Khodorkovsky on Yukos Rulings, Sanctions, and His Public Life

July 31, 2014

The following interview with Mikhail Khodorkovsky was originally published in Russian on TV Rain.

“The Russian Economy is as simple as a three-legged stool: sell oil, then steal something”. Mikhail Khodorkovsky’s interview for Dozhd

Mikhail Khodokovsky talks to Dozhd about the ECtHR’s unprecedented award of nearly EUR 2 bn in favor of YUKOS shareholders, about the sanctions and the situation in Ukraine

Lev Parkhomenko: Just like in the case of the Hague arbitration, you have forgone the compensations. Still, what is your assessment of the judgment?

Mikhail Khodorkovsky: I have already discussed my attitude to the judgment by the European Court for Human Rights. Unlike the Hague tribunal, the European Court did not have the jurisdiction to consider the main issue in our relations with the Russian authorities – that of the fairness of the tax claims. The European Court for Human Rights has the right to consider only issues of compliance or non-compliance with the Convention [on Human Rights – Dozhd]. That is why it specified in its judgment that to the extent of the underlying problem of tax claims it relied on the Russian courts. Not because European judges are so trustful of Russian courts, but simply because that is the kind of powers they have and they do not have the authority to consider the substance of issues. Therefore, the judgment of the European Court regarding YUKOS’ application was somewhat technical. As in whether the money was justly or unjustly assessed – without considering the substance. This is why the amount is so small compared to award by the Hague tribunal. True, the amount is unprecedented by ECtHR standards, which shows how the European judges view the problem itself, but, regrettably, the ECtHR as a matter of principle never examined the underlying issue of the tax assessments’ fairness that the Hague tribunal focused on.

P: Over the last few days following announcement of the Hague arbitration award, many officials, observers and members of opposition movements in Russia have mentioned coincidence of events – the conflict between Russia and the West, the award of the Arbitration Tribunal in the Hague, and the record-setting ECtHR judgment. Do you think this string of events is a coincidence or not?

MBK: Even if this is a coincidence, it is an absolutely man-made one because it was the Russian authorities who delayed the award of the Hague tribunal throughout the last year at least. Quite a number of steps were taken towards that end, which only shows that the Russian authorities did have an idea of what the award would be. They tried to hold it off until the very last moment. They even requested the award not to be announced for ten days after it was issued. Therefore, we are dealing with an absolutely man-made situation regarding the timing of those judgments. The same goes for the ECtHR – in fact, the judgment was issued a long time ago, and as we all know our authorities tried as much as they could to delay the announcement of the final decision. What was the problem and why was it happening? Not because it was all that important to Russia as a country, as a state. But it was extremely important for specific officials who were very reluctant to go to Putin and tell him that in fact things were not as good as they had been telling him all these years. In other words, some of the Kremlin officials will now have to face the music for all this outrage, for keeping the President in the dark. Certainly, this is something they were not looking forward to.

P: Who do you think it’ll be? Who precisely will be held accountable and in what form?

MBK: Well, it is hard for me to say in this case. You and me, we know our esteemed President very well for what can be expressed or perceived as pressure from without. But sooner or later, his discontent with the situation will get the officials into trouble. The list of those officials is actually well-known, I am not going to repeat it – everybody knows very well who orchestrated the YUKOS case.

P: In recent years, there have been calls in Russia to stop complying with the ECtHR’s decisions, and consequently, to withdraw from the Council of Europe. The argument is that the court is biased against Russia. Do you think that this decision and this unprecedented compensation award may provide a pretext for a decision to terminate membership in the Council of Europe and, accordingly, to refuse to comply with the decisions of the Court in Strasbourg? And if so, how would you react to this?

MBK: As we both know, the Russian authorities’ behavior is not pragmatic – something one would expect from any authorities – but rather extremely emotional. What will be their prevailing emotions after this decision is a question one should put to experts on human emotion. As for pragmatism, it would – or it will – look illogical and bad if that decision were to be denied credibility, because it was the ECtHR decision that the Russian authorities relied on only a day or so ago as they argued that the Hague award was allegedly no good because “the European Court actually recognized that the tax claims were legitimate”. Although in fact their position is insincere –the ECtHR never considered the tax claims issue in the first place. Therefore, to rely on the [ECtHR] decision and at the same time to ignore it – as is the case with claims against Platon Leonidovich Lebedev and myself in the infamous 17 billion ruble suit – does not look good: on the one hand, to rely on this decision, but to refuse to implement this part of it, on the other hand. I find it hard to predict what the next step will be, given this illogical behavior. Does it make sense for the Russian authorities to withdraw from the Council of Europe, or withdraw from other potential international arbitration procedures? No country joins such procedures or events unless it has its own interest in that. If we want to protect the interests of our own nationals, particularly those outside the Russian Federation, we will need the ECtHR very badly – “we” meaning Russian citizens, while the authorities may have little use for it. Actually, we are now about to see what the authorities really want – peace of mind for themselves and for their bureaucratic … (let’s stop here) — or they want to have additional leverage, more opportunities to protect the rights of Russian citizens domestically and abroad.

P: Here is a somewhat provocative question: if at issue is Russia’s withdrawal from the Council of Europe, if the Russian authorities come close to making this decision, do you think it conceivable that the YUKOS shareholders would give up that suit to let Russia stay in the Council of Europe, i.e. for Russian citizens to still have an option of appealing to the ECtHR for justice and compensation from the Russian authorities if their rights are abused? Can such selflessness be expected?

MBK: This is yet another insincere that has been repeated so often that it even found its way into the mind of my distinguished interlocutor. When we refer to YUKOS shareholders, we are not talking about two or three individuals – we mean 40 thousand people and a considerable number of organizations, including pension funds in various countries. One can hardly hope that all these people and all these organizations that lost money in the YUKOS case will forgo compensation. I think that even Russian nationals – several tens of thousands of them who constitute a majority on that list – are unlikely to give up an opportunity to receive such compensation – one should be realistic about it. From the Russian authorities’ perspective, we both know that if an emotion-driven decision is ever made to withdraw from the Council of Europe, and, accordingly, from the ECtHR jurisdiction, it most likely will be done through reinstating capital punishment. I am afraid that our Russian people will readily embrace the idea … as always.

P: Do you think this is a realistic scenario?

MBK: Yes, I believe Mr. Putin and his officials will need to divert the attention of our citizens from the developments in Ukraine, and the best way to divert their attention is to make them focus on something else. And what is it that our citizens like the most? A spectacle, capital punishment. We just fail to realize that this may affect any one of us – after all, innocent people were executed in the Chikatilo case. Alas, we are not learning from our own history.

P: I would like to ask you about the Arbitration Tribunal’s award that was announced on Monday. I understand this does not refer to the 40 thousand, but rather to Group Menatep Limited (GML) that includes the holdings of YUKOS’ largest shareholders. Leonid Nevzlin, a former business partner of yours, said that the award might become an argument in the negotiations with the Russian authorities about the future of those behind bars in connection with the YUKOS cases, I am referring to Alexei Pichugin here, and in negotiations on other criminal cases against former YUKOS employees. What do you think about that idea and Leonid Nevzlin’s proposal?

MBK: You said it quite rightly that the Hague Arbitration Tribunal, unlike the ECtHR, did not consider the dispute between all of the YUKOS shareholders and the Russian authorities, but rather one between the majority shareholders of YUKOS and the Russian authorities. I am not a majority shareholder of YUKOS and I have not been a shareholder of YUKOS for more than ten years. Therefore, these questions should be put to Leonid Borisovich Nevzlin, of course, the more so since I personally have not seen his statement on this subject.

P: I would like to ask you about your personal opinion. What would you say if Leonid Nevzlin and other majority shareholders of YUKOS started such negotiations and proposed such a solution that might also affect Platon Lebedev who essentially still cannot travel outside of Russia because of the fine imposed on him. Would you support this approach or this way of dealing with the conflict in general?

MBK: This is up to YUKOS shareholders, and I am not one of them.

P: If I may, a short question not only about this case in general but also about the recent developments. It is about the sanctions against Russia. Yesterday, the sanctions became sectoral. As an economist, an expert and an entrepreneur, how do you see their potential impact on Russian policies? What do you expect from these sanctions?

MBK: As an economist for whom I have a lot of respect once said here, the modern Russian economy is as simple as a three-legged stool. They produce oil and gas, sell it, and then use the proceeds … part of which gets stolen … use the remainder to buy some consumer goods. In this regard, the sanctions will not have any impact on the Russian economy. At the same time, we as Russian society have always had somewhat different ambitions. We wanted our country to be at the forefront of science, in the vanguard of production, producing some high-tech goods. And naturally, we have wanted the new generation, your young people, to find jobs, high-tech jobs in Russia, and not to have to move abroad for that. From this perspective, these sanctions are extremely dangerous because they shut down any opportunities for investment cooperation, such cooperation being extremely important in the high-tech sectors. This is where we will not find an alternative to cooperation with Europe and America. And this is very sad.

P: But you are saying that these sanctions are not going to affect Russia’s policies. What do you think could be done then to put an end to the armed conflict developing in eastern Ukraine? And in general is there any way in which the West, the US, can somehow influence this process? Or is this a matter only for Russia and Ukraine?

MBK: I did not say that the sanctions would not affect the policies. I said that they would not affect the Russian economy in the short run. That is true. In the medium term, the consequences would be different. As for our policies, all our policies are about the emotions of one individual – our President. It is hard for me to say how these sanctions will affect him emotionally. Therefore, I cannot offer any comments as to how they may affect the policies. As for the potential to end the conflict in Ukraine, I stick to my previous position. Separatism is a horrible evil in our specific circumstances. This is why we once sacrificed a great many lives to stop the separatist movement in Northern Caucasus, and we must show sympathy for similar aspirations in the Ukrainian society. It is most regrettable that wars are not fought with clean hands. Both sides have already done enough to keep the European Court for Human Rights busy for years to come. My fear is that the conflict can only end after either party has completely run out of steam.

P: I would like to ask you about your personal plans. Your prison term according to the judgment, according to the sentence, was to end in August. You were released earlier after being pardoned by Vladimir Putin. Can one expect that you positions and your actions may change as this formal term expires? Could you be more actively involved in the social and political life of Russia? Can any new steps be expected from you?

MBK: You are absolutely right. When I asked for an early release, I indeed argued that I needed that for family reasons. And such reasons do exist, and to my utmost regret, today I cannot be as active as I would like to be. Nevertheless, as I was getting out of prison I told those who were involved in making that decision that I would engage in public activities and that they could not expect me to sit still. They were aware of that, and the decision was made based on some other assumptions. And yes, I will go back into Russian public life after some time. But please understand that I am only human and my family matters are of greater importance to me today.

P: What do you mean by public life? Publishing, investing in the media, the mass media or, maybe, supporting some non-government organizations? Or perhaps political parties?

MBK: I have never promised to anyone that I would restrict myself to certain steps. I simply do not have such commitments. I am saying that I would like to engage in public activities. If somebody wishes to describe my public activities as political, I could not care less. But I will be announcing any specific steps as I take them, I will inform the public of them, if the public takes any interest in my actions, including through your highly regarded TV channel if you give me such an opportunity. Thank you!

P: We certainly will. And when can we expect such announcements?

MBK: Again, my family situation currently does not allow me to fully participate in public life. I would like to avoid mentioning any dates.

P: I cannot help but ask you about a project that the Russian press has already become aware of. It is media outlet that Galina Timchenko, the former chief editor of, is planning to launch in Latvia. The Russian press has reported that you are one of the investors. Can you confirm that? If so, what is your interest?

MBK: I have already confirmed to Vedomosti that I am planning to be a co-investor in that project. I do not have a major stake or a major interest there, but I do believe that it would be right for such independent media outlets to continue to exist. However I do not have a major interest in that. Again, I am just one of the investors in this case.