ars of prison, Russia has taken a step backwards into a dark past we all hoped it was leaving behind.
Now that the Yukos chief is headed for jail on a variety of fraud and tax evasion charges, property and free speech rights are on the ropes in Russia. Moreover, if there were any doubt that the Russian legal system is a political tool for the Kremlin, this travesty of justice has dispelled it.
This is justice Soviet-style. As Ukraine considers reprivatization, it must avoid Russia’s mistakes.
Soviet justice
Not that the result of the Khodorkovsky case was a surprise. The oil billionaire, Russia’s richest man, had been a thorn in President Vladimir Putin’s side for years before he was arrested by masked gunmen in the autumn of 2003.
Khodorkhovky made a name for himself in the 1990s, building the oil company Yukos up into a powerful force. But it was when Khodorkovsky, now 41, started supporting liberal and opposition candidates against Putin’s power bloc that he got in trouble. In a society ruled by law, it’s natural that a citizen would use his own money to participate in politics and make his voice heard. But Russia is not such a society. In a case of selective justice, the government went after the enemy of the people Khodorkovsky, even while other top businessmen were left alone – as long as they supported the Kremlin, or stayed out of politics.
And even as the government was trying Khodorkovsky and his partner Platon Lebedev, it was seizing lucrative parts of the Yukos empire – stealing property, Bolshevik-style.
Now the whole world knows that Russia is a society where the rule of law doesn’t apply, anybody who criticizes the government is a target, and property can be seized by the state. The international outcry at this mockery of justice is already loud. United States Congressman Tom Lantos, for example, called the case a “political trial, tried before [a] kangaroo court” and brought to a “shameful conclusion” that was “predetermined politically.”
Comments like that will only grow more common in the days ahead. That’s not good for Russia. The country is already experiencing serious capital flight as investors who don’t trust the Russian government or legal system head for the exits.
The Khodorkovsky outrage will accelerate that flight. It will also chill all entrepreneurship and free enterprise in Russia, with bad consequences for that country’s business environment and outlook for economic growth. There’s nothing to say that the Kremlin won’t go after small and medium-sized businessmen, too. No one is safe.
Ukrainian view
What does all this mean for Ukraine?
Plenty. The last thing Ukraine needs is to end up in Russia’s position, with foreign money escaping, instead of waiting at the door to see if it’s safe to come in. Another thing it doesn’t need is a government that destroys businessmen for political reasons. Ukraine stands at the threshold of a great future – but that future will be jeopardized if it doesn’t prove to investors that it’s safe to do business here. Ukraine has to reaffirm that property rights and human rights are sacred.
Unfortunately, Ukraine has not been good enough at proving and reaffirming these things under President Viktor Yushchenko. Led by Prime Minister Yulia Tymoshenko, the government is still threatening to carry out its destructive threats to renationalize hundreds of former state properties. But doing so would be terrible for the financial environment here, and a potential human rights disaster.
True, a number of privatizations should indeed be reviewed. But wholesale reprivatization will open up a Pandora’s Box, giving the government a mandate for simply destroying businessmen it doesn’t like, and stealing their property. No democratic government should ever have that type of power, and Tymoshenko should drop the talk of massive reprivatization now, before she makes Ukraine’s investment situation even more unattractive to foreign businessmen.
If Ukraine plays its hand right, it could provide a safe home base for capital fleeing its northern neighbor. If it succumbs to cheap populism and starts going after capital, it will shut down the good times before they even begin. Ukraine needs investment and a growing economy, not its own Khodorkovsky case.
Jed Sunden is the publisher of the Kyiv Post.
