In Russia, wealth vs. power

The arrest saga shows that finding a middle way, of market capitalism based on transparent rule, remains elusive for Putin.

Many are arguing that Putin is jeopardizing progress made over the past three years. US Ambassador Alexander Vershbow was quoted by the news agency Interfax as saying that "Russian law is being used selectively," and that Washington "was disturbed by the escalation of tensions around Yukos" that could raise "new doubts" about the Russian market.

In the case of Yukos, US oil firms ExxonMobil and ChevronTexaco are believed to be negotiating to buy a stake in the company, which, with recently acquired rival Sibneft, exports more barrels of oil a day than Kuwait. Anatoly Chubais, the head of Unified Energy Systems, met with other key Russian business leaders hours after Khodorkovsky's arrest on Saturday, and went on television to urge Putin to spell out his aims with business. "The conflict has grown to such a scale that we need direct intervention from the president," Mr. Chubais said. "I want business to understand the authorities' position on business. I want business to understand whether it has a future or whether its future is similar to Khodorkovsky's fate."

In a statement, the business leaders said: "The business community's trust in the authorities is ruined ... Companies are being forced to reassess investment strategies."

But not all analysts and potential Western investors are alarmed. Some see it as Russia cleaning house against the oligarchs, who are widely despised by ordinary citizens.

Liliya Shevtsova, an analyst with the Carnegie Endowment's Moscow office, says that top European businessmen she has canvassed since the arrest are divided evenly between those who are cheering the move, and those who say they will invest no more. "This is really about the crisis between power and business in Russia," Ms. Shevtsova says. Putin "failed to find a model ... and now it's very difficult to draw the line, because everything is becoming hot politically," Shevtsova says. "Now it's too late: Every economic decision is now a political decision."

Other analysts say the arrest has sparked a crisis that a research brief from the brokerage United Financial Group (UFG) in Moscow describes as a "disgraceful setback" in Russia's post-Soviet development. "Everyone is a loser, very much including President Putin himself," who has created a "dangerous political trap."

The UFG report says that "by opening the way for the warning to Khodorkovsky to be delivered by the FSB [formerly the KGB] and its agents in the prosecutor's office - the most unreconstructed Soviet-era agencies desperate to restore their former power - Putin has left himself face to face with a 'due process' which is in fact a travesty."

Page: 1 | 2