08.02.2005
Property and Freedom
№1 2005 January/March

The destruction of YUKOS is nearing its finale. I did my best to
avert a situation where the government’s dislike of me personally
would affect the company’s minority stockholders, employees, and
the country in general.

Six months ago, I offered to sell my stake and thus pay off
claims against the corporation. But the authorities chose a
different method. They chose to enforce a selective application of
law, the retroactive introduction and use of legal norms and their
interpretations, not to mention the trampling of the business
community’s early trust in the arbitration courts and the
government as a whole.

The well-coordinated and totally unscrupulous actions of the
tax, law-enforcement and judiciary agencies (as well as
corporations beating around the government), and the pressure on
YUKOS managers and employees whose only guilt was that they
reported to Khodorkovsky, leaves not a trace of doubt that the
entire affair was plotted on contract. Hundreds of people have been
interrogated, and many have been charged with incredible
accusations. Some of the people, including women, are being kept in
jail. What for? A clear message is being sent: don’t meddle with
the wrecking of YUKOS, and, furthermore, provide more damaging
information about Khodorkovsky. 

It is clear as daylight that the YUKOS affair involves more than
just economic interests since the methods chosen to satisfy them
deal a blow to the government’s credibility and the national
economy, while those who engineered the campaign seem to ignore
such trifles.

Today, the problem is not the fate of YUKOS – its rescue seems
improbable. Another problem is looming large. It is the lessons
that the country and society will draw from the YUKOS story where
the final chord appeared to be the most senseless and destructive
for the country’s economy since the beginning of Vladimir Putin’s
presidency.

THE TYRANNY OF PROPERTY

Over the past twelve months, the U.S. $15 billion of YUKOS
assets that Forbes magazine wrote about have declined to almost
zero, and will continue to shrink until it finally does hit zero. I
realized from the very beginning that things would turn out that
way, and I requested that the corporation and its minority
stockholders would be unaffected. I felt personal responsibility
for the 150,000 employees and their 500,000 family members, not to
mention the 30 million people who live in the rural and urban areas
that depend on the consistent operation of YUKOS’ enterprises.

I feel bad about the tens of thousands of YUKOS’ stockholders
who believed at one time that they could entrust their money to
Khodorkovsky and his team.
Until recently, we had every right to say that their trust was
justified. When my team joined YUKOS in 1995, the company was
losing money and it had a six-month wage debt and overdue
liabilities exceeding U.S. $3 billion. YUKOS had operations in only
nine Russian regions; its output of crude totaled 40 million tons a
year and was declining.

In 2003, the YUKOS network embraced 50 Russian regions, while
its production volume reached 80 million tons a year, with a
consistent tendency for further growth. The company paid reliable
and large wages – up to 7,000 rubles in the European part of Russia
and up to 30,000 rubles in Siberia. YUKOS was Russia’s second
biggest taxpayer in the country, yielding only to Gazprom. Its tax
payments accounted for 5 percent of the federal budget revenue.

I will refrain here from describing the audacious inventiveness
of the people who came out with YUKOS’ debts (according to the
Russian Tax Ministry, YUKOS was expected to pay more in taxes than
it received in gross profit). These nasty historical jokes will one
day become instances in textbooks on tax law – they have proven
that oil production in Russia is unprofitable. They have also
proven that the bureaucrats will stop short of nothing to
repartition property.
Many will be surprised to discover that the loss of my property
will not cause me unbearable pain.

Like many other convicts, known or unknown, I must extend my
thanks to prison. It afforded me several months of space for
contemplation and a reassessment of many aspects of life.

I came to the realization that property, especially big
property, does not make man freer. As a co-owner of YUKOS, I had to
make huge efforts to defend this property and to keep in check
everything that might damage it.

I did not permit myself to say many things, since open thoughts
could threaten the property, as well. I had to close my eyes to
and/or put up with many things for the sake of maintaining and
multiplying this property. Not only did I manage assets, but they
also managed me.

That is why today I would like to warn young people who will
soon enter positions of power: Do not envy big proprietors,
gentlemen, do not think their life is easy and comfortable.
Property opens up great opportunities, but it also enslaves the
man, limits his creativity and erodes his personality. This is a
manifestation of a powerful tyranny – the tyranny of property.

So here I am, taking on a new quality. I am turning into a man
on the street, an ordinary representative of the upper middle
class, whose main objective is simply to live rather than to
possess something. A man fighting to be himself without owning
anything.

Ratings, bureaucratic connections and promotional tricks are all
meaningless. Developing the self, together with feelings, ideas,
abilities, will, reason and faith are the only things that
matter.

Such an understanding leads to the only possible and correct
choice, the choice of freedom.

UNMANAGED DEMOCRACY

What happened to YUKOS has a direct bearing on the authorities;
what will happen to the government after the YUKOS affair comes to
an end is a critical question.
It is an old truth that each nation has a government that it
deserves. I would like to add that every government is an
embodiment of the people’s ideas about state power. In this sense,
power equally belongs to the people of Britain, Saudi Arabia or
Zimbabwe, and the traditional perception of power by each nation
forms the basis of its stability. That is why any talk of
Western-style democratization of Arabic monarchies sounds as absurd
as a proposal to restore the medieval absolute monarchy in
Denmark.

In this context, Russia’s political tradition is synthetic, and
Russia has always been on the borderline of civilizations. For the
most part, however, Russia is a European country, thus the European
political institutions providing for the division of powers look
quite organic here.

At the same time, however, the reverse side of the medal should
not be ignored either. The Russians have a habit of treating state
power as a superior force that gives hope and faith. Russian
history tells us that a loss of the super-rational faith in the
state inevitably brings about chaos, insurrections, and
revolutions.

One must draw a clear line, however, between the notions of
state power and governance. The person performing the latter
function is an official, or a bureaucrat, and is not a sacred cow
in any way. He or she is an ordinary mortal called upon to take
responsibility for any problems and mistakes that may arise.

The destruction of YUKOS shows that once the bureaucrats get off
their leash, they become guided by anything but the interests of
the state. They believe that the state machinery should serve their
interests, while all other functions are inessential and can be
forgotten (temporarily or for good). The bureaucrats have no
respect for the state and regard it simply as a mechanism of
attaining their personal objectives.

Viewed from this perspective, the YUKOS affair is not a conflict
between the government and business. It is a politically and
commercially motivated attack by one business (represented by
government officials) at another business. Such a scenario makes
the state hostage to the interests of individuals who happen to be
empowered as government employees.

The same logic of action has prompted bureaucracy to eliminate
the division of powers. The recently adopted political and
governance model places an equal sign between the politician and
bureaucrat and makes the contents of politics synonymous with a
career within the narrow framework of a bureaucratic
corporation.
What may the import of it be? Is it to mobilize the nation and
bring it to new historic achievements? Not a single man in the
quarters close to the Kremlin will agree to it if he means what he
says. In private conversation they will tell you that the
elimination of the division of powers will make it easier for the
bureaucrats to collect money from the country and share it on the
basis of their own perceptions without heeding the interests or
needs of the citizens.

Another question is: Will the system being created in this way
work efficiently and bring its architects to the desired goal? No,
it will not. The measures being taken to increase the country’s
governability may eventually make it fully ungovernable.

Why? Because there are eternal laws for organization of complex
systems and there are historically settled rules of power.
Government always implies mutual motivations being applied to those
who govern, as well as to those who are governed. The motives can
range from building Communism to banal universal enrichment, but
motivation is a must and it must be universal for all.

In the meantime, however, the worthless bureaucrats who follow
the principle “This is for me, this is for me, and this is for me”
offer no such motivation, nor do they understand what it is needed
for. That is why they destroy all the mechanisms that could let the
Russian people show their worth in elections, free market
competition, freedom of public speech, and so on.

No genuine patriot will ever give his life for a handful of
bureaucrats who are interested in nothing but their financial gain.
No genuine poet will write odes in their honor. No scientist will
take the effort to make discoveries in an environment where no one
cares for his genius.

Soon, the omnivorous bureaucracy will find itself counteracted
by a shapeless and furious mob, which will come out into the
streets to ask: “Well, you promised us food and amusement, so where
is it?” And the trick of waving a heap of bureaucratic papers in
their faces and laughing will not work.

At this point, an ungovernable democracy full of endless woe
will come onto the scene, and this is something that all of us must
be apprehensive of.

WHAT WILL THE FUTURE BE?

Naturally, I would like to make a contribution to making Russia
free and prosperous, but I am also ready to be tolerant if the
government decides I must stay in jail.
As a rank-and-file, post-Soviet prisoner, I feel pity for the
greedy people who acted so brutally and senselessly toward the tens
of thousands of YUKOS’ stockholders. They will fear a future of new
generations of people who are willing to “take away and divide,” as
well as farcical, as opposed to genuine, justice. Only a handful of
federal television channel viewers will continue to believe that
the current actions aim to defend the interests of all people.

But I have even more pity for the people in power who believe
they are doing a good thing for the nation’s benefit. The road to
hell is paved with good intentions, and the logic of history proves
that building a modern economy is incompatible with repressive
political methods, as well as the forceful re-division of property
in the interests of certain groups. Furthermore, this machinery
will not limit its actions to Khodorkovsky, YUKOS, or the
oligarchs. It will victimize many others, including the architects
and builders of the machinery.

My persecutors know perfectly well that the criminal case
against me does not contain a single proof of my guilt, but that
does not matter. They will conjure up other charges against me,
say, for example, that I had committed arson in the Moscow Manege,
or instigated an economic counter-revolution. I have been informed
that they consider marooning me for another five years, or longer,
since they are afraid that I will avenge myself.

Those artless people judge others by their yardstick. Relax,
guys, I am not going to play the role of Count Monte Cristo. I find
much more importance and comfort in breathing fresh spring air and
having time with my children who will go to a regular Moscow school
than sorting out my past.

I thank God that I have realized – and my persecutors have not –
that earning lots of money is far from being the only (and is
probably far from being the main) meaning of work. I am past the
period of making lots of money. And with this burden now gone, I
intend to work for the benefit of generations that will soon
inherit this country, the generations that will have new values and
new hopes.