Putin and the Yukos affair - Update

President Vladimir Putin on Friday offered the nation's leading executives a new deal that few are likely to refuse: share your wealth or risk losing it. The state, Putin told nearly 800 business leaders from across the nation, will work to strengthen property rights and reduce bureaucracy, but businesses must "fully recognize their social duties" by sharing their wealth and helping to reduce poverty. "Businesses must aim their efforts at developing a system of new social guarantees for the population in line with the new demands of the time," Putin told a packed Hall of Columns in the House of Unions that included at least five billionaires.

"Business and the authorities will not only continue their dialog with each other, but, more than that, they, in my view, are duty-bound to work together and will work together to develop Russia, to modernize the Russian economy, to make our country stronger, richer and more prosperous....We must join forces to make the lives of people economically sound so that they have plenty to live on. "

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You go, Vlad.

You know, he may be a politician, and you may tell me he is corrupt, and it wouldn't surprise me, but that sounds better than anything I've ever heard any leader of our country ever say to business. And it's certainly a far cry from anything the current Oaf of Office says.

Khodorkovsky has been denied bail, Deputy Prime Minister Alexei Kudrin has trumpeted "the end of the oligarchy," unrelenting prosecutors have publicly warned all businessmen to toe the line, and the leading pro-business voice in the Kremlin, Alexander Voloshin, has been replaced. The result has been that the once-heated rhetoric coming from the so-called union of oligarchs has given way to cowed deference.

And I think that should give the people of Russia cause for some hope.

"The Kremlin has never before demonstrated so strongly that it did not want to discuss anything with big business," Makarkin said, referring to the three-week period in which Putin refused to meet with a business community in shock with Khodorkovsky's arrest.

...Metals-to-banking tycoon Vladimir Potanin explained the RSPP's decision to not press Putin publicly about Khodorkovsky, who still sits on the union's governing council, this way: "There is a level of detail into which you can go with the president, and one into which you had better not go. Today the president clearly stated that there should be a line between business and power. Many of my colleagues and I understand this and we don't intend to cross this line," Potanin said.

Would that American businesses had that kind of understanding. Alas, for us, it's the other way around.

One exception is Unified Energy Systems chief Anatoly Chubais, who has been called the father of the oligarchs for overseeing the rigged privatization auctions that formed the basis for most of their fortunes. Conspicuously absent from Friday's congress, Chubais chose instead to attend, together with Prime Minister Mikhail Kasyanov, the grand opening of the second unit of a hydropower plant in the Siberian town of Nizhnevartovsk.

Well, let's see what develops in the future with Mr. Chubais and the Prime Minister, who has been vocally in some opposition to Mr. Putin.

Analysts say the attack on Khodorkovsky was a reaction to his bid for greater political power at a time when Putin is determined to consolidate his own power base and wipe out any alternative sources of influence. Combined, the political power grab by Putin and the prospect of property being returned to the state led many to speculate Russia was returning to its Soviet past.

I hope that Putin's critics are wrong. It looks to me like it could be exactly what he says it is, and his refusal to meet with the businessmen right away just another reminder that they will not be able to outmaneuver him on this. He made the statement publicly at the time that Khodorkovsky's arrest did not signal a state clamp down, and used this finally granted meeting with big business heads to once again assure them and the country that there will be no return to the hardline of old days where everything was nationalized.

And despite his staunch defense of the attack on Yukos, Putin seemed anxious to contain tensions with the business community, insisting yet again that it did not presage a "deprivatization" campaign. "Any criminal case involving the world of business gives rise to suspicions and alarm, because a thought always arises whether there won't be a return to the past. There will not be, it is impossible,"

...In laying out the new deal, Putin agreed with businesses that security forces should not be used in settling business disputes, but he said businesses were acting in a similarly negative fashion. "It's often hard to understand where the government ends and business begins, where business ends and the government begins," Putin said. In what seemed to be a direct attack on Yukos, he lashed out at some businesses that, he said, were "lobbying their interests through the government so that their competitors get hurt. We are coming to a point that whoever pays more to his majesty the bureaucrat gets his way," a visibly angry Putin said. Volsky said RSPP got the picture -- business will take on the responsibility for wage hikes and other social issues while the state conducts full-scale tax reform and insures property rights are upheld.

I'm liking Vlad more and more all the time. Don't disappoint me Vlad.

Russians get Putin and we get Poofta. Oh well, it's their turn. I wish them all the best.

If you haven't been following my posts on this story, they're linked up here.

....but hey, do what you want....you will anyway.