Untitled Document

On August 4, 2003, the Carnegie Endowment for International Peace hosted a meeting on the implications of Vladimir Gusinsky's recent arrest in Greece. The speaker was Mr. Igor Malashenko, president of the Russian NTV channel from 1993 to 1998, currently heading Mr. Gusinsky's media group abroad. Dr. Anders Åslund, Director of the Russian and Eurasian Program at the Carnegie Endowment, moderated the session.

Mr. Malashenko began by asserting that Mr. Gusinsky's arrest in Athens on August 21, 2003 was the result of "human error and a number of coincidences", and certainly not part of an anti-media or anti-oligarch conspiracy on the part of the Kremlin. Mr. Gusinsky, who is a dual citizen of Russia and Israel, flew in from Tel Aviv on August 21, only to find himself arrested on arrival. The arrest was made possible by the "unusual efficiency" of Athens airport staff, who found in their computers a detention request for Mr. Gusinsky, issued by Russia three years ago. It is worth noting that Mr. Gusinsky was arrested in Spain in 2000 on the same request. There was no international warrant for Mr. Gusinsky, as Interpol considered the charges against him to be politically motivated. The request for his arrest was thus a bilateral matter between Russia and Greece, and earlier between Russia and Spain.

According to Mr. Malashenko, Mr. Gusinsky's unexpected arrest caused confusion in Moscow, where the authorities were not sure about an appropriate response. Under the terms of the extradition treaty between Russia and Greece, the latter can only hold Mr. Gusinsky for 40 days while Russia prepares its case against him. To date, however, Greece had not received any evidence from Russia, nor did it receive a confirmation of the request to extradite Mr. Gusinsky. Since the request upon which Mr. Gusinsky was arrested in Spain and in Greece is one and the same, Mr. Malashenko observed that the Greek court considering Mr. Gusinsky's case may decide to set him free, acting on Spanish precedent. Further, Greece was being lobbied by the U.S. and Israel to secure Mr. Gusinsky's release.

Mr. Malashenko then painted an overall picture of the Russian state's relationship with Mr. Gusinsky in the past few years. In 2000, the state-owned gas monopoly Gazprom offered him U.S.$300 million for the Media Most holding company. The deal was put forward to Mr. Gusinsky through the government, which promised him freedom from prosecution in return. He agreed to the deal, but renounced it once he was outside Russia. Gazprom offered him the deal again in the summer of 2002, except that this time the purchase price for Media Most would be $50 million. Mr. Malashenko quoted the journalist Yuliya Latynina as saying that there had to be a "sweetener" involved in the deal.

Earlier, Media Most had taken a loan from Gazprom, using Media Most shares worth $250 million as collateral. The charges that were brought by the Russian Prosecutor General's office against Mr. Gusinsky alleged that the loan was illegal, since the collateral had no value. Media Most owned the NTV, NTV+ and TNT television channels, as well as the Seven Days Publishing House and Itogi magazine. According to Mr. Malashenko, saying that a holding company that owned all the above productive assets has no value is false. This view is supported by Spanish judge Baltasar Garzón, who heard Mr. Gusinsky's extradition case in 2000. He ruled that the charges essentially did not make sense, since he found it hard to believe that a company as large and powerful as Gazprom could be duped with false shares.

Mr. Malashenko then posed the question as to why the charges against Mr. Gusinsky were not dropped while the latter was in exile. He asserted that they were not dropped deliberately, and speculated that the reason was "to keep Gusinsky outside of Russia." Of all the oligarchs, Mr. Gusinsky had been the closest, relatively speaking, with another figure currently in disfavor, Mikhail Khodorkovsky. The latter had a "hard time" earlier because of his support for Mr. Gusinsky. The Federal Security Service (FSB) allegedly thinks that Gusinsky, Khodorkovsky, and others, such as Boris Berezovsky, are all in a conspiracy together, which is not actually the case.

Most of the Russian government seems content to have Mr. Gusinsky be in exile, and does not want him tried in Russia. There have thus been "reassuring noises" from Moscow that Russia will not send any new information to Greece, which would mean a free hand for Greece to let him go. However, in Mr. Malashenko's words, "in the long run, the hardliners always win." It is thus only a matter of time before the Kremlin changes its view and decides to have Mr. Gusinsky extradited. However, the hardliners probably do not have enough time to influence the Greek extradition process, since they are working against the majority.

In Mr. Malashenko's opinion, "Gusinsky's extradition would put an end to opposition in Russia for the foreseeable future." In other words, the extradition would be a strong signal to anyone who dares challenge President Putin that the challenge would be taken personally and responded to. Besides, extraditing Mr. Gusinsky would be a "great political move" for Mr. Putin, because it would boost his popularity "enormously" among the public, who are generally against the oligarchs as a group. Mr. Putin does not actually need such a boost in power, but may not be averse to one in any case.

According to Mr. Malashenko, the central issue in Russian politics now is the question of the succession to President Putin. He did not know how Mr. Putin intended to solve this question but he did know of a solution proposed by some members of the business elite. Tired of the "unpredictability of general elections", some oligarchs came up with a plan for a parliamentary republic, in which, given sufficient financial backing, a compliant majority and prime minister would presumably be able to hold on to power indefinitely. This, however, was a political line that Mr. Putin could not allow anyone to cross. Mr. Khodorkovsky did indeed cross this line, and was thus "outlawed." Mr. Putin had also demonstrated that whoever crossed a forbidden line would never be forgiven. Thus, Mr. Gusinsky had spent the last three years "like a submarine," hidden from public view, but that did him no good.

Responding to a question by Dr. Åslund, Mr. Malashenko noted that Roman Abramovich may be preparing to leave Russia. He described Mr. Abramovich as a savvy businessman who knew the risks in the Russian market and political scene. Every time President Putin saw him, he remembered that this was one of the key people who brought him into power in the first place, and he did not like to be reminded of this fact. When the Yeltsin "family" chose Mr. Putin as the successor to the Russian presidency, a deal had been worked out whereby Mr. Putin would get power in exchange for security and freedom of action for the members of the "family." Mr. Abramovich was now becoming aware that the time for the deal was running out, and it was thus time to bail out. In addition, he "never liked" living in Russia, where, after all, there is not much you can do with your "ninety-meter boat."

The struggle between the St. Petersburg group and the FSB people or siloviki does not really exist, Mr. Malashenko asserted. The two sides are not engaged in a battle over "Putin's soul", because Mr. Putin is firmly on the side of the siloviki to begin with. In the tradition of the KGB, Mr. Putin "rationally believes that things have to be under his control 100 percent." Thus, the Russian president is personally "behind many more decisions than we can imagine." He is also suspicious of foreign direct investment, because he cannot exercise control over it. As for the U.S., he does not consider it an enemy, but "certainly" does not think of it as a friend, either.

A former U.S. diplomat who had served in Greece noted that in cases such as Mr. Gusinsky's, there is no such thing as an independent judiciary;" the decision on whether to extradite Mr. Gusinsky or not will be taken, in his view, by the prime minister and foreign minister of Greece. He further added that Greece often compares itself to the other Mediterranean members of the European Union, and "can't be seen to do something deficient where Spain did something to standard." In other words, if a Spanish judge found the legal arguments behind the request to extradite Mr. Gusinsky to be wanting, then a Greek judge is likely to do the same.

Responding to a question on the effect of Mr. Gusinsky's arrest on the investment climate in Russia, Mr. Malashenko responded that foreign investors, "if they are exotic enough to go to Russia," care mostly about stability, which Mr. Putin is good at providing. Therefore, there should be no significant impact on foreign investment in Russia. As for foreign businesses at the regional level, they face "very murky water" irrespective of events in Moscow, because there local authorities come into the picture, and one thus has a tricky course to navigate.

Finally, Mr. Malashenko concluded by saying that if he were a U.S. politician, he would find no reason to be interested in Russia, since "it is not making too much trouble."

Summary prepared by Rashed Chowdhury, Junior Fellow with the Russian and Eurasian program at the Carnegie Endowment.