Mikhail Khodorkovsky: “Freedom is a swear-word in Russia”

August 14, 2017

Mikhail Khodorkovsky speaks to German news website Spiegel Online about freedom, privatisation, YUKOS and the generational gap in Russia.  

Spiegel Online: Three years ago you were unexpectedly released from prison with the help of an intermediary: the former German Minister of Foreign Affairs Hans Genscher.  How are you using your freedom?

Mikhail Khodorkovsky: I am trying to help my country overcome the current phase of counter-reforms which president Putin is busy conducting.

Spiegel Online: How do you intend to bring the Putin era to an end?

Khodorkovsky:  I wouldn’t call it an “Putin era”.  It’s an time when society is tired of the ambitious changes that took place in the 90s, and is aggressively trying to relax.  Russian society, which mistakenly considers itself ‘humiliated’, is trying to bring back a sense of self-respect, often using strange methods, for example through confrontation with the West.  In order to bring an end to this, there are two choices.  The first is to help people to learn the truth; to see the real state of affairs.

Spiegel Online: What’s the second choice?

Khodorkovsky: The natural process of generational change.  The new generation of Russians see the world differently to their parents’ generation.  We have to work with these young people.  Today’s government has begun to feed young people myths, for instance that Russia is surrounded by enemies, and that our history is wonderful and doesn’t have any shady periods.  In schools all course books on history have been banned except one.  Therefore, our job is to fight against these myths and attempt to explain to people that there is a genuine alternative to the current state of affairs.

Spiegel Online: What do the majority of Russians understand by the word ‘freedom’?

Khodorkovsky: Many different understandings of the word ‘freedom’ exist in Russia today, in a perverse sense.

‘Democracy’ is a swear-word in Russia, ‘liberal’ even more so.  In the current climate ‘freedom’ is perceived with suspicion; it is seen as the opportunity to do whatever you like, regardless of those around you.

Spiegel Online: In the 1990s you were able to utilise privatisation; you made millions and you had political influence.  Is it possible that you should have done more to reconcile your fellow citizens with democracy and the market economy?

Khodorkovsky: When political reforms began in Russia (during the Soviet Union) I was 24 years old.  I had no idea that I should somehow teach anything to those who were older and more experienced than me.  At the time I was trying, as many young people do, to present a road to the future, for myself, for my friends and those who were twenty-something years old.  It was surprisingly easy for us to accomplish this.

Spiegel Online: Many in Russia believe that you and other entrepreneurs of that time gained your riches as a result of crisis.

Khodorkovsky:  At the time I did not understand to what extent it was happening because we were able to adapt better than others.  The older generation who lived in Russia at that time differed hugely from their equivalents in other Eastern Bloc countries.  Those in Eastern Germany could at least remember what a market economy was.  In Russia, over the course of 70 years almost three generations had passed by without knowledge of what was going on.  We young people were not aware that we were using their lack of understanding.

Spiegel Online: When did you realise this?

Khodorkovsky: In 1998, when a serious economic crisis took place.  The ruble lost three quarters of its value to the dollar and the price of oil collapsed.  At that moment we all ended up in a position  where we were ignorant of what was taking place around us.  It was at that point when I first decided to set up Open Russia, which until this day is engaged in working with the public.

Spiegel Online: During Soviet times you were a member of the Communist Party Youth Organisation (Komsomol).  How did perspective builders of communism become vanguards of the new Russian capitalists?

Khodorkovsky: The Komsomol was not a ideological organisation.  During the 1980s it was analogous to the Scouts movement in America and gave people the opportunity to ‘prove’ themselves.  The party, the factories and authorities used the Komsomol as a reserve of people qualified for organisational work.  In the 1980s the Soviet Union was much less ideological than, for instance, East Germany.  Communist dogma was already something of a ritual by that time, and everyone knew that they had to go along with it.  In fact, during day-to-day life it was more or less laughed at.

Spiegel Online: After the fall of the Soviet Union, president Boris Yeltsin and his advisors took the path of radical privatisation: gigantic state companies were given over to private hands at phenomenally low prices.  You thus acquired YUKOS for a total of 300 million dollars.

Khodorkovsky: In a market economy it is the market that decides what is adequate, and what is not.  I spoke at the time with Egor Gaidar and Anatoly Chubais, the two men who were responsible for privatisation.  They said that there was a very narrow window of opportunity in which privatisation was politically possible.  To sell important state companies to foreign investors was politically impossible.

Spiegel Online: So, does that mean that it was right to go through with it all?

Khodorkovsky: At the time I warned about two fundamental mistakes.  The first was the sectioning and subsequent sale in parts of large industrial conglomerates.  On their own many of them were practically unviable.  This caused colossal losses to the Russian economy.  The second mistake was the decision to give citizens shares certificates at a time when very few people understood their real value.  Securities are a difficult issue.  Even in modern Germany many people are fearful of investing in stocks.  Besides that, in Russia in the 1990s there were no institutes capable of helping people to handle these shares.

Spiegel Online: Do you regret this today?

Khodorkovsky: Yes and no.  We destroyed people’s hope in the market economy.  On the other hand, oil production fell catastrophically.  In 1995 the question was raised as to whether Russia should import oil for its own consumption.  One of the causes of this problem was that the old Soviet directors of the companies were heads of production units without any entrepreneurial experience.  During the Soviet times important decisions were taken on a much higher level.  In the market economy these directors turned out to be helpless.  How could we have exchanged them for entrepreneurs?  Besides privatisation the government did not come up with any other solution.

Spiegel Online: YUKOS was nationalised after your arrest in 2003.  Today the Russian economy is dominated by the concerns of the state, which account for 60% of GDP.  Therefore, experts such as Putin’s former finance minister Alexey Kudrin are calling for a second wave of privatisation.  Given that the first wave outraged the population so much, is this a little too unrealistic?

Khodorkovsky: If I could not organise a second round of privatisation, then I would transfer the shares to pension funds, which in turn would place them in the individual pension accounts of Russian citizens.  I conducted such an experiment with YUKOS: 10% of shares were transferred to the individual pension accounts of our employees.  I am convinced that after 10 years of such a system functioning correctly throughout in the country, the attitude of the population to private property would change significantly.

Spiegel Online: How would you characterise Putin’s economic policies?

Khodorkovsky: Putin is more or less a liberal in his budget policies, whereas meanwhile he is absolutely anti-liberal in his formation of the Russian economy.

Spiegel Online: What do you mean by that?

Khodorkovsky: Low inflation and minimal budget deficit are two Putin principles to which many liberal economists in the West are sympathetic.

However, alongside this the influence of state companies is growing.  Putin likes this because, in his eyes, it increases the controllability of the Russian economy by the Kremlin.  He does not understand that as a result effectiveness and innovation will decline.

Spiegel Online: Why is Putin doing this?

Khodorkovsky: According to Putin’s logic: freedom is chaos, filthy streets and decrepit houses.  In his head something can only be done when everyone marches in formation.  This is a military way of thinking, the way of thinking of a soviet man.  It is important to understand that Putin is not imposing anything on Russians.  He is simply reflecting the views of the majority of citizens.  In any case, that’s how it has been until now.

Spiegel Online: Can you elaborate?

Khodorkovsky: In Russia young people significantly differ from their parents’ generation.  The new generation views everyday freedoms in a much more natural fashion: it is totally not accustomed to the fact that the government can tell them what they are allowed to read or watch.

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