President Vladimir Putin came down hard and heavy on the side of prosecutors Monday, dismissing private-sector pleas to negotiate the fate of Yukos CEO Mikhail Khodorkovsky while warning his own Cabinet to keep quiet about the escalating legal assault on the jailed tycoon's company.
In his first public remarks since Khodorkovsky was arrested in a pre-dawn raid at a Novosibirsk airport Saturday, Putin rejected requests by the nation's biggest businesses to end what they see as a disturbing trend in law enforcement that could lead to a massive redistribution of assets and eventual economic calamity.
"Leaders of the Russian Union of Industrialists and Entrepreneurs have sent a message to me over the arrest of the Yukos chief, while several political figures have asked me to meet with them to discuss this issue," Putin told his Cabinet in televised remarks. "There will not be any meetings or bargaining over the activities of law enforcement agencies, as long as these agencies stay within Russian law."
Putin, uncharacteristically reading from a notebook, said: "Everyone should be equal before the law, irrespective of how many billions of dollars a person has on his personal or corporate account. Otherwise, we will never teach and force anyone to pay taxes and defeat organized crime and corruption."
The Russian Union of Industrialists and Entrepreneurs, or RSPP, which represents companies that collectively account for more than half of the economy, had called on Putin to make clear his position on the months-long Yukos investigation, which could lead to possible prison terms for at least three of the company's top shareholders.
Although Putin tried to allay concerns that the Yukos affair was not an isolated event, leading business figures and political commentators instead heard remarks they found chilling.
"Executive agencies or the prosecution service cannot deprive someone of their freedom. Courts alone can do this.
"If this is the case, then I believe the court has done so for a good reason. Incidentally, those who think that somebody is guilty or not must prove it," Putin said.
"I understand the concerns of the business community, because any activities by the federal authorities start and end as a sort of campaign," he said. "I wish to emphasize that no generalized inferences should be made from this case, which will not set a precedent for other cases, and all speculation and hysteria over this case should end, [and] the government should not be drawn into this discussion."
If that last remark did not get the attention of state officials who may be on the take, Putin also essentially declared war on corruption by giving the Cabinet two weeks to come up with a plan to root out institutional graft.
"Some countries have special systems for preventing corruption. I believe we should do this, too."
With the Kremlin's battle line apparently drawn, the RSPP went into crisis mode, convening an emergency meeting at a downtown movie theater to hammer out two strategies to deal with the developments -- one "nonconfrontational" and one "confrontational."
RSPP vice president Igor Yurgens told reporters that the lobby still held out hope of solving the issue through dialogue, which is why "we are very sorry that the president said 'no' to our appeal."
Others were less diplomatic.
"We need to consolidate business and civil society. The people who are conducting this campaign must realize that they are facing forces that will be an obstacle to them," said Yevgeny Yasin, head of the Higher School of Economics and, as an economics minister in the 1990s, one of the architects of early economic reforms.
"I think that in some sense the threshold of global love toward the president has been crossed and many people will think twice about who they vote for in the parliamentary and presidential elections."
Yasin said his take on what Putin said earlier in the day was this: "We, those in power, want business to prosper. There won't be any de-privatization -- everything will be fine. But when we want to attack someone, we will do so. We will crush anyone. You must realize that and be afraid of that!"
Most political analysts polled Monday interpreted Putin's remarks in similar fashion.
"It really feels like it would have been better for Putin to not say anything at all," said one political scientist at a leading Moscow think tank.
Others said Putin's remarks on justice for all sounded rather hypocritical.
"The principle of due process is great. But it is hard to take it seriously when applied to alleged economic offenses permitted in 1990s," said Christopher Granville, chief strategist at United Financial Group investment bank.
"There are literally millions of people who could be charged with similar offenses. Therefore the concept is not really applicable.
"What we see of course is the very opposite of the impartial law enforcement, but rather partial application of the law for political reasons. This cannot inspire investors' confidence," Granville said.
Georgy Satarov, head of the Indem think tank, said Putin's remarks suggested he had finally chosen which Kremlin faction to side with publicly.
"He showed that he is leaning toward a specific wing within his administration -- the siloviki," he said, referring to the group of former security service officials from St. Petersburg that Putin brought into the presidential administration and who are thought to be behind the attack on Yukos.
The rising tensions between the Kremlin and big business, however, are not the fault of overzealous siloviki alone, Satarov said.
"The [oligarchs] are paying the price now for placing the wrong bet [by backing Putin] in 2000," Satarov said.
Back then, he said, big business bought the idea that liberal economic policies can actually coexist with limited democratic institutions.
"Well, it's not like this, not in Russia. Here such models simply don't work," he said.
In his first public remarks since Khodorkovsky was arrested in a pre-dawn raid at a Novosibirsk airport Saturday, Putin rejected requests by the nation's biggest businesses to end what they see as a disturbing trend in law enforcement that could lead to a massive redistribution of assets and eventual economic calamity.
"Leaders of the Russian Union of Industrialists and Entrepreneurs have sent a message to me over the arrest of the Yukos chief, while several political figures have asked me to meet with them to discuss this issue," Putin told his Cabinet in televised remarks. "There will not be any meetings or bargaining over the activities of law enforcement agencies, as long as these agencies stay within Russian law."
Putin, uncharacteristically reading from a notebook, said: "Everyone should be equal before the law, irrespective of how many billions of dollars a person has on his personal or corporate account. Otherwise, we will never teach and force anyone to pay taxes and defeat organized crime and corruption."
The Russian Union of Industrialists and Entrepreneurs, or RSPP, which represents companies that collectively account for more than half of the economy, had called on Putin to make clear his position on the months-long Yukos investigation, which could lead to possible prison terms for at least three of the company's top shareholders.
Although Putin tried to allay concerns that the Yukos affair was not an isolated event, leading business figures and political commentators instead heard remarks they found chilling.
"Executive agencies or the prosecution service cannot deprive someone of their freedom. Courts alone can do this.
"If this is the case, then I believe the court has done so for a good reason. Incidentally, those who think that somebody is guilty or not must prove it," Putin said.
"I understand the concerns of the business community, because any activities by the federal authorities start and end as a sort of campaign," he said. "I wish to emphasize that no generalized inferences should be made from this case, which will not set a precedent for other cases, and all speculation and hysteria over this case should end, [and] the government should not be drawn into this discussion."
If that last remark did not get the attention of state officials who may be on the take, Putin also essentially declared war on corruption by giving the Cabinet two weeks to come up with a plan to root out institutional graft.
"Some countries have special systems for preventing corruption. I believe we should do this, too."
With the Kremlin's battle line apparently drawn, the RSPP went into crisis mode, convening an emergency meeting at a downtown movie theater to hammer out two strategies to deal with the developments -- one "nonconfrontational" and one "confrontational."
RSPP vice president Igor Yurgens told reporters that the lobby still held out hope of solving the issue through dialogue, which is why "we are very sorry that the president said 'no' to our appeal."
Others were less diplomatic.
"We need to consolidate business and civil society. The people who are conducting this campaign must realize that they are facing forces that will be an obstacle to them," said Yevgeny Yasin, head of the Higher School of Economics and, as an economics minister in the 1990s, one of the architects of early economic reforms.
"I think that in some sense the threshold of global love toward the president has been crossed and many people will think twice about who they vote for in the parliamentary and presidential elections."
Yasin said his take on what Putin said earlier in the day was this: "We, those in power, want business to prosper. There won't be any de-privatization -- everything will be fine. But when we want to attack someone, we will do so. We will crush anyone. You must realize that and be afraid of that!"
Most political analysts polled Monday interpreted Putin's remarks in similar fashion.
"It really feels like it would have been better for Putin to not say anything at all," said one political scientist at a leading Moscow think tank.
Others said Putin's remarks on justice for all sounded rather hypocritical.
"The principle of due process is great. But it is hard to take it seriously when applied to alleged economic offenses permitted in 1990s," said Christopher Granville, chief strategist at United Financial Group investment bank.
"There are literally millions of people who could be charged with similar offenses. Therefore the concept is not really applicable.
"What we see of course is the very opposite of the impartial law enforcement, but rather partial application of the law for political reasons. This cannot inspire investors' confidence," Granville said.
Georgy Satarov, head of the Indem think tank, said Putin's remarks suggested he had finally chosen which Kremlin faction to side with publicly.
"He showed that he is leaning toward a specific wing within his administration -- the siloviki," he said, referring to the group of former security service officials from St. Petersburg that Putin brought into the presidential administration and who are thought to be behind the attack on Yukos.
The rising tensions between the Kremlin and big business, however, are not the fault of overzealous siloviki alone, Satarov said.
"The [oligarchs] are paying the price now for placing the wrong bet [by backing Putin] in 2000," Satarov said.
Back then, he said, big business bought the idea that liberal economic policies can actually coexist with limited democratic institutions.
"Well, it's not like this, not in Russia. Here such models simply don't work," he said.
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