From Oligarch to Icon

The plight of Mikhail Khodorkovsky raises questions about the place of Russian Jews today

Khodorkovsky

Peering from behind bars, his hair shorn to prison regulation length, Mikhail Khodorkovsky maintains a quiet dignity. Once the richest man in Russia and head of the giant Yukos oil conglomerate, he has become a cause célèbre as Russia’s most famous political prisoner and an increasingly irritating thorn in the side of the Putin administration. His case highlights Russia’s ingrained authoritarianism, an image Putin has been at pains to challenge, as well as drawing attention to the uncomfortable phenomenon of the Jewish oligarch. More widely it invites consideration of the position of Jews in post-communist Russia and why it is that so many of them left.

Among the many restrictions to be lifted along with the iron curtain were the two great taboos: money and religion. At the same moment that ordinary Russians found themselves able, even encouraged, to make money and build private enterprise, they were also allowed to express the ethnicities and religions they had suppressed under 72 years of communism. Many Jews took advantage of the new freedom to emigrate — up to 1.3 million left for Israel — while those who stayed were able to benefit from the radical domestic reforms and, possibly, to play a part in helping shape the future state. Khodorkovsky himself studied chemistry, following in the footsteps of his Jewish father and Christian mother. Together with his right-hand man, Leonid Nevzlin, fully Jewish and currently in exile in Israel, in 1987 ‘Misha’ Khodorkovsky founded Menatep, Russia’s first private investment bank, with the approval of Mikhail Gorbachev’s liberalising Kremlin. At the time he was a middle-level chemist and a former member of Komsomol, the Communist Party youth wing. Before the Menatep years, he had already shown entrepreneurial nous by setting up a firm to import badly needed computers from abroad. In 1991 he used Menatep proceeds to gain the fertiliser company Apatrit. Yet the big breakthrough came in late 1995 when he acquired Yukos, Russia’s second biggest oil producing company, from Boris Berezovsky in loans-for-shares auctions, for $300m. Even then the line between politics and business was hard to draw. In 1996 Berezovsky, Khodorkovsky and Guzinskii helped re-elect Boris Yelstin, according to Yelstin’s biographer, Timothy Colton. At the time Berezovsky was the most politically active of the oligarchs.

By 2000, however, Khodorkovsky seemed to breach the unwritten rules of the game. He rebranded himself with the help of a PR firm; he founded the Open Russia foundation, to encourage liberal values and broader education; he also turned Yukos into a transparent, Western-style conglomerate. This last apparently innocuous and praiseworthy gesture won Yukos increased loyalty from foreign investors, and shares soared, but worried the Kremlin inner circle, who saw it as the thin end of the wedge, a threat to their power. Misha publicly stated that the Kremlin had problems with corruption; televised for all to see, a furious Putin retorted that Yukos should be investigated for possible tax evasion. Not that everything about Yukos seemed pristine, even by Khodorkovsky’s admission. In the eponymous film by Cyril Tuschi, Khodorkovsky — whose screenings in Moscow and St Petersburg were abruptly cancelled this year — the man himself is quoted as saying: ‘Yes, we bent moral standards, but those standards matched those of the society we were in…’ The Yukos acquisition at knock- down prices saw Menatep assuming $2bn in debt; in 2001 the bank was declared broke. Worse followed when the state arrested Khodorkovsky’s deputy, Platon Lebedev. In the film Misha admits he knew he would be next, but he wanted to tell the truth in court… while admitting “I was naïve about justice”. Sure enough he was arrested onboard his private jet on a landing strip in Siberia in 2003. After an 11-month trial, for tax evasion, he was sentenced to 15 years. In 2005 Roman Abramovich ousted Khodorkovsky from Forbes magazine’s Russian Rich List — “the ultimate indignity in the world of the super-wealthy”, according to the BBC.

During the build up to the collapse of communism, there was a growing awareness among Soviet authorities that they would need to create a Russian elite, a native super-rich class, that could acquire state assets and keep them on Russian soil. Screeds have been written about the Jewish preponderance in the top-ranking business elite. One theory suggests that because Jews were traditionally excluded from the centres of Communist Party power, especially in post-war Russia, they developed skills on the unofficial peripheral market which came into play when the Marxist edifice of a centrally run economy collapsed in 1991. However, the theory develops holes when we look closer: most oligarchs were not cunning black marketeers in the Soviet days, but often clerks, scientists and technicians, even mathematics professors, who operated, quietly, within the system. As it was virtually impossible for Jews to enter high profile Moscow Universities, many studied at less prestigious establishments like the Institute of Oil and Gas where they were, later, ideally placed to develop Russia’s lucrative Oil trade. Certainly, the lifting of restrictions on Jewish professions combined with the licence to develop private enterprise may go some way to account for the fact that by the early 1990s, six out of seven of Russia’s richest tycoons were Jewish or part-Jewish.

Of the Yeltsin-era oligarchs, who enjoyed particularly close relations with the government, few have managed either to retain their fortunes or stay in Russia under Putin. Years in the KGB gave Putin a mistrust of the individual and his rule has seen the restoration of state authority over the once all-powerful magnates. Roman Abramovich, formerly favoured by the Kremlin, was forced to sell 72% of his assets to the Russian state before finding a bolt-hole in the UK, also the haven for his former business associate Vladimir Berezovsky. Heeding the warnings, Leonid Nevzhlin, Khodorkovsky’s original business partner, moved to Israel where he enjoys the status of major philanthropist and friend of Binyamin Netanyahu. Unlike his fellow oligarchs, Khodorkovsky chose to stand his ground and use his inordinate wealth to help shape the free and democratic Russia he wanted to live in.

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