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. Last Updated: 07/27/2016

Khodorkovsky Sees Totalitarian Threat

Yukos chief Mikhail Khodorkovsky is openly raising the political stakes in his fight against snowballing investigations into his company, warning that the state risks turning back the clocks to totalitarianism and defending his moves to fund opposition parties as being key for maintaining stability.

"For me, the situation is clear -- the law enforcement structures decided that this was the best moment to show they could come to power," Khodorkovsky said in an interview broadcast on TV Center late Sunday.

"Today we must definitely decide if our country's future will be totalitarian. If we hold strong, this will be resolved once and for all," he said. "However, there is a risk that we will once again return to this stagnant swamp."

But as President Vladimir Putin returned from a five-day trip to northwest Russia on Monday, there was still no sign of a clear resolution to the conflict that has rocked investor confidence. The whole affair, which began July 2 with the arrest of Khodorkovsky's right-hand man Platon Lebedev on embezzlement charges and has since escalated to include an investigation into possible tax evasion, accusations of murder and an armed raid on Yukos offices, has knocked billions of dollars off the stock market as concern mounted it could herald a new attack on Russia's fragile property rights.

Economic Development and Trade Minister German Gref, in an interview published Monday in the Profil weekly magazine, called on law enforcers to bring the case to a swift end to make sure the market calmed down. But political analyst Gleb Pavlovsky, seen by some as a Kremlin spin doctor from one of its many factions, said the dispute had already wrought disastrous results. "There is no private property in Russia -- this is the conclusive result of an analysis of this situation," Pavlovsky said in comments published in Monday's Nezavisimaya Gazeta.

Analysts have said the case against Yukos comes as a result of an attack by former KGB men who moved into the Kremlin with Putin against the old oligarchic elite that made their fortunes and wielded immense political influence in the Yeltsin era. Khodorkovsky's remarks Sunday refer to what has been seen as a battle for the heart and mind of Putin as he heads for a second term in elections next March.

"At stake behind this struggle is the question of who has power in the next term. Who is going to run the government, parliament and the Kremlin," said Christopher Granville, chief strategist at United Financial Group.

But Khodorkovsky's attempt to portray himself in this fight as the defender of democracy runs the risk of backfiring, analysts said Monday.

If just days after Lebedev was arrested Khodorkovsky sought to strike a conciliatory note, saying he would not finance political parties if the Kremlin did not approve, now he is defending his involvement in politics.

"The country's stability cannot be obtained unless the left balances out the right," he said on TV Center.

Many analysts have seen the campaign against Yukos as punishment for Khodorkovsky's attempts to buy his own political backing in the State Duma. Putin himself last week lashed out at big business for using its clout in parliament to block reforms. "Khodorkovsky is now being less cautious than he was a few weeks ago," Granville said.

Kremlin-connected political analyst Sergei Markov warned that Khodorkovsky risks antagonizing Putin. "Putin can handle criticism of policies as long as it does not turn into an attack on the country. Then he loses his cool. It's not gone that far yet, but it could do."

Markov said Khodorkovsky would have been better to stick to the more conciliatory tone struck by fellow oligarch Vladimir Potanin in an interview with state-owned Channel One television on Sunday. In his first comments on the affair, Potanin warned that a new carve-up of property could undermine Putin's goal of trying to double GDP and overcome poverty.

"I prefer the recipe that the president proposed: We will overcome poverty on the basis of economic growth and doubling GDP. That means that we have to create new things and not carve up what has already been done," Potanin said, Interfax reported.

"It is not possible to consolidate when people are trying to overcome social injustice by taking something away from one person and then dividing it up between everyone else. That way you would achieve justice by making everyone equally poor," he said.

At a Kremlin meeting July 11 attended by the heads of political factions, Putin called for society to consolidate and not split into what he called " groups with their own narrow interests" in order to rid the country of poverty.

On Monday, a big part of society responded to that call and in doing so rallied in defense of Yukos. The heads of the Russian Union of Entrepreneurs and Industrialists, the small business lobbying group OPORA Russia, and of human rights organizations such as Helsinki Human Rights Watch and the Glasnost Defense Foundation were due to sign off on a letter to Putin calling on him to support their initiative "to bring an end to lawlessness and scare tactics, and restore stability."

A copy of the draft letter obtained by The Moscow Times says representatives of small, medium and big business and civil society organizations have joined together to defend the country against what they see as an attack on stability.

It calls for the state to create a new social contract. The letter calls on the state to protect the results of past privatizations, and in return business is to take on social and moral responsibilities, such as ensuring transparency, bringing an end to corrupt schemes and taking part in social programs.

The trouble is, analysts said, it is still not clear which way Putin wants to go. He has slammed business for trying to lobby in its interests and at the same time has said jailing businessmen is not an appropriate way to deal with economic crime.

But with the Moscow City Court due to hold hearings on Lebedev's detention Wednesday, investors and the nation are expecting the first steps in some sort of resolution to come soon.

Nezavisimaya Gazeta reported Monday that Putin's chief of staff Alexander Voloshin held a meeting with the heads of the main television stations where he said the Kremlin was putting together a plan to defuse the situation that would allow both sides to save face. The report, which did not go into details, could not be confirmed Monday.

But Vyacheslav Nikonov, the head of the Politika think tank, speculated that Khodorkovsky's decision to increase the political rhetoric could mean that even if Lebedev is released this week, other steps could be taken against Yukos, such as an endless chain of further investigations. "Chopping off the tail in small pieces can actually end in being a very painful operation," he said in a conference call with Renaissance Capital.

"If Putin steps back it will be seen as a big victory for Yukos and a major loss for his circle," Markov said. "He can't afford that. He has to decide what to do with big business but it is clear he hasn't decided yet.

"He listens to his close circle, which tells him that the oligarchs ran the country after 1996 with horrific results. Now they tell him they are once again trying to gain power. He understands their logic very well. The threat from the oligarchs really is huge. Oligarchic capital is responsible for massive corruption.

"But if you don't change the system, when you get rid of one oligarch he is only going to be replaced by another. But the president does not appear to know how to change it," Markov said.

Staff Writer Valeria Korchagina contributed to this report.