Robert Amsterdam

Today the Financial Times is running an interesting article about how Peter Hambro Mining lost £100m in market value overnight because of threats from the Russian government to revoke mining licenses. The environmental claims, like the Sakhalin gambit, appear to be totally bogus, and representatives from Hambro are telling the press they have broken no rules.

At what point will the authorities realize that these kinds of assaults on both foreign and domestic companies are bad for business, and that this elevated political risk will eventually scare away foreign investment? Not any time soon, because Western banks and corporations are sending the message that there is no consequence for this kind of economic gangsterism - investment has shot up to $35.3bn in the first nine months of this year.

From the FT:

The biggest political risks are in natural resources as Russia pushes to retake state control over strategic assets. That drive seems to be spreading from oil and gas into areas such as metals and mining.

At the same time, Russian authorities are systematically reviewing licences to exploit natural resource assets and penalising those not sticking to the agreed development timetables. ...

"Peter Hambro Mining is rather high profile, which has served them well but this has also made them a target," he says.

PHM may have become a victim of its visibility and the crackdown on companies the government feels are not developing fields quickly enough.

If foreign companies are seen to be sitting on projects, the government prefers to have someone else - preferably Russian - take over, speeding up job creation and tax generation. Even Russian companies, such as Lukoil, have suffered similar threats to withdraw licences. ...

Outside natural resources, the biggest difficulties businesses face are red tape and corruption. Labyrinthine requirements for permits and licences create plenty of opportunities for officials to demand bribes.

"Corruption is probably the most immediate threat and difficulty that any business faces in Russia - and the trend is increasing," says Carlo Gallo, Russia analyst at Control Risks, the business risks consultancy.

Today's Economist has an article analyzing how the "fever pitch" of conspiracy theories following the Litvinenko poisoning is helping to drive the thaw between Russia and her neighbors:

That Mr Putin should be so anxious to strengthen Russia’s weakening ties with its “near abroad”, and with his few remaining Western allies, is understandable. The radioactive fall-out from the death last week in London of Alexander Litvinenko—a former KGB agent who was apparently poisoned with polonium—may have been small (although radioactive traces have been found on aircraft that flew between Moscow and London before Mr Litvinenko’s death). But the diplomatic fall-out could hardly have been bigger.

Conspiracy theories in Moscow about who killed Mr Litvinenko have reached a pitch of dialecticism that is scarcely intelligible to outsiders. It was done either by Mr Putin, or to discredit him; to promote one of his possible successors as president, or to force him to stay in office. The polonium was either an intentional warning or a cock-up. Mr Litvinenko was murdered by the same forces who killed Anna Politkovskaya, a journalist, in October; or somebody saw her shooting as an opportunity to settle other scores. Mr Putin’s allies point the finger at Boris Berezovsky, a renegade Russian oligarch who lives in London and sponsored Mr Litvinenko. His alleged goal? To disgrace Mr Putin and ultimately force his clique from power.

The Russians have agreed to co-operate with a British investigation. But whoever did it, Mr Putin has been vilified in the West’s media. It emerged this week that Yegor Gaidar, a former prime minister, fell violently ill in Dublin on the day after Mr Litvinenko died (Mr Gaidar is now apparently recovering). Although a critic of some of Mr Putin’s policies, Mr Gaidar is a highly unlikely target for the Kremlin. But his plight can only add to the impression, widely held west of Minsk, that Russia is an increasingly dark place.

The Washington Post is reporting on a U.S. press tour this week by Gazprom's Alexander Medvedev, capped off by a friendly hockey game between a Gazprom sponsored team and former NHL stars from the Boston Bruins. According to a Bruins press release, "The Boston Bruins Alumni will play Gazprom Export during Gazprom’s 2006 winter tour with proceeds benefiting The Boston Bruins Charitable Foundation. The Friendship Cup will spotlight Gazprom Export’s efforts in the global energy market with four teams featuring both Olympians and NHL Hall of Famers."

The Post article goes on to report that Gazprom is undertaking an aggressive effort to improve their image in the United States, especially in Houston, where they maintain an office to drum up investment opportunities - some of Gazprom's largest shareholders are emerging market mutual funds. According to Gazprom's entrepreneurial acumen, purchasing Pravda is a good business decision!

The Post reports:

"We are not an instrument of policy because it cannot comply with our commercial structure," Medvedev said in an interview yesterday.

But ever since a contract dispute with Ukraine led to a cutoff of Russian gas exports on New Year's Day, Europeans who rely heavily on Russian gas have worried about security of supply. Russia, meanwhile, has argued that Gazprom needs to expand into the European and U.S. distribution business to assure Russia of "security of demand."

Many experts say that Gazprom is unwieldy and poorly run and will have trouble meeting gas delivery obligations regardless of the politics of supply. Vladimir Milov, president of the Institute of Energy Policy in Moscow and former deputy energy minister, said yesterday that Gazprom had spent $18 billion in the past three years on acquisitions outside the gas sector, more than it has spent in the past decade to increase gas production. ...

When Gazprom does invest, it often does so inefficiently. Much of the company's recent spending has gone to building new pipelines and repairing aging ones. Yet one study Milov quoted said that every mile of new pipeline built by Gazprom costs two to three times as much as those built in the rest of the world.

Gazprom's Medvedev defended the company's non-gas ventures, calling the newspaper it bought, Pravda, a "pure commercial decision" and not a tactic for controlling public opinion. He said many of the non-energy ventures were being managed by Gazprombank.

During the hockey + Harvard Business School press tour, Medvedev also did an interview with Forbes:

So why did Statoil, for instance, express surprise? [in regards to Shtokman]

The market is changing. It's inevitable. Also, you should not take everything for granted what everyone is telling you. I can imagine the level of disappointment, that they were so close. But due to the change in the market, we have reconsidered. To us, the discount rate for Russia is substantially higher than the discount rate for Libya or African reserves. It's not fair.

At the same time the announcement was made, it appeared to many that Russian energy companies were attempting to push aside Western companies doing business in Russia, particularly in Sakhalin.

I believe these allegations are not fair. In Sakhalin, we have been in negotiation with Shell. We signed an agreement with them. The next day, we saw a doubling of the capital costs and operational costs. Second, we saw that 50% of the ecological requirements had not been fulfilled, and some of them were very serious.

It seems there is a wide gap between your view of Gazprom and the conventional wisdom. What do you do to close that gap?

We appreciate we could do a better job in this respect, meeting with the media and the investment community. We are making progress on that. My presence here is part of that. What I don't like is just to be in a defensive position. We should have a regular communication channel.

Last week, the National Public Radio affiliate in Houston, KUHF, broadcast an interview with me addressing some concerns regarding Gazprom's Houston presence. Click the link and it is possible to listen to the interviews.

The Globe and Mail is reporting that Petro-Canada is considering giving up a part of a Quebec LNG project in exchange for participation in a St. Petersburg project with Gazprom. During his press tour in the United States, Alexander Medvedev noted that Gazprom may prefer doing business with Canada, because they are less likely to raise any hackles with energy asset acquisitions, or be critical about the company's close relationship with the Kremlin.

Shawn McCarthy writes:

"I believe that ownership of infrastructure is a key to the market because we saw a lot of cases where absence of infrastructure access or ownership leads to a lot of risk or risk for energy security," Mr. Medvedev said.

"We, as the responsible supplier, would like not just to produce or to leave the product somewhere in the middle between the producer and the consumer but to be as close to possible to consumer to meet the needs of consumers."

The Russian executive acknowledged the company may face political opposition if it attempts to make major acquisitions of energy companies or assets in the United States.

He noted two recent cases in which U.S. political opposition derailed foreign investments -- Chinese National Offshore Oil Company's attempted takeover of Unocal Corp., and Dubai Ports World's effort to acquire management of U.S. ports. ...

Gazprom is widely considered in the West to be an arm of the Kremlin, with 50-per-cent-plus-one of its shares owned by the state and the government appointing the majority of its board. The company acquired major assets of bankrupted OAO Yukos in a controversial fire sale that was forced by the government when it jailed former Yukos chairman Mikhail Khodorkovsky. ...

"We are a commercially driven and value-driven enterprise, he said. "And all of the accusations that say we are manipulated by the Kremlin are absolutely absurd," he said.

The Gazprom executive said Canadian officials appear to be more welcoming than the Americans, and he would anticipate no problems with Russian investment in Canada.

However, the Conservative government recently signalled a tougher review procedure for foreign state-controlled companies that want to make major acquisitions in Canada.

Mr. Medvedev said Gazprom is looking to expand its reserve base beyond Russia ands become a full-fledged international energy company.

He said the company has exploration programs in India, Vietnam, Algeria, Libya and Venezuela. "Why not the United States and Canada?" he said.

On the Baltic LNG project, Gazprom is negotiating with a group of companies -- including Petrocan -- and will soon narrow down that slate to two or three companies with which it will form a consortium.

Petrocan is counting on the Baltic project to supply the $500-million LNG terminal in Gros-Cacouna, Que., project that it is developing with its partner, TransCanada PipeLines Ltd.

Edward Lucas has a great post on his blog today on the poisoning of Yegor Gaidar.

He writes:

“Nyet faktov, tolko versii” [No facts, only theories] is a Russian saying that captures perfectly the difficulty of trying to fit the attempted murder of Yegor Gaidar, a former prime minister, together with the poisoning of Alexander Litvinenko (a defector from Russia’s FSB security service) and the shooting of Anna Politkovskaya, a campaigning journalist.

They could hardly be more different. The other two were outspoken figures who already lived in fear of their lives. Mr Gaidar was widely respected in Moscow: at most a moderate critic, at least in public, of Vladimir Putin’s regime. Unlike most retired Russian politicians, he cared little for personal wealth: his energies were devoted to his free-market thinktank, where his rotund figure and beaming smile contrasted with his spartan office: undecorated, when I last visited, except for a pile of economic journals and a solitary holiday postcard. ...

The most terrifying explanation is that the Kremlin, or some other powerful faction in Russia, is systematically intimidating every kind of critic. Ms Politkovskaya because she was their best-known critic in the media, both at home and abroad. Mr Litvinenko because he was a defector. Mr Gaidar because his brainy liberal views undermine the Kremlin’s authoritarian and incompetent rule.

The Sunday edition of this British paper features numerous articles on Russia. There is a piece on the spy threat to England, a story about Evgeni Limarev, and an article on the luxury and security preferences of Russian emigres in London.

One of the most important articles comes from Patience Wheatcroft, titled "Putin's poisonous nature is now plain to see":

Mikhail Khodorkovsky has not been killed with a dose of polonium-210 but there may be occasions on which he feels that his fate is little better. He has now served three years in a Siberian penal colony and, after a Moscow court on Friday refused to hear his appeal against sentence, he must contemplate another five years of misery there.

Krasnokamensk, where winter temperatures can fall as far as minus 40C, is 3,000 miles away from Moscow, where Khodorkovsky had enjoyed a luxurious lifestyle. The dramatic reversal in his circumstances is the direct result of his political opposition to President Vladimir Putin. Although he was sentenced for tax evasion and fraud, there seems little doubt that Khodorkovsky might still be living the high life of a Russian multi-millionaire had he not become a public enemy of the President. An infuriated Kremlin exacted revenge on the former oligarch by bankrupting the company he headed, Yukos, and sending him to the steppes. That this treatment was meted out through the courts should have sent out the starkest of messages to the west. If the courts were prepared to follow the will of the President rather than the writ of the law, then nothing and no one was safe.

Yet there were plenty of people who chose to view Khodorkovsky's punishment as an exceptional case. They chose to believe that Mr Putin was a reasonable man who had just been pushed too far by a hot-headed rival. They closed their eyes to the unfortunate deaths that befell journalists who asked too many questions, or those who protested too loudly about the abuses committed by the pro-Moscow Chechen government. Largely, they persisted in their blind optimism because of the money to be made in Russia.

But now, even those who have struggled most fervently to cling to the idea that President Putin is a modern leader with whom the west can do business, rather than an old-fashioned Kremlin commissar who cannot be trusted, must be feeling queasy. The extraordinary death of Alexander Litvinenko is the work of professional assassins with access to the most deadly of radio-active materials. Whatever efforts Moscow makes to point the finger at others who might have perpetrated such a crime, the overwhelming suspicion is that the commission to kill came straight from the Kremlin.

If the reports on Mr Litvinenko's ghastly death, his shady associates and meetings in hotel rooms and restaurants, read more like the early novels of John le Carre than accounts of what we expect to happen in contemporary London, it is because President Putin's regime is still behaving as it did during the Cold War. Glasnost may have been celebrated but, as we report today, Russian spies are still alive and well and working in Britain. The difference is that now they are not only spying on Britons but on those who have left Russia for a more congenial life here, many bringing their newly minted fortunes with them.

Mr Putin has staged some lavish public relations exercises to try to show the world that he presides over a very different country to that of his predecessors. There have been glitzy galas at the Royal Albert Hall and family-friendly fairs in Trafalgar Square. And Russia is now, economically, a world away from the country of Krushchev. Its rich supply of natural resources has seen the economy grow at an average of 6 per cent a year for the last seven years.

But Putin remains at heart the KGB man he once was, and he now presides over an old-style autocracy that will brook no opposition. Later this week the law school at Pennsylvania University will host a symposium on "Human Rights and Political Prisoners in Russia", taking as its base the apparently politically-motivated prosecution and punishment of Khodorkovsky. The likelihood is that Western governments and the business people who have invested heavily in Russia will not take part, nor will they wish to learn of the verdict. They have too much resting on the regime behaving itself.

Yet the positions of those businesses that have staked fortunes in the country look increasingly precarious. Quietly last month BP's Russian joint venture, TNK-BP, settled a bill for back tax that the Russian government had demanded but which the company had insisted was unjustified. This is just the first of several unexpected tax bills which have landed with the company, and with Shell and the other oil giants that thought the pull of Russia's resources outweighed the political risks.

They cannot now be feeling so sanguine. There are threats that if they do not comply with this demand for tax or that demand for compensation for some perceived offence, then their licences may be redrawn. Blackmail? None of the brave corporate chiefs is going to say so. They are well aware that it was an unreasonable, and resisted, tax demand on Yukos that started the process which eventually sent Khodorkovsky to the prison camp.

Companies such as BP and Shell now have too much invested in Russia to pull out and they may feel that they will have the backing of the British government should they encounter difficulties. Mr Putin, however, has already made clear that he cares little for the opinion of fellow leaders. When he temporarily turned off the energy supplies to the Ukraine at the beginning of this year, he demonstrated his preference for being seen as a bully rather than beneficent.

Whatever the Kremlin says about the death of Alexander Litvinenko, it should awaken a wider acknowledgement of the nasty realities of Putin's regime.

Today the Financial Times is running a lead editorial titled "The Kremlin is Killing Russia's Rule of Law."

Here are some extracts:

Russian president Vladimir Putin took power in 2000 with promises of recreating a strong, law-abiding state. The killing of Alexander Litvinenko, the former spy, and a spate of other assassinations suggest Mr Putin's Russia may well be strong - but it is far from being law-abiding.

Nobody has been charged over Mr Litvinenko's death. The range of possible suspects, including present and former security officers, businessmen and gangsters, is wide.

The Kremlin bluntly denies any involvement. But Mr Putin cannot reject responsibility for contributing to the creation of a state in which assassination has become commonplace. Nor can he deny that recent targets have included Kremlin opponents such as Mr Litvinenko himself and Anna Politkovskaya, the murdered campaigning journalist - and also, quite possibly, the soft critic Yegor Gaidar, a former prime minister who this week survived what seems to have been a poisoning attempt. Other high-profile murder victims include a state news agency manager, a Chechen commander linked to the FSB security services, and a senior central bank official. Russian public life has suddenly become very dangerous. ...

Mr Putin would argue that in the process he has recreated the rule of law. However, this does not mean law as applied by independent courts, but law as imposed by the Kremlin. The state can resort even to gross violations of human rights without fear of legal challenge, as with the recent mass deportation of Georgian migrants. Might, not right, has triumphed.

As a result, growing numbers of those with power and money feel no need to respect the law. Some seem to think they can bully their way out of any trouble - even to the extent of killing their enemies. The recent assassinations may have varying origins but there is a common thread - a settling of scores among the powerful.

The media is reporting that Russia has set forth serious restrictions in regards to its cooperation with the Scotland Yard investigation of the Alexander Litvinenko poisoning. At the moment in which Russia should be setting a precedent with a new level of transparency and cooperation, instead the Kremlin is viewing the investigation as an opportunity to push forward their requests for extraditions.

The WSJ reports:

But a day after investigators from London's Metropolitan Police, as Scotland Yard is formally known, arrived in Moscow to pursue their probe, Yuri Chaika, Russia's prosecutor general, set clear limits on their reach.

He said only Russian police would be able to question suspects, though British police can listen. He said no Russian could be brought to the United Kingdom for questioning or trial since the two countries have no extradition treaty. He ruled out questioning leaders at the FSB, Russia's state security service. "Why question the FSB leadership?" Mr. Chaika said. "We'll end up having to question everyone in Russia." ...

Still, Russia's response to Mr. Litvinenko's death is raising concerns. "It is my view...that the Russian side also must make its contribution" in clearing up the case, said German Chancellor Angela Merkel. And French President Jacques Chirac, meeting with Ms. Merkel in Germany, said Russia "must provide perfectly transparent cooperation."

Russia's relations with the West have cooled dramatically in the past several years as the Kremlin has become more assertive abroad and Western criticism of Kremlin domestic policies has sharpened. In one high-profile sign of friction, Moscow has continually frustrated Washington's efforts to impose tighter sanctions on Iran to curb that country's nuclear program.

Russia's efforts to convert its vast oil and gas resources into political capital have raised tensions and spurred European governments to look for alternative fuel sources. The Kremlin's efforts to pressure neighboring governments it views as unfriendly and support those it sees as allies have provoked harsh reactions in Europe and the U.S. ...

Indeed, Russia's state-run television began its prime-time newscast last night by saying that Russia had amassed enough evidence against British transplants Mr. Berezovsky and Akhmed Zakayev, an alleged terrorist, to prosecute them, but that Britain wouldn't extradite them to Russia. The newscast didn't specify their alleged crimes.

Max Boot, a CFR fellow and author, has penned a column in the Los Angeles Times today regarding the U.S. foreign policy stance toward Russia. Here are some important excerpts:

Don't play dead for Putin What the West can do help stop the authoritarian Russian president from garnering too much influence in the world.

By Max Boot

There are a lot of ways to make a man's death look like an accident, suicide or a street crime. That wasn't the intent of whoever murdered former KGB agent Alexander Litvinenko in London. By using such an exotic murder weapon — a radioactive isotope known as polonium-210 — his killers sent a message: Don't mess with the powers that be in Russia.

The identity of his murderers is likely to remain unknown, but in all probability Litvinenko was poisoned because of his campaign against Russian President Vladimir V. Putin and the KGB's successor, the FSB. He is only the latest to pay with his life for offending Russia's ruling clique. The list of prominent people murdered in the last few years includes crusading journalists such as Anna Politkovskaya (whose death Litvinenko was investigating), politicians, executives and government officials. Others, such as Ukrainian President Viktor Yushchenko, have narrowly survived assassination attempts or have been exiled or silenced with threats of violence or legal charges.

Alleged tax evasion has been a favorite tool of intimidation. Wielding such dubious accusations, the Kremlin was able to consign Russia's richest man, Mikhail Khodorkovsky, to a Siberian prison camp and to expropriate his giant oil company, Yukos. Whatever the state of his taxes, Khodorkovsky's real sin was to bankroll opposition to Putin. ...

Western governments can also signal to Western companies and financial markets that investing in Russia is not a good idea. Russia's oil and gas industry, its major exporter, remains dependent on expertise and capital from abroad; a slowdown of such investment would be costly for Moscow. Russia is financially dependent on the West in another sense: Putin's cronies (and probably Putin himself) are thought to stash their ill-gotten gains in havens such as Switzerland. If the U.S. Treasury Department and foreign financial watchdogs were to launch investigations and start tossing around phrases such as "money laundering" and "asset freezes," Kremlin insiders would feel the heat.

This is something that could be done behind the scenes. At the same time, public pressure could be applied to deny Putin the international legitimacy he so obviously craves. President Bush could stop holding summit conferences with him and stop including him in high-profile meetings such as the G-7.

Above all, what's needed is a change of mind-set in Washington. We need to stop thinking of how to cozy up to Putin and start thinking of how to frustrate his illiberal imperial designs.

The Streetwise Professor: Robert Gates Demonstrates Awareness of Gazprom Threat
A Step at a Time: What's Behind the Litvinenko Smear?
Sean Guillory: Voting for Bad Democracy, Bush 32%, Putin 19%
La Russophobe: Russia Blackmailing Britain for Cooperation in Murder Case
Global Berlin: Barroso Visits the Bundestag
The Oil Drum: CFR Report on Oil Dependency
Global Voices: Stunt Protests for Russian Democracy
Plubius: Krime, Konspiracy, and Korruption at the Kremlin
The Social Affairs Unit: Litvinenko Spoils a Dinner for Alex Deane

This afternoon I will be participating in a symposium held at the University of Pennslyvania's Law School entitled "Human Rights and Political Prisoners in Russia: A View from the Khodorkovsky Case."

The other participants include Michael Fitts, Penn Law Dean, William Burke-White, University of Pennsylvania law professor, Mary Holland, New York University Law School research scholar, Benjamin Nathans, University of Pennsylvania history professor, Roger Clark, Rutgers Law School professor, and other members of the Mikhail Khodorkovsky's legal team including John Pappalardo, Sanford Saunders, Pavel Ivlev, and Elena Levina.

WHAT:Human Rights and Political Prisoners in Russia: A View from the Khodorkovsky Case

WHEN:Dec. 7, 2006

4:30-6:30 p.m.

WHERE:University of Pennsylvania Law School

34th and Chestnut streets

The symposium will examine recent legal, political and human rights trends in Russia and discuss whether Russias courts and intelligence services are being used by the Russian government to silence opposition political forces.

Symposium participants will focus on the trial and conviction of Mikhail Khodorkovsky and Platon Lebedev, Russian business leaders sentenced to eight years in Siberian labor camps, and also on the recent murders of former Russian KGB officer Alexander Litvinenko and journalist Anna Politkovskaya.

Khodorkovsky's prosecution and conviction are considered by many international journalists, politicians and businessmen as politically motivated by Vladimir Putins government. Khodorkovsky is the former head of the Russian oil company Yukos.

In a column set for tomorrow's edition of the Financial Times, Mark Medish, Vice President of the Carnegie Endowment for International Peace, lists three things Vladimir Putin should do to improve his legacy: 1) release Mikhail Khodorkovsky, 2) Bury Lenin, and 3) Invite the Pope to visit.

Again, Russia is waiting for Godunov By Mark Medish

Russia has entered its political season a little early. Although elections are more than a year away, Russians talk seriously about "the 2008 question". This question refers to who will succeed President Vladimir Putin, who is constitutionally barred from a third consecutive term. Kremlin succession has been a vexing issue for Russia for centuries, partly because institutions and the rule of law are weak. Will Russia remain trapped by its troubled history?

After its first dynasty died out in 1598, Russia was plunged into a succession crisis. Speculation centred on Boris Godunov, who had been chief minister to his brother-in-law Tsar Fyodor, son of Ivan the Terrible. Godunov had killed the only male heir, Ivan's son Dmitry. Russia's bard Alexander Pushkin wrote about this historic drama. The play and its author were viewed with official suspicion when it was first performed in the 1830s. Who knows what would happen if Pushkin published his play today, especially in the wake of mysterious poisonings.

In the opening scene, Godunov has sequestered himself in a monastery. The nobles in the Kremlin are intriguing. One asks: "How do you think it will all end?" The reply was prophetic: "The people will plead with him. He will put on a long face and play hard to get. Finally, from the kindness of his heart, he will accept the crown and continue to rule us as before."

History often finds ways to cast long shadows – through habits of mind and culture. If it were put to a plebiscite in Russia today, the constitution would be amended and Mr Putin drafted for a third term. The risk of a "colour revolution" demanding change is remote. To the contrary, this is a time of nationalist fervour in Russia.

Presiding over a stable and resurgent Russia buoyed by oil and gas exports, Mr Putin is widely popular among his countrymen. His competence and swagger appeal to their sense of restored national pride. What is more, the vested interests deem him the guardian of a complex web of power and wealth sharing arrangements. Under Mr Putin, the freewheeling oligarchs of the Boris Yeltsin era were domesticated. The process started with a warning to them to stay out of politics and culminated with the Kremlin reasserting control over strategic economic assets.

Now the search is on for a reliable guarantor of the Putin system. Current rumours favour Dmitry Medvedev, the young deputy premier with ties to state gas giant Gazprom. Another candidate is defence minister Sergey Ivanov, a Putin confidant with solid KGB credentials. All known contenders are beholden to the president. In Soviet style, Mr Putin has ensured that there are no independent political figures of consequence. Credible alternatives such as former premier Mikhail Kasyanov have been sidelined.

Remindful of Pushkin's play, the rivalrous Kremlin factions have visited Tsar Vladimir, even at his Black Sea refuge in Sochi, where he often holes up weighing his options. The anxious courtiers have beseeched him to stay in power. Mr Putin has so far demurred, while reassuring the public that he will "retain influence" after he steps down.

Succession will test whether Russia can make progress with political modernisation. Underlying this is a deeper question about the country's moral direction. Mr Putin may have restored Russia's power and prestige, but without a clear vision of Russia's national identity or its role in the world as a force for good. Can Mr Putin articulate a more inspiring vision for Russia? Will the Russian people have a real choice of candidates and a stronger say in the matter? Or will Mr Putin keep the helm to himself or an appointed clone?

In advance of 2008, if Mr Putin were looking to improve his legacy – and I am under no illusion that he is – he might consider three moves. He should release Mikhail Khodorkovsky, the jailed oligarch, bury Lenin and invite the Pope. Each move would erase a dark shadow of Russia's history. The first would close the book on the vicious power struggles of the past decade. Mr Khodorkovsky is accused of evading taxes but his exile in Siberia has made him a prisoner of conscience.

In the same vein, Mr Putin should pursue a full investigation of recent high profile murders and bring those responsible to justice. These cases include American journalist Paul Klebnikov, central banker Andrey Kozlov and reporter Anna Politkovskaya, all assassinated on the streets of Moscow.

The second bold move – burying Lenin – would help diminish Soviet and Stalinist nostalgia by interring the Bolshevik founder, whose embalmed corpse lies on Red Square and whose Jacobin ideas haunt Russia today.

The grandest gesture – inviting Pope Benedict XVI to Russia – would repair the east-west rift within Christianity. The church schism of 1054 separated Russia spiritually from the flow of European development. The pontiff seems poised to extend his recent Ostpolitik from Turkey to Russia.

Acts of reconciliation should appeal to Mr Putin, who often mentions his Christian faith. Symbolic gestures alone will not change Russia. What such moves can do is show that Russia is not a prisoner of its past.

The writer is vice-president of the Carnegie Endowment for International Peace. He served on the US National Security Council as senior director for Russian, Ukrainian and Eurasian Affairs

The BBC has posted a short streaming segment of the Litvinenko funeral today in London (click the link in the upper right hand corner).

The Wall Street Journal is running an interesting article today about Novaya Gazeta, one of Russia's few remaining independent newspapers and the former employer of the slain journalist Anna Politkovskaya.

Some excerpts:

As opposition voices are slain, exiled or intimidated into silence, Novaya is one of the last outposts of free speech left in Russia -- a status that has earned it influential friends in the West. On a trip to Moscow in October, U.S. Secretary of State Condoleezza Rice pointedly invited the paper's editors to her hotel. "I want to stress that you are not alone in your struggle," she told them.

Novaya Gazeta's past isn't free of taint. Like the vast majority of Russian newspapers, it has printed articles paid for by influential politicians and businessmen, former Novaya journalists say. Today, one of its biggest fears, in an overwhelmingly pro-Putin nation, is irrelevance. The paper's strident antigovernment line puts it out of touch with the masses and the wealthy alike, leaving it to drift increasingly to the margins of Russian life. ...

More alarming, the paper's journalists were coming under physical attack. In May 2000, Igor Domnikov, whose articles alleged corruption in the southern region of Lipetsk, was beaten with a hammer in the entrance of his apartment block. Two months later he died of his injuries. His accused killers are currently on trial in central Russia, but authorities haven't said who ordered the killing.

Later that year, Ms. Politkovskaya, whose reports from Chechnya exposing atrocities committed by Russian troops led to a slew of criminal investigations, had to be placed under armed guard after receiving death threats. She was then sent into hiding abroad.

In 2003, Yuri Shchekochikhin, Novaya's deputy editor, fell ill with a mysterious ailment. A liberal lawmaker, Mr. Shchekochikhin had been investigating tax-evasion allegations against two Moscow furniture stores with links to senior figures in Russia's security services. In June, he was admitted to the hospital with an "extreme allergic syndrome." Ten days later he was dead. To this day, authorities have refused to divulge details of the autopsy, designating them a "medical secret." Family and friends insist Mr. Shchekochikhin was poisoned.

Strange incidents continued to dog Novaya's staff, especially Ms. Politkovskaya. No longer just a reporter, she was emerging as a human-rights advocate, often volunteering to help ordinary Chechens whose relatives had gone missing. That earned her enemies in Russia's security apparatus, according to colleagues. In the fall of 2004, she became violently ill and had to be hospitalized after drinking tea on a plane to southern Russia, where she was traveling to cover the Beslan hostage crisis. She claimed she had been poisoned.

Then in October this year, Ms. Politkovskaya was shot dead in the elevator of her apartment building. Before her death, she had been investigating cases of torture allegedly committed by the pro-Kremlin authorities in Chechnya.

The death reverberated around the world. Ms. Politkovskaya, 48, was the 13th reporter to be slain in a contract-style killing since Mr. Putin came to power in 2000, according to the New York-based Committee to Protect Journalists.

At this time, the last remnants of Russia's free press were being scooped up by Kremlin-friendly business groups. Gazprom bought Izvestia and later Komsomolskaya Pravda. A steel magnate loyal to Mr. Putin acquired Kommersant, one of Russia's last big independent newspapers.

The IHT is running a year end wrap-up article about the biggest conceptual developments in business and economics that have helped shape our world in 2006. Among the most notable and troubling developments in 2006 was the return of the corporate state, as originally described by Andrei Illarionov (see Sean Guillory's balanced summary here)

Return of the corporate state

Karl Marx wrote that the state was nothing more than the executive committee of the bourgeoisie. But in Russia, President Vladimir Putin has stood Marx on his head: the state dominates many of the most important businesses, not the other way around. A new hybrid of country and corporation has been created, fusing the public and private sectors to serve the Kremlin. Andrei Illarionov, who in December 2005 resigned as an economic adviser to Putin, calls it "a corporate state."

This goes way beyond mere cronyism. Dmitri Medvedev is both a deputy prime minister and the chairman of the state natural gas monopoly Gazprom, which controls one-fifth of the world's natural gas reserves. Igor Sechin, Putin's deputy chief of staff, was appointed chairman of the sprawling state-owned oil company Rosneft. The Kremlin has also tightened its control over other industries. In February, Putin consolidated Russian aircraft makers into one state-owned corporation. Last month, the secretive state arms trader Rosoboronexport grabbed a controlling stake in Vsmpo-Avisma, the world's largest maker of titanium, with Rosoboronexport's director, Sergei Chemezov, becoming the company's chairman.

As Illarionov put it, "There is no free economic space remaining anywhere in Russia."

The corporate state is more than a way for Putin apparatchiks to get rich — although it is certainly that. According to Keith Darden, a Russia expert at Yale University, it is in large part a solution to an enduring political headache for authoritarian rulers: how can you maintain enough of a market economy to generate wealth without allowing the creation of independent businesses that could grow to challenge your authority? First, Putin cracked down on oligarchs who had dared to cross him. Now the Kremlin seems to be consolidating control over the remaining potential bases of opposition.

The corporate state shows no signs of withering away. Medvedev, the Kremlin's man at Gazprom, may well be Putin's pick to be the next president of Russia.

— Gary J. Bass

I think that this short IHT article underscores one of the primary misconceptions about the theft of Yukos, the Kremlin's aggression toward private businesses and organizations, and the growing role of the state in general: people actually believe that these assets are being "nationalized" for the "public good." This is actually not quite accurate. As Andrei Illarionov pointed out during a speech at the Cato Institute last month, in the case of Yukos, these energy assets were transferred by illegal means not from one private owner to the people, but rather from one group of individuals to another group of individuals. It is absurd to pretend that this is a real nationalization when it is only a small group of private individuals within the government lining their pockets with the rents from these businesses. In regards to the mechanics of this new corporate state, Pavel Baev writes the following:

A particularly striking feature of this systemic corruption is the positive identification of personal profit with the passionately proclaimed “state interest.” This is typical for the St. Petersburg cadre that Putin brought into the colossal bureaucratic pyramid in order to enhance his control. These “Putin people,” with backgrounds in the special services, were expected to show discipline, efficiency, and above all clan loyalty. The resentment of losers in the privatization of the 1990s sustained their zeal in restoring the power of the state, but they were not immune to the temptation to mix business with pleasure. Easy access to overflowing streams of money has eroded discipline and efficiency, but it is the very real p rospect of Putin’s retirement that has deeply undermined their loyalty (Ezhednevny zhurnal, September 20). The so-called siloviki, or “power guys,” have turned into feuding gangs that settle their scores in the long Kremlin corridors.

This war to capture the unraveling networks reached a climax in June, when one group of “loyalists” convinced Putin to sack the over-zealous Prosecutor-General Vladimir Ustinov, and another “team” quickly arranged his reassignment as minister of justice. After the summer break, the battles acquired a new intensity, as the cadre reshuffling in the judicial system has taken down Ustinov’s lieutenants who supervised the rigged investigation against the oil giant Yukos and its owner M ikhail Khodorkovsky (Kommersant, September 21). No explanation has been given for the chain of resignations and firing in the FSB central apparatus, but the leaks about internal corruption investigations and corruption in the department of internal investigations are growing into a deluge (Ezhednevny zhurnal, September 18).

More attention should be paid to how private interests are being advanced in Russia under the mantle of “the public good.”

The Kremlin has once again used legal pretexts to cover what is essentially an expropriation of private resources in the energy sector. No one should be surprised that this is the result of the environmental review of Shell’s project.

Extortion is not permissible as a method of acquisition. The Kremlin ought to cease this behavior if it wishes downstream asset acquisitions in Europe to be welcomed.

See Bob's comment on this news below.

Today the FT is running an op/ed about the latest news out of Sakhalin. Here are some excerpts:

Gazprom’s gas grab

The Kremlin has once again forced the owners of a prize Russian energy asset to cede control. This time, the victims are Shell and its partners in the $20bn Sakhalin-2 gas project who have been pressed to surrender a majority stake to Gazprom, the gas monopoly.

Shell is still negotiating the terms with Gazprom, but should expect no favours. The Russians have the whip hand, and they know it. It is another poor day for the rule of law and the sanctity of contract. It bodes ill for other foreign groups in the Russian energy sector, not least BP, which through its BP-TNK joint venture controls the giant Kovykta gas deposit – another asset coveted by Gazprom. ...

Russian officials also claim Shell broke environmental rules. Doubtless, there were infringements. There always are in such huge schemes. But there is no evidence of large-scale law-breaking, even though Sakhalin-2 is Russia’s most closely monitored investment. The charges were little more than a public relations campaign aimed at softening up the target and concealing the Kremlin’s real motives, which are to secure control for Gazprom.

President Vladimir Putin sees Gazprom as the undisputed master of Russia’s gas, including all large new gas projects such as Sakhalin-2 and the Shtokman field in the Barents Sea. Next in line is likely to be Kovykta.

Quite aside from the legal and moral issues involved, this strategy risks damaging Gazprom and Russia. Gaz­prom lacks the managerial resources to run its existing project portfolio, let alone take on new ones. It is already too cumbersome to be properly managed. It needs to be smaller, not bigger. Gazprom has itself admitted it will soon struggle to meet growing export and domestic demand. Russian officials argue optimistically that they can close the energy gap by boosting non-gas energy sources and increasing consumer efficiency. Perhaps they can. But it would be unwise to stake Europe’s energy future on it.

Marina Litvinenko, the widow of the murdered former FSB officer Alexander Litvinenko, broke her silence this weekend in a heartbreaking interview with Sky News, recounting her husband's final days.

Is Everything Fine in Russia's Camps?
Apparently, even the President of Russia wants to know
By Grigory Pasko, exclusive to robertamsterdam.com

Russia’s chief prosecutor, Procurator-General Yuri Chaika, recently held a press conference in Moscow. The government official touched upon many topics, including that ex-YUKOS head Mikhail Khodorkovsky may face new charges, if the evidence can be gathered.

This statement, in my opinion, says more strongly than anything else can to the fact that today’s power in Russia has no intention of leaving Mikhail Khodorkovsky alone, let alone releasing him on parole before his full sentence is up. Furthermore, as passions rise in the run-up to the State Duma elections, and then the presidential elections in 2008, even more radical measures are likely in respect to this disgraced convict.

The recent spate of murders and poisonings of Russian citizens, which has resonated throughout the entire world, gives reason to doubt that president Putin is really in charge of things in the country and in control of the situation. It is obvious that there are people (some call them the “third term party”) who want to get Putin entangled in bloody events so as not to give him a chance to avoid the temptation of becoming president for a third time.

The events unfolding today in Russia make for a depressing picture, despite all the efforts of the propagandists to present reality in a rosy light. Particularly ugly is the situation in correctional institutions. The conditions under which prisoners are held are so alarming that even the chairwoman of the Council to Promote the Development of Civil Society Institutions and Human Rights under the president of the RF, Ella Pamfilova, has begun to speak about them. Recently, she expressed her dissatisfaction with the work of the Federal Service for the Execution of Punishments (FSIN) [Translator’s note: the direct successor of the notorious GULag, the agency in charge of the prison system] to the president of Russia. “The significant increase in the number of complaints in recent times from places of imprisonment is associated with the fact that the system has become more closed. In all previous years, they worked actively with the human rights community, but now, access has become restricted not only to human rights workers, but even to human rights ombudsmen in the regions, human rights representatives”, Pamfilova explained to the president.

In her talk with the president, Pamfilova underscored that the opportunities to file appeals have been reduced for prisoners, and especially for those with respect to who have been unjustly convicted.

A few days ago, representatives of several human rights organizations, including Amnesty International, met in Moscow. They spoke about coming up with proposals which, in the opinion of the human rights advocates, they must bring to the attention of the president of Russia with the aim of changing the situation in the organizational units of FSIN. Among others, these proposals included some such as these:

1. It is necessary to have a constructive dialog between the human rights community, independent experts, and representatives of governments services.
2. To create an expert-consultative council of FSIN with the inclusion in this council of former corrections officers, prosecutors, retired judges, etc., who have a wealth of experience in dealing with the everyday issues affecting the criminal justice and correctional systems.
3. To create a Council of Prisoners’ Relatives, in which the friends of prisoners or their work colleagues could also be encouraged to participate. Such a Council could help quickly solve some of the problems arising in the correctional system and bring prison conditions closer to international standards.
4. The work of receiving citizens with personal questions by various services of institutions must be qualitatively improved.
5. Desk duty by senior officers at centers for receiving citizens and for receiving packages ought to be organized; this will allow for the establishment of relations of trust between the administration of institutions and the relatives of prisoners.
6. In order to reduce the social tension in places of deprivation of liberty and to increase the level of trust by the populace towards the organs, the authorities must have great openness of FSIN.
7. To regularly (on a quarterly basis) conduct joint press conferences by FSIN on questions associated with the state of medical services in correctional institutions.

It is noteworthy that Representatives of Amnesty International recently met with FSIN officials. At the meeting, they expressed concern in connection with the complaints they have been receiving. Among others, they spoke of the so called Premises Functioning in the Regime of Investigative Isolators (PFRSI) – the use of separate buildings in a penal colony to hold persons on remand.

By the way, in November of this year in Geneva, the UN Committee Against Torture (abbreviated CAP) looked at the situation with torture in Russia. In the words of Tatiana Lokshina, a representative of the Moscow Helsinki Group, there were no heavyweights reporting before the Committee Against Torture about [Translator’s note: in?] Russia’s name. The only people who came were deputy departments heads from the Ministry of Internal Affairs and Ministry of Foreign Affairs and the head of the Ministry of Defense legal department. The highest-ranking person in this unimpressive “group of comrades” was the deputy director of the Federal Service for the Execution of Punishments, Oleg Filimonov. And placed at the head of the delegation was Valery Loshchinin, permanent representative of Russia at the Geneva branch of the UN.

Loshchinin, in particular, expressed regret with respect to there not having been coordination with the visit to Russia by Special Rapporteur on Torture Manfred Nowak, and promised that everything would be fine. He told that while there are individual excesses, the state is successfully battling with them. While the murder of Politkovskaya is being actively investigated. And that the state is working together with NGOs. That is, as the hero of one Soviet cartoon used to say, “all is quiet in Baghdad”.

In actuality, of course, the situation in Russian jails and camps continues to remain alarming. And evidence of this are the thousands of complaints from prisoners that have already made it to the International Court of Human Rights.

That is, we are once again witness to a double-handed game: on the one hand, the president seems to be showing concern about the situation in the country’s correctional system; on the other – his officials insist that everything’s normal.

Reports about the conditions under which Mikhail Khodorkovsky is serving his sentence in a penal colony get lost against the background of all these events. But this does not mean that his life and his health are not in danger.

If the Procurator-General is promising a new round of prosecutions with respect to someone who has already been convicted, then you can be sure of one thing – this round will take place. All the more so in light of the fact that, in Chaika’s own words, “investigation of the main criminal case continues”.

The IHT and New York Times have an interesting opinion column by John Vinocur today, in which he argues that the American reaction to Vladimir Putin's recent conduct is shockingly weak. Emphasis added.

For Russia’s Cooperation, a Harder Line May Be Needed By JOHN VINOCUR International Herald Tribune BRUSSELS

Vladimir Putin does not want to be "reviled and isolated," a close adviser to a European government leader was saying the other day.

Could be. But one problem when it comes to mustering opprobrium and ostracism, even in careful doses, is that President George W. Bush and Europe appear incapable of making Putin believe they have the will or the unity to manage either.

So while newspapers were recounting visions of Russia's return to Cold War tactics - murders in London, harassment of the British ambassador in Moscow, silencing BBC broadcasts in Russian - Putin's people went ahead last week further holding up an already defanged UN Security Council resolution on Iran that, if it passes, would only postpone the question of when the world will sanction the mullahs' nuclear program more seriously.

The resolution's delay, now running toward a fourth month, says something. For an Iran expert talking at a symposium, it signifies Iran's strengthening belief that it can get away with anything in moving toward nuclear weapons - with what for some appears to be tacit Russian complicity.

And that without any apparent downside for the Russians, Iran's major supplier of arms and heavy equipment.

In fact, if Russia were somehow producing a Baker Commission report this week on Putin's fulfillment of major strategic goals since 2003, from the point of view of Moscow's nationalist power politics, he would get straight A's.

Putin has pushed and bullied Ukraine and Georgia away from NATO, established and deepened Europe's dependence on Russian energy sources, and elbowed the European Union into near silence in the face of threatened boycotts and Russia's refusal to sign a charter of good conduct between energy suppliers' and their clients.

Through the Security Council, and Bush's current reliance on it, Putin holds a Russian veto and a gatekeeper's prerogatives in relation to the West's hopes to stop Iran. The war in Chechnya, normally a minus-column entry, escapes serious censure because the allies keep quiet about it. A democracy that's flickered out, a fleeting rule of law? To Putin, they're nonproblems, as disposable as paper hats and tinsel.

Alongside Vice President Dick Cheney's supposedly hard-line speech on Russia in Lithuania last May (it reads like softly-softly stuff now), contrast Putin's current behavior and the Americans' faint reaction to it:

Bush meets twice with Putin in the last 30 days and offers him American approval for membership in the World Trade Organization. This, after years of withholding it out of minimal belief in Russia's reform course.

Amazing. For Europe, here was Bush, whose bark is regarded in the European subconscious as ultimate back-up insurance against Russia, giving away something for nothing without a hint of a quid pro quo.

Less than nothing, actually, in terms of Russian contempt. Pocketing the WTO offer, Putin then thumbed his nose at Bush and NATO through an attempt to set up a private dinner with Jacques Chirac in the margins of the Alliance summit meeting in Latvia two weeks ago.

Some Europeans see Bush as cowed. For the most part, they want him to talk directly to Iran. They don't laugh off one American analysis that argues that in refusing the Baker Commission's call to engage Iran directly, Bush seemed to abandon his best route to bypass Putin's barrier at the Security Council and move ahead with or without European allies who will not talk of an eventual military response to Iranian nukes.

In the view of experts at the symposium, the juxtaposition of American and Russian behavior leaves Iran believing it does not have to fear attack. Beyond that, they say, Iran thinks it holds levers over Russia on a number of strategic regional issues, and may be able to buy Russian support as the Iranian nuclear program evolves.

So what to do? The least dismal part in working toward an answer is that the Russians continue to publicly insist that they don't want Iran to have a military nuclear program, and seek the same goal as the Allies.

One response is for the allies to tell the Russians they must stop being a problem on every front. This involves what may seem more like a wish-list than reality.

The official who believes that Putin does not want contempt or a pariah status - without insisting he thinks the West could make this into Putin's fate - enumerated a series of points that could meld into a common European/American admonition.

It would say to Russia that it must be helpful and consistent on Iran, stop attempting to destabilize Ukraine and Georgia, approve a UN resolution giving Kosovo its independence, and accept the idea that the West wants a constructive relationship.

Investment and technical assistance is the carrot. Intensive development by Europe of alternative energy sources to Russia is the precaution.

But getting Putin to move? The answer there, the official said, would be a more united, more coherent front that does not start qualifying the message "when there's a deal in the wind."

He did not mention Bush.

If the Baker Commission argues that Bush is failing in his prosecution of the war in Iraq, the truth is also that Russia's current view of America as its "primary adversary" (the phrase is that of a senior U.S. official two months ago) serves as an accusation Bush has failed as well in his favorable, accommodating judgment of Putin.

Acknowledging this now and acting to reverse it (or just disregarding it) would become an indelible part of Bush's legacy. In any event, Putin's aggressive Russia commands a decision because it's a big part of an existential problem dogging the president's final 14 months: how not to leave office with Iran on track to become a nuclear threat.

For Putin, his favorable legacy at home already looks assured when his time is up (in theory) in 2008. He's the man who retrieved Russia from humiliation and turned it into a nation that counts again.

His reaction to purely verbal contempt coming from abroad? Hah. The only seemingly certain route to shame in Putin's mind would be for him to retreat or show weakness at those points where he's marked out Russia's hard new lines.

In response to the news that Royal Dutch Shell has offered to give up control of the single largest energy investment project in Russia, Sakhalin II, to state-controlled Gazprom, observers in Europe and North America have reacted with a healthy amount of skepticism. The Globe and Mail, the Wall Street Journal, the Guardian, and the Times of London (among others) have all characterized the Kremlin's tactics as excessive and brutal.

Jeroen, we have a problem Veer

A breaking story from the Economist has also captured the key issue at stake: how state-sponsored business interference can damage the investment environment - which is the last thing Russia needs.

It is a disturbing and unwelcome development, but it should not come as a surprise. Vladimir Putin’s regime shamelessly dismembered Yukos, an oil firm owned by a political rival. And Russia’s government has made little secret that it regards energy as a legitimate tool of foreign policy in an energy hungry world. The grab for Sakhalin is just the latest tightening of Russia’s grip on its oil and gas reserves. The Kremlin is discouraging foreign participation in the exploitation of energy reserves: legislation is planned to limit outsiders, in future, to minority stakes in energy and precious-metal firms. ...

But where Russia’s government may have had a good case for renegotiating the deal, instead it has resorted to intimidation. Shell had few negotiating levers and had little option but to back down. Though the details of the deal are not clear, some analysts suggest that Shell and its Japanese partners might get $4 billion for the half of Sakhalin II that they will hand over. At least it seems that Russia has not yet torn up the PSA, so Shell can still expect returns on its huge investment. ...

The risk for Russia, of course, is to its reputation. The government is getting a name for disregarding or unilaterally rewriting agreements when the mood strikes. With global demand for energy so high, oil firms may well decide that the risk is still worth it in Russia. But foreign companies considering investment in other sectors may think again. Investors eyeing a slew of forthcoming IPOs (among energy firms and others) may now be discouraged. That is not what Russia needs. Thanks largely to high oil prices, its economy has been growing by an average of some 6.5% a year. The best way to sustain that is not to cede control of oil and gas fields to bureaucratic, inefficient and opaque state energy firms. More foolish still would be to scare away investors from other parts of Russia’s still-creaking economy.

It is argued almost unanimously that President Vladimir Putin's popularity is rooted in the performance of the Russian economy and aided by the cohesive yet toxic combination of unrestrained nationalism. But to what extent are the high oil prices that currently keep the country afloat able drive growth in other industries? Given that so many Russian firms are making for the exit before the next election, what are we meant to understand about political risk?

There are of course legitimate grievances over the Sakhalin II project, and nobody likes to recognize that they chose the wrong time to sell - but to address these grievances, a government must honor contracts and adhere to international norms and processes (a deal is a deal, after all). The attack on Shell increases macroeconomic instability for Russia, which places more pressure on Putin, and makes his grip on power ever more dependent on the growth of the GDP and the price per barrel of crude. It seems even that those who want the President to remain popular should be advocating against this ham-handed energy bullying, lest the Kremlin insiders and Gazprom elites put him between a rock and an even harder place.

There May Be More Victims of the Regime
Is Trepashkin’s Life in Danger?
By Grigory Pasko, journalist

A few weeks ago, Trepashkin wrote the attached letter to Pasko

A Letter from “There”

“To journalist Grigory Pasko from Mikhail Ivanovich Trepashkin, lawyer of the Moscow collegium of advocates “Mezhregion”, colonel (reserves), veteran and pensioner of the FSB RF, unlawfully convicted on fabricated charges of having committed acts of medium severity – Art. 222 part 1 and Art. 283 part 1 of the Criminal Code of the RF – and sentenced to 4 years in a penal colony-settlement, held under guard in Federal State Institution IK-13 of the city of Nizhny Tagil.

I am writing to you for help in getting press coverage of the essence of my case. They were in such a hurry to get me behind bars that they simply made up nearly all of the charges. …All of my appeals always end up in the hands of those same persons who had fabricated the case. I have only one hope now for a review of the case, and this is broad coverage of the situation in the mass media. …I am confident that through the mass media, it will be possible to attain not only a review of the case, but that certain military procurators and judges might get their epaulets ripped off as well! Why? Because the fabrication is very obvious even to an ordinary citizen who doesn’t have any legal training.

Why were they in such a hurry to lock me up? The trial in the case of Dekkushev and Krymshamkhanov was starting. Where I was supposed to be representing the interests of the sisters E.A. and T.A. Morozova, victims of the bombing of a house on Guryanov street in Moscow in September 1999. There was an FSB directive to do whatever necessary to remove me from the case.

How many charges were there against me? Two under Art. 222 part 1 and two under Art. 283 part 1 of the CC RF.

To whom had I divulged a state secret? I was charged with divulging a state secret to FSB colonel V.V. Shebalin, serving in a secret unit of the URPO FSB RF [the FSB’s organised crime unit – Trans.].

What is omitted is the fact that I met with Shebalin in August 2002 in order to warn him about a terrorist act that was in preparation in Moscow (Nord-Ost). What FSB secrets did I divulge to an FSB colonel in 2002 if I haven’t been serving in the FSB since 1997?

Why is it that a criminal case was initiated in 2002 concerning an event that took place on May 3, 1955, To wit, I’m sitting behind barbed wire for a case for which an amnesty has been issued!

With your help, I’m hoping to break through the informational blockade system that has been created around me and through publications to attain a review of the case. Please note that I’m not asking for a dismissal of the case, but for a review! Because I know that everything’s just “pasted together”, and that there are no grounds for me to fear any “other turns” in the case.

Respectfully, and hoping for a reaction,
Mikhail Trepashkin
November 22, 2006

The text of this letter was scanned from a handwritten original and sent to me by email. There was no need to doubt the authenticity of the letter – the original of Trepashkin’s letter to Litvinenko can be found on many websites, so even a non-specialist can see that the handwriting is identical.

Some first thoughts about this missive: the man must be in dire straits indeed if he is ready to believe even in the power of the printed word in these days. And more: Mikhail Ivanovich doesn’t trust me, and perhaps doesn’t trust anyone at all. And this is right, because he has been in a situation for quite a long time now where excessive trust could mean big trouble for him. Not from a journalist, of course, but from his former friends in that big jar of spiders that goes by the name “KGB."

The Trepashkin case

What do we know about the so-called Trepashkin case? Here’s what Mikhail himself said in a 2003 interview with Grani.Ru:

“The goal of this accusation is to not allow me to render assistance to the Public Commission. After I started in January of this year (2003 – author’s note) to investigate the circumstances of the terrorist acts of 1999 and the tragedy on Dubrovka [Nord-Ost – Trans.] at the request of the Commission, all kinds of charges started to be brought against me. I’m being charged under three Articles. The first: Art. 22 part 1 of the Criminal Code of the RF (‘Unlawful acquisition, transfer, sale, storage, transportation or bearing of a weapon, its principal parts, munitions, explosive substances and exlosive devices’). The case was already initiated in those times when the declarations of Achemez Gochiyayev were publicised during a July 25, 2002 Moscow-London “space bridge” television show. At that time, cartridges were planted on me, and the investigation attempted to prove that they belong to me. Another Article – 283 (‘Divulging a state secret’). It was not established than there had been anything divulged. Then the prosecution brought up the Article about abuse of official position – 285. They recollected the year 1995, when I, being an FSB officer, started to “expunge” caches of Chechen weapons in Moscow. I took several caches, for which I received a medal ‘For valour’. And suddenly a command comes from above, from Patrushev (director of the FSB – author’s note): not to work any further. I was shocked: what did that mean, ‘not to work’? After all, the Raduyevites are operating in Moscow, a cache has been established in Zagoryanka, eyewitnesses of deaths at the hand of Chechen bandits have appeared. I did not reconcile myself to this order, after which a judicial inquiry began, which determined that I had supposedly abused my official position by detaining a band of Chechens. I had to resign. I sued. The court ruled that I was right. I h