Richard Sakwa, professor of Russian and European politics at the University of Kent, discusses with Russia Direct the potential role of Mikhail Khodorkovsky as an intermediary in resolving differences over Ukraine
Khodorkovsky, from moneyman in Russia to middleman in Ukraine. Photo: Reuters
Richard Sakwa, professor of Russian and European politics at the University of Kent, has been following the story of Mikhail Khodorkovsky and Yukos since the 1990s. Last week, Sakwa presented his book Putin and the Oligarch: The Khodorkovsky-Yukos Affair at the Institute of Modern Russia.
The story began, says Sakwa, when Vladimir Putin came to power in Russia and had its first major development when Khodorkovsky was arrested several years later (October 2003). Sakwa saw in these unfolding events “a change of fundamental significance,” especially as the whole Yukos affair began entering the global spotlight.
“This was clearly an issue of fundamental importance,” he said in a Skype interview withRussia Direct. “Once the Yukos case started, quite a lot of Russian executives came to London whom I met and discussed the case with them. Gradually, after the folder on the question got bigger and bigger, I decided I’d better do a book on it. And that’s how it began.”      
“Clearly, the most important thing ultimately was the conflict between political power and economic power,” he said. “And this is an issue which hasn’t been resolved.”    
Russia Direct sat down with Sakwa to discuss Khodorkovsky and the oligarch’s new role in resolving U.S.-Russia confrontation over the Ukraine crisis. Sakwa also weighs in on Russia’s economic future and the relationship between the Russian government and the private sector.
Richard Sakwa. Photo: RIA Novosti
Richard Sakwa. Photo: RIA Novosti
Russia Direct: How have your thoughts about Khodorkovsky, his relations with Putin and Russian business evolved after you finished your book? 
Richard Sakwa: My thinking has evolved, of course, because the whole situation has changed. Yet, on the whole, I still stick to the fundamental idea that both Khodorkovsky and Putin - in different ways - had certain logic in their actions.
They are both powerful individuals with strong ideas. What is most fascinating is the interaction between these two significant figures - perhaps, the two major figures in post-Communist Russia - and how they came into conflict. Both of them have legitimate points of view and the tragedy is that these two legitimate ideas came into conflict.
RD: What conflicting legitimate ideas do you mean?
R.S.: My meaning was in their differing views of the appropriate role of the state. One stressed the need to allow market forces to have free play, whereas the other pursued a rather more dirigiste strategy.
In the end, both accepted that there needed to be a combination of state and market forces. The question was the appropriate balance between the two. Equally, there were fundamental differences over the rule of law and political freedom, but both struggled to make private property and the market system legitimate. The struggle is certainly far from over.
RD: As you noted in your summary to the book, Khodorkovsky has become actively engaged in trying to find a way out of the Ukraine crisis. Will he succeed given the reluctance of Eastern Ukraine’s authorities to accept his help when he came to Ukraine to contribute to resolving the conflict?
R.S. It is very brave and important of him to engage in this dialogue. I think he also needs this dialogue. He is in unique position to be able to act as an honest broker. And the fact that he is an independent political figure who spent ten years in jail demonstrates that.
Yet he had a high level of political independence, as well as tact and dignity, which means that he is well aware of the dangers of becoming an instrument, for example, of American neoconservatives, American right wing [politicians] and American Russophobes.
And at the same time, if he can find a language which would be in Russia’s state interests, not necessarily Putin’s regime personally, but still the state’s interest, I think that he could play an important part as intermediary. But I would like him to give voice to this more loudly than he has done so far.
I hope that Khodorkovsky will be able to find a formula that will be able to reconcile these two different parts for Ukrainian development. These two parts ultimately have to be combined to achieve a united, free, democratic and friendly country to Russia, as well as one that is closely linked to the West.
It’s not an either/or but a question of finding an adequate formula to satisfy the legitimate concerns of all. The language of absolute free choice is infantile – states, like individuals, have responsibilities not only to themselves but also to their neighbors.
RD: Will the Kremlin listen to him?
R.S.: Well, as long as he takes a balanced view. If he simply becomes the voice of Maidan, that won’t work – Maidan’s voice is quite loud enough without him. I don’t necessarily agree with what Khodorkovsky is actually saying in all the details. The conflict in Ukraine is over two legitimate positions: Those who wish to see a national Ukrainian state develop in alliance with the West; and those who insist that a model of national development has to be found that can encompass the many different identities within Ukraine.
Thus, on the one side, is Ukraine becoming close to the European Union, if only to achieve improved governance to fight back against corruption and so on. Equally, it is legitimate for Russia to have security concerns about the country to ensure that the deep economic, personal and cultural levels [of the relationship] have to continue and there has to be a formula to make this continue in a civilized manner. Unfortunately, the events of the last few years have led to a conflict of these two principles, both of which are valid.
So, what he has to do is to transcend the immediate logic of these two positions [Russian and Ukrainian ones] and find a level at which the two forces can work. I do admire his attempt to adjudicate, yet I am concerned if he simply repeats ‘Euromaidan’ perspectives. But the last thing to do, of course, is to just repeat the Kremlin’s line. He has to be above both.   
Mikhail Khodorkovsky trying to find common ground with separatists in Eastern Ukraine. Photo: Reuters      
RD: What consequences can such political activism result in? How may the Kremlin respond to it? Does Moscow really have any leverage to intimidate Khodorkovsky now?
R.S.: Unfortunately, the Kremlin still has some leverage given the fact that some Yukos employees, including Platon Lebedev, are still in Russia or in prison. So, clearly, there is no shortage of leverage points.
RD: From your point of view, how will the Ukraine crisis affect Russian business? 
R.S.: The situation looks extremely bad now that the West is imposing sanctions. So, clearly, at the moment the West is overreacting and misunderstanding really fundamentally what is going on and externalizing on Russia the deep problems within Ukraine. For some people, the weaker and more catastrophic the situation becomes in Russia, the better it is for Europe. This is a position that I find hopelessly shortsighted.
This is the language of war, economic warfare, sanctions and violence. I think it is catastrophic for all concerned and, of course, it could be hugely damaging for Russia. A lack of investment would make the whole environment more unstable. The world is at the threshold of an enormously dangerous period. And I do hope that the West can calm down a bit and stop conducting economic warfare and listen to the wiser voices of European businesses.     
RD: The EU and the U.S. have imposed the third wave of sanctions that bans some high-profile managers such as Igor Sechin from entering the U.S. and restricts the connections between Rosneft and its Western partners. Given its ties with American and British oil companies such as ExxonMobil and BP, to what extent will these sanctions affect Rosneft in the future?
R.S.: It will be very damaging. There is no doubt about it. It will survive, of course. But it’s damaging for investment, borrowing and partnership links. This escalation from the West is irresponsible and fundamentally dangerous because Russia is not the strongest power in the world.
It has several very major points of weakness in its domestic economy. We know that its economy is slowing down. So, the idea that the West in some ways can achieve its ends by damaging Russia in this way – I think it is ill conceived.
Russia has repeatedly offered trilateral talks, which are usually ignored. The Geneva session was premised on the idea that the unrest in eastern Ukraine is purely Russian-sponsored – that is quite wrong. As for the threat of a Russian invasion, that has been far-fetched, but as the crisis develops it may become a political necessity.
There is no doubt that the great majority of people in southeast Ukraine wish to remain part of a united and inclusive Ukraine, so the situation is very different from Crimea, but the economic, cultural and political concerns of the southeast have to be factored in.
Fortunately, some of the leading presidential candidates for the May 25 election have started to do this. However, we immediately see a harsh response from the West. The situation remains dangerous, and the demonization of Russia and Putin does not help the situation.
Neither does the total marginalization of the European Union. This crisis has demonstrated how it moved swiftly from over-reaching itself to irrelevance – it cannot even ensure peace on its own continent. The U.S. riding to the rescue is not helpful.
RD: Russia warns the West against a tougher response to the sanctions. From your point of view, what could we expect?
R.S.: There are plenty of options, from shutting down the northern distribution network fromAfghanistan, or intervening in Iran and Syria. Of course, there is even a possibility of interrupting the gas supply through Ukraine.
But all of these measures will be as damaging to Russia as to the West. The only thing to do is to try to negotiate and de-escalate to try to act as an honest broker. This is most important for the May presidential elections to take place in Ukraine. So, instead of responding to sanctions with sanctions, Russia should try to keep calm, open and continue the path of dialogue.
I only hope that the situation won’t become even worse.
RD: Russia is turning to the East and, particularly, to China. Probably, Russian leaders see China’s state capitalism and the relations between business and government as an example. To what extent is Russia’s state capitalism compatible with China’s? Is such model really viable in a new world?
R.S.: Basically, China’s model is a dead end for Russia because the starting point is very different. China is a developing country and it’s developing through the model of state-sponsored development. Russia is already a sophisticated economy, a developed one. And what it needs now is more freedom for business, a stronger rule of law, an environment in which investment becomes attractive, and a more self-confident government.
In other words, high quality wages, a high quality labor force, high quality social services, health care system and educational system – this is what Russia needs to focus on rather than following the dream of going the Eastern path.
Russia has to maintain its independence. In other words, it’s an illusion to think that if the West is closed, that the door will automatically open in the East. Yes, this door to the East has many positive things, but there are also many pitfalls. Ultimately, Russia has to establish a good relationship, once again, with the West but on equal partnership terms.
RD: One more question on global energy security in the context of Ukraine crisis. Given the shale gas revolution and the decrease in gas exports to Europe, do you agree that Russia might exaggerate Europe’s dependence on Russia’s energyresources and underestimate the U.S. capability to help Europe handle thisdependence?
R.S.: The U.S. supplies won’t be able to come to Europe for many years. They have to build liquefied natural gas (LNG) terminals and shipping capacity. And in any case, any export would go to Asia where the prices are higher. Is Russia exaggerating European dependence on Russian gas?
Probably not, since there are no immediate alternatives. I think both sides should stop talking in this way and start business-like talk. We should talk about mutual and health interdependence. Instead, the West has come to believe its own propaganda – a very dangerous state of affairs. Meanwhile, Russia’s worst prejudices are confirmed, which is no less dangerous.
At the same time, the greatest victim of all of this is the credibility of the European Union as an independent political actor. It has been completely overshadowed by the United States, which has almost no economic dependency on Russia (only one-fourteenth of the trade turnover of the EU). Europe must be able to stand up for its own.
The European Union, in this context, should start exercising a bit of independent leadership while articulating a vision of a united continent - not one with divisions, as desired by some of the new Eastern European members. This crisis is as much one for the EU as it is for Ukraine and Russia, and there are absolutely no signs that the EU is engaging in appropriate self-criticism.
Putin and the oligarch
As Richard Sakwa explains, the Khodorkovsky-Yukos Affair quickly transformed into one of the most important events in the post-Soviet era, representing a titanic battle between the state and big business in the new Russia.
By Richard Sakwa
Richard Sakwa, Putin and the Oligarch: The Khodorkovsky - Yukos Affair (London & New York, I. B. Tauris, 2014), pp. 298. [ISBN: 978 1 78076 45]
In a dawn raid on his plane in Novosibirsk on October 25th, 2003, Mikhail Khodorkovsky, the head of the Yukos oil company, was arrested. This event has provoked a controversy that continues to this day. By then, Khodorkovsky had become one of the world’s richest and most powerful business leaders, while Yukos had been transformed into a vertically integrated oil company.
It was Russia’s second larger producer, and if the plans to merge with Sibneft had been completed, it would have become the biggest, with up to 40 percent of its stock to be sold to an American company.
On all counts, this looked like a success story, but it was precisely at this moment that the authorities struck. In May 2005, Khodorkovsky was sentenced to nine years in jail (reduced to eight on appeal) and the Yukos oil company was broken up, its name removed from share registers, and its cheery yellow and green strip, once so common in petrol stations across Russia, disappeared.
In December 2010, Khodorkovsky and his leading colleague Platon Lebedev were given another long sentence, to be served concurrently with the first, but after various reviews they were due to be released on August 23 and May 2, 2014, respectively. However, on December 19, 2013 President Vladimir Putin pardoned Khodorkovsky, and early next morning he was released and flew to Berlin.
The book explains why all of this occurred.
It provides some theoretical discussion as well as analysis of the rise and fall of Yukos, and examines the relationship between the state and big business during Russia’s traumatic shift from the Soviet planned economy to the market. Since 1985, Russia has been engaged in one of the most ambitious acts of political and economic reconstitution undertaken by any nation in history.
Mikhail Gorbachev’s perestroika (restructuring) tried to remake the Union of Soviet Socialist Republics (USSR) into a democratic socialist state, but the more successful his reforms, the less was left of the system that he tried to save. In the end, by December 1991, the country even disintegrated into 15 separate republics, of which Russia was by far the largest. This was then followed by the accelerated disbursement of state property, a process that remains controversial to this day.
The Soviet collapse and the shift to national capitalism represented another revolution for Russia and its people.
The work traces the story of Khodorkovsky’s emergence during perestroika in the late 1980s as one of the country’s leading entrepreneurs, the development of Yukos in the Yeltsin years in the 1990s into one of the country’s most dynamic oil majors, the transformation of the company into a modern corporation in the early Putin period, and then the epochal confrontation between business and state that culminated in Khodorkovsky’s arrest and imprisonment and the destruction of the Yukos company.
Like Henry II, Putin turned on ‘this troublesome priest’ and the confrontation between the state and temporal power that led to the murder of Thomas Becket in December 1170 reappeared in a new guise as a struggle between political and economic power. Khodorkovsky’s status as a political victim of the Russian regime is evident. This extraordinary confrontation between the two great forces of modernity - the state and the market - and their associated conceptions of freedom, is at the same time a struggle over the definition of Russian identity and of the boundaries between the state and society.
A revolution has its own laws and dynamics, its victims and its idealism, its heroes and villains, and these were vividly in evidence in Russia’s era of transformation.
With Boris Yeltsin as president between 1991 and 1999, Russia became a capitalist democracy, but it did so in a revolutionary way – that is, law, constitutionality, the regular operation of institutions, all were subordinated to the imperative of change. This was a hybrid revolution, since part of the transformation was designed precisely to create the conditions where extraordinary politics no longer applied, and where law and institutions would be able to operate autonomously.
The Yukos affair demonstrated just how entrenched the subversion of law and constitutionalism had become. This gave rise to a distinctive type of dual state. Freedom has been granted to the nation, but this freedom can only be exercised within the constraints of the logic of the transformative process itself. In other words, while the typical panoply of democratic institutions exists within the framework of a constitutional order, a parallel system has emerged that claims certain prerogatives that transcend the rules and constraints of the constitutional state.
This administrative regime represents a classic case of a system where the rules applied to the rest of society do not apply to itself. These administrative powers were unleashed against Khodorkovsky and his associates.
Today, with Khodorkovsky at liberty and international politics facing an unprecedented crisis in Ukraine and elsewhere, Khodorkovsky has become actively engaged in trying to find a way out of the crisis. This is a greater challenge than anything he has faced before. Various sides seek to use him as an instrument in their struggles against others. Will Khodorkovsky be able to articulate a peaceful and progressive vision of Russian political and economic development, and an appropriate and worthy place for Russia in the world?