe that in this case a purely political decision cannot be made.

On Big Business
Using methods that violate the chief aims that big business was made for and that violate the laws of the government is inadmissible for a business. For a very simple reason: big business functions based on existing laws, even if they are wrong. Acting outside the law destroys the business, and limits the access a population has to products and services. This brings with it implications that are destructive for a contemporary civilized society. Other methods — like civilized lobbying, which are, in my view absolutely admissible, in the nation’s parliament — are precisely the point where the different interests of the groups should meet. In my view, this is a cornerstone of democracy — the possibility for any influence or interest group to demonstrate its point of view in front of a democratically elected body that will make the final decision.

On People in Big Business
Now, about another aspect of big business. The people — the shareholders, the managers, and the employees of the company. Some people say that they should have nothing to do with the political process, or their involvement should be limited. I was derided after saying that a part of our shareholders support the communist party. I believe that the mudslingers were certainly not from a democratic society.
Every person, every citizen of a country, regardless of who he is by profession, not only can, but must take part in the political process. Because if he doesn’t, that means he is giving someone else the right to decide how he should live his life. That someone else is not always a worthy person or organization. That is why an independent involvement in the political process is not only acceptable, but preferable for everyone, including major businessmen, employees, and company shareholders.

On Choice and Responsibility
Our country has a history of serfdom and slavery. A very brief interval ended recently. And, unfortunately, the psychology of society is the psychology of serfdom. In this situation, the responsibility of successful businessmen (regardless of whether it’s small business or big business) is to support the democratic process, regardless of its potential problems. This is the moral duty of these people — a duty to their own children to take part in this process. In our country it is easy to take away a hired worker’s job, to stifle him. But if someone has the money, or the social position, or the courage to fight this, then he is simply obligated to fight.
Regrettably, we still do not have any institutes of civil society, when this function could have been handed over to political parties and public organizations. For a society like ours, with a history like Russia’s, this is normal. We have to understand this, but we also have to struggle to change this. First of all, through education — preparing the future generation. We must say that we have a choice — not between civil society and business, but between business and authoritarianism. This isn’t a perfect alternative, because business only recently walked around in maroon suits and even today doesn’t appear very appealing. Still, we have a real choice: between people in military uniform and a civil society.
Our strength is pretty much equal. And the problem is not that one side has military uniforms and weapons while the other side has nothing. The problem is the mentality.

Interview with Sabrina Tavernise (10.2003)

2003-10-01T17:09:00.000-07:00

FRONTLINE/World reporter Sabrina Tavernise's exclusive interview with Mikhail Khodorkovsky, just weeks before his dramatic arrest:

Tell us about your past, your personal past. What did your parents do?

My parents were Muscovites. They worked at the Kaliber factory. It's a factory that manufactures various measuring devices: rulers, micrometers, projectors. ... I went to this pre-school that shared a fence with the factory, and we would always climb the fence with the intent of pocketing some interesting metal things for ourselves. My parents worked there as engineers. My father was a construction engineer, and my mother was a production engineer.

In 1991, when Yeltsin stood on the tank, where were you?

I was in the White House [in Moscow]. I was an advisor to the Russian Prime Minister [at the time, who was then facing down a coup.]

Were you scared? Do you remember that feeling?

Yes, of course. I was absolutely calm during that whole situation. In these cases, I'm always calm. I was just convinced that we'd either be sent to jail or shot. I had an uncomfortable feeling with Yeltsin's press secretary, Mr. Vashchyanov. ... He's very intelligent looking, he wears glasses, and he had a machine gun across his chest. And he is talking to me, and he turns his head to me, and he turns the gun to me too, and I just [gasps for air] because I could see that the safety device was taken off of the gun, and his finger was on the trigger. It was just a more comfortable way for him to hold it. [Laughs]
Everything else was relatively calm.

Have you ever thought of leaving Russia?

During Soviet times, of course not. I was a student at the university in the department that dealt with rocket fuel. No one would have let us leave the country. But when perestroika took place, I thought about what it would be like to live someplace else. And I even tried, as I traveled, to feel what it would be like to live in a different society. I've been to Europe and it didn't work out. At one point, I even bought an apartment in England and then sold it.

Why? You didn't feel comfortable?

You know, every person has a different sense of home. Some people are more cosmopolitan; it is easier for them to travel all over the world, live in other countries. Many journalists are among those people. And others are homebodies by nature. Their home, their own circle of friends, that for them personally is more important. And I probably fit into the second category. I have to travel a lot, but relaxation to me is when I am at home.

What is the most important change in your life between 1991 and today? Do you even have enough time to brush your teeth?

There haven't been many changes in my everyday life. I'm living in the same way that I'm used to. But there is a serious lack of time. I allow myself certain things that help me make up for the lack of time. For example, I have a driver, because in a car, I either read or sleep. Catch up on sleep; especially if you consider Moscow's traffic jams, it's not so bad. And I now have the opportunity to fly on a private jet, which really allows me to save time and it allows me to be more mobile, because it's a problem for me if I have to leave home for a long time. I can even fly to United States for a day, that's important for me. That I feel is a positive part of the changes.

Ten years ago, many people said that everybody had to give bribes to do business in Russia. Since everyone took bribes, they said, how could they be judged on the basis of what was legal or legal? If it wasn't right, they said, then everyone would be in jail. How do you feel about that? Was business back then the way Americans saw it: "Russia, Mafia, bandits?" What's changed now?

You know, the business sphere in Russia was difficult, and remains complicated....each person in every moment has certain self-limitations: what he can do to reach his goals and what he can't do to reach his goals. I admit that those people that have very high limitations become saints, but they do not become entrepreneurs. And people whose bar is set too low, I don't think that they remain entrepreneurs for very long, they become criminals. And the rest depends on what limitations you choose for yourself. I made a choice for myself: I said that I will not break the law. I saw that the situation was changing, I knew how business was conducted in other countries in the world, and how it varies, but nevertheless I liked the way that open public companies conducted business. That's why I said that not only will I not break any laws, but I also will not break any widely accepted ethical principles. And if I am not sure whether something fits into that idea, I will ask. But before 1999 I did not operate like that. I did not break Russian law, but everything else wasn't my concern.

What do you mean by everything else?

Everything else is the question of ethical standards. Russian legislation allowed many things that in the West were already considered inappropriate. For example, our standards on insider information were completely different, our standards of false advertising were completely different, our standards of working with shareholders were completely different. I worked within the standards that existed in Russia. I agree that many people have had to break or are breaking laws within the boundaries of their business that exist there and ethical conventions that exist here. I was able to avoid that, and still be successful in business.

How did you manage to avoid that?

You see, every person looks for opportunities. If he is a little bit lucky, he finds the opportunities. If he is less lucky, but is ready to break the law, then he finds other opportunities. I was able to avoid that. And that is why I'm fearlessly talking to our respected prosecution, telling them that you can show that we broke ethical standards as far as we understand them today, and that is true, and it went on until 1999. But we did not break the law.

I see you have a new office.

In the other office we had to remodel to meet our needs, we constantly had problems with our network. We use paperless technology; we do not have any paper output in the company, and it turned out that we needed a completely different technical system. But to transfer the company while we renovated the office space, and then move back, as we could in New York -- unfortunately there aren't many office buildings of that caliber available in Moscow, so we just built ourselves a new building and sold the old one.

And what is that picture behind you? [pointing to a large abstract painting on the wall]

Honestly, I don't know. I don't trust my artistic taste, so the designers that were hired to decorate did it according to their taste. My demands were only that [the whole office] would be a transformable space. ... The structure of the company is constantly changing. The composition of the necessary working groups is constantly changing. We have many divisions that are based on the project principle, which means that they are put together for each project. They need different types of space, so [we need to be able to] take it apart and put it together.

And what about at home?

At home, I'm very conservative. ... I can't stand the modern design, all those glass structures on the bottom. I like everything to be dependable, heavy, English furniture.

Can you describe your company? Has the merging [between Yukos and smaller rival Sibneft] taken place?

No, the merge has not taken place yet. We are currently in the process and we have to be done by the end of the year, and then starting January 1st, we will be operating as one unified company.

What will happen; what will the company [be] like?

The company [Yukos] will be the largest oil company in Russia, and the 4th largest in the world in oil production. It's a large Russian company, a large oil company by global standards. ... But let's not overstate the role of oil in the Russian economy. If we take Saudi Arabia for example, there 90% of the economy is tied up in oil. In Russia the oil fraction of the economy is around 20%, and that's oil and natural gas combined.... ... Our company produces/will be producing somewhere around 5% of the gross national product. That's a lot for one company, but it's less than, for example, the share of Nokia [cellphone company] in Finland. It's a large Russian company, [and] large as an oil company by global standards. ...

What is happening with your company right now?

Today there is an attack going on by the government that has been motivated by certain political powers. This attack is not targeting the company, but targeting very specific people. Without a doubt, today the shareholders of Yukos are becoming victims of the attack; some staff members are becoming victims. The targets of the attack are the shareholders and the management of the MENATEP Group that is in turn a shareholder of the company Yukos.

Why is the government attacking specific people within a specific company? What do they want with them?

We, without a doubt, happen to be very influential people in the country. And we have our own views on development of our country; it's development according to the democratic model. There is a section of the government that supports that model, and there is a section of the government that does not support that model. There is consensus in place on the issue of property. Everyone thinks that property ought to be private. Some of the people think that private property has to coincide with democracy, and some of the people think that private property can exist, but we can hold off on democracy. The company itself has nothing to do with it, the company itself is a matter of private property, and there is a consensus on that issue. But the people, the shareholders, they are fairly influential, and they have the opportunities to support one or another political power.... I have announced that I support two political parties, liberal-democratic in their nature: the Union of Right Forces, and Yabloko. And that's a problem.

So they think that you are too influential?

We are fairly influential, and we have the opportunities to help those that are choosing an alternate development route. So it is not a question of my personal involvement in politics or the question of personal political involvement by the employees or shareholders of the company. It's the question of our ability and our desire as individuals to support the democratic developments in our country. Not everyone is okay with that. There are people in our society who think that it's normal, and others who think that we should be denied our civil rights. I don't agree with that. I think that that property and civil rights are not only equal in merit, but civil rights are even more important than property.

Would you describe Russia as being between two models?

Everything is very simple and very clear. In our country in 1996, we had presidential elections, where we elected president Yeltsin. And in that moment we had a choice between the path of development that was taken by France, America, and other developed western countries. That was one way, and another way that was offered to us was the path of development taken by the Soviet Union, China prior to reforms, and so on. It was a clear alternative. The people chose the option that would follow the development in the western societies. We began moving in that direction, and that other alternative no longer exists -- no one is asking us to go back to the Soviet Union. But now we're presented with a different choice: are we choosing the model of, let's say, the United States, or the model of Venezuela or Guatemala? ... Some people think that Russia should follow the example of Guatemala, where there is private property, but at the same time all the political life is in the hands of the government. Some people think, and I'm among them, that in modern society it is impossible, if we want to be a developed country, to say that there should be private property but it's not important what happens to democracy. These are not separate issues. A country cannot be wealthy if it is not democratic.

Among Russians there is some criticism about privatization, and the deals that were made during the early 1990's. How would you respond to those people, the screaming grandma, or babushka, on the street corner who insults you? She was not able to make any deals...

To the grandmother I say that in 1990-95, you stood in line at the gas station, if you owned a vehicle, and you did not receive any benefits from the oil companies' budget. Oil companies did not pay taxes [then]. Today in 2003, we produce fifty percent more oil than we did in 1996, we pay five times more in taxes, out of which the salaries for teachers and doctors are paid, and you are not waiting in line at the gas station. That's what I tell the grandmother. But this is what I'll tell an American investor who doubts whether or not the shares were rightfully obtained: I'll tell him that the government, for completely understandable reasons, made the decision to sell off a large industry because it did not pay taxes. ... This was on the brink of the 1996 elections, when everyone was certain the Communists were going to win. The Communists firmly announced that any companies that were sold off would be nationalized without payment. So you understand that no investor would have paid a single dollar for this company. We paid, for the first part of the company, a total of $450 million-- $150 million before the election and then $300 million after the elections.

Do you have a receipt?

Of course, of course. And that's considering that the company was $3 billion dollars in debt -- it was a huge risk. But when we bought the second part of the company in 1997, after the election, such risk didn't exist, and we paid $1.2 billion for it. That was right on the eve of the oil crisis, and there were not that many investors who wanted to buy a company in Russia. Americans think that in ten years of democracy, the Communist Party has been the biggest threat to democracy in Russia. What do you think is the biggest threat? The biggest threat is that we do not have a civil society, and so there are people, groups of people, who want to have the power in their hands, basically bypassing democratic procedures, by keeping the shell, but taking out the meaning. There are people who think that the country would do well with an authoritarian regime.

And who are they?

There are very many people in the government who came out of the Soviet times and have not changed. There are [also] younger politicians who think that the authoritarian way of developing is right for the country. On the one hand, it seems like there is a democracy in place, a multi-party system, and so on, but on the other hand there isn't a democracy, which means that very little depends on the expressed desires of the people. There is an impression of a [democratic] society, an independent court system, but when you look at it closely, you can see that it is not independent. A civil society, a self-governing society by the citizens does not exist.

Is that really a threat?

Of course. It's a serious threat. In Russia in the last thousand years, since the Novgorod Veche, [a popular assembly in ancient Russia] we have been taking a step towards the West. And in Russia, the West and democracy are synonymous. And then we've taken steps towards Asia..., which, for Russia, is synonymous with totalitarianism. For us, there really is a question of what we are moving towards, the West or the East. It's a traditional problem for Russia, and probably the country's most poignant. If we were to take Peter the Great for example, everyone thinks that he pushed Russia closer to the West, but in reality he, much like Ivan the Terrible, pushed it towards the East, by devaluing human life. In the beginning of the 20th century we tried to move West...Railroad construction began in Russia, and Western entrepreneurs began to take part in the work. And then in 1917 we went back to the East again. Again human life lost all value for us. For us the West means a high value on human life, for us the West is civil rights. For us the East is the lack of civil rights, and as a result, no value on the human life. Please understand that this has nothing to do with property. Property is a separate thing; it can be decided one way or another. We're talking about whether we will have a society with civil rights or without civil rights. I don't know how serious a choice that seems to you, but for me, as a citizen of my country, it is a very serious choice.

So which direction are we moving in now, to the East or to the West?

We're moving towards solving the problem. We dealt with one issue in 1996, whether or not to have private property or not to have private property. ... And now we come to this issue. And I'm absolutely convinced that this issue will be before our citizens at the 2008 election. Today it is impossible to say where we are going, East or West. Part of our society is moving East and part of it is moving West. Society cannot split apart, we have a unified country, we don't have any place were we can separate. So we must come to a consensus within our society. But whether it will be an authoritarian consensus or a democratic consensus cannot be said today.

As far as politics, what do you think was [exiled oligarch Boris] Berezovsky's mistake? Why is he outside the country [recently granted political asylum in Britain] and why can't he operate in Russia?

Berezovsky is the type of person who already lost interest in business. He was interested in politics, but continued to do business. And he created a lot of very difficult contradictions for himself. Then, the mistakes that he made, he made them as a politician, in my opinion. I don't want to go over them now. You can be involved in business, you can be involved in politics, but you cannot simultaneously play well on both fields. There is always a choice.

Are you involved in politics?

I'm without a doubt involved in lobbying for the interests of the company at the State Duma [parliament]. As a citizen I support one or another political power, which I talk about publicly. Myself personally, I am not involved in politics. I have not taken part in a political process. You understand that it is one thing to financially support people who have similar views, and a different thing entirely to take part in a political process yourself. One demands money, and I as a person have it; another demands time and mental energy, which I as a head of a company do not have. ...

source:
FRONTLINEWORLD
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