Mikhail Khodorkovsky, founder of Open Russia, joins CFR Fellow Stephen Sestanovich to discuss building and strengthening civil society in Russia. Khodorkovsky describes Open Russia's online and offline platforms for communication and information sharing among Russians, and the short-term goal of facilitating support for candidates in the 2016 election. He addresses Russia's power balance, legal system, and corruption.
SESTANOVICH: Good morning. I'm Steve Sestanovich. I'm a fellow at the Council. And we have a very interesting discussion ahead of us this morning with Mikhail Khodorkovsky.
I want to welcome him back to the Council on Foreign Relations. In the summer of 2003, we had a small gathering with him in Washington, very memorable for many of us. Some of the people who participated in that in that gathering are here this morning.
You know about Mr. Khodorkovsky that he was released from prison in December 2013 after ten years. His prior business was as the CEO of Yukos, which he'd made Russia's largest oil company. In the past month, he has assumed a more political role, launching Open Russia, about which I hope we can hear a little bit more in the course of our discussion.
You're going to have questions for him about his past, present and future, but for now, I thought just to get this question done with, I might ask you why Mr. Putin released you from prison.
KHODORKOVSKY (through translator): It's a very good question. I always get asked it. And nobody knows the answer. But either way, I'm glad.
SESTANOVICH: All right.
Let's turn to the future, then. You've launched a new organization, which is to be a kind of political movement in Russia. Can you tell us what its purposes are, how you intend to operate, and how you can do this outside of Russia?
KHODORKOVSKY (through translator): Today, Russia is not so monolithic a society as our power would sometimes like to think, that there's this monolithic society and then there's some fifth column that is a small number of people who think differently. In actuality, things are somewhat more complicated.
In Russia, it's traditional to have a rather large number of people who see a path of development for the country differently than the current regime does. In particular, they come out for a law-based state, naturally for a separation of powers, and naturally for a regular replacement of those in power.
It should be noted that our power today has very—in a very talented way broken these people apart into small pieces that are not connected with one another. As an example, they give parties an opportunity to register as parties. For example, the SPS-PARNAS Party with Kasianov and Nemtsov. They even let them develop a bit and then they encapsulate them. They give them an opportunity to create a movement, a civic platform, for example. They let the movement develop a little bit and then they encapsulate it.
As a result, if in Moscow and maybe in St. Petersburg, too, people feel that there are not all that few of them, that is, those who think differently from the powers—today's power in other cities, such people get the feeling that they're all alone, and the task that I'm setting myself within the framework of Open Russia is to help establish communications between these people.
SESTANOVICH: So your goal, you have said, in addition to making people feel not so alone is also to create some unity among the leadership of the opposition. Is that—how do you do that if the regime has been so successful at dividing people?
KHODORKOVSKY (through translator): I don't see for myself a task of creating a unity of leadership in the opposition. That's an entirely different task. And it's—if anything, it's more harmful because the regime works very effectively with those who try to deal with such a task.
They're either sullied personally or they're blocked, as happened with Navalny or Udaltsov. Something else is—a different system is important. People need to feel that they have common political goals. They need to get the tools that they need that will allow them to act together in individual concrete situations, because that part of society that I personally am orienting myself at, it's very diverse as a whole. Besides those key questions that I had mentioned earlier, people have very many of their own personal views of life.
SESTANOVICH: So your target, the people you intend to reach out to, are not the leaders of the opposition, but the unrepresented advocates of a European path for Russia?
KHODORKOVSKY (through translator): Indeed. I would like these people--would like to feel that there are many of them and, secondly, that they would get the mechanism and would learn how to act together in pursuit of their common interests. That's not—that's going to be hard, because the power is doing everything it can to not let this task be accomplished. Even something as elementary as our first conference that we conducted met with a very inappropriate response.
SESTANOVICH: Given those obstacles, what is it that you would imagine Open Russia will do to make people feel less isolated and alone?
KHODORKOVSKY (through translator): Well, thank goodness that besides the problems that today's technologies create, they also create opportunities. Of course, I don't very much trust the words of President Putin that he's going to leave the Russian segment of the Internet alone, but I believe that he does understand that to shut it down completely will have a very depressive impact on the economy and on the social situation in the country as a whole, really, because the young people—for the young people, this is a major part of their lives.
Now, if such an opportunity remains, then the whole question is one of how many brains we'll be able to get together to solve this problem. Well, and the quality of those brains, too.
SESTANOVICH: So is this your answer to how you can have an impact inside Russia while being outside Russia, that is, through technology?
KHODORKOVSKY (through translator): Through technology, but, of course, this doesn't also rule out offline events. It's just that today technologies allow us to deal with this problem somewhat more simply. At the same time, I am always a little bit surprised by people who say that to act outside—from the outside of Russia is more difficult than to act being inside of Russia.
This may be would be so if those who act inside Russia were honestly shown on television and—and that—instead of locking them up with house arrest.
SESTANOVICH: Could we—I'm going to change the focus just a little bit, because we've been talking about people who are outside of the—of the elite. A lot of people have—in the West, experts—have assumed that there are divisions within Putin's regime, that there are people who disagree, who actually didn't want him to come back and be president, who now criticize his policies. The speech by German Gref last week got a lot of attention—he's an economic adviser to Putin and now the head of the largest bank—gave a speech seeming to raise questions about what Putin is doing.
Do you think these divisions within Putin's circle are important for what you're trying to do or not?
KHODORKOVSKY (through translator): I know German Gref very well. I am carefully following what his position is. He is always—like Mr. Kudrin, also—took a rather critical position when it came to questions of economic ideas—the economic ideas of this other part of Putin's entourage and, of course, about the influence, the impact of these ideas on Russian society.
What he can allow him—the fact that he can allow himself to utter these ideas publicly shows that Putin does not consider this to be much of a threat. And I think that in this question President Putin is right. In the current situation, the question of economic disputes is definitely on a back burner. This does not mean that it will remain on the back burner forever, but neither does it mean that people like German Gref will always be allowed to say this publicly, either.
SESTANOVICH: You were on "Charlie Rose" last week, and you mentioned three scenarios for the end of Putin's time as president. You said he could die in office, he could be removed by a coup, or there could be a revolution like 1917, which you said would be terrible for the country, because nobody would hold back, it would be all-out.
You didn't mention a peaceful transition supported by Open Russia, and I wonder whether that's because you don't see it as a very serious possibility for the foreseeable future?
KHODORKOVSKY (through translator): There are some things that one would like to believe in, but it's—that they're hard to calculate. Putin had an opportunity to leave in a very good personal position, despite the fact that I was in jail at the time. This was when he switched places with Dmitry Medvedev. Many people cautiously thought that maybe what we're seeing is—well, maybe a very strange form of it, but still a rotation of power. We know that that kind of mechanism is used in China all the time, roughly speaking. And in general, even though it is palliative to some extent, it does allow the elite to go through a constant changing process.
After Putin returned back to the presidency, everybody understands that it's going to be very hard for him to leave calmly and peacefully. It's hard to imagine a strong successor who would not be compelled to get rid of Putin, because if he doesn't do so, all of society will continue to consider that he's just in the office temporarily. And I'm convinced that Putin understands this, and this doesn't make it any easier for him to make a decision for a soft departure.
SESTANOVICH: Another thing you said to Charlie Rose seemed extremely interesting to me. You said you don't want money, your money, to be the motor of a new movement. You said other people have got to show their interest, and the fact that there's not an active opposition means perhaps that people don't feel the need for it. How do you expect to energize people to make a commitment to politics?
KHODORKOVSKY (through translator): It seems to me that the mechanism—that today—the social networks provide today is being underused for solving everyday tasks for people. Not large ones, small problems, but important for people, improving their quality of life within the framework of their own towns.
We can see that in Moscow and in St. Petersburg, at least—it's harder for me to speak about Yekaterinburg, but these two cities I—you can see that a strong civil society that does exist in these cities has been able even under the existing power to improve their living environment, including through pressure during election campaigns. And the power makes concessions. We are living the 21st century, after all, not the 19th, and not even in the 20th.
I think this is the right way to go. It just needs to be studied and multiplied and expanded elsewhere. When people see that their own social activity improves their own personal lives, they get a taste for this kind of activity.
SESTANOVICH: But two years ago, there were many hopes that that kind of self-sustaining popular organization could have a real impact on the politics of cities like Moscow and St. Petersburg. Today, that seems much less. What's the new ingredient that you think you can add to this situation?
KHODORKOVSKY (through translator): This is not going to sound very pleasant: time. Very many people expected too much in too short a period of time. I'm accustomed to thinking in larger timeframes.
KHODORKOVSKY (through translator): Yes. And Russia as a country thinks in larger timeframes, too. If nothing extraordinary takes place, which, of course, could happen, we all see in recent years that there are unexpected bursts of things, but if nothing certainly happens, we're talking about ten years, maybe a little more.
SESTANOVICH: This is the Council on Foreign Relations, so at a certain moment, we have to ask about what American policy should be in this process, whether the current policies of sanctions, for example, are working. You told Charlie Rose they're working badly. Does that mean we should do something different or we should just have lower expectations for what they can achieve?
KHODORKOVSKY (through translator): I think both the one and the other. Russia, despite the fact that this is no longer the Soviet Union, is a strong country, much stronger than, say, Iran. How influential the sanctions versus Iran have been, you yourself have seen.
I think that the West is not capable of taking that level of loss itself, those costs that would bring it real—really influential sanctions that would have an impact on the Russian economy. At the same time, in fact, I'm not all that sure that such impacting sanctions are even possible in the first place, at least in the short term.
But there's another question. The West has always had an influence on Russia with its values position. We saw those values that the West was projecting, and we wanted to be kind of like that. We wanted, for example, that the value of human life would be high, like it is in the West. We painted a picture of the West as a sort of moral example for ourselves. And therein lay the West's strength.
To my deep regret—and you yourselves know this, as well—this image in the past ten to twenty years has become much, much more blurry. Maybe this is something that you might consider changing. And then proceeding from that position already, you could speak about what actions with respect to the Russian elite are—the right ones and which ones are not.
Here, take a look at how the Russian person views what the West is doing today. People around Putin have plundered the Russian budget. This is obvious enough for the majority of Russians. Likewise easy enough to see is that they did not keep this money in Russia, but took it out to the West. Everybody understands that you knew about this. Then they put this money into Western real estate, Western banks, into their good life and the good life of their families in the West, and everybody knows that you knew about this, and you were fine with the fact that the Russian people are being plundered.
Then, Russia took an independent policy stance with respect to international questions. Whether it's a correct position or incorrect position, we're not going to discuss that now. It was an independent position. And you started punishing Russia—that is, you're not punishing for a moral position, because that's to your benefit. You are punishing for an independent foreign policy, because apparently this, too, is to your advantage. So what's the reaction? We're all together.
SESTANOVICH: So you think that a moral campaign just based on exposing the immorality of the Putin regime would have the maximum influence and then we could put aside other policies?
KHODORKOVSKY (through translator): I think that for Russian people maybe not immediately, they won't believe you immediately. There is twenty years of history that you have to overcome, after all. But a moral position from the West would be very important in order for them to re-evaluate their own attitude to what's going on in their own country.
SESTANOVICH: Let me ask you one last question before turning to the audience, which has been patiently storing up their questions. You said to Charlie Rose that there are some things that you couldn't say from your current position because, among other things, there are hostages in Russia who limit your freedom.
Can you tell us what kind of constraint this is on your ability to be an independent political figure? I know it's hard to say what you can't say, but help us understand the limits on what you're doing.
KHODORKOVSKY (through translator): I am compelled to take into account those restrictions that are formed in Russian legislation today. And if I cross these, I would put people under threat of being labeled a part of an extremist organization and an analogous question.
SESTANOVICH: OK. I'm going to recognize people from the audience with questions. Please wait for the microphone, which will be circulating. And I'm going to recognize Andy Nagorski first. State your name. Hardly necessary now, Andy, and affiliation.
QUESTION: Thank you, Steve.
SESTANOVICH: And limit yourself to one question, if you could.
QUESTION: OK. Mr. Khodorkovsky, in this issue of moral campaigns, during the Cold War, of course, the radios were very important, Radio Free Europe, Radio Liberty, BBC, Voice of America. Now they're still operating, of course, through the Internet more than short-wave. Is there a role still for Western information play in trying to project—influence the situation inside Russia and opposing the information blockade?
KHODORKOVSKY (through translator): Thank you for that question. This is, indeed, an important question. Working on the short-wave band in the Soviet days, the Western agencies oriented themselves at the most advanced progressive part of the Russian audience. And because of this, they were effective.
They naturally weren't able to break through to the broad circles of Russian society, but they had an impact on the most advanced part of society, which could learn about a different position, come to its conclusions, its own conclusions, and to project these conclusions onto Russian society.
Now, what's happening today? The agencies continue to work on radio. The audiences for radio, however, are all pensioners these days. And from this point of view, these are not the movers and shakers that are going to effect change in the country.
What's going on in the social networks, however, which is where the most advanced part of the Russian audience is now found, what's going on in the social networks looks very sad, indeed. I hope I didn't affect anybody personally in this audience right now with that.
We can see the quality of the product being created here in Silicon Valley. And we compare this with those dinosaurs that crawl out of the—crawl into the Russian social networks from the agencies that we have historically had a lot of respect for. And what we see is sad.
SESTANOVICH: OK. Another?
QUESTION: You have made many implicit references...
SESTANOVICH: Please identify yourself.
QUESTION: Oh, Jerry Cohen from the Council and from NYU Law School. You've made many implicit references to the legal system. You've talked about informal house arrest, economic disputes, social organizations developing, legislation's influence. Can you give us your current assessment of the Russian legal system with which you have had such intimate personal experience?
KHODORKOVSKY (through translator): Yes. Well said, personal relations, yes. Personal relations.
The problems of the Russian judicial system and the legal system as a whole can be divided into several, I would say, echelons. The first echelon is the fact that, in principle, the personnel in the legal system are not very strong, not very good, especially out in the regions. And if it were not for the judicial vertical that exists—that is, when the higher standing courts regularly repeal—correct—the courts that are below them in specific cases—I am afraid that the situation in the statistical sense would be worse than it is today. And this is a problem that requires solving. We understand the problem, but the problem does exist.
The second part of the problem is the problem of a controlled application of the law from the other side. They're approximately—approximately 2 percent of court cases are political, where you have direct commands coming from the power. And then there's about 10 percent, maybe 15 percent of cases that are regarded—or that are examined by courts differently from the way they ought to be examined, not out of political considerations, but because the courts are under the control of the executive power. And these are purely bureaucratic games that we're talking about.
It's clear that these 2 percent political cases—you would think it's such a small number, but they demoralize the entire judicial system as a whole.
And then, finally, there's a third problem that has become particularly noticeable from this latest convocation of the Duma. This problem existed before, but it's just become very noticeable now. Legislative acts are being adopted to deal with specific, narrow problems, despite how they might impact the entire legislative system as a whole.
I'll give you a clear example: the latest law on limiting the percentage of foreigners in mass media down to only 20 percent. Two specific goals were being pursued by this law, the Vedomosti newspaper and Forbes magazine. And an entire law is adopted just so that these two newspapers would lose their independence. And that's sad.
SESTANOVICH: Right here.
QUESTION: Thanks. Esther Dyson. Except for just now, you very properly were quite abstract in much of what you said. Could you just tell us concretely how you're going to be spending your time, how you're going to make Open Russia spread?
KHODORKOVSKY (through translator): What we have done as of today is we've conducted a conference that showed that people in the regions are ready to participate in this work. Despite the fact that they all were called in for prophylactic meetings at the FSB, people are still ready to take these risks and act.
We have launched a website, which naturally with time will die from attacks, but for now, it is creating an opportunity for people to find one another and to take part—well, and to know how people implement projects—analogous projects in different regions.
As of today, in this month, we've gotten a huge number of proposals to work together and we're hoping that we will succeed in realizing—in implementing a part of them, not through ourselves, but by passing them on to other regions, from one region to another region.
In this way, we have three paths: online; offline conferences, including seminars and workshops and the like—for now, this is still possible within Russia; and meetings outside of Russia. All this is being aimed at dealing with specific tasks that arise in the regions, well, for people in the regions, of course.
The ultimate short-term goal that we see for ourselves is to help independent candidates in the 2016 elections. We don't know what legislative situation they will create for us at that time, so the structure that we're assuming to—that we will form will be as flexible as possible.
So to say that, OK, let's help a specific political party, we don't know. They might by 1916 prohibit this party or otherwise sideline it from the elections. But it's certainly true that there will be a collection of—or gathering of votes, signatures, declarations of pre-election platforms, and we've got to be ready for that, and, of course, election monitoring, no question.
QUESTION: I'm Lucy Komisar, a journalist. I want to take off from what you said about Mr. Putin and his friends sending money outside of Russia. Regarding two firms you controlled, I have documents from the London office of Yukos oil company and papers from an Isle of Man court filing concerning the titanium sponge maker AVISMA, which show that when you controlled those firms, you used offshore shell companies to skim their profits, cheating minority shareholders of their rights and Russian citizens of taxes. Now that you say you are a reformer, why don't you acknowledge what you did in the past and speak out against the offshore shell company system that enables international corporate corruption and tax evasion, as well as the looting of countries by corrupt government officials and leaders such as Mr. Putin and his friends?
KHODORKOVSKY (through translator): I always enjoy speaking about mistakes that were made at the beginning of the development of capitalism in Russia, at the very least because I am one of the few who has paid for his part of the mistakes.
Nevertheless, I do not feel myself so much of a moral authority to be able to speak about how international business as a whole is set up, what with offshores, not offshores, with states of Delaware, without states of Delaware.
There are people far more competent than I to address these questions. What I do say—and which, by the way, I told Putin in 2003—is that even if we can't be totally moral we shouldn't use this to justify the fact that we're totally amoral.
The plundering of the Russian budget has become too total. And that is something that should be spoken about and that I have the right to speak about this, because this is the premise under which I was sent to jail.
SESTANOVICH: Way in the back. Hand up there.
QUESTION (through translator): (inaudible)
QUESTION (through translator): I'm sorry. I'm not getting audio in here. Is this comparable—is the situation comparable to 1913?
QUESTION: OK, how deep had to be crisis in Russia for your presidential ambition to realize? Sorry, my English.
KHODORKOVSKY (through translator): Thank you for your question. I have answered this on several occasions, and I will repeat myself, because this is important. I believe that the problem in Russia is not only a problem of Putin. Putin is merely a symbol of the problem. The problem itself is the lack of a law-based state.
It's in a constitution that has made it impossible to have a balance of powers. To change this is possible only with the help of a constitutional assembly, which as we know can—is the only thing that can determine the structure of power for the transition period, the period of transition from a totalitarian figure of a president to a system of separation of powers between president, a (inaudible) parliament, judiciary, et cetera, civil society, all of the things that are associated with that.
Who will be working on this—or to work on this will be extremely dangerous. And the most important thing is that the main danger is that the people that will be doing this reform wouldn't make this reform to fit themselves personally. What this means is that the best decision will be when—having conducted this reform they will leave the stage for good.
And in particular, they tried to use this kind of mechanism in Kirgizia. And when I was asked if I am prepared to participate at this stage, I said, yes, because I do not have, nor can I have, any claims to lead Russia further after the situation is changed and becomes normal.
SESTANOVICH: There's another—yeah.
QUESTION: Michelle Caruso-Cabrera, CNBC, the business news network. The Russian stock market is trading at very low multiples, single digits, so cheap that some American investors argue that the upside risk is worth—the upside reward potentially is worth all the risks that you know about. Do you have anything to say to them?
SESTANOVICH: Hot tips?
KHODORKOVSKY (through translator): There's one wonderful city in America—you know what it's called—Las Vegas.
I think that many people in this hall fly there on weekends. You now have an alternative.
SESTANOVICH: Not distinguishing among the different kinds of gambling opportunities there.
QUESTION: I'm Carroll Bogert from Human Rights Watch. Impulses of pragmatism and ideology have competed in the behavior of President Putin for a long time. Do you understand him now to have been completely captivated by ideological impulses? Or is there still a pragmatic core inside Putin that can be dealt with?
KHODORKOVSKY (through translator): Your question was very spot-on. Indeed, for me, this is that main change that has taken place in President Putin, whom I do know, in the past maybe five or six years. Has this pragmatism remained in him? Or is all of his policy a short-term reflex? This is a huge question for me, as well, including at the stage of my release, in fact.
I deeply regret that nearly all of the actions of the Russian authorities over the recent past can be easily explained within the framework of short-term reflex. Is it possible to work with a power like that? Well, of course it is. It's just that you need to be aware that talk of strategic advantages for the country is not the language at which you will be truly understood.
SESTANOVICH: Mikhail Borisovich, you have said that you would not be—have been released after the confrontation with the West began. Why did Putin release you?
KHODORKOVSKY (through translator): You know, a group of many people are expressing a whole list of opinions on this topic. The one that resonates most with me is that it was just a confluence of a whole series of factors. The first was the Olympics were close. Secondly, the position of the only close and strong ally in Europe—that is, Germany. Without a doubt, there was an emotional component there, because Putin felt emotionally uncomfortable to start up a third criminal case against me. And at the same time, he didn't want me to be released without any obligations, scot-free, at the end of my term.
So this was confluence. There were other aspects, as well. It's just everything happened to align at the same time. And I think that the likelihood that I would have to spend the whole of my life was around 90 percent. But thank goodness that 10 percent played their role.
QUESTION: David Malpass with Encima Global. Could you discuss the Russians who lived near Russia, for example, Russians in Estonia, in Ukraine, in Kazakhstan, what's their future? Thanks.
KHODORKOVSKY (through translator): I think that the policy of the current Russian authorities has undermined these people. In many places, they have now begun to be looked upon not as friendly neighbors, but as a threat. And this is very sad, because the Russian diaspora outside of Russia could—and I hope will still—play a huge role in the effective development of our own country, because right now, the world is a totally different place.
The fact that people leave is more of a good thing than a bad thing, if they then return at least for a little while. It is precisely in this way that exchange of ideas takes place. The best perception of the global world—that is, in the countries' integration—I very much hope that the Russian diaspora is not going to get a feeling of anger at the country from this experience today, nor a feeling that they are aliens in an enemy milieu—in a hostile milieu, rather, in those countries in which they are located. And I hope that Open Russia will be able to be useful in this respect, as well.
SESTANOVICH: Right here?
QUESTION: Hi, Robin Hessman, documentary filmmaker. You've talked about how the moral authority of the West certainly has eroded, and with the fall of the Iron Curtain, many people in Russia did see that the West is imperfect. But young people today are also so cynical and suspicious of every kind of information they get and also feel a great degree of hopelessness—young people in Russia—that there's anything that they can do to change anything.
How do you hope that Open Russia can help fight this cynicism, suspicion, and also this feeling that since there's absolutely no point to try to improve things, they'll just return to the kind of internal exile that existed during the Soviet Union?
KHODORKOVSKY (through translator): Today, a significant part of the problems of Russian youth has to do with—people are trying to persuade them how unimportant they are, that they can't accomplish anything, that they live in—in their own made-up world, that there's no way that they can impact what's going on in their country, and that in principle the country's economy will do just fine without them.
This, of course, is not so. I remember that when—even in such a difficult industry as the oil industry, we were transitioning to the use of modern technologies that allowed us to improve the yield of wells by a factor of ten, from ten to 100 tons per day.
Those people that we were able to rely on, along with experienced workers, these were also the young specialists who had just, just finished college. We were just able to organize for them an effective post-college education for these people. Colleges change slowly, academia, but we were able to compensate for that through this post-college education for them.
And we worked specifically with these people, because to try to reorient their older and more experienced colleagues was an order of magnitude more difficult. And I'm not even speaking of how the whole information system at the Yukos company—this was ten years ago—was created by kids twenty-six years old and under.
So it's extremely important that Russian young people understand their place in the world and demand political representation in accordance with their true position in society and in the economy.
SESTANOVICH: At the Council on Foreign Relations, we fetishize prompt close of meetings on—you know, it being 9:30, we have to call this one to a halt. I want to thank our guest, Mikhail Khodorkovsky, and thank the audience for their questions.