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Biodun@bbcnews.com
Tuesday, 28 December 2010
Khodorkovsky trial: Russia hits back at West
Topic: russia, imf, bbc news, the econo
Mikhail Khodorkovsky in court, 27 Dec 10 It is Khodorkovsky's second trial

Related stories

 

by Maria Ogryzlo, BBC News, for the BBC's Biodun Iginla

Russia has accused Western nations of exerting "unacceptable" pressure over the trial of jailed oil tycoon Mikhail Khodorkovsky.

Russia's foreign ministry was reacting to criticism by the US and Germany on Monday after a second guilty verdict was delivered against Khodorkovsky.

Khodorkovsky, once seen as a threat to former President Vladimir Putin, was convicted of embezzlement.

He was first jailed in 2005, for fraud and tax evasion.

Khodorkovsky and his former business partner Platon Lebedev were back in court on Tuesday as the judge continued reading out his verdict.

It is unclear when their sentences will be pronounced.

"Attempts to exert pressure on the court are unacceptable," the Russian foreign ministry said in a statement on its website.

"We expect everyone to mind his own business, both at home and in the international arena."

Analysis

The Khodorkovsky case has become an irritant in relations between Russia and Western countries even though it has not derailed progress on other fronts such as co-operation on sanctions against Iran and transit for Nato forces into Afghanistan and the agreement on nuclear weapons in the new Start treaty.

Western governments have to be careful not to criticise the principle of anti-corruption moves in Moscow so those critical of Russia have concentrated on what they claim is the selective nature of prosecutions. These have been targeted, they say, at political opponents of the Russian government.

This case is also seen in the West as part of Moscow's failure to develop a proper rule of law. The Russians, however, have had little difficulty in painting Khodorkovsky as a thief and oligarch and so reject what they regard as interference, saying that this reflects badly on those who defend him.

Assertions that justice was being applied selectively in Russia were, the statement said, "groundless".

The judge found Khodorkovsky and Lebedev guilty of stealing from their own firm, Yukos, and laundering the proceeds.

Delivering the full verdict and sentence is expected to take several days.

The White House said it was "deeply concerned" about the verdict, calling it a "selective application" of justice.

Germany said the trial was "a step back".

Khodorkovsky, in custody since 2003, was less than a year from completing his first prison sentence for fraud when he and Lebedev were convicted on Monday.

Khodorkovsky's lawyers dismissed the charges as an absurd pretext to keep the two men behind bars.

One of them, Vadim Klyuvgant, condemned "an unjust verdict by a court that is not free", saying it was "shameful for the country".

Start Quote

It is not a bad thing that Khodorkovsky is in jail. But it is a bad thing that others like him are not in jail”

Sergei M, St Petersburg

US Secretary of State Hillary Clinton said the trial had raised "serious questions" about the rule of law in Russia and the verdict would have a "negative impact on Russia's reputation".

German Foreign Minister Guido Westerwelle said he was "very worried" by the conviction.

"The way the trial has been conducted is extremely dubious and a step backward on the road toward a modernisation of the country," he said in a statement.

"It is in the interest of our Russian partners to take these concerns seriously and to stand up for the rule of law, democracy and human rights."

Richard Ottaway, chairman of the UK parliament's Foreign Affairs Committee, said the "due process of law that we in the UK would recognise" had not been followed.

More on This Story

Related stories

The BBC is not responsible for the content of external Internet sites


Posted by biginla at 12:35 PM GMT
Friday, 26 November 2010
Stumbling towards infinity
Topic: russia, imf, bbc news, the econo

The Russian default

Nov 25th 2010 | From The Economist print edition

 

How the IMF was stumped by Russia

No Precedent, No Plan: Inside Russia’s 1998 Default. By Martin Gilman. MIT Press; 416 pages; $29.95 and £22.95. Buy from Amazon.comAmazon.co.uk

BEFORE the global economic crisis, the IMF’s slide into irrelevance seemed assured. Now it is back at the front line of gargantuan bail-out packages, wrangling over government spending and tax reform, and attempts to stop sovereign defaults further disturbing the jittery global financial system. Few would doubt that the fund faces a thankless task in countries such as Pakistan and Greece. But its missions are also intensely political and their success fundamentally unpredictable. Just how much so readers will learn from Martin Gilman’s account of Russia’s fitful, often stumbling economic reforms in the short decade between the collapse of the Soviet Union and the country’s default on its domestic debt in 1998. Especially unpredictable too are the chances of troubled economies getting back onto an even keel.

As the IMF’s senior representative in Russia, based in Moscow during the 1990s, Mr Gilman is well-placed to offer an unusually detailed account of what really went on as the IMF tried to work with the Russian authorities to help it move from post-Soviet chaos to a functioning market economy. Few observers fully appreciated just how dysfunctional the Russian state was at the time. The Russian establishment, or whichever faction had the upper hand in the endless internecine manoeuvrings he describes, grossly overestimated the extent to which it could effect changes in policy. And of course there was corruption. Mr Gilman’s view is that there was less outright pilferage than is commonly believed, though American food aid and bilateral trade credits were two areas where corruption was endemic. The biggest problems, he says, were poorly conceived projects and wasteful expenditure. The IMF repeatedly erred in believing the claims of Russian politicians about what they could achieve. In the end, the fund had only a marginal effect on the course of events, though Mr Gilman stops short of admitting it was out of its depth.

The results were often farcical. In the mid-1990s, Russian targets for tax collection were repeatedly thwarted by a tendency first to overestimate the government’s capacity to raise revenues and then, when faced with chronic shortfalls, to resort to apparently attractive shortcuts that promised quick fixes to problems that required institutions to be built up slowly. But there is a particularly otherworldly feeling to the tale of the Russian government setting up an agency to galvanise tax collection, apparently without realising that its acronym, VChK, was identical to that of a much-hated early Bolshevik secret police force, making it an easy target for political opponents.

Given just how heavily the cards appear to have been stacked against Russia in Mr Gilman’s account, it is not surprising that the wayward progress of its economic transformation in the 1990s culminated in its 1998 default. Mr Gilman cautions that Russia’s fundamental institutional problems, including the absence of much rule of law, still need to be properly addressed. Meanwhile, though, the economy is growing; inflation has been tamed; and the poverty rate was halved in the ten years to 2009, helped by an eightfold increase in the oil price. Mr Gilman disagrees with those who interpret this period as a “temporary aberration fuelled by high energy prices”, pointing out that Russia has, in the past decade, also made some good policy choices, including reforming its tax code and passing prudent budget laws.

Russia’s particular circumstances after communism’s collapse make it unique. Still, those trying to reform other highly indebted economies on the brink of default will find plenty to chew over in Mr Gilman’s account of the toxic interaction between domestic politics and otherwise soundly conceived economic policies. But they will be disappointed if they seek to understand how governments can deal with the justifiable frustration that people feel, and seek to express, during times of economic turmoil. Mr Gilman’s portrait of Russia in the 1990s details every twist and turn of policy in sometimes excruciating detail. But the Russian people—and any sense of what it felt like to live through the tumultuous times he describes—are largely absent from this book.

Readers' comments

The Economist welcomes your views.


Posted by biginla at 1:54 PM GMT

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