Publication: Eurasia Daily Monitor Volume: 1 Issue: 113

Vladimir Putin has never been a man of second thoughts, but these days he might reflect on his year-old decision to put Mikhail Khodorkovsky behind bars without much joy. The negative repercussions of the arrest are definitely greater than he expected in an area that he greatly values: personal relations with key Western leaders. He travels often to Central Asia but remains a “foreigner” in the old-boys networks of the post-Soviet nomenklatura; he looks visibly uncomfortable in the company of the shamelessly authoritarian Alexander Lukashenka; his Ukrainian best friends, Leonid Kuchma and Viktor Yanukovych, may have been guests of honor at his recent birthday party but are also not quite his type — and not that reliable either. A heart-to-heart with George W. Bush or an easy moment with Silvio Berlusconi or a get-together with Jacques Chirac and Gerhard Schroeder, these are the truly important occasions for a Russian leader aspiring to be accepted “as an equal.”

Pragmatist as he is, Putin meticulously calculated the scale of the damage to his international standings before dispatching special forces to capture the richest man in Russia. His damage-limitation strategy was based on three key assumptions. First, this demonstration of the president’s unlimited authority would confirm that he is firmly in control of the situation and is the only man to do business with. Second, Western demand for Russian oil keeps growing, so seizing Yukos would eventually turn the oil factor to work for the president and not for the oligarch. Third, the charges of tax evasion, embezzlement, and fraud would show Putin’s determination to exterminate corruption.

While the first reaction to the special anti-Yukos operation was probably stronger than Putin expected, he weathered it with few reasons to doubt the perfection of his planning. Western leaders expressed only mild disapproval, and the media outcry was dismissed as “sponsored PR.” Indeed, Khodorkovsky, with his questionable business ethics and bold ambitions, had few friends-in-need. Putin, to the contrary, had been very useful for the U.S. President, by giving Bush the green light to deploy troops in Central Asia, and for the Chirac-Schroeder “old Europe” by registering his firm opposition to the U.S.-led invasion of Iraq. However, Putin did not find a single opportunity to prove this value in the past year and instead has been spending his political capital on covering his increasingly evident miscalculations.

The first stumble was that Khodorkovsky refused to go along with the plan and surrender his treasures in return for a one-way ticket out of Russia. Making the charges stick in court and appropriating the oil assets have turned out to be much more difficult that Putin’s lieutenants envisaged. Rules have to be bent again and again, but a badly needed “closure” still cannot be achieved.

Key members of Putin’s inner circle have been eager to take charge of the business side of the problem, leading to embarrassing public rows between them. The crusade against corruption has come to naught, so the recent Transparency International report on corruption points to the Russian oil economy as infected by rampant corruption. Fearing a steady deterioration of the business climate, Andrei Illarionov and German Gref, the only remaining liberal economists in prominent positions, have broken the taboo against commenting on the Yukos affair and emphasized its political nature.

The simmering anxiety pervading the global oil market may bring Russia hefty profits, but it does not necessarily play in Moscow’s favor, since every clumsy Russian move to assert central planning is brightly illuminated. Customers want to see dynamism and flexibility, but the Kremlin-appointed “new oligarchs” now running Yukos come nowhere near to the efficiency of management achieved by Khodorkovsky.

The most unpleasant consequence for Putin is the erosion of his carefully constructed image of firm and competent control. Rubbing shoulders with Western leaders, he has to convince them — as well as himself — that he is also an adept leader, confidently in charge of a huge country that contains enormous risks. That one decision made last October, instead of proving his leadership, has trapped Putin in a circle of limited and pre-determined choices about curtailing democracy, regulating the economy, and abandoning modernization. Each of these post-Yukos steps takes Putin further away from where he wants to be as equal, and his unequivocal support for Bush appears to be a sign of desperation. During his first year in jail, Khodorkovsky has kept his composure and gained more respect than any PR-campaign would have brought him. Putin was irritated by his presence on the international arena, too independent and stylish, but now he is wary of his prisoner’s shadow.

(Ezhenedelny zhurnal, October 19;, October 21; Kommersant, October 21; Izvestiya, October 25; Ekho Moskvy, October 16; Novaya gazeta, October 18;, October 20).