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. Last Updated: 07/27/2016

The Struggle for Russia

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The arrest last month of Mikhail Khodorkovsky on charges of fraud and tax evasion has put Russia back in the forefront of U.S. media attention. But is the story being reported the full, or essential, one?

It's being told as follows. Although Khodorkovsky, like all of Russia's "wealthy businessmen," acquired his company at little if any cost to himself through "murky" insider dealings in the 1990s, when the enormous natural resources of the former Soviet state were being privatized under then-President Boris Yeltsin, he has since transformed Yukos into a model for a new capitalist, democratic Russia -- "transparent," exceedingly profitable, even philanthropic. So much so that it has helped fuel a Russian "economic rebound" while becoming a potential source of oil for the United States.

Unlike other, less "clean" oligarchs, the story continues, Khodorkovsky is being persecuted by President Vladimir Putin chiefly because he became active in Russia's democratic politics, funding opposition parties in next month's parliamentary elections and even aspiring to the presidency. To crush Khodorkovsky and make an example of him, Putin is relying on a Kremlin faction he has recruited largely from the KGB, where he began his own career, which wants Yukos' wealth for itself. The result will therefore be a grievous blow to Russia's "booming economy" and democracy, replacing free-market-oriented "liberal oligarchs" with much worse and less efficient ones and driving away needed foreign investment.

Elements of this story, which relies very heavily on Moscow sources associated with the "liberal oligarchs," are plausible, but others are not. Democracy in Russia has been failing ever since Yeltsin made oligarchic privatization possible by destroying an elected parliament in 1993, and neither side is interested in truly reviving it; the oligarchs are zealous monopolists, not free-market reformers, and Western investors interested in Russia's huge oil reserves have already indicated that they care about official guarantees of the contracts, not who signs them; Putin now controls elections sufficiently to get substantially the legislature he wants; and no one of Jewish origin, as are Khodorkovsky and most of the other oligarchs, could be elected president of Russia. Above all, however, the prevailing media account omits the essential background and context.

Privatization -- or "piratization," as it is often called -- did not take place in an economic or social vacuum. It was accompanied in the 1990s by the worst economic depression of modern times and the impoverishment of a great many Russians, probably the majority of them. In the process, it created the oligarchic economic system that exists today. In 2000, Yeltsin-era oligarchs, fearfully aware that they were loathed by most Russians and that they lacked any real legal legitimacy, put Putin in the Kremlin to be a praetorian president safeguarding the system, its creators and beneficiaries in business, politics, the media and even intellectual circles.

Various motives are behind the Khodorkovsky affair, but none would matter if that system had not failed to alleviate Russia's most profound problems. After a decade, and despite a purported "economic boom," most of the country's essential industrial, agricultural and social infrastructure is still starved for investment and disintegrating. The human toll continues to grow in the form of more poverty, disease, crime, premature deaths and homeless children. From the vast provinces beyond "booming" Moscow, one hears persistent reports that "Russia is dying." And indeed, the population is shrinking by nearly a million people a year.

That ongoing human tragedy is what is mainly missing from the U.S. media story, where poverty and the plight of most Russians are hardly ever mentioned. Even if some accounts of Russia's crisis are overstated, the only solution is a new economic course that uses the oligarchs' enormous profits from the country's natural resources to rescue and develop the rest of the nation, though not even its advocates agree on how to do it. Some suggest deprivatization and state direction; others advocate redistribution of assets to new owners; and still others call for a punitive compensatory tax on today's oligarchs followed by an amnesty.

Though Khodorkovsky does not deserve to be singled out for such severe treatment, and may even gain some public sympathy, his arrest makes clear that the struggle over the oligarchic system, and thus once again the future of post-Soviet Russia, is under way. It is impossible to foresee the outcome of this struggle. The result may be, in the tradition of Russian leadership succession, a far-reaching de-Yeltsinization of the post-Soviet system. And, of course, it may be an even worse system, also a Russian tradition. But for the majority, as opinion surveys seem to indicate, there is the hope, realistic or not, that Putin is finally turning against his creators and preparing to become, as even a KGB general remarked privately, "Vladimir the Savior."

Whatever the case, it is a struggle that Russia must decide, not the United States, which is already too deeply involved. Many Russians remember the Clinton administration's complicity in the formation of the oligarchic system, when it applauded Yeltsin's privatization deals as "reform," and they understand that today's self-interested oligarchs stand behind the uncritical pro-United States faction in Kremlin politics. They also know about Khodorkovsky's personal relations with the Bush White House, which is intervening on his behalf.

The widespread impression that America is a leading supporter of the hated oligarchic system cannot be good for future U.S.-Russian relations. Nor can it be good for international security. The world's largest territorial country and still its other nuclear super-repository will never be truly stable, as we are witnessing again today, until a system based on plunder and poverty is replaced by one capable of producing real economic development and more social justice.

Stephen F. Cohen, professor of Russian studies and history at New York University, is author of "Failed Crusade: America and the Tragedy of Post-Communist Russia." This piece first appeared in The Nation.