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War and Peace
Everyone is talking about a renewed dialog between government and business. As well they might, after meetings between the president and prime minister and businessmen. But then there is the ruin of YUKOS. What kind of dialog is that? Nikolay Vardul answers that question.
Relations between business and government have not been so distorted for a long time. We can talk about war and peace without any exaggeration.
They staged peace at the Kremlin on July 1 when the president met with businessmen, and the prime minister was accessible on July 5 at the White House at a session of the council on competitiveness. They peaceably discussed reformsfrom tax to administrative, the social responsibility of business, its tarnished image and, of course, raising competitiveness, without which the doubling of the GDP ordered by the president will be impossible.
That is only half the story. War is being waged behind this peaceful façade. On July 1, the court gave YUKOS five days to pay its 2000 tax bill of 99 billion rubles. At the same time, the Tax Ministry made a new claim against YUKOS for 98 billion rubles from 2001. Now they will work on 2002 and 2003. YUKOS is suggesting ways of paying off those debts, but no one wants to talk to them. Khodorkovsky is ready to hand over his stock to the state, but deputy Tax Ministry head Sergey Shatalov says that he doesn't see any way for the tax debt to be paid off with stock. The state is after YUKOS.
I don't think those events were being managed behind the scenes. I just don't see anyone capable of it. But the coincidence is telling.
What is more importantwar or peace? Or is YUKOS just a fluke?
I'll start with YUKOS. It really is a special case. This is seen in the size of the company and the scale of the project it was involved in. I don't just mean the intended merger with Sibneft, but the plan to exchange YUKSI stock with a major transnational oil company, as a result of which YUKOS would have become a powerful international company. (Sibneft had delegated its management from the beginning.)
It's this specialness that allows us to draw the first lesson. That is that Russian authorities don't need Russian business projects that stretch so far that their leaders' influence may come to rival the president's. And there is another lesson that has already been widely noted. The authorities were not satisfied with the prosecution of Mikhail Khodorkovsky. They then unleashed a repressive machine against YUKOS using very simple fiscal methods, the likes of which could be used against practically any of the president's or prime minister's guests. Even when Mikhail Kasyanov was still prime minister, they were saying that what happened Khodorkovsky and Platon Lebedev could happen to the heads of dozens of companies.
The government is destroying YUKOS without any heed for the fact that they are doing so to the detriment of the Russian economy (in 2003, it regressed in volume of foreign investment by several years, to the tune of $1 billion) and the state itself (Western stockholders in YUKOS could very well file suit not only against the owners and managers of the holding, but also against the Russian government for intentionally bankrupting the company, and not in the Basmanny court in Moscow, either.). And the campaign against YUKOS will deprive the state of its current taxes and fees. As they watch this going on, Russian businessmen are thinking about self-preservation. Why upset the powers by mentioning YUKOS at the Kremlin or White House? Everyone remembers that the president says one thing and does just the opposite. (On June 17, Putin said that the government was not interested in bankrupting YUKOS).
The government may still benefit from this situation. The businessmen are ready to form a venture fund, in the name of competitiveness and innovation, and even take on some of the functions of the state in social policy. It doesn't matter that these new undertaking make their main activities harder. Economic expedience is already beside the point. Sometimes you have to make sacrifices to survive.
The Russian Union of Industrialists and Entrepreneurs is an excellent example of the will to live. The day before the meeting at the Kremlin, the Union stated, “Businesses can be divided into those that show social responsibility and high standards of corporate, labor and social relations, and those that are parasites on society, with incorrect, destructive, improper methods of attaining financial results, such as forced bankruptcy, seizure of property and tax evasion.”
In other words, if you can't stop the prosecutor general, join him. All's fair in love and war.
Nikolay Vardul
All the Article in Russian as of July 12, 2004
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Photo: Viktor Kulikov