Sunday, November 23, 2014

The Power Vertical

The Khodorkovsky Endgame

Mikhail Khodorkovsky speaks to a lawyer as he stands in the defendants' box during a court session in Moscow on May 24, 2011.
Mikhail Khodorkovsky speaks to a lawyer as he stands in the defendants' box during a court session in Moscow on May 24, 2011.
Are the Russian authorities really considering a pardon for Mikhail Khodorkovsky? The markets sure seem to think so.
Deutsche Bank AG and Troika Dialog both said this week that the former Yukos CEO, who has been incarcerated since October 2003, has a 50-50 chance of being granted early release.
In a note to clients on March 26, Yaroslav Lissovolik, Deutsche Bank’s head of research and strategy for Russia, said Khodorkovsky's chances of being freed were “significantly higher than anytime in the past."

The Khodorkovsky case is widely seen by investors as a metaphor for the absence of the rule of law in Russia. 
Khodorkovsky, once Russia's richest man, is serving a 13-year sentence for two separate convictions for tax-evasion, fraud, and oil embezzlement that critics say are punishment for opposing Vladimir Putin's authority.
Releasing him, analysts say, would have a bullish effect on the Russian stock market. 
Both Lissovolik and  Roland Nash, chief investment strategist at Verno Capital in Moscow, told Bloomberg News that this could add as much as 10 percent to the value of Russian shares.
What exactly is driving these market expectations? In large part, they are a reaction to signals being sent by the Russian authorities.
On March 5, President Dmitry Medvedev ordered Prosecutor-General Yury Chaika to review Khodorkovsky's case, as well as others raised as politically motivated prosecutions by opposition activists in a February 20 meeting with the outgoing Kremlin leader. Chaika has until April 1 to complete the review.
Moreover, earlier this month, the Kremlin’s human rights council urged Medvedev to pardon Khodorkovsky before Putin's May 7 inauguration. The council, which is strictly advisory, called Khodorkovsky's conviction “a fiction,” adding that there was “no evidence” to support the charges against the former oil executive.
And as "Nezavisimaya gazeta" reports, two key members of the council,  Chairman Mikhail Fedotov and former Constitutional Court Justice Tamara Morschakova, said that there was no legal requirement that Khodorkovsky admit his guilt as a precondition for receiving a presidential pardon. Khodorkovsky has repeatedly said he would never admit his guilt.
Russia's human rights ombudsman, Vladimir Lukin, also suggested last week that a Khodorkovsky pardon might be on the table.
"I think there is an increasing number of indications that the authorities are considering this issue, although I personally am not aware of it," Lukin told Interfax on March 23. 
"I have discussed it with the president; he knows that he has this legal power. However, I don't know how events will unfold.... I believe that the sooner humanity is shown toward Khodorkovsky, in one form or another, the better it is for everybody, including the authorities, civil society, and him too."
It seems clear that Medvedev, who has said in the past that releasing Khodorkovsky would not be dangerous, favors a pardon. But if this long saga is really moving toward an endgame, it would require the blessing of Putin, who in reference to the case has said that "a thief must sit in prison."
Moreover, as Igor Yurgens, an adviser to Medvedev who heads the Institute for Contemporary Development, told "Nezavisimaya gazeta," there are also powerful forces in the ruling elite opposed to releasing Khodorkovsky. These include the law enforcement hierarchy and those connected to the oil industry who benefitted from the break-up and redistribution of Yukos's assets (see Rosneft and Sechin, Igor). 
"There is the whole vertical of law enforcement agencies objecting to Khodorkovsky's release. They will see this as a slap in the face," Yurgens said. "Even should Khodorkovsky himself decide to keep a low profile afterward, Yukos's foreign shareholders might demand compensation from Russia." 
But that said, those familiar with the case say there has been a noticeable shift in favor of a pardon as more of the ruling elite come to the conclusion that keeping Khodorkovsky in prison has become a liability for the Kremlin, while the benefits of his continued incarceration diminish.
-- Brian Whitmore

Tags: Mikhail Khodorkovsky

This forum has been closed.
Comment Sorting
by: Bruce W. Bean from: Michigan State University
March 29, 2012 01:34
Yes, the chances for pardon of Khodorkovsky and Lebedev are much improved. The odds may have moved 1 chance in 1000 to 1 chance in 300.
But, regrettably, the anti-Khodorkovsky bias within the government will prevail.


by: Ray F. from: Lawrence, KS
March 30, 2012 13:25
I’m not a market expert, but not sure they should be used as an accurate gauge for political decisions. Did the Russian markets foretell MK’s arrest in 2003? I can’t help but think that this is more wishful thinking on the author’s part. With the recent rash of embarrassing revelations over police torture in Russian jails, releasing MK would send the absolute wrong message to the country (i.e. we are weak and unable to control the situation). Hope I’m wrong, but must agree Bruce above. MK will likely still be behind bars in 2018.

by: Marko from: USA
March 30, 2012 17:23
I doubt he gets out, wharever Dima may want.. While Khodorkovsky's second conviction was legally dubious, and he has been subsequently reinvented as a some sort of saint by Moscow liberals and the West, he was always actually a greedy, ruthless (quite possiblly murderous) oligarch. He is not and has never been generally popular in Russia. Ironically, he was portrayed in the Western media in a very negative light before he began "playing ball" with Western energy multinationals such as Exxon and trying to destabilize the Russian government by funding, of all things, the Communist Party. The attempted sellout of Russia's energy assets to the West and the cynical assistance to the Communists are what triggered Putin's anmosity ... A saint, not so much.

by: vyto2ba from: vilnius
April 04, 2012 06:14
One of the tests for the success of the "reset" policy is the resolution of the Khordokovsky case. If he is released and not kept down and out afterwards those who criticise the "reset" will have one less argument in their favor. Would be the first evidence of a positive move away from the track Russia has taken since 2000.

The Power Vertical Feed

In this space, I will regularly comment on events in Russia, repost content and tweets I find interesting and informative, and shamelessly promote myself (and others, whose work I like). The traditional Power Vertical Blog remains for larger and more developed items. The Podcast, of course, will continue to appear every Friday. I hope you find the new Power Vertical Feed to be a useful resource and welcome your feedback. More

19:16 November 21, 2014


On this week's Power Vertical Podcast, we use the one-year anniversary of the Euromaidan uprising to look at how it changed both Ukraine and Russia. My guests are Sean Guillory and Alexander Motyl.

09:14 November 21, 2014
09:11 November 21, 2014


09:09 November 21, 2014


From RFE/RL's News Desk:

Ukrainians are marking a new national holiday on November 21 -- the anniversary of the start of Kyiv’s Euromaidan protests that led to the ouster of the country’s former pro-Kremlin regime.
Ukrainian President Petro Poroshenko signed decree on November 13 that declared the holiday for annual “Day of Dignity and Freedom” celebrations.
The protests began with a few hundred people who met spontaneously on a vast square in central Kyiv of November 21, 2013 – disappointed by then-President Viktor Yanukovych’s rejection of a landmark deal with the European Union in favor of closer ties with Russia.
After that first night, as the protests quickly swelled to tens of thousands of demonstrators, brutal police efforts to disperse the crowds with batons and teargas backfired.
As the crowds got bigger, the protesters began to call for Yanukovych’s ouster – which came in February 2014 after more than 100 people were killed in clashes with police that failed to end the demonstrations.

U.S. Vice President Joe Biden was expected to announce an increase in nonlethal U.S. military assistance to Ukraine on November 21 as he meets in Kyiv with Ukrainian President Petro Poroshenko and Prime Minister Arseniy Yatsenyuk.
The talks come on the first anniversary of the start of the Euromaidan protests in Kyiv that toppled Ukraine's former pro-Kremlin regime.
As Biden arrived in Kyiv on the evening of November 20, U.S. officials told reporters that he will announce the delivery of Humvee transport vehicles that are now in the Pentagon’s inventory of excess supplies.
They said Biden also would announce the delivery of previously promised radar units that can detect the location of enemy mortars.
The U.S. officials, who spoke on condition of anonymity, did not specify a dollar value for the assistance. 
Russia on November 20 warned the United States not to supply weapons to Ukrainian forces.
Russian Foreign Ministry spokesman Aleksandr Lukashevich cautioned against "a major change in policy of the (U.S.) administration in regard to the conflict" in Ukraine. 
He was commenting on remarks by U.S. President Barack Obama's choice to fill the number two spot at the State Department, Anthony Blinken, who told a congressional hearing on November 19 that lethal assistance "remains on the table. It's something that we're looking at."
The U.S. State Department's Director of Press Relations Jeffrey Rathke on November 20 told reporters that "our position on lethal aid hasn't changed. Nothing is off the table and we continue to believe there's no military solution."
He added, "But, in light of Russia's actions as the nominee mentioned [on November 19] in his testimony, as he indicated, this is something that we should be looking at."
The aid expected to be announced by Biden on November 20 falls short of what the Ukrainian president requested during a visit to Washington in September when he appealed for lethal aid - a request echoed by some U.S. lawmakers in response to what NATO allies say is Russia's movement of tanks and troops into eastern Ukraine.
In September, Washington promised Ukraine $53 million in aid for military gear that includes the mortar detection units, body armor, binoculars, small boats, and other nonlethal equipment for Ukrainian security forces and border guards in the east.
The United States and its European allies have imposed several rounds of economic sanctions on Russia for its seizure of Crimea and incursion into eastern Ukraine.
(With reporting by Reuters, AP, AFP, dpa, and TASS)

Russian Olympian hockey player Slava Voynov – who plays with the Los Angeles Kings NHL hockey team – has been charged with felony domestic violence against his wife.
Voynov faces one felony count of spouse abuse with a maximum penalty of nine years in prison. If convicted, he also could be deported.
Prosecutors say Voynov “caused his wife to suffer injuries to her eyebrow, check, and neck” during an argument at their home in October.
Voynov has been suspended from the NHL since his arrest early on October 20 at a California hospital where he took his wife for treatment.
Voynov’s attorney, Craig Renetzky, says his client didn’t hit his wife.
Renetzky blames the charges on a misunderstanding between police and Voynov’s wife, who speaks very little English.
Voynov – who played on Russia’s team at the 2014 Sochi Winter Olympics -- faces arraignment on December 1.
(Based on reporting by AP and Reuters)

NATO says Russia's growing military presence in the skies above the Baltic region is unjustified and poses a risk to civil aviation.
NATO Secretary General Jens Stoltenberg said in Tallinn on November 20 that the aircraft regularly fail to file flight plans or communicate with air controllers and also fly with their transponders off.
Speaking at the Amari air base, he said alliance fighters have intercepted planes more than 100 times in the Baltic region alone so far this year, a threefold increase over 2013. 
He did not say how many of the intercepted aircraft were Russian.
Stoltenberg also said that, overall, NATO aircraft have conducted 400 intercepts to protect the airspace of its European alliance members in 2014 -- an increase of 50 percent over last year.
(Based on reporting by AP and AFP)


16:55 November 19, 2014


Konstantin Eggert has a commentary in "Kommersant" on Russia's anti-Americanism. He opens like this:

"Sometimes I have this feeling that there are only two countries in the world - Russia and the United States. Of course, there is Ukraine, but it either to join us or the Americas. Russian politicians and state television are constantly in search of the 'American hand' in all spheres of our life. In Soviet times, the United States was formally considered to be our number one military and ideological enemy. But even then it didn't occupy such a large space in the minds of the political leadership and citizens. And the paradox is that, on one hand, officials and the media regularly talk about the decline of America as a great power, and on the other declare it to be the source of all evil in the world. This contradiction does not seem to disturb anybody."

And closes like this:

We still have not been able to use the opportunity that we were given with the collapse of the communist regime - to arrange our lives based on liberty and civic virtue. And today, we, as a people, want to go back to the starting point, to beat everyone. And the Soviet Union, with its absence of sausage and freedom, again suddenly seems sweet and dear. But it won't happen. I will put it banally: you can't go into the same river twice.

Read the whole thing here (in Russian, with audio)

15:53 November 19, 2014


MIchael Weiss, editor-in-chief of The Interpreter magazine, appearing on Hromadske TV to talk about Russia's information war.

Michael and Peter Pomarantsev recently co-authored an excellent report "The Menace of Unreality: How the Kremlin Weaponizes Information, Culture, and Money." Both also appeared recently on The Power Vertical Podcast to discuss the report.

15:42 November 19, 2014


Oleg Kosyrev has a snarky and clever blog post on the subject up on the Ekho Moskvy website. 

1) The United States is the ideal opponent. "It is big and strong and your self-esteem increases when you fight somebody really influential."

2) The United States is not fighting with Russia. "They aren't really interested. They have enough of their own problems and dreams. It's nice to fight somebody who is not fighting you."

3) It is a substitute for the authorities' inability to benefit Russians. "How convenient. Who is to blame for rising food and gas prices? The U.S.A.. Who is to blame for the fact that Russian has political prisoners? The U.S.A. Who is to blame for people demonstrating on the streets? The U.S.A. Who is to blame for the fact that independent international courts denounce the Russian court system? The U.S.A. You can even blame the U.S. for the fact that the light doesn't work in the entrance to your apartment building."

Read it all (in Russian) here.

15:23 November 19, 2014


14:47 November 19, 2014


From RFE/RL's News Desk:


Ukraine says it will not tolerate pressure from any other country over whether or not it seeks to join NATO.

Foreign Ministry spokesman Yevhen Perebyynis spoke made the remark to reporters in Kyiv on November 19, after the BBC quoted Kremlin spokesman Dmitry Peskov as saying in an interview that Moscow wants "a 100 percent guarantee that no-one would think about Ukraine joining NATO."

Hitting back with a reference to Russia's annexation of Crimea and support for pro-Russian separatists in eastern Ukraine, Perebyynis said Kyiv would like guarantees that Moscow will not interfere in Ukraine's internal affairs, send in troops, or annex Ukrainian territories. 

The U.S. Ambassador to Ukraine, Geoffrey Pyatt, told journalists on November 19 that any decision on seeking to join NATO could be made only by the Ukrainian people, not by Russia, Europe, ar the United States.

The Canadian Ambassador to Ukraine, Roman Waschuk, made a similar statement on November 19.

(Based on reporting by UNIAN and Interfax)


President Vladimir Putin says that Russia is ready for cooperation with the United States as long as Washington treats Moscow as an equal, respect its interests, and refrains from interfering in its affairs.

Putin spoke November 19 at a Kremlin ceremony during which he received the credentials of foreign envoys including John Tefft, the new U.S. Ambassador to Moscow.

Putin said, "We are ready for practical cooperation with our American partners in various fields, based on the principles of respect for each other's interests, equal rights and non-interference in internal matters." 

The remark echoed a formula Putin set out in a foreign policy decree at the start of his third term in 2012.

Tefft, 64, is a career diplomat who previously served as U.S. ambassador to Ukraine, Georgia and Lithuania. 

His posting starts at a time when ties are badly strained over the Ukraine crisis. 

Tefft replaces Michael McFaul, who was ambassador from January 2012 until February 2014. 

(Based on reporting by Reuters and TASS)



Russian Foreign Minister Sergei Lavrov has signaled that a landmark nuclear arms treaty with the United States is not in jeopardy despite severe tension over Ukraine.

Speaking to Russian lawmakers on November 19, Lavrov said the 2010 New START treaty "meets our basic strategic interests and, on condition of its observance by the United States, we are interested in its full implementation."

The treaty, one of the main products of President Barack Obama's first-term "reset" of ties with Russia, requires Russia and the United States to have their long-range nuclear arsenals under specific ceilings by 2018.

But Lavrov said the Conventional Armed Forces in Europe (CFE) treaty, which President Vladimir Putin suspended in 2007, is "dead" for Moscow. 

NATO has refused to ratify a revised version of the CFE treaty without a full withdrawal of Russian troops from Moldova and Georgia.

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The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It covers emerging and developing trends in Russian politics, shining a spotlight on the high-stakes power struggles, machinations, and clashing interests that shape Kremlin policy today. Check out The Power Vertical Facebook page or