[Chris Monday] Prisoner of the Russian system: V.V. Putin

The Christmas to New Year’s period (Gregorian-style) is popular for conducting controversial business. During the little-covered Belarusian “elections,” President Alexander Lukashenko arrested his other competitors, even threatening to send the 3-year-old son of one presidential hopeful to an orphanage. At the same time, Ukraine’s president rounded up his political opponents. In Russia, Mikhail Khodorkovsky and the stoic Platon Lebedev were each sentenced to seven more years of prison.

Khodorkovsky, once Russia’s richest man, fought to make his petroleum company Yukos modern and transparent. For this, Khodorkovsky, who was rumored to harbor political ambitions, was arrested in 2003 and his company was taken over by Putin associates. Many foreigners, who view their shares as having been expropriated, are now reluctant to invest.

As a result, the majority of Russian companies are seriously undervalued. Yukos, now called Rosneft, through its murky trade with China plays an increasingly important geopolitical role, about which everyday Russians have no say. (In the parallel universe of South Korea, Samsung’s legal problems present an almost mathematically perfect inversion: the Korean state has imposed global standards of corporate governance on the company).

Owing to the Russian bureaucracy’s habitual standards of efficiency, Putin, as pater familias, had to personally take charge of even this case. On national television, he compared Khodorkovsky to American mobster Al Capone. As Putin sees it, in both cases the authorities knew they had committed heinous crimes but these criminals could only be convicted on technicalities. Days before the official verdict, Putin assured his audience, the common man, that he knew the true circumstances for keeping the former oligarch behind bars. Putin then quoted the Soviet classic “The Meeting Place Can’t be Changed,” a film in which the iconic Vladimir Vysotsky had to rig the system because “thieves should sit in jail.” Putin, perhaps unconsciously, is increasingly reenacting the Andropov-era, KGB-led campaigns over “corruption,” which masked turf wars between rival clans.

The Khodorkovsky case is widely seen as confirmation of Putin’s dominance over Russian life, especially in comparison to the virtual President Dmitry Medvedev. In fact, the trail demonstrated Putin’s fundamental weakness. The second conviction of Khodorkovsky was based on absurd claims ― Khodorkovsky was accused of not paying taxes on oil he stole from himself. Even the judge laughed when prosecutors read their allegations. Thus any attempt to “modernize” the regime will automatically entail public discussions of the infelicitous logic behind the prosecution (and persecution) of Khodorkovsky and Lebedev.

The case, moreover, fits into a wider picture of egregious and compromising activity: Putin has been accused by an ex-partner, Sergei Kolesnikov, of building a billion-dollar mansion, while Internet sites, and occasionally even mainstream newspapers, report on Putin’s flamboyant personal life. All this guarantees Putin must stay in power to protect himself and his family.

Political game-theory assumes that leaders form “winning coalitions” of supporters, by choosing from the “selectorate.” As opposed to democracies where the general populace votes, in countries such as Russia it is only a small elite of oligarchs, security officials, and party leaders, who can actually “vote” for the leader. Nonetheless, political theory posits that all leaders (whether dictators or democrats) must create polices to win over enough members from this selectorate, often through bribes and doling out opportunities for rent seeking, to win “elections.” They must also make sure that defectors from their winning coalition are punished. But in Russia, as opposed to China, Belorussia, Kazakhstan or Cuba, the situation has been reversed: it is the winning coalition that chooses the leader and furthers policies to prevent the leader’s defection. In other words, Putin, analogous to Kim Jong-il, has gradually turned himself into a weak leader completely beholden to a corrupt power elite.

By Chris Monday

Chris Monday teaches economics and regional studies at Dongseo University in Busan. He holds a Ph.D. in international studies. ― Ed.