March 2009 Archives

From Day 1 of the trial of Mikhail Khodorkovsky, the following dramatic statement was read and greeted with surprising applause from observers and media in the courtroom.

STATEMENT

At the preliminary hearing, I declared that I would answer any questions relevant to the charge that has been brought against me, and would not be playing any tricks and hiding behind procedural stickling points.

I confirm my position.

At the same time, I declared that inasmuch as the political sub-current of the whole YUKOS case is self-evident, I would not speak about the political component of the given charge, in order not to obscure the essence of the case.

I confirm my position.

Consequences of Being Candid

Mikhail Khodorkovsky is looking at many years of imprisonment from the second trial as well, unless President Medvedev is serious about the rule of law.

When Mikhail Khodorkovsky was still an oligarch wielding influence and with political ambitions, he received an invitation to the Kremlin, along with the other richest of the rich. On this day in February 2003 a long road of suffering began. This road took him to a penal colony on the Chinese border and might now be lengthened by several years in a second show trial.

In that February meeting a dozen oligarchs sat at an oval table and framed President Putin, their president, who wanted to push back the political influence of the magnates and strengthen the state. The TV cameras were rolling and broadcast every word.

But an examination by The Moscow Times of the publicly available information and interviews with independent lawyers raise questions about the legal soundness of the case, including whether the state is violating double jeopardy rules by trying a defendant twice for the same crime.

"I don't really understand how it is possible to charge one person for the same thing twice," said lawyer Yury Gervis, who is not involved in the case. "But the Prosecutor General's Office often fulfills orders from above with the 'as you say' principle."

Khodorkovsky and his supporters say his legal troubles are punishment from the Kremlin for his political and commercial ambitions. The Kremlin denies this.

"Neither the president nor any one else has a right to interfere in that situation," President Dmitry Medvedev said in an interview aired by the BBC on Sunday.

He said Khodorkovsky's fate will hang completely on the court's decision.

On Tuesday in Moscow the first hearings will be held for the so-called "second trial" of Mikhail Khodorkovsky, though to use such language of legalism may be misleading in describing this process.  In the preliminary hearings leading up to this week, so far observers have been treated to a rerun of the basic and regular violations of the first trial:  a catalogue of show trial hijinks contributing to a fraudulent scheme by certain elements of the Russian government to produce another photocopy of the prosecutor's indictment (some may recall that during the first trial, the judge's cut-and-paste decisions often contained not only the same language but also the same typos as the prosecutor's submissions).

The open cruelty of this scheme was echoed by the banishment of Khodorkovsky to Siberia, the deportation or attempted disbarment of his lawyers, the threatened indictment of a broader net of allies, and ultimately by the torture and vicious assault on his former lawyer, Vasily Alexanyan.  In this "legal" case, one of the most important in post-Soviet Russia, we have prosecutors withholding anti-retroviral drugs and painkillers while this man was held in inhumane conditions, to the point that Alexanyan was weakened to full blown AIDS and lymphatic cancer, tuberculosis and near blindness.  Alexanyan's only real crime was his refusal to perjure himself to advance an overtly criminal case.  Criminally conceived and criminally executed to justify the lockup of a political threat, a massive theft of private assets and the destruction of hundreds of lives connected to the once great company -dare I say the name -Yukos.

It's nice to know the State Duma of the Russian Federation doesn't have anything more important on its agenda... To be honest, when we read this report on the «Regnum.ru» information agency website,  we first thought it was some kind of early April Fool's Day joke, but apparently it's for real, albeit instigated by the never-a-dull-moment Zhirinovskyite "Liberal" "Democrats". The anti-Western hysteria being whipped up by the Kremlin and its compliant Duma these days has found a new whipping-boy - Daylight Savings Time (or, as it's known in most of the rest of the world outside North America, Summer Time). Reminds us of when, in a fit of heady euphoria after the collapse of the Soviet Union, the Uzbeks actually moved the clocks an hour in the wrong direction in the spring - just because they could now! Ironically, today's xenophobic article, which we're delighted to offer in exclusive translation below, appeared on the website below a rather bizarre banner advertisement for "American lard - because you're worth it!".

In the State duma, they consider the switch to "summer" time to be a part of the world conspiracy against Russia

In the State duma of the RF, they consider the switch to "summer" and "winter" time to be a part of the world conspiracy against Russia. As is being reported by the IA REGNUM correspondent, during the course of a session of the State duma, deputy Sergey Abeltsev (LDPR) brought to the attention of parliamentarians that "a tragic day approaches - the day of the moving of time".

"They beguiled us with the idea of universal equality and brotherhood, then they promised us to build a society of equal opportunities, and now they're playing with the most valuable thing a person has - his time", - noted the State duma deputy.

The Obama Administration is trying to push the "reset" button on U.S. relations with Moscow. Yet in foreign affairs, haste is the enemy of wisdom.

According to The New York Times, in February 2009, President Obama sent a secret, hand-delivered letter to President Dmitry Medvedev. The letter reportedly suggested that, if Russia cooperated with the United States in pre­venting Iran from developing long-range nuclear-missile capabilities, the need for a new missile defense system in Europe would be eliminated--a quid pro quo that President Obama has denied. The letter proposed a "united front" to achieve this goal.[2]

"Even Hitler," even when it was obvious that he was losing the war "retained allies up to the end of 1944. But Putin, after ten years of uninterrupted rule doesn't have any."

Instead of following "the first rule of ancient diplomacy: assemble around oneself more friends and thus destroy more quickly the coalition of enemies, Putin has pursued a policy that has offended and driven away Russia's neighbors and not gained Russia many of the advantages it might have gotten had it not followed Putin's lead.

And as a result, with the possible exception of China, Belarus and Kazakhstan, about whose attitudes toward Russia there are still "some doubts," "all other countries bordering us are clearly not disposed in our favor," something that Nadein insists did not have to happen and that could be reversed with different policies.

"We can expect that the level of overdue loans for the whole system might reach 15-20 per cent" by the end of the year, Mr Aven told the Financial Times. "Maybe the 20-30 biggest banks, including Alfa, will receive state support - we're sure.

"But the future of hundreds of small banks is under big question . . . I believe that hundreds of banks will disappear by the end of the year."

Back in the spring of 1998, when Boris Yeltsin was still at Russia's helm, I led a group of global investors to Moscow to find out firsthand where the Russian economy was headed. My long career with the International Monetary Fund and on Wall Street had taken me to "emerging markets" throughout Asia, Eastern Europe and Latin America, and I thought I'd seen it all. Yet I still recall the shock I felt at a meeting in Russia's dingy Ministry of Finance, where I finally realized how a handful of young oligarchs were bringing Russia's economy to ruin in the pursuit of their own selfish interests, despite the supposed brilliance of Anatoly Chubais, Russia's economic czar at the time.

At the time, I could not imagine that anything remotely similar could happen in the United States. Indeed, I shared the American conceit that most emerging-market nations had poorly developed institutions and would do well to emulate Washington and Wall Street. These days, though, I'm hardly so confident. Many economists and analysts are worrying that the United States might go the way of Japan, which suffered a "lost decade" after its own real estate market fell apart in the early 1990s. But I'm more concerned that the United States is coming to resemble Argentina, Russia and other so-called emerging markets, both in what led us to the crisis, and in how we're trying to fix it.

The two sides are now accelerating talks on a new strategic arms reduction treaty to replace Start 1 before it expires in December. While Russia and the US will retain huge arsenals, the planned cuts are significant given the grave concern about nuclear proliferation, not least in relation to Iran. There must be no illusions: full nuclear disarmament is a distant dream. But US-Russian readiness to make cuts is a good precedent. As elsewhere, Mr Obama is changing the tone, and by changing the tone creating openings for more concrete developments.

But, the nuclear issue aside, it would be wrong to hope for many early gains in US-Russian ties. Mutual mistrust runs deep. Russia remains a corrupt authoritarian state with limited respect for political rights and a record of bullying its neighbours. Even if the US now refrains from criticising Russia's internal affairs, serious differences will remain over Moscow's claims to dominate the former Soviet republics. The west must not give Russia a free hand in the region: the post-Soviet states must have the right to make their own political choices, including co-operating with the European Union and, perhaps at some future date, joining Nato.

On the face of it, Russia should be happy with the news that the EU and Ukraine have agreed a deal to modernize Ukraine's aging gas pipeline infrastructure. The Russians themselves have complained for years that Ukraine has allowed the system to degrade due to lack of investment.

But Vladimir Putin's response laid bare Russia's interest not in securing the pipeline to carry 80% of Russia's gas exports to Europe, but in controlling it. Putin was harshly critical of the EU for failing to involve Russia. This move by the EU shows a significant degree of strategic resolve that many would say was lacking before the second cutoff of Russian gas supplies to Europe in January this year. In any case, the Ukraine-Russia gas conflict is far from over since Naftogaz is struggling to meet its monthly payments to Gazprom.

A message to Moscow: do not underestimate the new US President.

The Obama administration has put out clear signals to Russia about real possibilities for engagement. Many Russian commentators believe that the new US administration 'needs' Russia to help solve its difficulties over Iran, Afghanistan or Iraq. Igor Yurgens recently told a high-level audience in London that the letter Obama sent to Medvedev was unlike anything Moscow had seen out of Washington DC in years. The Russian side has leaked details of the letter that suggest that the US is prepared to drop plans to deploy a missile defense system in Central Europe if Russia can help rein in Iran's nuclear ambitions.

The onus is now on Russia to deliver.

Once in a while, perhaps too rarely, it is necessary to compliment a member of the Russian administration. Whenever a Russian politician addresses hard economic or political truths head-on, this needs to be recognized and in this case applauded.

Government officials who can think past resource dependency are implicitly accepting that their responsibilities are to the state and its citizens. Those who simply favor resource extraction industries at all costs generally do so out of beliefs that are more tied to the instrumentalization of the state than to their duty to the state.

Igor Shuvalov, with his recent pithy comments on Russia's urgent need to diversify its economy, deserves our admiration. There is an important logic and reality that flows from Shuvalov's comments, and the recent decisions reached concerning the budget. These represent a positive step. For those who are as focused as I am on looking at the relationship between various groups in power in Russia, the resolution of the budget dispute is of tremendous interest.

A partak means a lot "on the zone"

Grigory Pasko, journalist

Partak - that's a tattoo in the language of jailbirds. The history of tattooing goes with the roots into the ages. They say that the fist to start doing it were the aborigines of the island of Tatu. Cook's sailors saw and borrowed. Then tattooing, like a contagious disease, spread throughout the entire world and became particularly beloved by prisoners.

In the years of the Stalinshchina and the GULAG, zeks tattooed portraits of Stalin and Lenin: there existed a myth that the convoyers [transport guards--Trans.] are not going to start shooting at the leaders of the USSR and the revolution. The myth has remained just that, a myth.

Here is a link to the press release on Reuters announcing Nasir El-Rufai's retention of Robert Amsterdam to defend against a raft of baseless, politically motivated charges by the Nigerian government.

Nasir El-Rufai, a popular Nigerian reformer who has faced nearly two years of investigations from trumped-up, politically-motivated charges has announced the retention of the well-known international lawyer Robert Amsterdam, of Amsterdam & Peroff. Mr. Amsterdam has a broad mandate to mount a vigorous legal defense of El-Rufai's reputation, person and property both in Nigeria and abroad.

Mr. A. U. Mustapha, prominent Nigerian counsel for El-Rufai, stated that, "the increasingly libelous accusations against former Minister El-Rufai and the ferocity of the campaign against him which violate Nigeria's commitments under international law prompted us to look for jurisdictions outside of Nigeria for additional arena for redress."

Former German Chancellor Gerhard Schroder is chairman of the Nord Stream shareholders' committee. And Schroder has been earning his pay check. While Gazprom owns 51 percent of Nord Stream, German energy majors E.On and BASF own 20 percent each. Dutch company Gasunie (remember it was the Netherlands who sided with Germany to get Nabucco downgraded at the recent summit) holds the other 9 percent. That Nabucco threatens Gazprom's energy, and thus Putin's geopolitical interests, is clear. With gas exports to Europe having declined by 40 percent since the beginning of 2009, Gazprom has developed, in Germany, a major ally at the heart of the EU to assist Russian interests. It's a growing relationship that helps explain Germany's opposition, even threatening an EU veto, to Georgia and the Ukraine's United States-backed bid for NATO membership in 2008.

Given the EU's sense of urgency in achieving greater energy diversification, it now finds itself caught in a pincer movement of external geopolitical realities and internal national self-interest. The EU may soon be forced to admit defeat and raise the white flag over Nabucco. But however the Russo-EU energy plot-line plays out, Germany, Europe's largest economy, is revealing only too clearly that sticking to the Eurocratic official text is one thing, conspiring with Putin over the subtext - national self-interest when it comes to energy security - is another. Europe, take note.

Right now, the prime example of Kremlin legal nihilism is the new trial of Mikhail Khodorkovsky. It looks like a conspiracy by the Vladimir Putin hard-liners against Medvedev that the trial is to begin March 31, two days before Medvedev's first meeting with U.S. President Barack Obama in London. Obama cannot possibly avoid raising the Khodorkovsky case.

That budget made five extraordinary assumptions, all of which have now been radically revised. It presumed that gross domestic product would grow by 6 percent in 2009 (now revised to negative 2.2 percent); that the budget surplus would be 3.7 percent of GDP (now a deficit of 7.4 percent of GDP); an average oil price of $95 per barrel (revised to $41 per barrel); an exchange rate of 24.7 rubles per dollar (now 33 rubles); and inflation at 8.5 percent (now 13 percent). It has taken some time, but once again Russia's macroeconomic policy is based on realistic assumptions.

In Russia, lawyers who defend the weak can find themselves on the firing line. Mr. Markelov's murder contrasts starkly with a simple promise Russian President Dmitry Medvedev is making. Last weekend, the president delivered a national address renewing his pledge to restore the rule of law and end Russia's culture of "legal nihilism."

Russia's rule-of-law crisis takes many forms. A few days from now, former oil tycoon Mikhail Khodorkovsky -- as recently as 2004, Russia's richest man -- goes on trial for fraud in what his supporters claim is political persecution. His real offense, they say, was to oppose former President Vladimir Putin. (...)

Mr McCain was equally emollient on Mr Obama's soft-pedalling approach to Russia, in spite of bouts of near cold war rhetoric during the campaign ("We are all Georgians now").

This month, Hillary Clinton, secretary of state, gave Sergei Lavrov, her Russian counterpart, a box which said "reset" in English on one side and "self-destruct", instead of "reset", in Russian on the other side in a slip-up that caused some embarrassment.

"If I gave him a reset button, I'd find someone in the state department who understands Russian," said Mr McCain. But he added, "I'd reiterate that we want to engage in dialogue with Russia . . . We are not going to see a reignition of the cold war. Russia doesn't have the military or economic clout to do that."

Some blasted the ad as insensitive after it surfaced on English-language websites this week. "This is just racist," said one visitor to the Ads of the World website, while another asked: "Is the ice cream as tasteless as the ad?" 

Andrei Gubaidullin, who created the ad, told AFP that it was not racist and that Russia simply had a different attitude to race than Western countries.

"For Russia, this is not racist. It is fun and that's it," said Gubaidullin, creative director at Voskhod advertising agency, based in the Urals Mountains city of Yekaterinburg.  "We don't consider teasing ethnic groups racist. It is just seen as a joke," he said by telephone, adding that he personally liked Obama.

Czech Deputy Prime Minister Alexandr Vondra said the energy investments are a "clear reaction" to this winter's gas crisis. 

After the interruption of Russian gas deliveries via Ukraine in early January, the lack of interconnection between national networks in EU countries was identified as a major reason for the EU's vulnerability to delivery shortages.

The investments in the EU's energy infrastructure are meant to make the bloc safer against outside pressure. The investments will, Vondra said, "strengthen our energy security."

The significance of the Basmanny court's December 5, 2008 decision, or more precisely, the Russian Federal Center's legal expertise which preordained it, goes far beyond the bounds of my case.

The FSB [Federal Security Service] and the prosecutors, armed with a new law on extremism, were trying to hold a show trial and create a precedent of criminal prosecution for criticism of the authorities.

The highly professional and academically reasoned report by Andrei Smirnov, Olga Kukushkina and Yulia Safonova, which found no signs of extremism in my harsh criticism of the country's president, knocked this "avenging sword" from the hands of the repressive agencies. And for a long time, I hope.

Stalinism was idealist in another, even more terrifying sense: it aimed at controlling from within the very thoughts we think. In a toast delivered on November 7, 1937, at the height of the Terror, the Great Helmsman swore to destroy every enemy:

Even if he was an old Bolshevik, we will destroy all his kin, his family. We will mercilessly destroy anyone who, by his deeds or his thoughts--yes, his thoughts--threatens the unity of the socialist state. To the complete destruction of all enemies, themselves and their kin!

Even the worst of the tsars never thought of punishing relatives for a criminal's acts. But what is truly remarkable about this toast is the promise to murder people and their kin for thoughts. One must live in continual fear of one's own mind.

Cherchez la femme!

The legislative power of the Russian Federation, as always, is on the lookout for spies

Grigory Pasko, journalist

The State Duma of Russia on 18 March instructed its committee on security to gather in the law-enforcement organs information about the sources of financing of the organizers of mass protest actions. The initiative comes from the United Russians, inclined to lay the blame on western non-governmental organizations.

The fictional account tells of a U.S.-based entomologist and a female Russian journalist who unintentionally capture evidence that Georgia started the conflict using a special camera night lens as they attempt to film rare night butterflies.

First Deputy Prime Minister Igor Shuvalov, a leader of the government's anti-crisis campaign, tried to calm Russians: "The current anti-crisis plans are formulated so that even under the most adverse conditions, our model for the country's economic growth through 2020 will be strategically executed -- with some tactical corrections."

Of course, Shuvalov is no Cicero and therefore gets his thoughts a little bit mixed up, but the idea is clear enough: The crisis won't damage Russia. It follows that none of the government's current policies or strategies requires corrections because it is doing everything right. And if, by chance, something does not work out as it should, it can be fixed with "tactical corrections."

Who actually believes all of that? Probably only those who believe in abominable snowmen, UFOs, witches, demons and Santa Claus.

Although France and Italy also supported the downgrading of Nabucco, Germany, which stands to be on the receiving end of the Nord Stream pipeline, is Nabucco's largest opponent. Nord Stream's shareholders include Gazprom with 51 percent, German enterprises E.On and BASF with 20 percent each and Dutch Gasunie with 9 percent.

Most of the skepticism surrounding Nabucco centers on the lack of gas to fill it. Iran, with the world's second-largest natural gas reserves, could easily fill the pipeline, but it is impossible to imagine Tehran as a reliable partner in Nabucco considering how many sharp points of contention there are between Iran and the United States (and many EU members as well) -- mainly over Tehran's nuclear program. Turkmenistan, which has the world's fifth-largest reserves of natural gas, could play a prominent role in Nabucco, but this would require building a new Trans-Caspian pipeline. Moreover, there are security issues regarding transit routes through Georgia and Turkey.

The two new directors appointed to the management board of TNK-BP Ltd, which has six members at full strength, are Jonathan Muir, who has been appointed chief financial officer, and Didier Baudrand who is the new executive vice-president of the downstream business, which includes refineries and petrol stations.

The appointments are evidence against the suggestion that it has become impossible to hire non-Russians to work at TNK-BP.(...)

The appointments reflect the power-sharing deal thrashed out by BP and the Alfa-Access-Renova group of Russian tycoons last year.

Under that deal, two of the executive directors are to be drawn from each side of the partnership and two are intended to be neutral.

Comrade Sechin, the oil economist?

Grigory Pasko, journalist

Inasmuch as I'm not an economist, I didn't pay much attention to a report from the Bloomberg agency. However, there are more observant people on Live Journal. One of them, a certain "rusanalit", did notice a Feb. 17 report from Bloomberg about Russia's seemingly desperate long-term oil deal with China (20 years, $25 billion credit, 15 metric tonnes a year supplied).

Subsequently, this Livejournal user rusanalit decided to do some calculations. And here's what he came up with:

Term of the contract - 20 years.
Annual delivery - 15 mln. metric tons.
Payment - 25 bln. dollars.

Calculation: 20 years x 15 mln.metric tons * 7.3 barrels per metric ton = 2.2 bln. barrels that Russia will deliver to China for 25 bln.dollars.

That is, Russia has sold 1 barrel to China at 11 dollars!

Conclusions:

1.Bloomberg is lying or did not quite understand.
2. China squeezed Russia to the maximum, having obtained a price four times below the current one.
3. There's a huge kickback built in there. Several tens of billions of dollars.

Will he or won't he? Grigory Pasko sent us this Kommersant article (which we have duly exclusively translated below) about the latest twist in a flurry of flip-flopping these past few days as to whether or not Venezuela really has offered to let Russia build a military base on its territory, in violation of the constitution. As the article states, such a base would allow the Russian long-range air forces to regularly patrol the Caribbean basin in order to protect all those vital strategic Russian interests in the region we never knew they had.  [As I am here in Washington this week meeting with people about both Russia and Venezuela, I am told that the timing of this saber-rattling news successfully torpedoed much of the entreaty attempted by the Brazilian President on behalf of Chavez.  Doh!]

Venezuela will not accommodate Russian air base // Context

The newspaper «Kommersant» № 46(4101) of 17.03.2009

Venezuelan president Hugo Chavez appeared with clarifications in connection with the declaration sounded the previous day by chief of staff of long-range aviation of the military-air forces of the RF Anatoly Zhikharev about how Caracas had offered Moscow to make use of the Venezuelan island of Orchila for the basing of Russian bombers (see yesterday's "Kommersant"). "Everything is not exactly so,-- specified mister Chavez.-- I said only to Dmitry Medvedev that Russian airplanes will be able to make a landing in Venezuela at any moment". The reason why Hugo Chavez had been forced to justify himself became the treatment by a series of world mass information media of the words of major-general Zhikharev, having reported that Venezuela had offered Russia to make use of the island of Orchila for an air base. In the meantime, what was being spoken of was exclusively "temporary basing", inasmuch as the constitution of Venezuela prohibits the presence of foreign military bases. However, by his denial, president Chavez confirmed information about how he had made Moscow an offer to use Venezuelan territory for the landing of long-range aviation, which in this event will be able to regularly patrol the aquatorium of the Caribbean Sea.
Vyacheslav Leonov

Under the bill, a governor could propose that a mayor in his region be dismissed for failure to fulfill his duties. Grounds for dismissal include serious budget deficits or misuse of budget funds. [...]  The bill, to be considered Friday in the Duma, would make it harder for independent candidates to hold onto mayoral posts and would strengthen United Russia's control over local politics.

In a meeting with regional legislators in Tula last week, Medvedev said the bill would allow deputies to "create a normal, effective vertical of power," according to comments posted on the Kremlin's web site. [...] Recently, Medvedev has referred to the need to remove "criminal elements" from positions of power in the provinces.

"Unlike in the case of Nabucco, we have everything we need for this project [South Stream] to materialize. We have gas, the market, experience in implementing complex projects, and corporate management."  The executive said Gazprom was not prepared to split its operations between two projects simultaneously.  "You chase two rabbits, you catch neither. We have a rabbit we know, and we will chase it," he said.

But even before the global crisis hit, an opinion poll by the Russian Public Research Center, last June, found more than half of those surveyed said Russia should limit the number of unqualified foreign workers.

The SOVA human rights organization and others report about 300 violent attacks against migrants, last year. Nearly one-third were fatal, including the December decapitation of a young Tajik national in Moscow.

SOVA Deputy Director Galina Kozhevnikova says many Russians accept what she says are myths that migrants take away increasingly precious jobs and drive down wages.

The politically charged cases against Mikhail Khodorkovsky, the jailed former chief of Yukos, the oil company since devoured by the state, and once Russia's richest man, or the long stand-off between BP and its local partners in TNK-BP have understandably fostered the conviction that Russian courts are tools of the Kremlin and (favoured) oligarchs. Now Russia's decade of explosive growth has fizzled, more-over, there are perfectly conventional reasons for investor caution.

The government's short-term handling of the macroeconomy has been good enough to earn Russia a breathing space. The problem has been its failure to use the oil and credit boom to diversify and lessen dependence on foreign loans, to upgrade its third-world infrastructure and mend its buckled institutions. But it has failed above all to strengthen property rights and embed the rule of law - the pledge Mr Medvedev gave to combat Russia's tradition of "legal nihilism".

Given the severity of the crisis, it seems unlikely the Kremlin power-brokers grouped around Vladimir Putin are angling to renationalise strategic chunks of the economy. They know they no longer have the resources or personnel to manage what would fall into their lap if things were to get a lot worse.

"The case goes far beyond Khodorkovsky's fate"

Interviewer: Daniel-C. Schmidt

Originally published in German in Die Welt, 13 March 2009

Defense lawyer Robert Amsterdam discusses the proceedings against the ex-Yukos head and the power demands of the Russian elite

Berlin - Last week the second trial against Mikhail Khodorkovsky, the ex-head of Yukos oil company began. He has been in prison since 2003, and was already sentenced to eight years behind bars. Now he is once again being accused of fraud, defalcation, and money laundering into the billions. His lawyer Robert R. Amsterdam believes this is a show trial: "The case is very clearly politically motivated."

Mr. Amsterdam, how is Mikhail Khodorkovsky doing?

He has been living in poor conditions in a Siberian prison for five and a half years. Now he is in Moscow, at least closer to his family. That helps him. He is very strong and determined to prove his innocence.

A symbol of selective Kremlin justice, his second trial - on embezzlement and money-laundering charges - promises to reveal whether Russia is really headed in a new direction. Does Medvedev really represent a loosening of the country's soft authoritarianism, as liberals hope? Or is it business as usual, with Prime Minister Vladimir Putin and a tight circle of Kremlin hawks pulling the strings? The Khodorkovsky Show, as it's being called, should provide some answers.

The bespectacled businessman's fall from grace was precipitous. In better times he was Russia's richest man, worth an estimated $15 billion. He ran and owned most of its biggest oil company, Yukos, and was the most successful of all the oligarchs - the sharp-elbowed businessmen who made their fortunes in the 1990s.

A Russian general said on Saturday Venezuela has offered the use of its La Orchila island airfield for Russian strategic bombers on long-range flights.

Russia has been keen to build relations with a rival to the United States in the Western hemisphere in an effort to counter U.S. influence in formerly Communist countries in eastern Europe and central Asia.

"If certain political decisions are taken, it is possible (for Russian bombers to use the base)," Interfax news agency quoted the head of Russian strategic aviation general-major Anatoly Zhikharev as saying.

At a time when the world's financial crisis has most countries hunkering down, Russia is parlaying the global meltdown into a lever for expanding its influence in Central Asia and other former Soviet republics that the Kremlin regards as its "near abroad."

The Kremlin has stewarded a plan to prop up five cash-strapped former Soviet republics by establishing a $10 billion bailout fund, three-fourths of which would be nourished by Russian coffers. Moscow is also giving Armenia a $500 million loan and has promised $2 billion for Belarus.

With its economy in shambles, Kyrgyzstan has little choice but to comply with Russia's wishes, experts say.

"Contract killings may have decreased in frequency since the 1990s and the day of wild capitalism, but they are still occurring regularly in Russia, though they rarely make the headlines," he told Forbes. "Victims tend to be journalists operating at a local level or local administrators involved in handing out permits, or land allocation."

Russia's problem with corruption is widely acknowledged. President Dmitry Medvedev himself has pledged to stamp out the problem.

However, the problem remains, and the troubles in the court system mean that the normal legal routes for solving business disputes or battles over planning permission are rarely effective.

"Russia has reached a crossroads. Many of the oligarchs are basically bankrupt and will not get out of this mess by themselves," said one senior Western banker, who requested anonymity because of the sensitivity of debt talks.

"Should they be bailed out with public money intended for Russian pensioners? That is the next page which we are about to see," said the banker. "Many are facing extinction."

There is no doubt that the Russian authorities conducted what amounted to a "show trial" against Mikhail Khodorkovsky. The Russian prosecution does not usually place on the Internet a detailed description of the crimes that a criminal allegedly committed prior to trial. Clearly, such actions were prejudicial. What was surprising was the poor quality of the case presented-- it stated conclusions rather than convincing present facts.

In my view, Khodorkovsky's greatest offense was that he did not show sufficient respect for Russian president Putin, and failed to understand the president's objectives. In ancient Greece, hubris was a crime. The Russian Criminal Code does not identify either hubris or arrogance as a crime. Despite the efforts of Khodorkovsky's courageous defense team, as well as the world's human rights community, the fact that this principle was not followed did not matter.

Despite the well worn campaign slogan, so far Washington's new foreign policy under President Barack Obama and Secretary of State Hillary Clinton seems to embody a blend of both continuity and change, depending on the situation. By and large we have seen a reactionary series of policies, as the new president has been thrust into a game with the cards already dealt. However, with the visit to Washington on Saturday March 14 of Brazilian President Luiz Inácio Lula da Silva -- the first Latin American head of state to be received by Obama at the White House -- a fresh hand is being dealt, giving the president a chance to define his administration and mark a clear departure from the policies of the past.

For years Latin America has been waiting for its day in the sun as a privileged partner of the United States; to be treated fairly, with respect, and joined in action toward the fulfillment of mutual goals for the Western Hemisphere. With the visit of Brazil, now graduated to the status of a true regional and global power, the administration should seek to support and enhance its role of responsibility, proving to the skeptics that we don't need or want a unipolar hemisphere, but rather a multi-lateral and institutional framework for stable and prosperous relations.

There are many compelling reasons for Obama to seek a close relationship with Brazil and establish a new partnership, one that would bring immediate benefits to both parties (while carrying very low risk and political costs). Despite being diplomatically stretched thin by Mideast conflicts, Brazil is a sure bet that Obama should not pass up.

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Telenor, the Norwegian telecoms group, on Thursday claimed its Russian partner Alfa Group was attempting to "steal" its strategic stake in Vimpelcom, Russia's second-largest mobile operator, after a Siberian court froze its shares in the company.

Alfa Group, which is controlled by Mikhail Fridman, the Russian billionaire, denied any connection to the Vimpelcom case and claimed Telenor was trying to ensure the seizure of its telecoms assets via a ruling in a New york federal court that could see Alfa Group fined a total $12bn over the next year.

The rulings in Siberia and the US take the long running legal battle over Vimpelcom to a critical level while the freezing of Telenor's stake looks set to revive new fears about the safety of foreign investments in Russia, just as the country's battered stock market is starting to recover.

"This will unfortunately reinforce many investors' view that Russia is a dangerous place in which to invest," said Chris Weafer, chief strategist at Uralsib investment bank in Moscow.

There are many reasons why relations "degraded significantly" over the last few years, and the Kremlin never seems to tire of enumerating the ones that have their roots in Washington -- the arrogance, ignorance, monomaniacalism, etc., of the administrations of Bill Clinton and George W. Bush. It is true now that there is a new administration in the United States, so perhaps it is reasonable to assume that some of the obstacles to better relations have been removed.

 

But not all of them. Despite Moscow's interest in promoting their "liberal, young president" on the world stage, there has been no regime change in Russia. The Kremlin, after all, made "stability" and "continuity" the main themes of its 2007 and 2008 election campaigns. And it is hard to deny that anti-Westernism, particularly anti-Americanism, is an important pillar of the Vladimir Putin political system in Russia.

 

The Kremlin has devoted a lot of time and energy over the last few years to convincing Russians that the country faces an existential threat from the United States -- that without the tough vigilance of Putin and his team, Russia would be partitioned and plundered. And this belief has taken root among Russians. A BBC poll last month found that just 7 percent of Russians believe the United States is a positive force in the world, while 65 percent view it as "mainly negative." Among the 20 countries surveyed, the average "positive" view of the United States was 40 percent.

Fortunately, there is a "designer" missile defense that would answer President Obama's hesitations and allay Russia's fears. And unlike the Bush missile defense, it would actually be able to deal with the threat of ballistic missile attacks from North Korea and Iran if such a threat ever emerged.

This is a proposal I've developed and analyzed with a variety of American and Russian experts and the idea itself is simple. The defense system would shoot down Iranian or North Korean long-range missiles as they slowly accelerate from their launching sites. It would take advantage of the fact that long-range missiles built by Iran or North Korea would be large and cumbersome, have long powered flight times and could take off only from well-known launching sites.

A happy holiday to the successors of the GULAG

Grigory Pasko, journalist

Soon after 8 March [The Russian shorthand name for International Women's Day--Trans.] in Russia there impends yet another holiday, about the existence of which our population dimly guesses, but celebrates somewhat reluctantly and without optimism, perhaps... But after all, 12 March - is the Day of Workers of the Criminal-Execution System (UIS) ["Criminal execution" is far less ominous than it sounds, and merely refers to the "execution" of sentences imposed by courts, e.g. imprisonment, probation, etc.--Trans.]

Dave O'Reilly, chief executive of Chevron, said the oil-rich countries that erected barriers to international oil companies amid the run-up in commodity prices were now seeking their expertise in managing the drastic fall.

"They're back now looking for [our] investment,'' Mr O'Reilly told Chevron's annual analysts' meeting. (...)

The oil-rich nations now require the expertise of the international oil companies to get costs down and grow production to maintain their economies. "This is a time they need companies like ours more than ever,'' Mr O'Reilly said. "That threat [to further nationalise] has receded quite a bit.''

Khodorkovsky's new trial, which opened last week, is based on charges far more sweeping and more absurd than the first one. He and co-defendant Platon Lebedev are accused of stealing all of the oil pumped by Yukos from 1998 to 2003. (Khodorkovsky claims that the quantity stated in the indictment exceeds the entire amount of oil produced in Russia in that period.) If these charges stand, virtually every other Russian tycoon, including staunch Putin allies, should be in the dock too.

But 2009 is not 2003. When Khodorkovsky was arrested, Putin's power was in its ascendancy. Today, while Prime Minister Putin still wields tremendous influence, it may be finally on the wane, battered by the economic crisis and by Medvedev's growing self-assertion. While Medvedev is no "democrat," he is identified with a more liberal, pro-Western, pro-business Kremlin faction; he has sharply criticized government officials for "terrorizing business" and spoken of the need for judicial independence.

Yulia Latynina has a powerful opinion column in the Moscow Times today about the second show trial of Mikhail Khodorkovsky, driving home the point that back in 2003, "Putin and Khodorkovsky personified two possible paths for Russia's development."  Now in 2009, Russia is a different country, with diminished opportunities to transform into a democratic society.

I don't think there is a point in discussing new charges against former Yukos CEO Mikhail Khodorkovsky. If a thief robs somebody at gunpoint, does it make sense to discuss the robber's claim that his victim did not pay taxes?

In the Yukos affair, the robber is the state. On Oct. 25, 2003, police stormed Khodorkovsky's private jet and "robbed" him at gunpoint by taking him into custody. In May 2005 he was found guilty of fraud in a classic Russian kangaroo court. As a result, Yukos was essentially expropriated by state-controlled Rosneft in a sham auction and that the oil that Khodorkovsky exported before his arrest is now traded by Gunvor, a company co-founded by Prime Minister Vladimir Putin's friend, Gennady Timchenko. Thus, does it make a lot of sense to discuss the robber's claim that Khodorkovsky did not pay of all his taxes?

Pushkin's "Russian Uprising" was an 18th century peasant revolt focused on the Ural and Volga regions led by Yemelian Pugachev, a pretender to the throne of Tsarina Catherine the Great -- a rebellion crushed with equal brutality. The memory of Pugachev is a distant one, but there are more recent events, less dramatic in scale that scar the Russian landscape.

One city name stands alone as a reminder to Russia's leaders as they weigh the dangers of social unrest in the months ahead: Novocherkassk.

In June, 1962, workers at the Novocherkassk Electric Locomotive Factory, furious about food shortages, wage cuts and dismal working conditions, declared a strike. Moscow, wary of any spread in the unrest, ordered tanks into the town. Crowds marched on the Communist Party headquarters to present their demands. Militants broke away and stormed the local militia headquarters. Rioting swept Novocherkassk, a city situated close to the historic heartland of the cossacks Pugachev drew on for his rebellion. Moscow ordered troops to act, and shots were fired into the crowd. Dozens, including women and children, were killed, their bodies buried secretly at night by the security services.

The real question is whether Moscow has any desire for a compromise or a new treaty. President Dmitry Medvedev's announcement, voiced by Foreign Minister Sergei Lavrov at an arms reduction conference in Geneva on Saturday, sets two preconditions. First, it demands that both warheads and delivery vehicles should be counted. The second, a suggestion to prohibit deployment of nuclear arms beyond national territory, is a bit of a mystery. If this is only a reiteration of the numerous limitations already included in START I, it is unclear why Russia is emphasizing this demand now. I suspect, however, that Moscow plans to consider not only the traditional nuclear triad of land-, submarine- and strategic bomber-based missiles as strategic arms but also elements of missile defense systems. Moscow thereby proposes that the United States cancel plans to deploy elements of its missile defense system in Central Europe. That condition alone could cause the negotiations to drag on for years.

I am not at all sure that the Kremlin actually wants to see the negotiations conclude quickly. After all, strategic arms talks allow the Kremlin to assuage its inferiority complex and raise Russia to the status of being the only country definitely capable of destroying the world's mightiest superpower. If an agreement is reached quickly, Russia's foreign policy authors will inevitably be left with the question: What more can we discuss with the United States the day after the new treaty is signed?

Putinka vodka piggybacked on the cult-like popularity of Vladimir Putin to become one of Russia's top-selling brands of spirits. For a new vodka named after Mr. Putin's presidential successor, Putinka is proving to be as tough an act to follow as Mr. Putin himself.

Medvedeff vodka, named after President Dmitry Medvedev, appeared in shops here in December, next to bottles of Putinka vodka and for the same price -- 150 rubles, or roughly $4, per half liter. But, while Putinka, which hit the market in 2003, remains Russia's second-best-selling vodka, Medvedeff has yet to find a place among the top 20.

The disparity reflects Russia's political reality. (...)

Stanislav Kaufman, the man who dreamt up Putinka, says he can't take Medvedeff seriously. "Mr. Medvedev is not a vodka personality," he says. "Mr. Putin is."

Mr. Kaufman says Mr. Putin's background as a spy is a good match for a drink that is at least 40% alcohol. Mr. Medvedev, a former corporate lawyer who has touted himself as a liberal modernizer, just doesn't have the right image, he adds. Brand gurus say the Medvedeff brand is also slightly confusing because it evokes images of bears -- medvedi in Russian -- as well as the president.

Will the real Shokhin please stand up?

By the Polittechnologist

Member of the Presidium of the General Council of United Russia (this is the putinite analogue of the Politburo of the Central Committee of the Communist Party of the Soviet Union) Mr. Alexander Shokhin has practically spoken out in support of Khodorkovsky. The key word in the given sentence is "practically."

As far as political power balances go, a dynamic of more immediate concern is the jockeying between the relatively more liberal technocratic faction of the political elite-personified in many ways by Finance Minister Alexei Kudrin-and the hard-line, statist elements of the elite known as the "siloviki" --- from the Russian word for people tied to the security services. In short, the two sides view the financial crisis in starkly different terms -- the liberals, who control the broad strokes of economic policy for the moment, see the crisis as a technocratic policy challenge, and are committed to defending Russias longer term macroeconomic stability and global openness. The hardliners, in turn, have advocated more protectionist and autarchic responses, and many of them are state capitalists eyeing lucrative assets weakened by the financial crisis. Should popular discontent, or silovik power, compel Putin to scapegoat Kudrin or other top liberals, it would be a grim signal about Russias economic and political future.

A key adviser wrote last week that the economic crisis threatened to unseat the two leaders, whom, he suggested, might be swept away in an uprising financed by the oligarchs.

"The transition of the [economic] crisis into the political arena has already begun happening," Gleb Pavlovsky wrote in the popular Moskovski Komsomolets tabloid.

This was an amusingly snide comment piece in the Washington Post from Robert Kagan, poking fun at the media's habit of embracing everything the Obama administration is doing as "new."  Sure, crabby as he is, Kagan does have a point on some of this stuff (especially Washington's willingness to put up with whatever shortcomings China has in the democracy department - a lesson Cuba seems to be taking to heart), but in other areas Kagan's argument about Hillary's secret continuity are much less convincing.  I wonder how these moves jibe for Kagan's league of democracies idea?

When it comes to actual policies, however, selling the pretense of radical change has required some sleight of hand -- and a helpful press corps. Thus the New York Times reports a dramatic "shift" in China policy to "rigorous and persistent engagement," as if the previous two administrations had been doing something else for the past decade and a half. Another Times headline trumpeted a new "softer tone on North Korea," based on Secretary of State Hillary Clinton's suggestion that the United States would have a "great openness to working with" Pyongyang -- as soon as it agrees to "verifiable and complete dismantling and denuclearization." Startling.

Don't hold your breath for the outcome. Russia's courts take orders directly from the Kremlin, and this trial sets a new Kafkian bar. The same prosecutor who won a state award for the first Khodorkovsky conviction came up with a thousand-plus page indictment. The main charge: That Mr. Khodorkovsky and his business partner stole the entire production of Yukos and laundered the profits. The presiding judge summarily dismissed defense lawyer motions even to consult with their clients.

A Kremlin confident about its hold on power would let this man be. Vladimir Putin has already destroyed the independent-minded oligarch who dared dabble in politics, sending a message to other tycoons about toeing the regime line. The 2005 conviction also provided Mr. Putin with a pretext to put the state back in control of Russia's oil and gas, which had been partially privatized in the Boris Yeltsin era.

But no potential challenger to Mr. Putin has ever been allowed to pass unmolested. Besides, a highly visible trial like this makes a very useful political distraction in the midst of an economic meltdown.

"This is Really About Destroying a Person"

DW: Ms. Leutheusser-Schnarrenberger, you know more about the Yukos case than any other German politician. What do you think about the new accusations against Khodorkovsky and Lebedev?

Leutheusser-Schnarrenberger: I consider the new accusations and the new court case to be an unsubtle attempt to keep Mr. Khodorkovsky imprisoned after he has served his first sentence of eight years. This is dealing with the same incident that was the subject of the first conviction.

How good do you consider Khodorkovsky's chances for a fair trial as long as Putin is still in charge?

I really doubt it is a fair trial with truly independent judges and prosecution that will take everything into consideration that may exonerate a defendant. Naturally, I feel justified in this opinion because of the first process that led to eight years of imprisonment for Khodorkovsky. There were many holes in the rule of law in that case.

So you don't have too many hopes from the new "liberal" president Medvedev?

I would be very happy if this process were to make the president's declared goal of making the justice system more independent, and the whole system more based on the rule of law, a concrete reality. But except for this announcement several months ago, nothing has happened and there has been no change in the case. That does not make me very optimistic.

Some say it is unfair that only Khodorkovsky and a few of his close associates landed in jail, but not all of the Russian oligarchs. These people think that Khodorkovsky's wealth could have been obtained through criminal acts. That would mean he is not a political prisoner along the lines of Nelson Mandela or Vaclav Havel.

Khodorkovsky and his fellow partner Lebedev showed themselves to be personalities willing to get involved in creating political opinion with the support of non-governmental organizations and civil society initiatives. And I would dispute any sweeping statement that everything Mr. Khodorkovsky is accused of can be generally judged criminal. Some of the acts were performed by everyone, and legal at the time. There were then changes to law applied retroactively and Khodorkovsky was clearly used to make an example to others.

Would you attempt a prognosis at the outcome of this new proceeding? Mr. Khodorkovsky is threatened with up to 22 ½ years in prison.

Unfortunately I fear and believe that this proceeding, which the prosecution has been preparing for years, could lead to another conviction for Mr. Khodorkovsky and Mr Lebedev. I can't judge the length of a prison sentence, but it is possible that the punishment reaches this two-digit range. This makes the impression that this is about the destruction of a person.

Our latest interviewee on the topic of "Venezuela and Russia" is the leading expert of the Analytical administration of the Center for political conjuncture of Russia, Pavel Salin.

1. How natural and justified is the convergence of Russia and Venezuela in recent years?

It's hard to say how much - it's hard to measure such things with quantitative parameters. Initially, I think, at the beginning of the process and in consideration of the deterioration of the relations of the RF with the USA, the parties were guided by the logic «the enemy of my enemy is my friend». The Russian powers, unpleasantly surprised by the series of «color revolutions» on the post-Soviet space, decided to inflict a «symmetric strike» to the «soft underbelly»/«backyard» of the USA, which Washington in the rush for world hegemony had simply abandoned. And Venezuela was here the most simple and obvious choice, inasmuch as Chavez had laid claim and is laying claim not only to independence from the USA, but also to ideologo-political leadership in the region (the scales of the economy, the territory and the quantity of the population of Venezuela don't allow for laying claim to anything else).

Will Russia respond positively? Given the unpredictability of the Putin-Medvedev duumvirate, we cannot say. What is not in doubt is that Mr Obama is going out of his way to defuse Russia's security concerns. The US has abandoned plans for immediate Nato enlargement to Georgia and Ukraine. The US has given the green light for Nato re-engagement with Russia, despite deep misgivings about Moscow's actions in Georgia. The US is prepared to compromise on missile defence, even though this would cause deep concern in east European states that backed the programme. So now the ball is in Russia's court. The world needs to know whether Vladimir Putin wants to go on cutting an unpredictable and irrational figure. Or whether he is a grown-up who genuinely seeks to solve the world's big problems.

It has always been clear that the real challenge posed to Russia by the missile defense installations in Central Europe is not of a military character, as the Russian government officially argues, but of a purely symbolic character. Russians are frustrated by the fact they are no longer treated as a veto-wielding actor in Central European affairs. They also know that the Czech and Polish governments want to participate in the project in order to strengthen their ties with the U.S., to anchor America in Central European security, and to demonstrate that their countries are not, at least politically, in "Russia's backyard."

It makes little sense to quarrel about how this paradigm shift occurred. The real challenge now is: In case the Obama administration decides to abandon the project, it should do so cleverly and manage the process in a way that secures the political interests of the United States and its Central European allies.

There are two important things at stake. The first is the traditionally Atlanticist orientation of Central European allies. The second is the future of Russia's foreign policy, especially in the country's vicinity.

A question taken via the internet asked about the US and its likely relations with Russia. She replied that "our engagement with Russia in no way undermines our support for countries like Georgia, or the Baltics or the Balkans or anywhere else in Europe to be independent, free, make their own decisions and chart their own course without undo interference from Russia."
 
Referring to the recent gas crisis she said, "we also are very troubled by using energy as a tool of intimidation."

"Israeli leaders seem convinced that at least for now, they have a military option," states the report, entitled 'Preventing a Cascade of Instability: U.S. Engagement to Check Iranian Nuclear Progress.' "However, Israelis see the option fading over the next one to two years, not only because of Iran's nuclear progress and dispersion of its program but also because of improved Iranian air defenses, especially the expected delivery of the S-300...Israel therefore may feel compelled to act before the option disappears."

Yesterday we posted some hostile reactions to President Barack Obama's "secret letter" overture to the Russians to suspend the plans for a missile shield in Europe.  Today, we bring you a ringing endorsement of the letter, which Joshua Tucker of NYU argues will "isolate Iran, undermine Putin, and save us money."  We can see Tucker's point, and for some time we've argued that the missile shield is an invented distraction, but this familiar line of thinking is flawed by typical assumptions we see in the liberal camp:  that Russia has very much influence over Iran (they don't), that the burden is upon the United States to give something up to a victimized Russia, and the idea that this concession would produce a change in Russian behavior.  The missile shield was never a good policy idea, but isn't it also in Russia's interest to prevent Iran from going nuclear?

But on closer inspection, it seems bizarre that this issue is souring relations between the two countries. A limited system comprising ten interceptors cannot threaten Russia's ability to retaliate in a nuclear conflict, so Moscow need be concerned only if the current plan is just a down-payment on a more extensive future system. From Washington's perspective, the system is an odd priority given that it is designed to protect Europe, not the United States, from attack. What's more it remains unclear if the system even works. (Among other things, the rocket booster for the European interceptors has yet to be tested.)

"Over the past few years, there was a window of opportunity for Russia to resurge while Washington was preoccupied with wars in Iraq and Afghanistan. This window has been kept open longer by the West's lack of worry over the Russian resurgence given the financial crisis. But others closer to the Russian border understand that Moscow has many tools more potent than finance with which to continue reasserting itself."

"The August war in Georgia demonstrated some risks associated with the functioning of the transit energy corridor in the southern Caucasus. It also demonstrated the need for broader security guarantees for a region that is vital to European and global energy security. The most important finding of the paper is that while the corridor has a tremendous potential to augment its transit capabilities with new pipelines, railroads, marine and air ports, the security of the South Caucasus transportation corridor cannot be taken for granted. Moreover, Western countries will need to ensure stability and security in the region in order for the corridor to meet its full potential."

"...they showed great courage and leadership in agreeing to have the missile defense systems deployed on their soil. Why? Because they recognize there is a real potential future threat. They didn't hide their heads in the sand. They said, you know what, we see it as you see it, that missiles not only with a nuclear warhead, but a conventional warhead, or some other chemical, biological weapon, could very well be in the