Putin Takes Russia Backward January 10 2005 Berkshire Eagle

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January 10, 2005 article titled "Putin takes Russia backward" By
Georgie Anne Geyer

WHEN I was in Moscow during the summer
of 2003, Russian President Vladimir Putin had just thrown the country's richest
man, Mikhail Khodorkovsky, into jail.

The handsome, clever Khodorkovsky, who
had risen from the grinding life of a cross-, border trader in Central Asia to
the powerful head of the Yukos oil empire, was certain he would be out soon. He
even thought he could gain position, as other similar persecuted men have
through history, and he told friends this temporary situation would help him
when he ran for the presidency himself.

By the time I was in Moscow last
winter, the situation had changed completely. By then, Khodorkovsky, who was
accustomed to the company of the Rothschilds and the Kissingers and was praised
in the West for being a relatively liberal and generous oligarch, was rotting
away in jail. A no exit" moment seemed to be drawing closer.

This October, I found myself in
Ukraine, and the Yukos case, now ripened for the Kremlin's picking, was
affecting that electoral crisis as well Now it has turned out to be what Putin
and his "security state" crowd in the Kremlin always intended: a
Russian state center renewing its power by first taking over Yukos completely
on false charges of non-paid back taxes, then having the company
"purchased" at auction by a cover organization nobody had ever heard of.

When the auction was held for the chief
production assets of the Yukos oil company, which Khodorkovsky had built into
his private fortune of $15 billion, up came the Baikal Finance Group. Who were
they? Russian news agencies went to the remote provincial town of Tver, where
Baikal was supposedly registered, and found a mobile phone and a 24-hour
grocery at the address. The whole "divestiture" of Yukos could have
been a Soviet era comedy, were the consequences not so serious.

These shenanigans are dramatically
cutting back Russian growth. President Putin's aim of doubling GDP by 2010 now
seems impossible as foreign investment dries up.

The minute the mysterious Baikal group
"bought" Yukos, it was turned over to the Rosneft, the state oil
company headed by the deputy chief of President Putin's administration, and
then merged with Gazprom, giving the Russian state just over 50 percent of the
company, which will produce L6 million to 1.7 million barrels of oil per day.
The Russian president, at a three-hour press conference in the Kremlin, spoke
of the flawed and even criminalized privatizations of the early 1990s:
"Today the state, using absolutely legal market mechanisms, is securing
its interest. I consider this to be quite normal."

The chaotic privatization policies of
the 1990s when oligarchs like Khodorkovsky used those early American ideas of
democratization to allow ruthless individuals to take over state enterprises,
leaving the populace impoverished are now being reversed. Putin has already
made similar moves against other companies; Russian telecom companies seem to
be the next targets as the Putin group aims for total control of the state 's
strategic assets, with clear limits on foreign involvement.

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