Three Khodorkovsky's interviews for Le Figaro, The Moscow Times and Vedomosti

Mikhail Khodorkovsky talks to Le Figaro about his hopes for Russia, and suggests how Europe should respond to his country’s national renaissance

Laure Mandeville, Le Figaro, 21 September 2008

Le Figaro is the first French paper to be granted an interview by the Russian magnate who is serving a prison sentence in Siberia. His lawyers gave us his written replies to our questions. The oil tycoon Mikhail Khodorkovsky made his fortune during the tempestuous and dangerous 1990s. He has already served five years of an eight-year sentence for major tax evasion, of which he was convicted at a highly politicised trial.

After Dmitry Medvedev was elected president many hoped there would be a “Thaw” in Russia. Did you, in your prison cell, share that hope? Has the Georgian crisis changed anything?

Not long before my arrest in 2003 I said, during public statements, that the economy cannot run efficiently without democracy. Many understand that, including people in the present Russian leadership, and are trying to create democratic institutions, with free elections, independent media and an opposition. Others fear change. They cling to a “stability” of a kind we had under Brezhnev [before perestroika]. That will inevitably lead Russia to lose its competitive edge and result in a “new perestroika”. The present choice, between economic growth or the control of inflation, can be explained by the exceptionally low quality of Russia’s democratic institutions and the squeezing of entrepreneurs by a corrupt bureaucracy. I do not give up hope, however. Medvedev said quite unambiguously that that the independence of the judicial system is critically important. Everyone feared to admit it but the practice of exerting pressure on judicial investigations (and that includes the Presidential administration) has been exposed. The most important thing is not to be afraid but continue cleaning these Augean Stables.

Your petition for parole in August was turned down. That does not inspire optimism ...

My friends and my enemies understand what enormous symbolic importance my case has for the country, and for others who have fallen into the clutches of the Russian judicial system. Today it is quite clear that not a single official will risk taking a decision on my behalf. If such a decision is made then the regime itself will take it, thereby sending a message to all of society. The issue is very simple. Do we have the right to take vengeance on our political opponents, deprive them of their property and imprison them, through an arbitrary interpretation of the law? If the answer is yes, then Russia will remain in the grips of the prehistoric law that says might is right. If not, then we must put an end to this case.

Are deputy premier Igor Sechin, whom you consider the main organiser of your downfall, and his clan less formidable now?

Those who persecute me will continue to put pressure on the authorities. I will face threats and, perhaps, more than just threats. Their methods are well known and they are possessed by an unswerving desire to keep me in prison forever. Don’t imagine that the positions held by my persecutors have truly been weakened by the change in presidents. They still remain in control of enormous economic and administrative resources.

Immediately after Medvedev came to power, however, I noticed signs of a change. Earlier I would have been sent to the punishment cell for giving such an interview. Between May and August, however, such harsh measures were not used against me. Still, the rejection of my parole application indicates that there is a long way to go before there are fundamental changes. Two days before the court hearing the prison administration made an absurd accusation: I had failed to inform the prison director, they said, how many inmates shared my cell. My application was turned down on the pretext that I had not mastered a trade as a garment worker! What is that, if not a slap in the face for justice? The investigation into the second criminal case continues. Now I am being accused of stealing all (!) the oil that Yukos produced over ten years. The investigators know perfectly well that they are merely tools and they try to second-guess the wishes of their superiors.

Angela Merkel mentioned your situation when talking with Medvedev. What do you expect from Europe?

For Europe and Russia the worst outcome would be for them to build relations on an attempt by one to dominate the other. Obviously, that would lead to an unprecedented confrontation. A strictly pragmatic approach, however, is also not very productive. It is impossible to share the same continent and become ever more dependent on each other without sharing the same values. The only realistic way forward is a mutual integration of elites that respects fundamental rules enshrined in our various national constitutions and European treaties. I have in mind the “third basket” of the Final Act [of the Helsinki Accords] which speaks about human rights. Europe has successfully followed that path since the mid-20th century.

Russia is not genetically programmed to be an authoritarian State. It is indeed a large country. Without special attention the balance within Russia between centrifugal tendencies and excessive centralisation cannot be preserved. However, we are a European country in spirit and cultural traditions, with an educated population, capable of absorbing new experiences. Believe me, I now know my own country from every angle. Even the famous syndrome of a national renaissance that can so strongly be sensed in Russia today is nothing new for Europe. Our country is transforming itself from an empire into a classic nation state. France has already made that journey. We face a difficult, bumpy road but if all goes well we shall become allies of Europe and not a hostile continental alternative. Europe and Russia must live together not because of oil and gas but on the strength of their common basic values; they must be part of a common security system.

Your argument carried greater weight before the Russian intervention in Georgia ...

It’s now the fashion to say that the “five-day war” in the Caucasus, and Russia’s recognition of Abkhazia and South Ossetia, will seriously damage Russian-European relations and prospects for liberalisation within Russia. I’m not convinced. An Iron Curtain cannot be lowered between the West and Russia — the Russian elite has neither the wish nor the ideology that would permit it to happen. On the contrary, this crisis could push the Kremlin into taking measures to normalise relations with the West. Though only if such a step does not signify a surrender of Russia’s geo-political positions. The events in South Ossetia, furthermore, have shown that the founder nations of the European Union such as France, for example, are taking a flexible approach to the problems raised by Russia and its former empire. It is no accident that President Sarkozy played a role in a peaceful settlement of the crisis.

Is the West being sufficiently firm when Russia lurches too far in one direction?

When Russia is in the wrong, Europe must say so and speak loudly without fear for its supplies of oil and gas. Russia is as interested in
having steady customers as Europe is in having regular supplies. This does not mean that Russia is always in the wrong. However, the loud and phony patriotism of some of my fellow countrymen is hard to tolerate.

'President Medvedev made the only possible decision'

Mikhail Khodorkovsky's interview to The Moscow Times


Staff Writer Nadia Popova interviewed Mikhail Khodorkovsky, the jailed former CEO of Yukos, via an exchange of written questions submitted through his lawyers on Sept. 5, 2008. Below is an edited transcript.

Russia has lost billions of dollars in foreign investment since Prime Minister Vladimir Putin's public attack on Mechel in late July and the war with Georgia over South Ossetia in August. What will the government have to do to win back foreign investors?

Investors worry most about uncertainty. From my own experience, I know that people will make the worst assumptions if you fail to explain what is happening. That is why restoring trust has to begin with regular, detailed explanations of [the government's] position. This is now taking place.
The second necessary step is to honestly and openly set out the rules of the game, regardless of whether people are going to like the rules or not. Actions in concrete cases have to be explained in reference to a set of rules that applies evenly to everybody.
Finally, you have to begin the laborious task of consolidating these rules on an institutional basis, which is the guarantee of their stability. There's no other way. Any other kind of market is open season for adventurers and crooks, which is absolutely not in Russia's interests.
As for South Ossetia, I want to take this opportunity to express my deep condolences to all those who have suffered and whose relatives and close ones perished in those days, which were full of sadness for our country as well.
With regard to foreign investment, I think that money is not the most important thing for Russia today - there is more than enough of it. What is important is knowledge, markets and cooperation. We want to build a post-industrial economy based on innovation, which means based on the opportunities provided by participation in global scientific, industrial and trade activities. This is why the level of trust from foreign investors, the investment climate as a whole and investment dynamics are so important. Foreign investment is just a method for harmonizing interests and sharing risks.

After its outstanding performance over the last few years, the Russian economy is beginning to be plagued by some of the problems created by this same impressive growth. What is the most effective way of tackling inflation? How effective is monetary policy or methods like those used earlier in the year, when the prices were frozen on certain staple items?

I am convinced that monetary methods alone are insufficient to fight inflation. We can't afford the slowing of economic growth that inevitably results, as we need this growth to solve our social and infrastructure problems.
Russia's economy doesn't operate on a reserve system, which is why monetary policy is far from the most ideal instrument. The stress should now be put on increasing labor productivity by improving the quality of management and broadening the use of modern technology. Besides, in both the private and public sectors there is a huge body of pseudo-employed people in the country that is a product of our level of corruption and bureaucracy. I am talking about several million able-bodied people. No one is arguing that a careful monetary policy is unnecessary, but there are also other solutions.

Russia's oil industry, the gold mine of the country's economy, has faced problems; production is falling. How would you suggest tackling the problem?

The fall in oil output is absolutely artificial. Back in 2002, at a meeting on energy policy, I suggested that we should aim at a production level of 10 million barrels per day (for land-based drilling) and stick to this level for 15-20 years. I believed, and still believe, that given Russia's on-shore reserves and the efficiency of its infrastructure (extracting and transportation), this is the best solution. For the realization of any long-term investment project, however, what is needed most is confidence that there will be stable rules to the game.
As for the oil price, I think $70 a barrel, considering the current dollar level, is the price at which modern technologies enable us to gradually replace hydrocarbons with other energy sources. But the decision is a political one, as every startup energy project in the history of modern civilization has required major investment. But this [investment] is necessary now; there is no time to wait.

Do you see any recent positive tendencies in the Russian economy?

I have to be happy about the growth in industrial production. At the same time, the discrepancy between the real structure of the economy and the desired innovation-based economy remains, which is lamentable and dangerous.

In your articles "Left Turn" and "Left Turn-2," you spell out some socialist ideas, but at the same time stress that Russia is a European country. How do you go about, to paraphrase the old joke, introducing socialist ideas to ensure that Communism doesn't return? In what direction should Russia move politically? Whose experience should we look at?

Leftist ideas and the Communistic Party of the Soviet Union are two different things. The Party represented a totalitarian approach to managing the state, including the management of the economy. European social democracy is, first of all, democratic management of a country and an economy with significant levels of public ownership.
For Russia, with its enormous territory and difficult climate conditions, the need to guarantee support for commonly accepted principles like the right to life, education and health care, requires a higher level of state expenditure. This share has to grow at first, as it is necessary to create public infrastructure. But it should then fall as the economy experiences general growth.
As for fighting the ghost of totalitarianism, what is very important is the strict separation of the different branches of power, a free press and other civil society institutions, including local government. The experience of the Scandinavian countries and Canada may be relevant here.

How do you see U.S.-Russian relations changing after the presidential elections in the United States? Will the South Ossetia conflict dramatically change relations between the two countries?

I very much hope that we will not cast each other in the role of Evil Empire. It would be a counterproductive farce in the conditions of today's rapidly globalizing world. As for South Ossetia, it's evident that [Georgian President Mikhail] Saakashvili, counting on the support of the West, decided to launch a military venture without the sanction of the United States and overestimated the chances of gaining backing for this outrage.
It's important to understand that President [Dmitry] Medvedev had no other choice given situations on Aug. 8 and Aug. 26, and made the only possible decision.
The coming change of presidential administration in the United States and the gradual building of the team holding power in Russia offer a great chance at a fresh start.

'The oil industry is a thing of the past for me today'

Irina Reznik, Vedomosti, 22 August 2008

On 21 August the Ingodinsky district court in Chita was unable to reach a decision, whether or not to grant Mikhail Khodorkovsky release on parole. The Judge promised to make a decision today. The escort guard did not permit journalists to approach the prisoner, either then or subsequently. However, he did answer questions sent to him by the daily newspaper in writing.

If you knew for certain that you would be pardoned, would you apply? Many former Yukos employees, unwillingly involved in the Yukos affair, believe that if you were pardoned the cases against many of them would be dropped and some would be freed from imprisonment. Are they mistaken?

I shall do all in my power to ease the fate of the innocent victims of the Yukos affair.

In July this year the Prosecutor General's office brought new charges against you and Platon Lebedev. In essence, they alleged that you stole all the oil produced by Yukos subsidiaries, passing it off as crude oil direct from the well, and legalising the proceeds thereby causing the company losses of 850 billion roubles. What do you make of this new accusation? Many say the charge is absurd and, in the meanwhile, the new Russian president has promised to “fight against legal nihilism”.

Many of my opponents consider that I believe myself to be the victim of a selection application of the law, i.e. everyone committed such violations but only Khodorkovsky is being punished. That is not true. My supporters often say that the laws in Russia permit anyone to be put in prison. That also is not accurate.

I consider that our Criminal and Criminal-Procedural Codes may not be ideal but they are entirely civilised and acceptable in a democratic country. Likewise I am convinced that people who break the law are not so numerous in Russia, at least no more than in the world’s other developed countries. Our problem is the way the law is applied, our judicial practice. The proportion of acquittals in ordinary Russian courts is one hundred times lower than for the world as a whole. There one case in 5-10 leads to an acquittal; in Russia, it is one in 500-1,000. It’s interesting to note that in trials by jury and before our arbitration courts the acquittal and conviction rates are, on the whole, similar to those elsewhere.

That is the angle from which it makes sense to examine my former sentence and the new charges against me. Our laws, in other words, correspond to common sense and business practice and if the accusation and the sentence do not meet those standards then the fault lies elsewhere, not in the law.

What do you think of the charges that were specifically made against you?

If we recall the first accusation, that I was guilty of tax evasion, even in that case the charge did not fit the requirements of the law, which forbids the distortion of accounting, not the avoidance of taxes in itself. The accounts in fact fully reflected the tax breaks offered within the tax haven. Whether it was lawful or not to make use of those tax breaks is the subject of a quite different discussion, that should be held before an arbitration tribunal. You can evaluate the new charges for yourselves, from a common-sense viewpoint.

What do I think of them? I don’t think much of them, but personally I would not raise, yet again, the issue of the legality of the tax demands made on Yukos. That’s all over and done with as far as I’m concerned. For reasons I cannot understand, however, the team of investigators is raising and exaggerating all over again.

This is where my common sense reaches its limit. Who in the Investigative Committee is digging up the subject of the Yukos bankruptcy once again, and why they want to do so, I do not understand.

If people really believe that you can steal all the oil an oil-producing company extracts and processes during six years’ work then they should not be reading your newspaper. And, of course, they don’t read Vedomosti: they’re busy watching variety shows on television or The Simpsons.

You say you do not recognise your guilt, yet by petitioning for release on parole you are in practice indicating agreement with the sentence passed on you. That ensures the assets of Yukos will quite legally remain the possession of Rosneft, Gazprom and others. Once you are free, in other words, you will not contest that situation. Are you ready for that?

As concerns my personal readiness to accept that those assets “legally” remain with Rosneft and Gazprom, I can say that oil is part of my past and I do not like looking backwards, I consider it unproductive. In court I have already stated that I do not intend to return to the oil business and fight for a re-examination of unjust decisions concerning Yukos. I also spoke about my attitude to my prison sentence, which remains unchanged.

It is considered one of the signs of your reformed character (a condition for release on parole) is to make compensation for losses running into tens of thousands of dollars. Is it realistic for you to provide such compensation?

Ever since Yukos assets passed into the hands of State-owned companies I don’t think any basis remains for considering compensation on my part. Everyone realises that but the people who organised the Yukos case are afraid to see me free again, and are therefore doing all they can to keep me in prison. Reforming the judicial system will take more than one day. As soon as the courts become independent and objective in Russia, however, these claims and charges will be withdrawn by those who are now making such accusations.

Do you follow events in the Russian business world — deals by major companies, important corporate events? Where do you get your information?

I use the media to keep informed about what goes on in Russia and abroad though it’s not easy. Strange as it may seem, I can still understand events that take place and sometimes predict them. The view of the world I get from the press is, in other words, on the whole sufficient. Of the Russian business press I read the dailies Vedomosti and Kommersant and weeklies Expert, SmartMoney and Kommersant-Money, and I do not feel very isolated from my accustomed sources of information, for which many thanks to those journalists.

What do you think about the conflict between the shareholders of TNK-BP? Does it mean that joint ventures between Russian and Western companies are not possible?

The conflict at TNK-BP confirms the general opinion that it is impossible to foresee everything in a contract, particularly in a strategic, long-term contract, and in conditions of poorly established business practice. There must be a constant balance of interests that is itself supported by the balance of opportunities. It’s another matter whether the sides have correctly assessed the changes in long term trends. That, however, is already a business decision.

At approximately the same time that TNK-BP was being set up, Yukos and Chevron were holding negotiations about a merger. If that deal had gone through, would you have been able to avoid a similar conflict?

The refusal to conclude the deal with Chevron was a strategic decision that arose out of the struggle between various forces within the presidential administration. Whether it was right or not, is not for me to judge. I am one of the interested parties. I had my own position, which I argued and supported, but the final decision was not mine to make.

There are several dramatic corporate conflicts going on all at once in Russia today: TNK-BP, Norilsk Nickel and the major problems affecting the Mechel metals and mining company. After Prime Minister Putin’s public criticism the capitalisation of Mechel dropped considerably. Do you agree that all this is having a negative effect on the attitude of investors to Russia?

Corporate conflicts are an everyday affair. What has a bad effect on the investment climate is the lack of predictability in the methods for resolving such conflicts and an instability in Russian business practice. And also a lack of reliable procedures in our courts and arbitration tribunals. What goes on is hard to understand and takes place behind closed doors — there lies the problem, and the key to an improvement in the investment environment.

How do you assess the world financial crisis and its consequences?

I’m very optimistic. The crisis is quite manageable. It is timely and will point the world economy in the right direction. We all need a more even distribution of the world’s wealth as a whole and of the level of consumption, in particular. We all need to reduce the energy consumption component in the world’s GNP. We must all think about changes in consumption paradigms and criteria for evaluating quality of life and shift them more towards the conservation of resources and nature. Finally, we all need massive investment to make the transition from our present hydrocarbon-based energy systems. The time has come. The present crisis, thankfully, is not a devastating fire or typhoon. It’s a wake-up call. Of course, we want to go on dozing but it’s time for work.

I do not expect either the US or the European markets to display fast growth rates. The changes there will be not quantitative but qualitative. It will be structure of the economy that changes, not its size. Steel and coal output are no longer indicators of success. I’m afraid that we in Russia are still in the thrall of an old paradigm, just like our Chinese neighbours. Only they have no choice. We do.

Looking back at the events of five years ago, and knowing that you face the threat of a new term of imprisonment, do you believe you acted rightly in not leaving the country before your arrest?

I regret it and, at the same time, I could not have behaved otherwise. Like any ordinary person I have many different feelings. I greatly regret that during these years I have been separated from my family and children. I have a great deal to make up to them. But I couldn’t abandon my arrested friend. Perhaps he curses me for that — I don’t know.

CHITA