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Boris Berezovsky: What is Happening to YUKOS is an Open Show of Power
// A specialist’s opinion
A year ago, Boris Berezovsky argued that once the authorities had won control over the media, they were bound to go after business. The so-called “YUKOS affair” has forcibly reminded us of this prediction. Sergei Stepashin, head of the Audit Chamber sharply criticized Roman Abramovich, a partner of YUKOS head Mikhail Khodorkovsky, calling Abramovich’s purchase of the British football club Chelsea a challenge to the country. At that same moment, Moscow Independent Broadcasting Corporation (MNVK), owned by Mr. Berezovsky, finally passed to new owners. This may have been just a coincidence. Boris Berezovsky tried to convince Kommersant correspondent Nataliya Gevorkyan that the authorities were acting systematically.
"It will take a long time to undo the damage"
- Do you think that Mr. Khodorkovsky will end up like you in London with suitcase in hand
–In the end, yes.
–And Mr. Nevzlin (Leonid Nevzlin, a major YUKOS shareholder) too?
–Even sooner.
–Well, if you’re right, then Mr. Putin is actually being consistent: if everyone is in London, then they’ll literally be equidistant. You said that by fall, Russian business would be forced to realize the need for joint action, since the authorities would inevitably try to take control of all finances in the state. Were you thinking of what’s happening to YUKOS now?
–I didn’t have YUKOS specifically in mind. Actually, the situation was already quite clear in spring 2000, when Putin announced a policy of forming a power vertical. It was perfectly obvious that they would build up a vertical power structure and then build up a media vertical, since you can’t support a power vertical without control over the media. The most important thing is that these two verticals are meaningless unless you build a third vertical – an economic vertical, i.e., business, since the Russian economy is already three-quarters private.
–But this very same president claimed back then that there wouldn’t be any review of the results of privatization, which both Russian and foreign media are now mentioning in connection with the YUKOS affair.
–He’s being a hypocrite as usual. What does he mean they won’t be reviewed if they’ve already been reviewed? Look at the facts. What about ORT, NTV, SIBUR, and the business with vodka brands belonging to Shefler (Yury Shefler, chairman of the board of directors of SPI Group - Kommersant) – this isn’t a review of privatization?
–Then why has there been such a sharp reaction to YUKOS?
–Because today YUKOS is the vanguard of Russian business. And in a certain sense, this is an open show of power.
–For domestic use?
–For both domestic and foreign. For domestic use, to prevent everyone from "rising up" together or consolidating. One of the most important aims of the authorities is not to allow the kind of capital consolidation that happened in 1996. I don’t mean just large-scale capital, but medium-scale capital as well. Consolidation in the sense of political pretensions. Right at the start, Putin proposed the idea of so-called "equidistancing", saying, "stick to business and keep your nose out of politics." It’s the same old story. There isn’t a single country in the world where you have capital without political aspirations. One of the best examples is Rockefeller, who was Vice-President of the United States. This isn’t capital involved in politics? So this is an internal signal to everyone: stay out of politics, OK? And we won’t give you any trouble, so to speak. Of course, they are. And they’ll keep on giving trouble, that’s inevitable.
–What about for foreign use?
–Well, I live in London and I’m seeing what a reaction there is here in the West. It’s rare…. In all the time I’ve been here, not even Chechnya disturbed them that much. You could even say that Chechnya isn’t a concern anymore. But when it’s a question of their money…! After all, 40% of YUKOS’s shares are on the market and foreigners have a huge stake in these shares. And the West wildly overreacts to anything concerning money. It’s rational about everything else. So the moment things touched on money, the commotion began. A real commotion. What’s more, confidence levels will never be the same, despite what Putin says, despite anyone’s assurances. It will take a long time to undo the damage. I’m not saying it will take as long as after the crisis of 1998, but something close to it. What this signal means outside is that the West’s reaction doesn’t bother us, the Kremlin, if it’s a question of holding onto power.
–But it’s illogical to choose a strong, transparent company with a good reputation for your open show, to use your terminology.
–It’s absolutely logical. As it turned out, neither the example of Gusinsky nor the example of Berezovsky convinced capital to stay out of politics. However, I want to add that what Gusinsky created and what I created were first-rank companies, not second. And the authorities struck precisely at first-rank companies. It’s quite another matter that they didn’t have the excuse that these two were meddling in politics and therefore they had the right to treat them that way. I said back then that this was only the beginning, that the authorities would take control of capital, and not just large-scale capital but medium- and small-scale capital as well, right down to the market stall. No matter what Putin says. What about Salazar, Pinochet, and Franco? The West worked perfectly well with them. The Americans had bases in Salazar’s Portugal, which means they had an agreement with him, right?
"Are they oligarchs or oligophrenics?";
–But then everything is simple: business swears, on whatever, not to meddle in politics and it will be left alone. And there won’t be any cases against them, at least no criminal cases. If, of course, what’s happening to YUKOS is a warning shot and not a fight to the finish.
–Of course it’s to the finish. It’s not going to be a finish in one second, but everything necessary to defeat it has already been done. Let’s take a look. The authorities are actually acting logically within the authoritarian-totalitarian structure they’re constructing. They’re acting methodically. And their methods are all the same: they took Titov hostage to get at Gusinsky, Glushkov to get at us, and Lebedev to get at Khodorkovsky. It’s all the same! And the parties in the proceedings are all the same: the same investigator, Salavat Karimov, destroyed Media-Most, tried to prosecute Aksenenko, and destroyed SIBIR and its car manufacturing business. The same person. Of course, this is part of the authorities’ logic, but they obviously don’t have enough professionals to destroy leading Russian companies professionally. This may be some consolation. However, the main problem is not the conduct of the authorities but the conduct of capital and business themselves. Business doesn’t understand its political responsibility.
–Aren’t you jumping to conclusions? Business still hasn’t formulated its position regarding the situation around YUKOS.
–Business agreed to stay out of government, which is absolutely impossible to do. For some reason, they still can’t overly trust the management of their own companies, but they trust government administration to people who are totally uninterested in defending their interests. Look at who forms the main power class today. The bureaucracy of course, that hateful word.
–Does this mean that previously, under the former president, for example, the bureaucracy didn’t rule the country?
–There’s a fundamental difference. In Yeltsin’s time, the bureaucracy didn’t participate directly in redistributing property. True, as everyone knows, it redistributed “nobody’s” property for bribes, that is, state property, which it regarded as its own. The bureaucracy didn’t believe that it was possible to revive the institution of private property in Russia. This is why they distributed millions worth of property right and left for a song with such ease. And now today, when the bureaucrats are convinced that private property is here to stay, they’ve decided to get involved in redistribution themselves. This is exactly what’s happening now—a struggle for still-undistributed property and for already-distributed property, in other words, redistribution. It seems to me that this is where the position of the business community itself, especially the oligarchs, is absolutely fundamental. Are they oligarchs or oligophrenics? I want to point out that oligophrenia means “mental retardation”, not “imbecility”. Incidentally, I didn’t phrase the question that way; President Putin did at a meeting, pointing at a well-known businessman. The oligarch wasn’t offended. I think this scene characterizes the president, the oligarchs, and their relationship with one another better than any other.
Notice, you said that Putin can’t be blamed for anything, but that’s inconsistent with the facts. From the very beginning, he announced and implemented the notion of removing capital from politics. It’s absolutely unreal, but the conflict with YUKOS is a clear demonstration of this trend, which the president formulated. And it will affect everyone without fail.
“It’s the December elections, the elections!”
–Why? What is the final objective? To force Mikhail Khodorkovsky to leave the country, and take away YUKOS? What?
–We can already single out two stages in the authorities’ subjugation of capital. The first stage was the Gusinsky and Berezovsky affairs, and the second is the Khodorkovsky affair. Without a doubt, these three cases are “tops” in magnitude. When did the president’s confrontation with Gusinsky and me start? Right at the start of his term. Right after the elections. He had to show his decisiveness immediately and send a message to society: see, we’re fighting against these hateful oligarchs. But actually, it was a battle against the media, to get them under control as quickly as possible. They all interpreted it the same way: Gusinsky and Berezovsky were involved in politics, so they got run over. Overall, they read it right. Only for some reason, they read it to mean that they shouldn’t get involved in politics either.
–So the media business was riskier than, say, the oil business might seem to be. Then why was this particular moment chosen for the Khodorkovsky affair?
–It’s the December elections, the elections! They need to get capital out of the way for this period of time. Right now, they have to solve their main problem, that is, winning a constitutional majority in parliament so there won’t be any chances for any Khdorkovsky, Fridman, or Potanin. Not a chance, so that they won’t even think of getting into politics. That’s the first stage. Then when they get their parliamentary majority, when the president is elected for a second term, they’ll essentially take over business. The first four years weren’t enough to build a business vertical. This will be one of the main objectives right after Putin is reelected president. And there will certainly be a redistribution of capital in favor of his people. Khodorkovsky isn’t one of his people, and neither is Potanin, nor Fridman, nor Abramovich.
–And who are his people?
–His colleagues. Those are his people.
“You see, Misha is a weak person, paradoxical as it may sound.”
–Could Mikhail Khodorkovsky have provoked the attack on himself by announcing he was going to finance a number of parties?
–No, I don’t believe Khdorkovsky did this without the Kremlin’s knowledge. Of course, the Kremlin knew. But obviously, there were certain prescribed limits, and when they decided Khodorkovsky had violated those limits and was becoming too influential….I’m convinced that Misha, being a pragmatist, didn’t just blindly carry out the Kremlin’s orders, but pursued his own interests and tried to form, and will keep on trying to form, his own Duma factions – nothing will stop him now – which will defend the interests of capital, and not just his, Khdorkovsky’s, interests. Of course, this doesn’t suit the Kremlin at all. In this connection, I’d like to add that the discussions Bogdanchikov (Sergei Bogdanchikov, president of Rosneft) allegedly had with Sechin (Igor Sechin, deputy head of the presidential administration) and Belkovsky (Stanislav Belkovsky, a political consultant), which appeared on the site Kompromat.ru (“kompromat” is an abbreviation of the Russian words for “compromising material”), are sheer provocation. Their aim is to draw the fire away from the main character. These people are supposedly the ones behind the confrontations with business and the plotting. Of course, that ‘s not the case. No one doubts that it’s Putin’s objective. Just like it was his objective to seize ORT. Putin himself said to me, “I want to control ORT.” It was Putin’s objective to destroy NTV, redistribute the property, and take it away from Gusinsky. He said that he’d tried to reach the general prosecutor, tried, OK? But he “didn’t get through.” And in exactly the same way, it was Putin’s objective to destroy TV-6. I talked to Alekperov (Vagit Alekperov, president of LUKoil), who was the real tool in this business. This doesn’t excuse him in the least.
–But Khodorkovsky doesn’t seem like your type of firebrand. He’s never mentioned the president even once. Maybe the printouts of the telephone conversations are provocation, but maybe it’s also a signal that the ones who are doing the scheming are part of the president’s circle, but not the president himself, which means there’s still room for negotiations between the president and YUKOS. You know Mikhail Borisovich; he was always very cautious, weighing everything, absorbed in his wells, I would say. In the elections, he covered himself by putting his eggs in different baskets. But the blow fell on him. Has he changed?
–There are two things. First, at his level of business, there’s no staying out of politics. It’s just not possible. He saw that more and more power was being concentrated in certain hands; this is deadly for business. Second, I think for all that, he underestimated just how prepared the authorities were for anything. Totally. He didn’t believe it. I know Misha. You see, Misha is a weak person, paradoxical as it may sound in reference to someone who has reached such a level and built up such a company. He really is very cautious.
–But that isn’t always a sign of weakness…
–Misha is a very good process man. He’s the right person for the job of prime minister, no doubt about it. Of all the people I know, he’s the best. But at the same time…. He supported the Communists in 1996, before the business community made the common decision to support only Yeltsin. Actually, a lot of oligarchs supported them. Our oligarchs are peculiar in that they don’t know how start a process; they’re afraid to start a process, they’re built into a process. That’s how it was in 1996 and 1999. And where was Khodorkovsky in 1999? Where were you, comrade? Khdorkovsky sat on the fence and waited to see who would win – Primakov or Putin. He would have run to Primakov just as he ran to Putin. But at some point, he realized that the government wasn’t achieving the economic objectives the company was pursuing, but on the contrary, was hampering their achievement. So he took a swing at politics and got it on the nose.
–For publicly stating his position on the war in Iraq, which was contrary to the official one; for talking about Rosneft; for criticizing bureaucrats?
–You’ve essentially named the areas of disagreement between his company’s level of business and the government’s notion of politics. The reference to Iraq was pure politics. Khodorkovsky said we should support the Americans. I personally disagree with this, but that’s another matter. But he identified an obvious point where the interests of the present government conflicted with the interests of big business.
“The purchase of Chelsea was Roman’s second big mistake.”
–A person backed by the world’s fourth-largest oil company can afford to take a different view. Is that particularly irritating?
–Of course. In my opinion, Khodorkovsky, Abramovich, and others made a really big mistake. They were wrong to give priority to improving their image. For some reason, they all decided that they first had to become intelligible to the West and then to their own country. That was a huge mistake. My own experience and my life here in the West have shown me that foreign countries won’t help. At best they won’t deliver you up to torture, to put it crudely. But they’ll happily prevent investment in business here in the West and shred funds that are sent to the West.
–But the West reacted when it found out about the YUKOS affair.
–So? The West understands Khodorkovsky better than any other large Russian company. Has this stopped anyone? Investigator Karimov arrived and quietly began destroying both his image and his company. I believe that if the Russian government were to issue an extradition order for Khodorkovsky tomorrow if he left for the West for some reason, full-scale proceedings would be launched. This would be to the West's advantage to some extent, because an enormous proportion of the company’s capital is located in the West, and this capital is generally easier for them to control and use.
–It always seemed to me that building up your image there is a kind of insurance here. Your former partner, Roman Abramovich, obviously thinks so, judging from his latest purchase.
–To my mind, the purchase of Chelsea was Roman’s second big mistake. The first was his acquaintance with me.
–Why was that a mistake?
–Because then there wouldn’t have been a second one. The surprised reaction to his purchase of Chelsea will gradually grow into a huge irritation there and here. Let me explain. In Russia, of course, each defeat of any Russian team will lead to complaints against Abramovich, because if that bastard (the fans’ term, not mine) had invested money in Russia, in that team, it might have won, but you…. That’s in Russia. Here in England, Chelsea wins and loses. And each loss will be blamed on Abramovich, of course. However, there’s a more important disadvantage for him from this deal. Abramovich won’t build it up as a business. He’ll overbid for players from other teams at inflated prices and won’t recover his costs. That’s not a business. He said himself that it was a bit of fun for him. But there are other players in this “bit of fun”, other team and company owners who make a living from it; it’s a business for them. They won’t tolerate this new kind of dumping in the football community, obviously.
–Ordinary people, who naturally don’t like the rich, generally take pleasure in the oligarchs’ misfortunes.
–Of course. Today, I was talking to Ivan Rybkin, who went to visit his mother in Tambov Region and to meet with his former classmates. These are mainly people with higher education, not poor downtrodden provincials. Most of them cheered the attack on Khodorkovsky. For two reasons, as Rybkin said. First, he stole, so now it’s time to give it back. The second reason, sadly enough, is because of phobias, our national phobias.
–Are they pleased at this attack on “Jewish capital”?
–Yes, they’re getting even with “Jewish capital”. Unfortunately, in doing this, the government is also systematically stirring up nationalism. So from this standpoint, I think capital underestimates what’s happening in Russia.
–You and Mr. Khodorkovsky are soul-mates. Do you have any idea what he can do? As you said, the government will try to deal with Khodorkovsky before the elections, and with YUKOS after the elections. What can he do in this situation?
–My opinion is that Khodorkovsky lacks both will and an understanding of what he’s ultimately being threatened with, which is redistribution of property. One hundred percent.
–Doesn’t understand or doesn’t believe?
–Both, in this case. Understanding is a necessary condition for having will. Being born is a sufficient condition. I don’t think he has enough understanding, and it’s as if there’s no sufficient condition. He’s not a fighter like me. At a certain level of confrontation, he’s probably a formidable opponent, only not of the government. He’s afraid. I want you to understand that I’m not trying to smear Khodorkovsky in this interview. I want to make that clear. It’s simply my opinion.
The interview with Khodorkovsky in Tomsk is the best proof that I’m right. In my view, he says absurd things that express fear and incomprehension (or fear of comprehending) of what is happening. Khodorkovsky says, “Yes, there are four specific cases set up such that each of them is aimed at a specific person in our group. When I say “group”, I don’t mean YUKOS, but a group of owners, partners, and friends… This isn’t an attempt to strike at the company, it’s an attempt to strike at the people who make specific decisions.” He turned out to be a person who is not only extremely cautious, but is also not very farsighted.
Now Misha will back down. Here’s an example. He was called to the prosecutor’s office. He went. It was a move on both sides. Why did he make a signed statement of nondisclosure? What’s there to disclose in this case? Obviously, they only took the statement to prevent any public discussion.
–Did they take such a statement from you?
–They asked, but I refused. And I commented on everything that took place. In my view, Khodorkovsky didn’t have the right, in the interests of all the people who are in danger in his company today (because tomorrow they might come for other people), didn’t have the right to make such a statement. The moral right.
“Business must openly aspire to power, without hesitation.”
–But his attempt at overcautiousness obviously had positive results. YUKOS shares rose again. He built up a huge, successful company. I’ll put it crudely: Khodorkovsky, the cautious one, has built the world’s fourth largest company, while you, the brave one, are sitting in London.
–I agree completely with you that we had different inner objectives. I’ve never hidden the fact that politics is my priority, and he’s never hidden the fact that business is his priority. But I turned out to be right. He still ran into the same problem. Let’s put it this way. I was on the front line and warned of all the dangers, based on my own experience. The authorities started fighting first with me, and it was a fair warning to the rest. Do I regret being in London while Khodorkovsky built the world’s fourth-largest company there? Is this the fundamental question? Everyone has his own answer to that. I have no regrets. And apparently Misha has no regrets, because there’s no common denominator here.
–Will he try to reach an agreement?
–I think he will. Certainly. He’ll believe, or he’ll convince himself to believe, what Putin or his people say; and in the end, of course, he’ll lose. Because now the government’s aim is to shut him up, so that he not only won’t talk, but will also stop taking independent steps in politics. The next step, if Putin is reelected, will be to take away his property.
–Are you saying that even if Mikhail Khodorkovsky clearly understands that they’ll try to take away his company he won’t resist?
–It will be too late. It’ll happen right after the presidential elections, in which Putin will be reelected, as Khodorkovsky is convinced.
–What will the business community do?
–That’s the eternal question: what to do? You need to understand clearly that the main source of danger to business at the federal, regional, and local levels is the existing power structure. Not the odd bureaucrat, but the power structure that gave the brush-off to redistribution of property. I’m sure that business in a small city feels pressure from the cops or the State Security guys – every level has its own Putin. The conclusion is that business must openly aspire to power, without hesitation.
–You mean take part in elections?
–Yes, in parliamentary, local, regional, and presidential elections. Business must nominate its own presidential candidate. Not Putin, of course. Second, business has to rely only on itself; foreign countries won’t help us. That’s absolute nonsense. I’ve already talked about that. Third, it has to combine the forces of capital in the struggle for power. And fourth, there has to be a change of priorities to try and win the support of people in Russia and then in the West.
–But what will the business community do in this particular situation? I remember how members of the Russian Union of Industrialists and Entrepreneurs (RSPP) started snickering at a meeting with the president when he lit into Mr. Khodorkovsky. But surely they understand as well as you do what’s happening now.
–In theory, they could do a lot, but they won’t do anything. The RSPP is a really strange organization that has consistently handed over its own members. You remember how quickly they backed off from Gusinsky and Goldovsky? What about the business with TVS, when Primakov and Volsky were babbling about having nothing to do it? They had everything to do with it. They agreed to act as a roof, in the literal sense of the word, to protect the independent TV station from the government. And where is Anatoly Chubais, our champion of capitalism? I said that I was for MNVK and for the destroyed TV-6, that I wouldn’t take a single kopeck, that I’d give it away for nothing. I had fundamentally moral reasons. Therefore, I have the right to say that I consider Chubais to be the main figure in this irresponsible action, because Chubais, who was the leader and ideologue of privatization of state property, also took part in the redistribution of property. Not state property, mind you. The problem is that everyone expected a lot from Chubais. He filled the niche, as it were, of capitalist leader in Russia and once again he betrayed the interests of this community. These aren’t high-flown words.
–So he won’t speak out if they destroy YUKOS and its owner right before his eyes?
–Speak out? In the sense that he’ll say he doesn’t agree with it? Maybe he will. But he won’t speak out in the sense of a show of force to prevent it from happening. There’s already enough force! You just have to take the RSPP and transform it from a vague organization into a real force that would defend Russia’s business community. You see, their inaction is far worse than their absence altogether. There’s this illusion that there’s someone who’ll defend Russian business. But this is a delusion.
Nataliya Gevorkyan
All the Article in Russian as of July 09, 2003
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Photo: Valery Levitin
