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Last Updated: Saturday, 25 October, 2003, 13:28 GMT 14:28 UK
Kremlin takes on Russia's tycoons

By Nikolai Gorshkov
BBC Moscow correspondent

Last call for Mikhail Khodorkovsky - that is how observers here describe the dramatic arrest of Russia's richest man on charges including tax evasion and fraud.

This is the strongest signal yet for him to leave the country, they say, just like Vladimir Gusinsky and Boris Berezovsky were forced to do before him.

President Boris Yelstin in 1998 with business tycoons, including Vladimir Gusinsky, first from left, and Mikhail Khodorkovsky, first from right.
The tycoons were at the height of their power in the late Yeltsin era
What these business moguls - "oligarchs" as they are called in Russia - have in common are their political ambitions.

Mr Gusinsky wielded influence through his private TV channel; Mr Berezovsky tried to establish his own political party to oppose President Putin; Mr Khodorkovsky pledged financial support to the already existing opposition parties.

This does not fit in with the concept of "managed democracy" being built in Russia by the Kremlin.

The forthcoming parliamentary elections this December are seen as an important stepping stone in this direction.

Business rules

The Kremlin's goal is to have as many pro-presidential deputies as possible in the new Duma, at the expense of the opposition.

RUSSIA'S OIL TYCOONS
Mikhail Khodorkovsky

The pro-presidential party "One Russia" increasingly looks like a super-ministry, most of its members being the country's top bureaucrats and civil servants, with the Interior Minister Boris Gryzlov at the helm.

The fear is that Russia may be turning back into a one-party state. Some commentators have dubbed this "the Chinese way": market economy under tight political control.

It is the political stability in China they say that has attracted the mega-billion Western investment, to the envy of Russia.

The lesson has been learned - it is not the political pluralism that attracts the much needed capital, it is the guarantee that foreign investment is safe.

That is why the Kremlin would prefer to do business with transnational corporations - like BP, ExxonMobil, ChevronTexaco, PhilipsConaco, and others - than with the home-grown tycoons.

Kremlin insiders explain the logic: the present day Russian billionaires did not earn their wealth through hard work - they were "appointed" by the Kremlin under President Boris Yeltsin.

Oligarchs warned

The impoverished post-Soviet government desperately needed to shed the shackles of the state-run planned economy, and a handful of street-smart entrepreneurs seized the chance through personal connections.

Mr Khodorkovsky, for example, was able to draw on his fairly high position within the Young Communist League, which in the dying days of the Soviet Union was busy setting up commercial enterprises with public money.

Now this easy fortune has gone to his head, critics say. Even those who are solidly behind Mr Khodorkovsky - including other Russian tycoons - admit he might have overstepped the line.

As the President of Russia's Union of Entrepreneurs (the professional body of big business), Arkady Volsky, jokingly said, while defending Mr Khodorkovsky: "Indeed earning $8bn in just eight years is a bit over the top."

The new bosses in the Kremlin appear to be telling the oligarchs - enjoy your windfall wealth but do not even think of playing politics anymore.



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