Russia: Putin's Big Mistake

RUSSIAN PRESIDENT Vladimir V. Putin just threw a CEO of one of the country's largest corporations into jail for doing what any American CEO could routinely do in the U.S. -- finance political candidates and political parties and lobby for his industry's economic interests. Yukos CEO Mikhail Khodorkovsky made the mistake of challenging

Putin's control of Parliament in the runup to Dec. 7 elections. His jailing undermines the rule of law in Russia and constitutes a significant blow to democracy (page 60).

Khodorkovsky is perhaps Russia's most important businessman, making the transition from robber-baron oligarch to Western-style corporate executive while building the world's fourth-largest energy company along the way. Before he was arrested, Yukos was negotiating a huge deal with Exxon Mobil Corp. (XOM ) That's on hold now. Other oil executives who have refrained from lobbying and kept out of politics entirely have been allowed to conduct their business without government interference. But fear is not the most effective force in motivating a vibrant market economy.

Before Putin took power, there was near-anarchy and little rule of law in Russia. Now there is authoritarianism and still little rule of law. All the independent TV stations and newspapers in Moscow are under the control of Putin's cronies. And Putin has surrounded himself with the siloviki, or strong men, colleagues from his days in the KGB. The best way for Russia to establish itself as a genuine Western country would be for Putin to release Khodorkovsky and deal with him in the court of law or in the court of public opinion. Right now, Putin's behavior smacks of the old Soviet Union.

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