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Analysts: Russia Not Necessarily Returning to State-Controlled Economy - 2003-11-04

U.S.-based Russia experts are commenting on the Russian government's crackdown on the top management of Yukos, the country's most independent, western-oriented energy company. While there is no consensus, some observers are cautioning against premature conclusions that the moves mean Russia is retreating toward state control of the economy.

There is wide agreement that by arresting Russia's richest entrepreneur Mikhail Khodorkovsky on fraud charges, the Kremlin is sending a clear political message. A panel of Russia experts met Tuesday at the conservative research organization, the American Enterprise Institute, to discuss the Yukos situation.

One of them, Anders Aslund of Washington's Carnegie Endowment for International Peace, turned aside the suggestion that the arrest may simply reflect Kremlin opposition to Mr. Khodorkovsky's plan to sell a minority holding in Yukos to a U.S. or West European-based oil company.

"I think it is pretty clear. Khodorkovsky was too big, too strong, and too independent," he said. "And it was political. Politics is far more important than one oil deal or the other, even when it is a potentially huge oil deal."

Mr. Khodorkovsky, now confined to a Moscow prison, obtained control of Yukos during what is perceived to have been a flawed and rigged privatization of state assets in the mid-1990s.

Ed Lozansky, a specialist on business operations in Russia, says by funding opposition political parties in Russia - ranging from liberals to communists - Mr. Khodorkovsky violated the unwritten rule that Russian business must stay out of politics.

Leon Aaron of the American Enterprise Institute says the Yukos affair is a major battle between competing visions of Russia's emerging market economy. In one, the Kremlin guides publicly traded companies and in the other rich oligarchs operate more or less without government constraint. Mr. Aaron cautions against quick conclusions.

"I think from all the perspectives being expressed here we can see the situation as extremely dangerous, but it is also delicate and it is not yet solved to the end," he said.

Harley Balzer, a professor at Georgetown University agrees, saying only days after Mr. Khodorkovsky's arrest it is too early to conclude that the forces backing state control have won.

"Russian President Vladimir Putin seems to want lots of things at one time. He seems to want rule of law for the country and rule by law for the president," he said. "He seems to want Russia to be a great power and also to be accepted in the community of nations. And I think it is too early to turn this whole episode into something that turns the entire political system."

But more conservative speakers are quicker to conclude that Russia may be making an historic shift. Bruce Jackson, a former U.S. military official and champion of NATO expansion into eastern Europe, spoke of the absence of protest about Mr. Khodorkovsky's arrest from either the Bush administration or western Europe. But that, he says, may change.

"I would suspect that we're at the beginning of a once in a decade or once in a generation reconsideration of where Russia is truly going," he said.

Mr. Jackson and the conservative Polish analyst Radek Sikorski fear that Russia is turning back toward state dominance of the economy and a tougher policy towards its neighbors who under communism were also constituent parts of the Soviet Union.