Mikhail Khodorkovsky, an oil magnate, who dared to fund
opposition parties, pronounce his own political ideas, and attempt
to cut pipeline deals with China without Kremlin permission, is now
serving an eight-year term in Penal Colony No. 10, in eastern
Siberia.
The real significance
of the Yukos Affair
The defining event in the new Russian energy geopolitics under
Vladimir Putin took place in 2003. It was just as Washington was
making it brutally clear it was going to militarize Iraq and the
Middle East, regardless of world protest or UN niceties.
A brief review of the spectacular October 2003 arrest of Russia`s
billionaire oligarch Mikhail Khodorkovsky, and state seizure of
his giant Yukos oil group, is essential to understand Russian
energy geopolitics.
Khodorkovsky was arrested at Novosibirsk airport on October 25,
2003, by the Russian Prosecutor General`s office on charges of tax
evasion. The Putin government froze shares of Yukos Oil because of
tax charges. They then took further actions against Yukos, leading
to a collapse in the share price.
What was little mentioned in Western media accounts, which
typically portrayed the Putin government actions as a reversion to
Soviet-era methods, was what had triggered Putin`s dramatic action
in the first place.
Khodorkovsky had been arrested just four weeks before a decisive
Russian Duma or lower house election, in which Khodorkovsky had
managed to buy the votes of a majority in the Duma using his vast
wealth. Control of the Duma was to be the first step by
Khodorkovsky in a plan to run against Putin the next year as
President. The Duma victory would have allowed him to change
election laws in his favor, as well as to alter a controversial law
being drafted in the Duma, The Law on Underground Resources. That
law would prevent Yukos and other private companies from gaining
control of raw materials in the ground, or from developing private
pipeline routes independent of the Russian state pipelines.
Khodorkovsky had violated the pledge of the Oligarchs made to
Putin, that they be allowed to keep their assets - de facto stolen
from the state in the rigged auctions under Yeltsin - if they
stayed out of Russian politics and repatriated a share of their
stolen money. Khodorkovsky, the most powerful oligarch at the time,
was serving as the vehicle for what was becoming an obvious
Washington-backed putsch against Putin.
The Khodorkovsky arrest followed an unpublicized meeting earlier
that year on July 14, 2003 between Khodorkovsky and Vice President
Dick Cheney.
Following the Cheney meeting, Khodorkovsky began talks with
ExxonMobil and ChevronTexaco, Condi Rice`s old firm, about taking a
major state in Yukos, said to have been between 25% and 40%. That
was intended to give Khodorkovsky de facto immunity from possible
Putin government interference by tying Yukos to the big US oil
giants and, hence, to Washington. It would also have given
Washington, via the US oil giants, a de facto veto power over
future Russian oil and gas pipelines and oil deals. Days before his
October 2003 arrest on tax fraud charges, Khodorkovsky had
entertained George H.W. Bush, the representative of the powerful
and secretive Washington Carlyle Group in Moscow. They were
discussing the final details of the US oil company share buy-in of
Yukos.
Yukos had also just made a bid to acquire rival Sibneft from Boris
Berezovsky, another Yeltsin-era Oligarch. Yukos/Sibneft, with 19.5
billion barrels of oil and gas, would then own the second-largest
oil and gas reserves in the world after ExxonMobil. Yukos/Sibneft
would be the fourth largest in the world in terms of production,
pumping 2.3 million barrels of crude oil a day. The Exxon or
Chevron buy-up of Yukos/Sibneft would have been a literal energy
coup d´etat. Cheney knew it; Bush knew it; Khodorkovsky knew
it.
Above all, Vladimir Putin knew it and moved decisively to block
it.
Khodorkovsky had cultivated very impressive ties to the
Anglo-American power establishment. He created a philanthropic
foundation, the Open Russia Foundation, modeled on the Open Society
foundation of his close friend George Soros. On the select board of
Open Russia Foundation sat Henry Kissinger and Kissinger`s friend,
Jacob Lord Rothschild, London scion of the banking family. Arthur
Hartman, a former US Ambassador to Moscow, also sat on the
foundation`s board.
Following Khodorkovsky`s arrest, the Washington Post reported that
the imprisoned Russian billionaire had retained the services of
Stuart Eizenstat - former deputy Treasury Secretary, Undersecretary
of State, Undersecretary of Commerce during the Clinton
Administration - to lobby in Washington for his freedom.
Khodorkovsky was in deep with the Anglo-American
establishment.
Subsequent western media and official protest about Russia`s return
to communist methods and raw power politics, conveniently ignored
the fact that Khodorkovsky was hardly Snow White himself . Earlier,
Khodorkovsky had unilaterally ripped up his contract with British
Petroleum. BP had been a partner with Yukos, and had spent $300
million in drilling the highly promising Priobskoye oil field in
Siberia.
Once the BP drilling had been done, Khodorkovsky forced BP out,
using gangster methods that would be unlawful in most of the
developed world. By 2003 Priobskoye oil production reached 129
million barrels, equivalent to a value on the market of some $8
billions. Earlier, in 1998, after the IMF had given billions to
Russia to prevent a collapse of the Ruble, Khodokorvosky`s Bank
Menatep diverted an eye-popping $4.8 billion in IMF funds to his
hand-picked bank cronies, some US banks among them. The howls of
protest from Washington at the October 2003 arrest of Khodorkovsky
were disingenuous, if not outright hypocritical. As seen from the
Kremlin, Washington had been caught with its fat hand in the
Russian cookie jar.
The Putin-Khodorkovsky showdown signaled a decisive turn by the
Putin government towards rebuilding Russia and erecting strategic
defenses from the foreign onslaught led by Cheney and friend Tony
Blair in Britain. It took place in the context of a brazen US grab
for Iraq in 2003 and of a unilateral Bush Administration
announcement that the USA was abrogating its solemn treaty
obligations with Russia under their earlier Anti-Ballistic Missile
(ABM) Treaty, in order to go ahead with development of US missile
defenses, an act which could only be viewed in Moscow as a hostile
act aimed at her security...
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