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Support Putin or face a return to the bad old days

Western investors should back President Putin in his battle with theoligarchs, who are likely to block any reforms that would harm theirown interests.
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The Western media used to chastise Russia for allowing the oligarchs to

run the place. When Boris Yeltsin was president, it was difficult to

know who was calling the shots: the oligarchs or the president. The

oligarchs were, in fact, created by Mr Yeltsin’s controversial

privatisation, in which they received state assets at rock bottom

prices; and they continued to control the state throughout his

presidency.

When Vladimir Putin became president, he set out to wrest control back

from the oligarchs. One outcome was that Boris Berezovsky (who was

enormously powerful under Mr Yeltsin) and Vladimir Gusinsky went into

exile. Mr Putin’s “deal” with the others was that, provided they kept

out of politics, no-one would investigate their acquisition of state

assets.

Peace was achieved and Mr Putin got on with the challenging job of

forging a capitalist economy out of Russia. Reforms of the tax code and

land ownership are among his achievements and the economy is marching

ahead at a healthy clip.

But no-one should be under the impression that Russia has reached the

status of mature democracy. Given the upheaval and schisms of the past

decade, that would be highly improbable. Under those circumstances it

is best to back the reformers, even if their methods do not yet meet

the ideal.

In the furore between the now-jailed oligarch Mikhail Khodorkovsky and

Mr Putin, the stance of the Western press and investors to side with Mr

Khodorkovsky is ill advised. We do not yet know the outcome of the

fraud and tax evasion charges levelled against him but they are serious

matters even if the reason for prosecuting them was political (to stop

him financing opposition parties).

If Mr Khodorkovsky were to prevail, the likelihood is that Russia would

be thrown back into the Yelstin era and the reforms (or anything that

didn’t suit the oligarchs) stalled. Right now, the democratically

elected Mr Putin has to defend his turf by fair means as well as foul

if Russia is to progress further.

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