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. Last Updated: 07/27/2016

Playing for High Stakes

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Last week's concerted attack on the Yukos/Menatep empire, delivered courtesy of the Prosecutor General's Office, is without doubt the most significant event in relations between big business and the Putin administration since the flight of oligarchs Vladimir Gusinsky and Boris Berezovsky three years ago.

The political component of the offensive, with parliamentary and presidential elections looming, is obvious and undeniable. The Kremlin is transmitting a fairly blunt message to big business that their loyalty and cooperation would be much appreciated in the elections -- and who better to make an example of, pour encourager les autres, than Yukos CEO Mikhail Khodorkovsky, Russia's richest man and someone who has been getting too big for his boots of late for the tastes of certain sensitive souls in the Kremlin.

Although some would have it that Khodorkovsky is the victim of a plot by the St. Petersburg chekists to demonize him by portraying him as a man with political ambitions way above his station, it can come as little surprise that his aggressive business style and self-assertiveness have been interpreted in certain quarters as excessive independence, bordering on disrespect and disloyalty.

And you don't have to go all the way back to the February RSPP meeting in the Kremlin, where Khodorkovsky publicly crossed swords with the president by questioning the legitimacy of state-owned Rosneft's purchase of Severnaya Neft.

A recent Vedomosti interview with Khodorkovsky, published just weeks before the judicial attack, provides sufficient ammunition. Two examples.

On the business front, Yukos' CEO stated that prior to going ahead with the Yukos-Sibneft merger, the president and all other relevant authorities had been "informed," but that as a private company they could make their own decisions. On the political front, he offered his vision of an ideal outcome to the upcoming State Duma elections, in which Yabloko and the Union of Right Forces between them would receive at least 30 percent of the vote, the centrists would get 40 percent, and KPRF would get 30 percent. This vision does not exactly tally with the more ambitious goal set by the Kremlin's party curators to win a "super-majority" in the new parliament (i.e. two-thirds of the seats, thus making amendments to the Constitution possible).

Expressions of obeisance toward the Kremlin were notable by their absence.

And this is not the end of it. In a country where business and politics are so incestuously interlinked, business projects quickly acquire a political coloring. Khodorkovsky has aggressively lobbied for a number of projects, some of which have put him at loggerheads with the Kremlin and the powers that be.

He has lobbied for the private construction of pipelines, as well as pushing very hard for the construction of a pipeline from Siberia to the Chinese city of Daqing, instead of ambitious plans to build a pipeline to the Far East port of Nakhodka. He fought a major media and behind-the-scenes lobbying campaign to kill off production-sharing-agreement legislation, and he has lobbied for the breakup of Gazprom and an end to its monopoly control of gas pipelines (politically a very sensitive area given the centrality of Gazprom to the Kremlin's campaign war chest).

In other words, Khodorkovsky is a sharp operator and has pushed aggressively for projects, even where his interests diverge with those of the state or the president's entourage. But does this really set him apart from fellow oligarchs such as Oleg Deripaska or Roman Abramovich?

Last summer, Deripaska tore into the government's official policy of early WTO accession -- a strategic objective set by Putin in his state of the nation address last year -- and made a personal attack on Economic Development and Trade Minister German Gref for good measure. (In this instance, in fact, Khodorkovsky came out strongly in support of Gref and the government's position.)

Furthermore, Deripaska has lobbied shamelessly and repeatedly to preserve the tolling schemes that make his aluminum business so profitable and for protective tariffs for the automobile industry where he has interests.

Deripaska and Anatoly Chubais have got involved in national television projects -- a political pandora's box and something that Khodorkovsky has never dirtied his hands with.

Or take the Sibneft-TNK acquisition of state-controlled oil company Slavneft in December of last year in an auction that was clearly not open and competitive. Not only did the skewed tender (as one of the first high-profile tenders of the Putin era) tarnish the Putin administration's reputation, but the so-called St. Petersburg chekist-Rosneft alliance (regarded as being behind Khodorkovsky's current troubles) was prevented from participating in the auction.

And yet there has been no assault on any of these oligarchs comparable in magnitude or ferocity.

Moreover, there have been a number of purely political projects undertaken by the oligarchs in the past few years that have not met with resistance from the Kremlin -- in fact, sometimes quite the reverse. For example, Abramovich's election as governor of Chukhotka, or more recently the Krasnoyarsk election bid of Alexander Khloponin (formerly of Interros and Norilsk Nickel), in which the president provided a helping hand.

But coming back to the current fracas, what is manifestly apparent is that we are entering a period of instability and very high stakes, which will run up to the March presidential election and continue on until 2008.

The main issue is not whether Putin gets re-elected, but which part of his entourage he will rely upon to secure his re-election, and hence whom he will keep on and whom he will jettison in his second term. This, in turn, will define the direction of Putin's second term and influence his choice of heir to succeed him in 2008.

Khodorkovsky, through lack of caution, may have been dragged in first, but none of the oligarchs can afford to sit on the sidelines as the wider struggle plays itself out in the coming months.

Too much depends on the outcome.