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Tuesday, December 28, 2010

The Khodorkovsky Verdict: The Power Struggle Is Now On

On December 27, 2010, the Moscow court began reading its verdict. Mikhail Khodorkovsky, once Russia’s richest man and leading industrialist, has been sentenced to a second term. He will not be released until 2017, well after the 2012 presidential election. The Khodorkovsky verdict represents a slap in the face to President Dmitry Medvedev’s “modernization” program, which includes an enhanced rule of law.

Currently, the “tandem” of Medvedev (President) and Putin (Prime Minister) is running Russia. Supposedly, the two will at some point sit down to decide which of them will be the presidential candidate for the 2012 election. Throughout his term, Medvedev has talked in general terms about modernization, corruption, and rule of law with only veiled attacks on Putin. The Russian and international press was shocked by Medvedev’s attack on Putin at his press conference following the Khodorkovsky verdict. Medvedev rebuked Putin, not by name, for his recent remark about the Khodorkovsky case ( “Thieves belong in jail”). In countries with a rule of law, high government officials must refrain from judgments about cases before the courts, declared Medvedev. Medvedev also spoke about the need for more democracy and airing of political ideas, going even so far as to mention the name of Gary Kasparov, who Putin despises. Medvedev has gone from the subtle to the direct.

It is my guess that Medvedev will decide not to contest the 2012 presidential election. Although Putin’s public-opinion ratings are falling and the country is less supportive of a strong state to bring about order, he will realize that his chances are too slim and that he is too weak to prevent Putin’s third term. In such a contest, a freed Khodorkovsky would have been a great asset for Medvedev as a voluble witness to the corruption of the Putin government. Putin cannot allow Khodorkovsky to be a free man.

Although Medvedev has surrounded himself with forward thinking business men and politicians, they can scarcely compete with Putin’s control of the “power” ministries and of oligarchic businesses. “Power” ministries is a peculiar Russian term for those agencies that can arrest, convict, spy, control resources, determine what is said in the press, and assassinate, if need be.

By 2012, Medvedev will likely be a much more popular figure than Putin, especially if Russia’s economic performance remains in the doldrums, which it likely will given the massive levels of corruption. If it were not Putin in the prime minister position, Medvedev would have replaced the prime minister with someone new.

By 2012, Putin will have lost the luster of high popular-opinion ratings (If the rating agencies remain honest), which served as a justification for his “strong hand.” An unpopular Putin can still win easily because his “power men”, including his crony recently appointed the new mayor of Moscow, can deliver the votes and intimidate potential opponents.

Since Lenin’s death in January of 1924, there has never been a change in power that has not been accompanied by a purge in which the old leader’s cronies are removed from their positions. A Medvedev victory would mean the loss of money, power, and privilege (and even jail) for those currently running Russia. This is a threat they cannot afford. Putin holds the upper hand. Medvedev’s cards are weak. He will likely fold when the time comes.

Does Medvedev hold any strong cards. He does, but they are risky to play. Presumably, he would have “kompromat” on Putin’s multi-billion dollar wealth. Also, as President, he has the authority to fire Putin and his government, but in so doing he would run the risk of impeachment in an all-out war. No, the likely outcome is that he will fold. He will probably be the one to announce Putin’s candidacy with a big forced smile on his face.

Saturday, December 18, 2010

Stalin-Putin Justice: The Bukharin-Khodorkovsky Cases

Dec, 12: Vladimir Putin's reply when asked on a national TV call in show about the upcoming Khodorkovsyky verdict: "Thieves should remain in jail."


When the history of Russian justice is written fifty years from now, two landmark court cases will stand out: The death sentence of Nikolai Bukharin in his Moscow show trial of March 1938 and the second prison sentence of Mikhail Khodorkovsky expected December 27, 2010. Both processes teach the same object lesson: anyone who crosses the Kremlin will be punished without mercy. There will be no protection in the courts for the innocent, and the guilty verdict and sentence will be already predetermined behind the Kremlin walls. It also does not matter how preposterous or ludicrous the charges.

Vladimir Putin was born in 1952, only one year before Stalin’s death. But Stalin’s system of justice was institutionalized and survived Stalin and the collapse of the Soviet Union, for use by apt pupils such as Putin. We have intimate knowledge of Stalin’s use of the courts from his many telegrams ordering arrests and trials and dictating the sentence, such as his 1937 authorization to try a group of bakers in open court “with participation of prosecutor and defense, sentence all to death, and publish results in the press.” We lack such records for the Putin regime. We doubt that its sentences are dictated in writing. A safer approach is “telephone justice” whereby the judge is given the sentence by phone.

The weak link in Stalin-Putin justice occurs when the court proceeding is open and the defendant realizes the verdict is set in stone and there is nothing to lose. Nikolai Bukharin was Stalin’s last standing political rival when he was brought before the court accused of murder, assassination plots (including Stalin’s) and espionage for Germany in March of 1938. He had been worked over since his arrest in February. His “confession” was read before the court. In Stalin’s time, death sentences were carried out immediately; Bukharin understood that he had little to lose if he retracted his confession in his final statement. Here is part of what he said in his final statement before Stalin personally censored it for publication in the trial transcripts:

I declare myself politically responsible for the totality of crimes committed by the “Rightist-Trotskyite bloc.” I accept responsibility even for those crimes about which I did not know or about which I did not have the slightest idea. I deny most of all the prosecutor’s charge of belonging to the group, sitting on the court bench with me, because such a group never existed, and it is clear that such a non-existent group cannot be, contrary to the prosecutors’ conclusion, created by the orders of foreign intelligence.

Bukharin’s retraction of his confession sent the judge and prosecutor into a frenzy. They knew that failure could put them in the dock along with Bukharin. They quickly moved to silence him.

Khodorkovsky today stands accused of the ludicrous charge of stealing virtually all of the oil produced by his Yukos oil company. Brave expert witnesses have testified that such a crime was impossible, but Khodorkovsky, like Bukharin, faces an inevitable guilty verdict on December 27. At least he does not face shooting as did Bukharin. Like Bukharin, Khodorkovsky used his “final statement to the court” to tell the audience, including the foreign press, that his conviction has been ordered by the Kremlin and what it means for the justice system. I attach (with some deletions) his eloquent final statement to the court:

I can recall October 2003. My last day as a free man. Several weeks after my arrest, I was informed that president Putin had decided: I was going to have to “slurp gruel” for 8 years. It was hard to believe that back then. Seven years have gone by already since that day. Seven years – quite a long stretch of time, and all the more so – when you’ve spent it in jail. All of us have had time to reassess and rethink many things. Judging by the prosecutors’ presentation: “give them 14 years” and “spit on previous court decisions”, over these years they have begun to fear me more, and to respect the law – even less.

Nobody is seriously waiting for an admission of guilt from me. It is hardly likely that somebody today would believe me if I were to say that I really did steal all the oil produced by my company. But neither does anybody believe that an acquittal in the YUKOS case is possible in a Moscow court.

I remember the end of the last decade and the beginning of the current one. By then I was 35. We were building the best oil company in Russia. We were putting up sports complexes and cultural centers, laying roads, and resurveying and developing dozens of new fields. In short, – we were doing all those things that Rosneft, which has taken possession of Yukos, is so proud of today. We felt hope that the period of convulsions and unrest – was behind us at last, and that, in the conditions of stability that had been achieved with great effort and sacrifice, we would be able to peacefully build ourselves a new life, a great country.

With the coming of a new President (and more than two years have already passed since that time), hope appeared once again for many of my fellow citizens too. Hope that Russia would yet become a modern country with a developed civil society. Free from the arbitrary behavior of officials, free from corruption, free from unfairness and lawlessness. It is clear that this can not happen all by itself, or in one day. But to pretend that we are developing, while in actuality, – we are merely standing in one place or sliding backwards, even if it is behind the cloak of noble conservatism, – is no longer possible. Impossible and simply dangerous for the country.

I am ashamed to see how certain persons – in the past, respected by me – are attempting to justify unchecked bureaucratic behavior and lawlessness. They exchange their reputation for a life of ease, privileges and handouts. It makes me proud to know that even after 7 years of persecutions, not a single one of the thousands of YUKOS employees has agreed to become a false witness, to sell their soul and conscience. Dozens of people have personally experienced threats, have been cut off from family, and have been thrown in jail. Some have been tortured. But, even after losing their health and years of their lives, people have still kept the thing they deemed to be most important, – human dignity.

I think all of us understand perfectly well – the significance of this trial extends far beyond the scope of my fate, and even the fates of all those who have guiltlessly suffered in the course of the sweeping massacre of YUKOS, those I found myself unable to protect, but about whom I remember every day.
Let us ask ourselves: what must be going through the head of the entrepreneur, the high-level organizer of production, or simply any ordinary educated, creative person, looking today at this trial and knowing that its result is absolutely predictable?

The obvious conclusion a thinking person can make is chilling in its stark simplicity: the power bureaucracy can do anything. There is no right of private property ownership. A person who collides with “the system” has no rights whatsoever. Even though they are enshrined in the law, rights are not protected by the courts. Because the courts are either also afraid, or are themselves a part of “the system”. Who is going to modernize the economy? Prosecutors? Policemen? Chekists? We already tried such a modernization – it did not work.

A country that tolerates a situation where the power bureaucracy holds tens and even hundreds of thousands of talented entrepreneurs, managers, and ordinary people in jail in its own interests, instead of and together with criminals, – this is a sick country. I will not be exaggerating if I say that millions of eyes throughout all of Russia and throughout the whole world are watching for the outcome of this trial. They are watching with the hope that Russia will after all become a country of freedom and of the law, where the law will be above the bureaucratic official.
Where supporting opposition parties will cease being a cause for reprisals.
Where the special services will protect the people and the law, and not the bureaucracy from the people and the law. Where human rights will no longer depend on the mood of the tsar. Good or evil.

I am not at all an ideal person, but I am – a person with an idea. For me, as for anybody, it is hard to live in jail, and I do not want to die there. But if I have to – I will not hesitate. The things I believe in are worth dying for. I think I have proven this. And you opponents? What do you believe in? That the bosses are always right? Do you believe in money? In the impunity of “the system”?

Wednesday, December 15, 2010

Khodorkovsky Verdict Delayed

Former Yukos Chairman, Mikhail Khodorkovsky's verdict in his second Moscow trial was supposed to be delivered today, December 15. Without warning or notice, the court announced that the reading of the verdict has been delayed until December 26. The reason for the delay is obvious: Western newsmen leave Moscow between Christmas and New Year. Few will be in the Moscow court room to hear the predictable guilty verdict and the new prison sentence.

The Kremlin wants as little attention as possible. The Khodorkovsky case is becoming uncomfortable. There is widespread recognition that the charges are a sham and that Khodorkovsky is being kept in jail for political reasons. As a prisoner of conscience and a well known figure, a free Khodorkovsky could be a serious challenger to the Kremlin. The Kremlin needs to keep the verdict as quiet as possible because it is now attracting attention from civil rights advocates in Europe, who increasingly assign political dissident status to Khodorkovsky.

The Khodorkovsky case also exposes as false President Medvedev's so-called campaign to establish a rule of law in Russia. How can there be talk of rule of law when the most prominent rule-of-law case is the sham Khodorkovsky trial?

Wednesday, December 8, 2010

The Ruffin-Gregory Award for the Worst Treatment of Climate Change in an Economics Textbook

I did not know until yesterday that there is a prize that bears my name. The Ruffin-Gregory Award was established by a protector of the faith in global warming for the purpose of “hounding out of print” the economics text that has the worst treatment of climate change. That the award is named after us, I guess, means that our Principles of Economics is the worst of all time!

The Cancun conference has again brought climate issues to the forefront, and an e mail from a colleague, whose economics text was recently awarded an F in climate change (and a threatened boycott of the publisher’s books), brought the existence of the Ruffin-Gregory Prize to my attention.

I had long forgotten that, in 2000, Roy Ruffin and I received complaints about our treatment of global warming in our seventh edition of Principles of Economics. Our publisher (Addison Wesley) was threatened with a boycott if it did not withdraw our text. Our sin was to suggest that the scientific method should be applied to three questions: (1) is global warming occurring, (2) is global warming caused by human consumption of fossil fuels, and (3) is global warming bad for our future. At the time we were writing (1999), we knew that there was no “normal earth temperature” in terms of geological time and we also that temperatures in the medieval warming period were higher than contemporary standards. Moreover, we had a healthy skepticism of computer modeling of such things from our first-edition discussion of the fatal flaws of the Club of Rome-MIT model, which famously predicted we would long be out of natural resources by today. These seemed like legitimate grounds to call for the application of the scientific method to our three questions on climate change. Whatever answers the scientific method produced would be fully acceptable to us. We did not and do not have any stake in the outcome. Let the chips fall where they may.

Over the past decade, much has happened: Nobel prizes for Al Gore and the IPCC, the “100% consensus” on global warming and its causes and consequences, and ClimateGate. My own personal view is that we still do not have solid answers to the key question of the human contribution to climate change. It is heartening to know that the Ruffin-Gregory Award is still alive and well (and that we now know it exists). It is also informative that economics textbooks are still being threatened by the climate police with boycotts for departing from climate orthodoxy. The one disheartening note is that some economic textbook authors seem to be deliberately aiming for an A grade.

Sunday, December 5, 2010

Putin, Russian Democracy and Wikileaks

It will take years for the United States to restore its image as a trustworthy diplomatic partner. U. S. diplomacy has suffered a severe set back and its national security has been damaged by the Wikileak dumps of classified documents.

The Wikileaks revelations on Russia provide a rare candid view of the Russian leadership, the state of Russian democracy, and the prevalence of corruption and thuggery at the highest levels of government. In this regard, the Wikileaks documents confirm what outside experts have suspected. It is perversely comforting to know that U.S. diplomats understand the reality of Russian politics irregardless of the optimistic tone of the “reset” of relations with Russia at the beginning of the Obama administration.

These leaks clearly show that the Russian government is corrupt to the core and that the corruption starts at the top. U.S. diplomats understand that Putin, despite his nominal number two position, still calls the shots and that Russia is run by incorrigible ex-KGB officers, whose mindset is that the U.S. is the enemy. Our diplomats also understand that Russian democracy is dead and will continue to be moribund for the foreseeable future.

These leaks also show the sensitivity of Putin to charges that he is personally corrupt. Attempts to investigate Putin’s personal wealth have likely resulted in assassinations of investigative reporters, and it seems that Putin’s most violent reaction to the published leaks relate to internal discussions of his personal wealth.

The secret dispatches from our diplomats in Russia paint a bleak but realistic view of the state of affairs in Russia.