World's Energy

Johnson's Russia List Arthur E. Adams Professor of History Emeritus, Ohio State University In our country, wherever serious interest exists in Russia there is perplexed dismay at the apparent passivity of the Russian people. I am constantly asked, "Why are they so submissive and long-suffering? Why dona't they organize themselves, stand up and fight to win the rights every citizen should enjoy? Addressing these questions by means of a brief historical survey suggests three political, economic, social, and cultural forces that shaped Russiaa's people and that continue to influence their behavior. If Russians appear to be supine, long-suffering, and even hopeless, there are reasons for this. However, to make this statement is not to agree that the popular view is correct. Far-reaching and violent changes are presently underway, but the processes are complex and complicated, concealed by the public mediaa's concentration upon international relations and the flaws of Russiaa's leaders. Why are the Russians that way? At least in part because they lived for several hundred years as slaves. Russian slavery was called serfdom, a term only distantly related to the kind of feudal serfdom that developed in the West. In Russia, the prince or tsar granted land and male "souls" with their families to his servitors. The landowner became the owner of the land and the people who lived on it, enjoying the right to buy and sell his "souls" and to discipline and punish them, including the use of the knout and banishment to Siberia if they complained at the treatment they received. For his gift the tsar required the provision of military service, collection of taxes, road-building, and in the eighteenth century, work in new industries. The landowner decided who should marry whom, who should be sold, and whose sons should serve for life in the army. The serf with his family was usually granted the use of a small plot of land he could cultivate when he wasna't required for work on the ownera's fields. In the larger settlements and villages of the landowner the peasants governed their internal affairs organized as communes to which all male souls belonged. Essentially, the commune functioned as a self-governing organization that served as administrator and executor for the landowner, making crucial decisions about internal affairs by means of authoritarian-democratic procedures. The commune periodically reallocated the allotments of land assigned each serf, decided who would serve in the army, and how much labor or money should be given by each household to pay various charges levied by the landowner. It also exercised the right to punish its members. Serfdom expanded rapidly during the eighteenth century. Peter the Great and Catherine the Great, needing money and services for wars and reforms, gave hundreds of thousands of serfs to their favorites. And those serfs, bought and sold and given away like cattle, fought the wars, tilled the fields, manned the new factories, and somehow eked out their living from the tiny parcels granted for their use. During the nineteenth century, as was true in the United States during the decades prior to our civil war, the injustice of slavery became a subject of constant and growing debate among the governing classes. Political and moral condemnation of the system grew among the upper classes and even among the rulers, resembling the kinds of passions displayed in the United States between abolitionist and slave-owner states. Ultimately, these concerns culminated in Tsar Alexander IIa's "Proclamation of the Emancipation of the Serfs" in February 1861--a noble and courageous effort that unfortunately left the serfs almost as badly off as before. They were declared free to marry as they chose, to acquire property, engage in trade, and even to bring action into the courts. However, the land continued to be the property of the landowner. The "freed" peasants could buy the small plot of land they had previously occupied, but they were saddled with redemption payments owed the landowners under conditions that invariably gave the landowners the upper hand in settlement negotiations. In effect, this arrangement pinned millions of peasants to the land, obligating them to pay for it. Redemption payments were to be completed within 49 years, and because the conditions of payment proved so difficult the redemption system was abolished in 1905. The communal system also continued to rule local affairs until 1904, although Michael Florinsky noted that "the deadening hand of communal organization in some manifestations lasted until 1917." In short, the freeing of the serfs was botched and incomplete. It left millions of serfs pinned to the land as before and bearing the painful obligation of working off their new-found debts by laboring in the land-ownersa' fields or finding some other means of payment. It is useful to compare the numbers of black slaves freed in the United States and those "freed" by the Emancipation Proclamation in Russia. Census figures in the United States recorded a total population of 31,183,744 in 1860, of which 3,950,528 were slaves. Our Emancipation Proclamation freed roughly four million black slaves, or 12.7% of our total population. In Russiaa's case out of a population of 60,000,000, 49,486,065 were peasants. In other words, the Russian emancipation "freed" 82% of the population. (1) We know well the cultural, economic, and psychological traumas our nation endured during the process of emancipation, and we are very much aware that slavery laid a blight on the lives of American black people some of which continues right into this century. Although racial prejudice played, and still plays, a unique role in the American experience, this comparison brings home the fact that 82% of the Russian population suffered from a form of slavery right into the twentieth century. Serfdom contributed to the character of Russiaa's masses, accustoming them to accept living and working conditions they could not escape, teaching them to bow to the cruel and capricious willfulness of their masters. The lessons learned from the mistreatment of centuries have not been easily erased. The Russian Orthodox Church and the faith it embodied also bear great responsibility for the passivity and submissiveness of the Russian people. It was unlike the Roman Catholic Church with its moral principles, its learned priests and borrowings from the Greek philosophy, Roman law, and the Judeo-Christian legacy, and its amazing ability to adapt and adjust to conditions in the secular world. Also, the Russian Church was unlike the protestant denominations of the West where reason, morality, and good works were made keys to salvation. These influences have never been present in the Russian faith. Priests did not preach; monks did not write learned tomes for the enlightenment of the flock. Beginning in the sixteenth century the state made itself the ruler of the church. Ivan the Terrible made it clear that State and Church were one, claiming divine authority for himself. In the early years of the eighteenth century, Peter the Great went even further, by making church administration a state responsibility and establishing an ecclesiastical committee, the Synod. Thereafter the chief administrators of the church were appointed by the tsar and carried out his commands. Little protest was expressed among religious officials and the laity about the secularization of the Church. However, here and there, over the years one or another protestant group raised its head, but its leaders and followers were quickly isolated or exiled. The Russian faith consists almost wholly of belief in the magic effect of ritual. Through all of Russiaa's history, the faithful have attended services without preaching, without moral guidance, or rules of belief and behavior to be followed. In the beautiful Russian churches the mass is performed, the congregation participates in the proceedings without understanding their significance. The ritual is the magic. One performs it, or watches the priest,s performance, and feels peace or satisfaction when the ceremony is complete. During week-days the priests performed other sacred rituals--marriage, birth, death--and received payment for each duty performed. Throughout the eighteenth and nineteenth centuries, men and women of the upper classes gazed out at the land, pondering the life of the people. They were awed by those millions of serfs who displayed such endurance and courage, who worked all their lives, accepting cruel punishment as their due and displaying contentment with the mystery of the mass. And because the faith of the serfs seemed to be so profound, the more learned men and women developed theories that the serfsa' faith was the source of Russiaa's unique character. Writers and publicists discovered in the masses a spiritual virtue of unity in the faith and the peasant commune. Some defined the "special" character as a quality of mystic-religious oneness that rose from the innate strength and goodness of the Russian soul. In time they concluded that this special goodness was destined someday to penetrate the sinful West and bring love and peace to the world. This belief joined with national pride, creating theories that the nation embodied the special goodness of the people, and that this special virtue was destined to save mankind. Feodar Dostoevsky dramatically expressed this conviction when he prophesied that someday Russia would "show a way out of the sorrows of Europe in our Russian soul, universally human and all-uniting; to find a place in it, with brotherly love, for all our brothers, and finally perhaps to speak the final word of the great harmony of all, of the brotherly unison of all nations according to the law of the gospel of Christ." Within the Church and among Russiaa's publicists, this special quality of unity was more imaginatively termed sobornost, a Russian word that stems from church and gives the idea of unity an overtone of holiness. These ideas were vigorously propagated by talented writers and thinkers in the latter years of the nineteenth century, and while to westerners the ideas may appear absurd, they are surely no more absurd than the British belief that civilizing the natives was the white mana's burden, or the idea popular once (and perhaps even now) that the United States has a manifest destiny to do good works in the world. The mystic-religious-nationalist concept of sobornost satisfied the needs of people who loved their country and their faith and needed to assure themselves that Russia stood for something vastly superior to the materialistic West. In fact, however, the Church failed to establish demanding principles of morality, good works, and the values of learning and law. This was a catastrophe for Russia with consequences so far-reaching that it helped to create generations of followers who were unable to compete in the world. This conclusion is not meant to be a condemnation of the Russian Church. Russia endured many catastrophes that could not have been avoided, and the Church suffered from them. For example, the Tatar occupation from the thirteenth century through almost the whole of the fifteenth century cut Russia off from the explosive developments of the western renaissance. Also, the crucial need of the first emperors to expand their land and fight off those who attacked them, compelled them to create an autocracy that submitted all elements of society to the need for money, laborers and troops. The Church was a victim of such events. It continued to teach little but respect for mystic rituals, and this left the Russian people without the intellectual weapons and institutions that might have helped them change Russiaa's history. A third major factor in the history that shaped the rural masses of Russia was the seventy-odd years reign of the Communists. The Bolshevik revolution of 1917 freed the peasants momentarily to seize the land they had so long coveted. For a few months, while the chaos of continuing war, allied invasion, and the merciless destruction of the former ruling classes kept the Bolsheviks busy, peasants ran wild, killing or driving landowners away, breaking up large holdings. A severe drop in agricultural production and a breakdown of procurement facilities for moving produce to the cities compelled Lenin to acknowledge that his theory of proletarian revolution suited the proletariat of the cities but not the land-starved, "petty-bourgeois" peasants. Determined efforts were made to establish Bolshevik dominance in the countryside during several years of civil war that left the party dictator of the nation but still struggling to restrain the peasants. For the peasants there was ultimately a gloomy realization that the new rulers were far more ruthless than the ones they had lost. They accepted the fact, but grimly continued the struggle to control the land in their own interests. Stalin soon realized that new and effective systems of controlling the agricultural production and procurement problems had to be created if the imperative to industrialize the nation was to be fulfilled. To meet these and other needs it was decided to collectivize agriculture in early 1930. Collectivization was not a system designed to improve the lives of peasants or the productivity of their work. It was essentially a means of consolidating thousands of private farms and placing them under communist control in fewer, manageable units. It was also designed to make procurement of agricultural produce for the cities more effective and to satisfy the need for agricultural products that could be exported to pay for machines needed from abroad to advance industrialization. Finally, it served as a welfare system for the hordes of rural people forced into the collective farms. The peasants fought the new system bitterly during Stalina's campaign to drive them into huge farms. Branding those who opposed the collectivization as Kulaks (petty capitalists) and enemies of the people, Stalin literally went to war against his own people. Peasants driven from their homes died from the fighting, from famine (five million in the Ukraine alone), or were exiled to Siberia during the early thirties. When this struggle was over, the peasants were packed into collective and state farms. Once again they were pinned to the land, with limited opportunities to escape, subordinated to their communist masters, seething with resentment, but cowed into acceptance and silence. The people of the cities were subjected to similar pressures throughout the communist regime. Stalina's policies and those of his successors consisted of unceasing efforts to drive Russiaa's industrialization forward in all haste. Threat of attack from Germany, and the war itself, intensified this effort, and at least for Stalin it justified the all-out effort to continue to whip the whole population into constant and heroic effort. Later, when the war was over, the devastation wreaked by the fighting was so terrible that there could be no rest before beginning the task of reconstruction. The communistsa' decades-long effort to transform the population into what was called "The New Soviet Man" was one of the most brutal and concentrated efforts to make over a whole population seen in the twentieth century. Stalin and his successors wanted Russiaa's people to become loyal, hard-working, dedicated, moral, and spiritually bound to the precepts of communism. To accomplish this transformation they employed an incessant barrage of propaganda designed to instill the masses with a godless religion that idealized productive labor, unquestioning loyalty to the leaders and their ideology, and total subordination to the will of the state. Education became a system to create the new Soviet man; youth and sports organizations indoctrinated the young; farms and industries and offices and the walls of buildings became billboards lauding in red and gold the glory of work and Russia. Literature, higher education, music and science were judged by the quality of their socialist message. To achieve the loyalty and effort Stalin demanded, the secret police and hordes of zealots from a variety of organizations including the party itself were assigned the task of ferreting out the doubter, the dissenter, the person whose knowledge or bourgeois grandfather or almost any expression of dissatisfaction seemed to signify deviance from total loyalty and support. For those who were found less than loyal--and there were millions--punishment varied from harassment and loss of employment, to torture, imprisonment, execution or exile.(2) The ultimate effect was to create a culture where family members dared not express dissenting opinions to one another. A whisper, a lifted eyebrow, or something one had said to a friend years before might attract the attention of the thought police and earn a ticket to a labor camp for life. Despite such mistreatment, or perhaps because of it, millions of men and women fought and died defending the nation during World War II that cost the lives of seven million military personnel and civilians. Khrushchev and his successors, though rapidly losing momentum and faith in their doctrines, managed to prolong many aspects of Stalina's system until the arrival of Gorbachev, Yeltsin and Putin. The details of this recent period are too well known to require summary here, but the conclusion is undeniable--communisma's reign marked the third great cultural force impacting the people with demands so rigorous that, like serfdom, the only possible response for those who could not escape was acceptance, submission, and silence. What does this tracing of the Russian peoplea's history signify? That the people are now so beaten down, abused, and conditioned by their past that there is no hope for them? Such a conclusion seems quite reasonable, but many signs indicate that more hopeful conclusions may be possible. The rural population has been diminished by the growth of industries and cities. At present 87.7 percent of the labor force is urban; only 12.7 percent is rural. Most Russians now live in the cities where, although living and working conditions are difficult, there is extensive opportunity for exchanging views with associates. Local and national groups act in defense of workers. Russian organizations resembling the Westa's NGOa's work for change deemed essential, and several hundred thousand of them are now registered in the country. The computer internet is flourishing with six million users. Although the central government owns or controls the national television companies, 7,300 more or less independent television stations operate around the country along with 65 million radios.(3) Russians travel abroad. Despite Western concern about official suppression of the press, close observers are constantly surprised at the boldness of public criticism. In sum, a wide variety of economic and social processes appear to be improving the quality of everyday life. It seems possible that through the complex mess of botched reform efforts, oligarchs punished and unpunished, and several hundred other developments now taking place, there may be a glimmer of hope that the long-suffering, grimly enduring people may be changing in character. If this is true, it is wonderful news, but the promise of progress may take generations to be fulfilled. One can only hope that the people find the courage and knowledge to play forceful roles in the way their lives are to be shaped in the future. They have much to escape-the slavery of serfdom, the failure of their religion to provide them with the principles and rules needed for life in the world, and the cruel communist effort to create a great industrial nation on the backs of the new Soviet Man. One small but impressive example of change in the right direction appeared early in January of 2005, when elderly people staged a kind of sit-down strike in the cities, objecting to the governmenta's bungled effort to cut back on old folksa' and other pensionersa' benefits. This demonstration called forth an immediate and responsive effort on the part of the government to backtrack, to adjust, to explain and correct its mistakes. Does this exhibit a remarkable step forward, with Russiaa's government hastily leaping to satisfy the publica's expressed need? It closely resembles the processes of interaction we call democracy.
(1) Wallace, Sir Donald Mackienzie. RUSSIA, Praeger, 1970. P.417; United States Population 1860. http://fisher.lib.virginia.edu/collections/stats/histcensus/php/state.php).
(2) Conquest, Robert, THE GREAT TERROR. A REASSESSMENT. Oxford University Press, 1990, pp. 484-489. He estimates twenty million dead from Stalina's terror, not including peasant losses of the early thirties.
(3) THE WORLD FACTBOOKRUSSIA, CIA. Updated through 2004. Pp.10-12.

By Marshall I. Goldman

From Foreign Affairs, November/December 2004

Summary: The jailing of Russian oil tycoon Mikhail Khodorkovsky has revealed the fault lines running through the post-Soviet political economy. The reforms and privatization of the 1990s were so flawed and unfair as to make them unstable. A backlash was inevitable. Given Vladimir Putin's authoritarian tendencies, that backlash has proved equally flawed and unfair-and perhaps equally unstable.

Marshall I. Goldman is Kathryn W. Davis Professor of Russian Economics, Emeritus, at Wellesley College, Associate Director of the Davis Center for Russian and Eurasian Studies at Harvard University, and the author of The Piratization of Russia: Russian Reform Goes Awry.

THE KHODORKOVSKY AFFAIR

In mid-September, Russian President Vladimir Putin announced plans for a radical overhaul of his country's political system, with the goal of centralizing power in the Kremlin. Acting in the wake of the hostage crisis in Beslan, during which Chechen separatists killed hundreds of children, Putin claimed that his power grab was necessary to help Russia win its own war on terrorism. Whatever his motivations, the move represents a major step backward for Russian democracy.

Putin's recent actions may be the most drastic of his tenure so far, but they were hardly the first signs of his willingness to deploy the power of the Russian state for his own purposes. A year earlier, he had Mikhail Khodorkovsky, the head of the oil group Yukos and one of the world's richest men, arrested and thrown in jail on charges of fraud and tax evasion-a move widely interpreted as a declaration of war against the so-called oligarchs, who have amassed phenomenal wealth and power since the collapse of the Soviet Union in 1991. A key question now is whether Khodorkovsky's arrest is the forerunner of what will happen to many of his business colleagues.

The Khodorkovsky affair has been a shock for those who had come to believe in the "new Russia." During the previous dozen years, Russians had rejected the Communist Party and the Soviet Union's command economy. To the applause of most of the outside world, Russian and foreign economic advisers drew up an elaborate program for the privatization of industry, housing, and land. In an attempt at "people's capitalism," virtually every Russian was issued a voucher good for shares in a soon-to-be-private enterprise. Stock markets sprouted almost everywhere, while industrial ministries gave way to privately owned, Russia-based multinational corporations.

The largest of these corporations were producers of petroleum, natural gas, or metal that had previously been controlled by a Soviet industrial ministry. Their new executives became dazzlingly wealthy almost overnight. In May 2004, the Russian edition of Forbes identified 36 of these oligarchs as being worth at least $1 billion. Khodorkovsky topped the list with an estimated net worth of $15 billion.

These events appeared to signal the triumph of the market and private industry. To be sure, there were unsettling reports of shady dealings during the takeovers, but most observers explained them away as inevitable side effects of such a far-reaching transformation. After all, did the United States not once have its own robber barons, who, despite early roughhouse tactics, became the leaders of some of the country's most prominent corporations and the benefactors of its most respected charities and foundations? Besides, many argued, it was only a matter of time before the Russian government would intervene to correct the most flagrant misbehavior, much as Theodore Roosevelt did with the passage of the Sherman Antitrust Act and other Progressive reforms during the early years of the twentieth century.

The difference in Russia is that the basic reforms and privatization of the 1990s were so flawed and unfair that they created an unstable business environment. A radical resettling of existing ownership arrangements was thus all but inevitable. And given Putin's authoritarian tendencies, it is hardly surprising that when the move came it was equally flawed and unfair-and perhaps equally destabilizing. What has happened to Khodorkovsky and nine of his now-jailed or exiled senior associates is, in short, more than the dramatic saga of a rich man's fall from grace or a despot's capricious revenge: it is a window onto the cracks that run through Russia's post-Soviet political economy.

OIL SLICKS VS. GOVERNMENT STIFFS

The reforms of the 1990s were mainly the work of the advisers brought in under then president Boris Yeltsin. Fearing that the population might soon have a change of heart and turn its back on reform, Yegor Gaidar and Anatoly Chubais, the chief Russian architects of the process, decided to accelerate it, selling off state resources and enterprises at little or no charge. Not long into the process, ownership of some of Russia's most valuable resources was auctioned off by oligarch-owned banks under a scheme called "Loans for Shares." Although they were supposedly acting on behalf of the state, the bank auctioneers rigged the process-and in almost every case ended up as the successful bidders. This was how Khodorkovsky got a 78 percent share of ownership in Yukos, worth about $5 billion, for a mere $310 million, and how Boris Berezovsky got Sibneft, another oil giant, worth $3 billion, for about $100 million.

When it came to dealing with the oligarchs, the government was generally unable to exercise much control. Since the state was very weak, these "new Russians" paid little or no taxes on their purchases. And if most American robber barons had at least created something out of nothing, the Russian oligarchs added nothing to what already was something. Virtually all their wealth came from the seizure of Russia's raw material assets, which until 1992 had been owned and managed by the state. An oligarch's success, in other words, almost always depended on his connections to the government officials in charge of privatizing the country's rich energy and mineral deposits, as well as on his ability to outmaneuver or intimidate rivals. (Two senior Yukos executives have been charged with murder and attempted murder, and the mayor of Nefteyugansk, where Yukos' major producing unit is headquartered, was murdered after criticizing the firm's failure to pay taxes.)

By the time Putin succeeded Yeltsin in 2000, there was much to remedy. One of Putin's first steps was to declare a change in the rules of the game. As he put it in a meeting with the oligarchs in February 2000, "It is asked, what then should be the relationship with the so-called oligarchs? The same as with anyone else. The same as with the owner of a small bakery or a shoe repair shop." That Putin said this at a special meeting with the oligarchs and not with a group of bakers or cobblers is beside the point; the statement was taken as a signal that the tycoons would no longer be able to flout government regulations and count on special access to the Kremlin. In July of that year, Putin told the oligarchs that he would not interfere with their businesses or renationalize state resources as long as they stayed out of politics-that is, as long as they did not challenge or criticize the president. Although the promise provided some reassurance, it also displayed a warped concept of how markets, businesses, and the state are supposed to function in a democracy.

Limiting the oligarchs' political involvement proved difficult. As more people grew richer, some were inevitably tempted to expand their activities beyond business. Several, including Vladimir Gusinsky and Berezovsky, created media empires of television stations, newspapers, and magazines and used these outlets to attack not only each other, but also Putin, particularly for his policies in Chechnya and his inept response to the 2000 sinking of a nuclear-powered submarine in the Barents Sea.

As Putin started to feel betrayed by the oligarchs politically, others found themselves victimized economically. Investors in Khodorkovsky's projects regularly found that they had acquired worthless pieces of paper. The American investor Kenneth Dart had to write off an estimated $1 billion. The oil company then known as Amoco (and later as BP Amoco) had a similar experience. Both had put money into an oil-producing subsidiary that Khodorkovsky seized and stripped of its assets. Similarly, when the Russian company Tyumen Oil stripped the assets of a Sidanko Oil subsidiary, BP Amoco had to write off, at least temporarily, $200 million of its $500 million investment in Sidanko Oil.

After the Russian government declared a moratorium on the repayment of its debt on August 17, 1998, most Russian banks, including Khodorkovsky's Menatep, simply closed their doors, depriving hundreds of thousands of ordinary Russians of their savings. Rather than try to help depositors and other lenders, Khodorkovsky took whatever sound assets he could salvage and diverted them to a subsidiary in St. Petersburg, beyond the reach of his creditors. After lengthy and often halfhearted intervention by the government, Menatep eventually agreed to provide token compensation; so did Yukos, to those who had taken its stock as collateral for loans to the company. But by the time Khodorkovsky was through issuing new shares and watering down the old stock, few of the banks' depositors or lenders had much to show for their efforts.

Still, it was less Khodorkovsky's financial skullduggery than it was his interference in political matters that upset Putin. Khodorkovsky was reported to have offered Russia's two liberal parties, Yabloko and SPS (the Party of Right Forces), $100 million to unite and campaign together in opposition to Putin and his United Russia Party. And he broadly hinted that he would run for president in 2008, when Putin's term is due to expire.

Khodorkovsky also actively promoted legislation that would benefit Yukos. It was said that, to ensure such support, he bought control of as many as 100 seats in the Duma (the lower house of the Russian parliament), including several held by members of the Communist Party. Whether the rumors were true or not, he was able to head off attempts by the Duma to increase taxes on petroleum producers in 2001 and 2002.

Such heavy-handed lobbying is hardly unknown in the U.S. Congress, especially on energy matters, but to Putin it represented a violation of the deal he had offered the oligarchs. The siloviki, the law-and-order types from the KGB, the police, and the army that Putin had been bringing into the government, felt the same way. Khodorkovsky's methods were a fundamental challenge to their control of the country-or, as one noted, "a danger and threat to the Russian state."

FLEECING THE BEAR

Ironically, just a few years earlier, Khodorkovsky had decided to turn over a new leaf, at least in financial matters, and he started to change the way he ran his business. In 1999, he espoused the importance of transparency for himself and his fellow oligarchs. He hired Western accounting firms, and Yukos became one of the few Russian companies to acknowledge who its main stockholders were. It began to pay back wages to its employees and publish a more complete statement of its tax obligations. Khodorkovsky reorganized Yukos' board of directors, bringing in several well-respected Western investors, lawyers, and businessmen. He also established the Open Russia Foundation, a charity supporting educational and cultural projects, and recruited Henry Kissinger, Lord Rothschild, and Arthur Hartman, the former U.S. ambassador to the Soviet Union, for its board. Once he had made his billions, he, like the American robber barons, decided it was time to become charitable and play by the rules.

As many in the West applauded these changes, Khodorkovsky became increasingly self-confident and even brazen. Eager to export more oil, he called for the building of new pipelines: one to the Arctic port of Murmansk (a base for exports to the United States), another through Siberia (toward Asian markets). For the latter, he favored a pipeline to China, despite the government's preference for a route to the Pacific, which would serve Japan. Although both proposals already were a direct challenge to Transneft, the state monopoly that owned and operated all of Russia's pipelines, Khodorkovsky announced that he was prepared to build his own pipelines if necessary.

To top it off, at a February 2003 meeting in the Kremlin, Khodorkovsky complained to Putin that the executives of a state-owned oil company, Rosneft, had overpaid for a smaller company in a sweetheart deal. (He was angry because Yukos had also been interested in the company but had refused to buy it at what it considered an inflated price.) Khodorkovsky's denunciation of Rosneft was an open challenge to Putin because Rosneft's head, Sergei Bogdanchikov, was closely associated with the siloviki. More and more, it appeared that, with his immense wealth, control over what was about to become the world's fourth-largest oil company, and considerable influence in the Duma, Khodorkovsky saw himself as beyond the control of the Kremlin. No businessman had ever reached that point before, neither under the tsar nor under Yeltsin, and Putin was determined not to let it happen on his watch either.

Khodorkovsky's financial shenanigans were hardly exceptional. The authorities could have brought similar charges of underpayment, tax evasion, bribery, murder, or attempted murder against many of the oligarchs. It was the audacity that Khodorkovsky and his Yukos subordinates displayed in interfering directly in politics that made them a special target. Like Gusinsky (who was jailed for a time) and Berezovsky (who was exiled) before him, Khodorkovsky provoked Putin by criticizing him and supporting opposition parties and candidates.

To those who believe in the supremacy of the state-as most Russians do-Khodorkovsky's aggressive behavior was suspect on any number of counts. An even more basic question, however, was whether he has the right to claim for himself so much of the wealth that had until recently belonged to the state or, supposedly, to the people at large. This issue loomed increasingly large for the Kremlin and the siloviki. From their perspective, the oligarchs had done nothing to deserve such good fortune. The country's resources had been stolen through the manipulation of a poorly conceived privatization process, thanks to rigged bids, bribes, violence, and dubious interpretations of the law. Until late 1999, moreover, almost none of the oligarchs had done much to restructure or improve the assets they had acquired from the state.

As a few private individuals seized state property, a third of Russia's population was thrust below the poverty line, exacerbating public resentment over such radical redistribution of wealth. According to a recent poll, 77 percent of Russians feel that privatization should be either fully or partially revised. Only 18 percent oppose renationalization. Many of those interviewed were also unhappy with the market system in general and sought to discredit the whole privatization process.

The siloviki, meanwhile, had become concerned that access to and ownership of more and more of Russia's mineral deposits were being sold to foreign multinational corporations, including some owned predominantly by Americans. By the time of Khodorkovsky's arrest in October 2003, Tyumen Oil had formed a partnership with BP, and several other companies (such as ConocoPhillips) were secretly engaged in similar negotiations. When Khodorkovsky, after announcing a pending merger between Yukos and Sibneft, began to negotiate with both ExxonMobil and Chevron-Texaco, government hard-liners grew truly alarmed. They feared that Putin would wake up one morning and discover that Russia's most strategic and valuable energy companies had been taken over by Western corporations. It was one thing for the foreign companies to be minority investors, but quite another for them to buy operational control, especially when some of their payments to the oligarchs were being diverted abroad. Roman Abramovich's purchase of London's Chelsea soccer team for $400 million may have pleased Londoners, but it angered Moscow's mayor, Yuri Luzhkov, who wanted to know why the money was not going to improve a Moscow team instead.

That many of the oligarchs were Jewish also helped revive some old and ugly prejudices. It was only a matter of time before a Russian nationalist like Alexander Tsipko dusted off the image of "Jewish capital" from the tsar's days, claiming (incorrectly) that Khodorkovsky had arranged for the transfer of his "stake in Yukos to the guardianship of Lord Rothschild's Institute of Jewish Policy Research in Britain" if anything happened to him.

In short, the oligarchs were an easy target. After Khodorkovsky's arrest, Putin's poll ratings rose from an already high 70 percent to an impressive 80 percent. In addition, running on the slogan "Russia for Russians," Rodina, a nationalist political party only a few months old, was able to win nine percent of the vote in Duma elections two months later. Most Russians feel, with good reason, that if the country's economic reforms in general, and privatization in particular, had been carried out more honestly and equitably, the economic results would have been better, the country's income disparities less pronounced, and control over its resources more widely dispersed.

PUTIN'S HEAVY HAND

If it is difficult to defend Khodorkovsky and most of the other oligarchs, it is equally difficult to justify the methods Putin used against them. The machinations of the siloviki have been particularly aggressive. According to the sociologist Olga Kryshtanovskaya, the siloviki now constitute 50 to 70 percent of the Kremlin's staff. Although most are not proponents of communism, they do seek to restore power to the state and ensure that the security forces regain a central, if not commanding, role in Russian politics. As Rosneft's Bogdanchikov, a key siloviki ally, boasted, "three days in Butyrke Prison and [Khodorkovsky and his aide Roman Lebedev] will understand who is the master of the forest."

To prevent the transfer of Yukos' ownership to Western companies, state authorities ordered the seizure of 40 percent of Yukos' stock, along with Khodorkovsky's arrest. They also sought to force Khodorkovsky and his aides to transfer control of the company to the state or at least to a more sympathetic Russian owner. Threats against Gusinsky had brought good results: after a few days in prison in a cell with common criminals, some of whom were thought to be infected with HIV, he had signed over his shares in Media Most to Gazprom, Russia's state-controlled gas monopoly.

But the Yukos executives were more resolute. Despite being denied bail and given ever-lengthening prison terms, they refused to turn over their shares. They held out in the face of the prosecutor's warnings that their sentences might stretch from days, weeks, and months into decades. Bemoaning the fact that "sadly, it is impossible to give Khodorkovsky a longer term" than ten years, Deputy Prosecutor-General Vladimir Kolesnikov suggested that the law be amended to extend the maximum term. And to deter anyone who might be tempted to come to Khodorkovsky's defense, Kolesnikov warned, "Let those who are not yet in jail think hard about what they are doing."

Arresting rich businessmen, even billionaires, is no longer a novelty in Russia or elsewhere. But in Russia they are arrested by masked men armed with machine guns, and they are denied bail. Those who are not jailed are increasingly pressured to accept siloviki as partners or return ownership to the state, lest their corporations be stripped of their value. The Natural Resource Ministry has already revoked Yukos' license to drill in some parts of Siberia. In July, the Ministry of Justice threatened to seize the company's largest subsidiary, Yuganskneftegaz, which is worth between $17 billion and $24 billion. Contemplating, ironically, a favorite tactic of Khodorkovsky's, for a time the government considered underpricing the asset and selling it off for only $1.75 billion, as partial payment for the company's $3.4 billion tax bill for the year 2000. At that rate, Yukos would not be able to pay its bill for 2000, or for any year since.

There are those in the Kremlin who would see such a sale as a golden opportunity for the state and the siloviki to regain control from people they consider to be undeserving hucksters. As a sign of what might be ahead, Igor Sechin, a senior Kremlin aide to Putin, has also just been appointed chairman of Rosneft, the state oil company. (His daughter just married the son of Vladimir Ustinov, Russia's chief prosecutor-general in charge of the Yukos case.) A few weeks later, Putin announced that Rosneft would be merged into Gazprom. As Russia's largest company, the new state-controlled entity would thereby become the most likely candidate to pick up Yuganskneftegaz should Yukos be forced to sell it off to pay taxes.

REFORMING THE REFORMS

Any examination of how Russia has come to find itself in such a situation must begin with a look at the original privatization process. The architects of the reforms can rightly claim that their blueprint achieved its main objective: the communists have not regained control of the government. But by moving so quickly to privatize state resources while failing to encourage the startup of new businesses, the reformers inadvertently paved the way for the rise of the oligarchs-and for the state's counterattack. And as the 2003 election results demonstrated, the oligarchic seizure of Russia's resources triggered support for the neo-nationalists-whose agenda is not all that different from that of the communists, at least not when it comes to the state's regaining control of mineral resources.

In response to these political trends, in April, Russia's State Audit Chamber-the equivalent of the U.S. Government Accountability Office-convened a one-day retreat with three Americans and four Europeans to consider what might be done to redress abuses of the privatization process. Its final report is expected by the end of this year, but Russian officials have said in an interim report that inspections of 140 privatized companies have revealed 56 violations of state regulations. Igor Shuvalov, one of Putin's economic advisers, later warned that Yukos would not be the last company to find itself under attack.

The return of the statists and their push for redress are bound to unsettle existing and potential private investors, Russian and foreign. Certainly, BP should be worried about the $7 billion it has already invested in a partnership with Tyumen Oil, a company that has been accused of misbehavior similar to Yukos', including abuse of the legal system, unfair payment for state resources, and tax delinquency. The partnership itself has also been charged with violating the official state secrets act by disclosing the extent of the country's petroleum reserves, even though it is information that the partnership's senior executive officers needed to know. State prosecutors and tax authorities have also raided the offices of Sibir Airlines, the metal producer RusAl, and the oil company Sibneft (which paid taxes on only 7 percent of its profits, less than a third of the statutory rate and half of what Yukos paid).

Foreign investors have not been spared, either. A 1993 tender for development on Sakhalin Island by an ExxonMobil-led consortium was suddenly revoked in February after the consortium was accused of failing to invest as much as it had promised. Since almost all the privatization efforts have involved underpayment, cutting corners, tax avoidance, intimidation, or outright physical force, every new owner has to fear that, if he can be identified, someday a government agency will also single him out for harassment. As a result, the crackdown may have unintentionally set back efforts to make Russian business more transparent.

Recognizing the anxiety that these measures have triggered, Putin has tried to reassure the business community. He made a point of meeting with James Mulva, the CEO of ConocoPhillips, to encourage him to bid for the shares the state still holds in Lukoil. In a December 2003 meeting with the Russian Chamber of Commerce, moreover, Putin noted, "If five, seven, or ten people broke the law, that doesn't mean the others did the same. The rest may not have made as much money, but today they sleep soundly."

This is hardly comforting. Who knows which five, seven, or ten of the 5,500 or so privatized businesses Putin was referring to? And if the past is any precedent, it would be unusual, as the State Audit Chamber report suggests, for so few companies to come under scrutiny in the end. So despite Putin's reassurances, most of those who benefited from privatization will see Khodorkovsky's imprisonment as a warning of what could happen to them if they get too ambitious or challenge the Kremlin.

Russia will undoubtedly survive the flawed process of privatization, just as it has survived more serious crises. But the direction Putin is taking is disappointing. By merging state-controlled Gazprom with state-owned Rosneft, he has signaled once again that the state will become a strong if not dominant voice in energy policy and economic planning. Moreover, the new entity has become the most likely suitor for Yuganskneftegaz once, as seems likely, Yukos is forced to sell it. If the purchase occurs, Gazprom-Rosneft will then account for 25 percent of the country's energy production. Combined with Putin's crackdown on the media and his September order to terminate the direct election of governors and members of the Duma, his increased involvement in economic matters is worrisome. It means that, under Putin, Russia is reversing some of the most important economic and political reforms it adopted after freeing itself from the yoke of communism.

By Nigel Hawkes
A medical experiment proves that the ancient Chinese practice of inserting needles to ease pain may help some arthritis sufferers

ACUPUNCTURE can reduce pain and improve mobility in patients suffering from arthritis by 40 per cent, scientists have found.

The news comes from one of the biggest scientific trials of the ancient Chinese treatment, carried out by a research team from the National Institutes of Health in America. At the same time a smaller trial in Britain has suggested that acupuncture might be effective in relieving chronic neck pain.

A total of 570 patients, aged 50 and older, with osteoarthritis of the knee took part in the American trial. All had suffered significant pain in their knee the month before joining the trial but had never been treated with acupuncture before.

They were assigned at random to one of three treatments: genuine acupuncture, "sham" acupuncture or a self-help course that teaches patients to manage their own condition.

Throughout the 26-week trial participants continued to receive their normal medical care, including anti-inflammatory drugs and pain relievers.

By the eighth week patients who received genuine acupuncture showed a significant increase in function compared with the sham treatment and self-help groups, the research team report in Annals of Internal Medicine. By Week 14, they were also experiencing a significant decrease in pain.

Pain was reduced by about 40 per cent and mobility improved by almost 40 per cent in the volunteers receiving acupuncture.

The trial, led by Brian Berman, of the University of Maryland School of Medicine in Baltimore, was funded by the National Centre for Complementary and Alternative Medicine (NCCAM) and the National Institute of Arthritis and Musculoskeletal and Skin Diseases — both of the National Institutes of Health in the United States.

Stephen Straus, the director of NCCAM, said: "For the first time a clinical trial with sufficient rigour, size, and duration has shown that acupuncture reduces the pain and functional impairment of osteoarthritis of the knee. These results also indicate that acupuncture can serve as an effective addition to a standard regimen of care and improve quality of life for knee osteoarthritis sufferers."

Sham acupuncture, which has been employed in a number of other trials, has been criticised for not providing a foolproof control condition. It is claimed that even if needles are not placed in the correct treatment points they might trigger a response in the patient. Because of the difficulty of faking needle insertion, designing acupuncture trials is notoriously difficult.

Acupuncture, which originated in China more than 2,000 years ago, is based on the idea that energy, or qi, flows along channels called meridians in the body. Practitioners say that they block or stimulate these channels by inserting thin needles at precise points and manipulating them.

A British study, also published in Annals of Internal Medicine, reached a different conclusion, finding that both genuine and sham acupuncture appeared to reduce neck pain.

Researchers at the University of Southampton compared genuine and sham treatments from the same therapist on 124 patients with chronic neck pain aged between 18 and 80.

Over 12 weeks both groups reported a decrease in pain levels of more than 60 per cent. George Lewish, who led the trial, attributed the success with sham treatments to "the non-specific yet powerful effects which are probably part of the treatment process".

Acupuncture is a form of Chinese medicine that involves inserting fine needles into precisely-defined places on the body

It is based on the idea that "life force" flows through the body along fixed "meridians" and that the blockages of these pathways causes illness. The insertion of needles is believed to unblock the pathways

There is no evidence, to scientific Western eyes, of the existence of the meridians, or the twelve pulses, six in each wrist, that are used to diagnose disease

Acupuncture needles come in nine different types, each with a different purpose. The angles and speed of insertion and whether a needle is twisted, pumped or left in place depend on the disorder

There is no strong evidence that acupuncture can cure disease, but there is evidence that it can help to control pain. The reason for this is probably that the pain pathways are influenced by the needles, which may block the transmission of nervous stimuli

A secondary effect is that of suggestion, or the placebo effect — the fact that people tend to feel better when they are being treated, almost regardless of the treatment

Article

HUMAN EVENTS asked a panel of 15 conservative scholars and public policy leaders to help us compile a list of the Ten Most Harmful Books of the 19th and 20th Centuries. Each panelist nominated a number of titles and then voted on a ballot including all books nominated. A title received a score of 10 points for being listed No. 1 by one of our panelists, 9 points for being listed No. 2, etc. Appropriately, The Communist Manifesto, by Karl Marx and Friedrich Engels, earned the highest aggregate score and the No. 1 listing.

1. The Communist Manifesto

Authors: Karl Marx and Freidrich Engels
Publication date: 1848
Score: 74
Summary: Marx and Engels, born in Germany in 1818 and 1820, respectively, were the intellectual godfathers of communism. Engels was the original limousine leftist: A wealthy textile heir, he financed Marx for much of his life. In 1848, the two co-authored The Communist Manifesto as a platform for a group they belonged to called the Communist League. The Manifesto envisions history as a class struggle between oppressed workers and oppressive owners, calling for a workers' revolution so property, family and nation-states can be abolished and a proletarian Utopia established. The Evil Empire of the Soviet Union put the Manifesto into practice.

2. Mein Kampf

Author: Adolf Hitler
Publication date: 1925-26
Score: 41
Summary: Mein Kampf (My Struggle) was initially published in two parts in 1925 and 1926 after Hitler was imprisoned for leading Nazi Brown Shirts in the so-called "Beer Hall Putsch" that tried to overthrow the Bavarian government. Here Hitler explained his racist, anti-Semitic vision for Germany, laying out a Nazi program pointing directly to World War II and the Holocaust. He envisioned the mass murder of Jews, and a war against France to precede a war against Russia to carve out "lebensraum" ("living room") for Germans in Eastern Europe. The book was originally ignored. But not after Hitler rose to power. According to the Simon Wiesenthal Center, there were 10 million copies in circulation by 1945.

3. Quotations from Chairman Mao

Author: Mao Zedong
Publication date: 1966
Score: 38
Summary: Mao, who died in 1976, was the leader of the Red Army in the fight for control of China against the anti-Communist forces of Chiang Kai-shek before, during and after World War II. Victorious, in 1949, he founded the People's Republic of China, enslaving the world's most populous nation in communism. In 1966, he published Quotations from Chairman Mao Zedong, otherwise known as The Little Red Book, as a tool in the "Cultural Revolution" he launched to push the Chinese Communist Party and Chinese society back in his ideological direction. Aided by compulsory distribution in China, billions were printed. Western leftists were enamored with its Marxist anti-Americanism. "It is the task of the people of the whole world to put an end to the aggression and oppression perpetrated by imperialism, and chiefly by U.S. imperialism," wrote Mao.

4. The Kinsey Report

Author: Alfred Kinsey
Publication date: 1948
Score: 37
Summary: Alfred Kinsey was a zoologist at Indiana University who, in 1948, published a study called Sexual Behavior in the Human Male, commonly known as The Kinsey Report. Five years later, he published Sexual Behavior in the Human Female. The reports were designed to give a scientific gloss to the normalization of promiscuity and deviancy. "Kinsey's initial report, released in 1948 . . . stunned the nation by saying that American men were so sexually wild that 95% of them could be accused of some kind of sexual offense under 1940s laws," the Washington Times reported last year when a movie on Kinsey was released. "The report included reports of sexual activity by boys--even babies--and said that 37% of adult males had had at least one homosexual experience. . . . The 1953 book also included reports of sexual activity involving girls younger than age 4, and suggested that sex between adults and children could be beneficial."

5. Democracy and Education

Author: John Dewey
Publication date: 1916
Score: 36
Summary: John Dewey, who lived from 1859 until 1952, was a "progressive" philosopher and leading advocate for secular humanism in American life, who taught at the University of Chicago and at Columbia. He signed the Humanist Manifesto and rejected traditional religion and moral absolutes. In Democracy and Education, in pompous and opaque prose, he disparaged schooling that focused on traditional character development and endowing children with hard knowledge, and encouraged the teaching of thinking "skills" instead. His views had great influence on the direction of American education--particularly in public schools--and helped nurture the Clinton generation.

6. Das Kapital

Author: Karl Marx
Publication date: 1867-1894
Score: 31
Summary: Marx died after publishing a first volume of this massive book, after which his benefactor Engels edited and published two additional volumes that Marx had drafted. Das Kapital forces the round peg of capitalism into the square hole of Marx's materialistic theory of history, portraying capitalism as an ugly phase in the development of human society in which capitalists inevitably and amorally exploit labor by paying the cheapest possible wages to earn the greatest possible profits. Marx theorized that the inevitable eventual outcome would be global proletarian revolution. He could not have predicted 21st Century America: a free, affluent society based on capitalism and representative government that people the world over envy and seek to emulate.

7. The Feminine Mystique

Author: Betty Friedan
Publication date: 1963
Score: 30
Summary: In The Feminine Mystique, Betty Friedan, born in 1921, disparaged traditional stay-at-home motherhood as life in "a comfortable concentration camp"--a role that degraded women and denied them true fulfillment in life. She later became founding president of the National Organization for Women. Her original vocation, tellingly, was not stay-at-home motherhood but left-wing journalism. As David Horowitz wrote in a review for Salon.com of Betty Friedan and the Making of the Feminine Mystique by Daniel Horowitz (no relation to David): The author documents that "Friedan was from her college days, and until her mid-30s, a Stalinist Marxist, the political intimate of the leaders of America's Cold War fifth column and for a time even the lover of a young Communist physicist working on atomic bomb projects in Berkeley's radiation lab with J. Robert Oppenheimer."

8. The Course of Positive Philosophy

Author: Auguste Comte
Publication date: 1830-1842
Score: 28
Summary: Comte, the product of a royalist Catholic family that survived the French Revolution, turned his back on his political and cultural heritage, announcing as a teenager, "I have naturally ceased to believe in God." Later, in the six volumes of The Course of Positive Philosophy, he coined the term "sociology." He did so while theorizing that the human mind had developed beyond "theology" (a belief that there is a God who governs the universe), through "metaphysics" (in this case defined as the French revolutionaries' reliance on abstract assertions of "rights" without a God), to "positivism," in which man alone, through scientific observation, could determine the way things ought to be.

9. Beyond Good and Evil

Author: Freidrich Nietzsche
Publication date: 1886
Score: 28
Summary: An oft-scribbled bit of college-campus graffiti says: "‘God is dead'--Nietzsche" followed by "‘Nietzsche is dead'--God." Nietzsche's profession that "God is dead" appeared in his 1882 book, The Gay Science, but under-girded the basic theme of Beyond Good and Evil, which was published four years later. Here Nietzsche argued that men are driven by an amoral "Will to Power," and that superior men will sweep aside religiously inspired moral rules, which he deemed as artificial as any other moral rules, to craft whatever rules would help them dominate the world around them. "Life itself is essentially appropriation, injury, overpowering of the strange and weaker, suppression, severity, imposition of one's own forms, incorporation and, at the least and mildest, exploitation," he wrote. The Nazis loved Nietzsche.

10. General Theory of Employment, Interest and Money

Author: John Maynard Keynes
Publication date: 1936
Score: 23
Summary: Keynes was a member of the British elite--educated at Eton and Cambridge--who as a liberal Cambridge economics professor wrote General Theory of Employment, Interest and Money in the midst of the Great Depression. The book is a recipe for ever-expanding government. When the business cycle threatens a contraction of industry, and thus of jobs, he argued, the government should run up deficits, borrowing and spending money to spur economic activity. FDR adopted the idea as U.S. policy, and the U.S. government now has a $2.6-trillion annual budget and an $8-trillion dollar debt.
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