What the arrest of Mikhail Khodorkovsky really means.

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Oligarchs Us

There is
big news brewing in Russia this week, and America is being sold a line of goods
about what’s happening there. The coverage of the arrest by the Vladimir
Putin administration of “businessman” Mikhail Khodorkovsky has featured such
grossly, shockingly transparent propaganda that it could hardly have been worse
during the Cold War. What’s more, some of my old friends—they know
who they are—are participating in it.

This story,
about the politically motivated arrest of Khodorkovsky, the Croseus-rich tycoon
who heads the oil company Yukos, is in fact an important story for the ordinary
American. The clash between two of the world’s baddest gangsters—Putin
and Khodorkovsky—is also a great symbolic battle, each side representing
one of the two great remaining pretenders to global rule.

Putin represents
the past, which also happens to be the American present: the fictional democracy,
in fact a ruthless oligarchy of corporate interests, with the state as the castrated

represents the future: no referee. Which is why our media establishment has
chosen to take up arms for him. They are making his case into an open referendum
on the neo-con revolution that until now has been fought in a largely clandestine
manner here at home.

The backstory
to this scandal is far too involved to get into in any detail here, but the
outlines are as follows. Khodorkovsky is one of about a dozen major “entrepreneurs”
who emerged from the collapse of the Soviet Union to dominate the Russian economy.
A series of corrupt privatization deals organized and overseen by American advisors
basically ensured that ownership of the assets of the Russian state would go
to this small handful of crooks.

The basic
story is that the U.S., in conjunction with the Yeltsin administration, decided
to create a super-wealthy class of oligarchs who would ruthlessly defend their
assets against any attempt to renationalize the economy. In return—and
this is the key point—they were to support, financially, the ruling, Western-friendly
“democratic” government. It is through such machinations that we were able to
bring about a compliant Russian state, wholly dependent on corporate support,
that would answer the bell whenever we needed something ugly out of them—for
instance their assistance in our bombing of their traditional allies, the Serbs.

The key
moment in this story was the winter of 1996. Polls showed that Yeltsin was certain
to lose a reelection bid against the idiot communist Gennady Zyuganov. So the
state, in conjunction with U.S. advisors, sold off the crown jewels of the Russian
economy to these crooks for pennies on the dollar. In return, these beneficiaries
massively funded Yeltsin’s reelection campaign. This is how Khodorkovsky,
then the chief of a bank called Menatep, came to control the precious Yukos
empire that is now under siege. It was given to him. His bank was put
in charge of the auction for 78 percent of the company, and he actually excluded
other bidders at will. He “paid” around $300 million (whether or not he ever
paid even that money is still a matter of dispute) for his controlling 78- percent
stake. The company is now valued at about $15 billion.

That doesn’t
begin to tell the Khodorkovsky story. Even in the group of fantastic individuals
who participated in this mass robbery, he stands out. He is the Bad Bad Leroy
Brown of Russia. You know that opening scene in Goodfellas where Ray
Liotta says, “All my life, I wanted to be a gangster”? Just imagine the fleshy,
bespectacled Khodorkovsky slamming that trunk shut. In a nation of mobsters,
he is king, a stone-cold ruthless genius. It would take a hundred thousand pages
to detail all of his schemes, but they make the work of Professor Moriarty seem
like a game of Chinese checkers.

set down one example, from a story I did many years ago about Russian minerals
company called Avisma, which eventually filed suit against its owners here in
the States, naming Khodorkovsky’s Menatep as the chief villain. Menatep
(allegedly, I have to say in America) bought the company, then forced its directors
to sell its commodities to a Menatep shell company called TMC at pennies on
the dollar. TMC then sold the goods (mainly titanium) to Western investors at
cost. To make matters worse, TMC then (allegedly) induced Avisma to buy
materials from them above cost. Readers are invited to imagine what words like
“forced” and “induced” mean in this context. In the end, nothing was left but
a skeletonized carcass. Any Brooklyn restaurant owner who has been taken over
by the Lucchese or Gambino families will recognize this technique.

This was
what was described as “the encouraging emergence of market capitalism” in the
new Russia, and for many years it was cool with everybody—the press, the
Russian state, the American diplomatic effort. Until this year, that is, when
Khodorkovsky broke the rules of the gangster-arrangement implicit in the new
Russian state. He decided he no longer wanted to pay the piper—Putin. Instead
of ponying up the agreed-upon tribute, he started making noise about wanting
to be president himself in 2008, and then, even worse, he started to fund opposition

give Putin this: He has balls. Unlike Boris Yeltsin, who dropped to his knees
for every greasy hood with a dollar for eight consecutive years, Putin decided
to make an example of Misha. In America, we settle these disputes by giving
the F-117 contract to a different company. In Russia, the methods are a little
different: an untimely car accident, an exploding briefcase, a mysterious fatal
illness contracted after a routine phone conversation. Absolutely the most civilized
of these options is imprisonment and seizure of assets. This is the route Putin
took with Khodorkovsky. In response to the latter’s decision not to abide
by the laws of gangsterdom, Putin decided, for once, to enforce the laws of
the state.

How anyone
can find morality in any of this is beyond me. But it is not beyond the New
York Times
, and it is not even beyond the Boston Globe. These papers,
along with the vast majority of Western media outlets around the world, have
cast this smarmy fight over assets long ago stolen from the Russian people as
a battle between the evil forces of nationalization and the good, industrious
representatives (Khodorkovsky) of the people-friendly market economy. Here is
how Steven Lee Myers of the Times described the resignation of Kremlin
chief of staff Alexander Voloshin, who has apparently thrown in his lot with

“On Mr.
Voloshin’s side is a coterie of aides who favor greater freedom for the
economy. On the other are those advisors who, like Mr. Putin himself, served
in the K.G.B. or other security services and favor a stronger role for the state…”

Myers leaves
out here the fact that Khodorkovsky himself, like most of the tycoons, is a
creature of the security services, having once been a chief of the Komsomol
in Moscow. He goes on:

“That faction,
known collectively as the siloviki—or as Chekists after the old Soviet-era
word for intelligence operatives—is widely believed to have initiated or
supported the prosecutorial assault on Yukos, though exactly why remains unclear.”

This is
outright bullshit. Everyone in Russia knows why. It’s because Yukos
didn’t pay the piper. This is typical of the Times, casting mafia
disagreements in the garb of an ideological dispute. For a dozen years now,
in that paper, anyone who disagreed with the neo-con laissez-faire corporate
tribe aligned with U.S. interests has been a Soviet throwback. It is worth noting
that just three years ago, when Putin was the same blunt thug he is today, the
Times went to great lengths to portray him as the next Thomas Jefferson.
He was on our side then.

the Myers piece, the Times ran an editorial entitled, “Crime and Punishment
for Capitalists.” The piece was written by Leon Aron, the author of one of the
most shameless blowjobs in the history of biographical art: Yeltsin: A Revolutionary
In the piece, Aron actually details many of the same facts I’ve
set down here, but he argues, against all available fact, that the tycoons are
actually wonderfully productive people who are doing their darndest to lift
Russia to its feet. The piece is full of righteous sentences like the following,
condemning Putin: “No one knows how far they will take their campaign against
economic vitality…”

The papers
have gone so far as to portray Khodorkovsky—a man whose name causes grown
men to spit uncontrollably in every part of the Russian empire—as an anti-Soviet
martyr along the lines of Andrei Sakharov. The Globe, normally the most
sensible source of Russia coverage, even ran an AFP photo showing a woman holding
a sign that reads, “Free Khodorkovsky.”

The “pro-Khodorkovsky”
demonstration that this woman was a part of is the kind of thing that no journalist
with any shame would ever touch. In Russia, it is well-known that “spontaneous”
demonstrations on behalf of elitist monsters are usually paid productions. I
once went to a demonstration of “Moving Together,” the so-called Putin Youth
movement, in which the attending kids were given tickets to see Shrek
in return for appearing. At another, a demonstration on behalf of Vladimir Zhirinovsky’s
neo-fascist LDPR party, demonstrators were given free beer. They even gave me
some. The LDPR has the best parties in town.

Many of
us who spent the 90s in Russia became aware over time that the aim of the United
States was to create a rump state that would allow economic interests to strip
assets at will. The population in this scheme was to be good for consuming foreign
goods produced abroad with Russia’s own cheaply sold raw materials. The
aim was a castrated state, anarchy, a vast, confused territory of captive consumers,
cheap labor and unguarded oil and aluminum.

Some of
us who came home after seeing this began to realize that the same process is
underway in the United States: the erosion of the tax base, the gradual appropriation
of the tools of government by economic interests, a massive, disorganized population
useless to everybody except as shoppers. That is their revolution: smashing
states everywhere and creating a scattered global nation of villas and tax shelters,
as inaccessible as Olympus, forbidding entry even to mighty dictators.

what this Khodorkovsky business is all about—preserving that dream. Ask
yourself what other reason there could be for the American press to defend a
thief with eight billion dollars.