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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 433,491 346,520 310,000 16
GNI per capita
 US $ 2,610 2,140 1,750 97
Ranking is given out of 208 nations - (data from the World Bank)

Books on Russia


Update No: 361  (28/01/11)

Putin the potentate
Nobody with an ounce of common sense believes that Russia has a liberal democracy and open society. It is corrupt through and through, nowhere more so than in the Kremlin itself. The epitome of this regime is the premier, and past (and future?) president, Vladimir Putin.

Yet, there is no reason to suppose that he is personally corrupt. He is interested in power, not money. It is hard to think what he might want money for, every conceivable expense will already be provided in his behalf by the special unit in the Kremlin that looks after the top apparatchiks, indeed where he first worked when he came to the Kremlin from St Petersburg. Anyway he knows that if he were to retire from the political stage, he could have lucrative directorships galore. Apart from all the Russian billionaires in his debt (for being allowed to become billionaires), his close friendship with Silvio Berlusconi, minted in many a crucial deal, would alone ensure him many a million. Putin was in charge of foreign investment into St Petersberg under Mayor Anatoly Sobchak in the mid-1990s when Berlusconi negotiated with him a $900 million deal, Finninvest, which has done very well. Many a clandestine deal between the two men since Putin's elevation to the Russian presidency and Berlusconi's to the Italian premiership, must presumably have ensued subsequently.

But Putin is not likely to retire soon. He enjoys being master of the Kremlin - enormously. He can hardly believe his luck. Fascinated by politics and the by-plays of power, he is in the driving seat of a true superpower. For over ten years now he has been one of the most important men in the world. He reckons on bestriding the geopolitical stage for many years to come.

The eternal enemy
He is following a hallowed tradition in hounding a public enemy, so-called, as a rallying cry for his cause, quite what that might be. Hitler no less defined the art of politics, at which he was after all a proven adept, as giving the people a composite enemy, an existential enemy, encompassing all their petty enmities in a compound hatred. For Hitler it was the Jews, culpable of both capitalism and communism.

The ideal existential enemy
Putin has not departed so much from the pattern. He fixed on Mikhail Khordorkovsky, the most exemplary, honest and brilliant of the oligarchs who prevailed from the privatisation of the 1990s after the collapse of the Soviet Union in 1991.

But he was also very rich - and he is Jewish. What a Godsend, a better fall-guy for the idea of the Russian non-intelligentsia, that they have been swindled out of their inheritance as ‘the world's greatest state’, once by Karl Marx and his malign progeny and now by a Jewish businessman pure and sublime.

It is rather astonishing that a man as intelligent as Mikhail Khordokovsky, surely aware of this Russian eschatology, did not twig that it was not for him to take on the Kremlin. His mother advised him strongly against it. He did it all the same.

The honest men in the dock
These are the results. A Russian court has found him and Platon Lebedev, his business partner, guilty of embezzlement and money laundering. Part of the ruling was read in court on December 27th by Judge Viktor Danilkan. Judge Danilkan read the rest of his lengthy ruling from the bench of the Khamovnichesky District Court on December 28th. Judge Danilkan issued an order banning the media from his courtroom as he read his ruling.

Amnesty International describes these criminal proceedings as political in nature. Nobel laureate Eli Wiesel describes Mr. Khordokovsky as a political prisoner, and calls for his release.

Mr. Khordokovsky was CEO of Yukos Oil, once one of the world’s privately owned oil companies. With Yukos producing 20% of Russia’s oil (2% of the world’s oil), Khordokovsky was Russia’s richest oligarch. Lebedev was Khordokovsky’s main business partner. He headed Group Menatep, a holding company that owned the majority of Yukos’s shares.

Khordokovsky and Lebedev acquired Yukos when the Russian government privatised it in 1998. Poorly run, inefficient, and saddled with $3 billion in debt, Yukos was quickly turned around with technology, investments, and organizational prowess. Khordokovsky and Lebedev also made Yukos into a Russian model of honesty and transparency. Soon, Yukos became so successful that it was Russia’s single largest taxpayer.

Khordokovsky and Lebdev made many enemies by insisting on non-criminal, honest and transparent business practices. As murdered investigative journalist Anna Politkovskaya observed: Khordokovsky “began creating a new Yukos, but all around him people remained at large who had absolutely no desire for transparency, people whose very nature is to work in the shadows, away from the light. They set about devouring Yukos, because light is unwelcome in the midst of darkness.” (“A Russian Diary”).

A Russian Soros?
However, Khordokovsky pushed for reform in Russia that went far beyond business. In this regard he strongly resembles George Soros. In 2003, he founded a school to train Russian students in democratic principles called the National School of Public Policy. He also founded the organization, Open Russia, which, like George Soros’ Open Society, promoted free speech, democracy, civil society, and anti-corruption. He funded Open Russia with a $20 million grant.

With the 2004 presidential elections fast approaching, he boldly also began funding Russian opposition parties, such as Yobloko and the Union of Right Forces. They are opposition parties because they stood in opposition to Putin and his United Russia party.

Putin is an authoritarian. Modelling himself on the Soviet dictator Josef Stalin, he has rebuilt Russia as a one-party state. Free and fair elections being no part of his planning, President Putin ordered the arrest of the mischievous pair, Khordokovsky and Lebedev.

In July 2003, Lebedev, was arrested, a warning shot for Khodorkovsky, one would have thought. He did not heed it. In October, 2003, they arrested him too. Both were charged retroactively on tax fraud and a privatization crime, trumped up charges for sure.

The accusations brought against Khordokovsky and Lebedev were absurd. They were a pretext for the political persecution of a powerful advocate for democracy and a funding source for the country’s democratic opposition. In 2005, they were convicted and given an 8 year sentence. Because they have been incarcerated since being arrested in 2003, they were scheduled to be released in 2011.

However, Putin is running for president again in 2012. To ensure that the 2012 election does not accidentally become fair and democratic, new charges were brought against Khordokovsky and Lebedev. As with the prior criminal proceeding, this one is also a pretext for political persecution.

The essence of the embezzlement and money laundering charges is that Khordokovsky and Lebedev stole 350 million metric tons of oil from Yukos sometime between 1998 and 2003. 350 million metric tons is 80% of Yukos Oil’s production during that time period, or 100% of its production during a 6 year time period. If true, it would mean that Yukos almost never produced any oil to sell, which is clearly not true.

Yukos produced and sold a huge amount of oil during this time, more than when the Russian government ran it. Moreover, it was essential to the government’s tax fraud case that Yukos had sold the oil, as opposed to it being diverted to Khordokovsky and Lebedev.  Khordokovsky and Lebedev could not have committed tax fraud and embezzled the same oil.

350 million metric tons of oil is worth $25 billion. Someone would have noticed it had gone missing. But, a Price Waterhouse Cooper accounting audit found not one drop gone or out of place. One of Putin’s former trade ministers testified at trial, that there is no evidence of a crime. In fact, the evidence establishes that the oil producers who the government claims were the crime victims were paid in full at cost, and they also were paid $2 billion in profit.

The court is likely to sentence Khordokovsky and Lebedev in January after the Winter Break. Prosecutors have asked for 14 more years of prison for both.

Russia has once again used its courts for a political purpose. It demonstrates an utter disregard for human rights, and importantly for the world outside Russia, contempt for the rule of law. In convicting Khordokovsky and Lebedev, Mr. Putin has proven that his country is once again a ruthless dictatorship.

One of the hallmarks of Putin’s foreign policy has been an obsession with colour revolutions – revolutions by peaceful democratic elections. George Soros’ Open Society was very much involved in those revolutions. The relentless persecution of Mikhail Khordokovsky and Platoon Lebedev is a similar attack on Open Russia and democracy.

Yet another terrorist outrage
Putin has a perfect excuse for his high-handed measures, the continuing series of terrorist attacks in Russia proper, whose onset in 1999 propelled him to supreme power in the first place, in 2000. Whoever was responsible for those outrages, and there are suspicions that it was rogue elements in the security forces themselves who were responsible (the timing was simply too neatly appropriate for Putin to start a second Chechen war and to ascend from the premiership to the presidency). North Caucasus groups in revenge have actually claimed responsibility for later assaults.

The latest was when a suicide bomber killed over 30 and injured as many as 170 in the Domodedovo Airport, Moscow and Russia's busiest airport on January 24. This comes after the horrific Moscow theatre siege in 2002, which killed 129 hostages and 39 militants, carried out by the 'Black Widows,' widows of the fallen in the Chechen war.

In early 2009 the terrorist leader Doku Umarov announced the revival of the revival of the Riyad – Salikhin Brigade of Martyrs, claiming he had 20 people fully prepared for martyr operations. This may not seem a large number. But an event in March 2010 showed otherwise. Two female suicide bombers from Dagestan in the then North Caucasus, detonated explosives in the Moscow subway, killing 37 people.

Now comes this outrage at Russia's busiest airport. Umarov and his followers are playing right into Putin's hands, little do they know it. But then he understands the art of politics and they don't.


Life goes on and business life too. Putin prefers to deal with people over whom he has the edge.

BP and Russia in Arctic oil deal
He likes the idea of a deal with BP, a world leader, yet not American, but British. There is no doubt who is the dominant partner, which would not have been the case with a US giant, backed by Washington. BP has, moreover suffered a recent reverse in the Gulf of Mexico, a disastrous oil spill.

If he helps to put BP back on its feet, he has a most invaluable ally, privy to the latest technology, a subordinate one at that.

The controversial decision to open the area up to oil drilling comes after the Deepwater Horizon rig explosion in the Gulf of Mexico last April. The disaster wrecked BP's reputation, and campaigners are concerned that the remote Arctic is even more susceptible to environmental disasters.

Crisis of the Arctic environment ahead
Speaking to “The Independent on Sunday” on January 16, Mike Childs, FoE's head of climate change, said: "BP, a number of years ago, were positioning themselves to be the greenest of the oil companies, promising to go 'beyond petroleum'. This latest move positions them quite nicely as environmental villain number one, given the huge impact they had in the Gulf of Mexico as well."

The oil giant "cannot be trusted" to drill oil in difficult waters, and any oil spill there would be "completely catastrophic". He added: "The Arctic should be a no-go for fossil fuel extraction as it's one of the few pristine environments we have left. It's very fragile and we should be looking at ways to protect it, not seemingly trying to find ways of wrecking it."

Dax Lovegrove, head of business and industry relations at WWF-UK, said: "Oil spill response plans in the Arctic are even less adequate than we saw in the Gulf of Mexico. There is less infrastructure, like equipment to ring-fence oil spills and ships to skim off oil on the surface of the water."

Greenpeace is even more damning of the deal, which also sees BP and Rosneft take shares in each other worth a total of £10bn. Senior climate change campaigner Ben Ayliffe pointed out that the Greenland government last year refused to allow BP to drill in its Arctic waters.

"The Kara Sea is pretty much virgin territory," Mr Ayliffe said. "It's bad news. BP has a pretty average record of safety recently. We don't know if they've learnt anything from Deepwater Horizon."

Another Greenpeace spokesman warned that an oil spill in the Kara Sea could take nine months to clear up. "Imagine that same scenario in the Arctic thousands of miles from anywhere, where the drilling season is three or four months long. If you get a leak at the end of that cycle it could run for nine months before you could get back in the next year to try to stop it," said Chris Kronick.

BP is also pressing ahead with its joint venture partner Husky Energy in a $2.5bn project in Alberta, Canada. This involves extracting oil from what are known as tar sands, a difficult but well understood operation that releases high volumes of greenhouse gases.

Bolshoi Petroleum
Mr Ayliffe hinted that Greenpeace will campaign heavily on exploitation of the Arctic in 2011. "These two ventures mean it doesn't look like the leopard is changing its spots. BP is going into some of the planet's most pristine wilderness. Questions need to be asked of BP, like why will it be investing shareholders' money in such areas - after spending $20bn on cleaning up after Deepwater Horizon."

The UK Government moved quickly to show its support for the Rosneft deal. The Energy Secretary, Chris Huhne, attended the signing of the agreement and welcomed the move. He said: "BP, as we all know, is coming out of a difficult period in its history, but this partnership shows that BP is very much open for business."

BP boss Bob Dudley has sought to convince the media and environmentalists that BP is now a much safer company. On December 14 he said: "BP is sharing the lessons we learnt around the world. You will see BP take these lessons into the heart of the company."

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