European Court of Human Rights: Khodorkovsky Case

Lord Bates Excerpts

Tuesday 23rd July 2013 Lords Chamber

[Lord Bates]

My Lords, I would be happy to give way to the noble Baroness because I am sure that her remarks will be of greater interest to the House than mine. Like the noble Lord, Lord Hylton, I pay tribute to the noble Lord, Lord Trimble, for securing this debate and, also like him, I had the opportunity to meet Mr Khodorkovsky in 2003 at the World Economic Forum annual meeting, where he spoke very passionately and persuasively. He was the star of the show. At the time, he was Russia’s richest man and chief executive of Yukos and could seemingly do no wrong. He spoke of the importance of corporate governance and independent oversight and was innovative in bringing foreign investors on to the board of his company to improve oversight. He was passionate about shareholder rights and issues of that nature. We were all greatly impressed by this man. At that meeting he invited us to attend the first annual corporate governance summit on investment in Russia, which was to be held in Moscow later that year. We all dutifully turned up in Moscow only to find that our host and sponsor was in prison. That was a bit of a shock and did immense damage to foreign perceptions, particularly as regards foreign investment as many institutional investors had turned up.

I do not think there is any doubt about how this situation came about. Mr Khodorkovsky was a very rich and powerful man. In the period between the January Davos summit and his own summit in Moscow he had declared that he intended to stand down from the chief executive position at Yukos in 2007.Given that President Putin’s term was to come to an end in 2008, that was a very clear indication that Mr Khodorkovsky’s intent was to pursue political office. It would not be the first time that the lethal cocktail of oil, political ambition and extraordinary wealth led to some pretty unpleasant happenings. The mechanism by which the events happened became clear afterwards. In an article in Time magazine in January 2011, there was a very interesting interview with Igor Yurgens, who was principal adviser to President Medvedev. Igor Yurgens said:

“Everyone understood [the first trial] was a case of selective justice. They all broke the law and only one was put in prison”.

A senior official stated:

“No one said it out loud, but of course it’s impossible to mention Russia’s investment image”

abroad without referring to what happened to Khodorkovsky. Therefore, it was clear that immense damage was done to foreigners’ perception of the country.

William Browder, whose Hermitage Fund was the largest foreign investor in Russia, said in the Time article:

“It seems they’ve decided they don’t care what anyone thinks outside of Russia”.

Browder says that the Russians need to ask themselves why Russian stocks have a market value 50% to 70% below their peers in other emerging economies. The reason is simple: in Russia, you have property rights conditional on the whims of various corrupt officials who may decide your future. We hear all that and we think, “There the Russians go again. We have seen it all before. The Russians are up to their usual tricks. Putin is up to his usual tricks”.

I close by making a slightly wider point. I would argue that, going back through history, one of the greatest weaknesses of British foreign policy is that we have manifestly failed to understand Russia. Churchill famously described Russia in 1939 as,

“a riddle, wrapped in a mystery, inside an enigma”.

It has puzzled us and we have never quite got to grips with it or how to respond to Russia in foreign relations.

In a thoughtful paper by Andrew Monaghan for the Foreign Policy Centre entitled, UK-Russia Relations: a Bad Case of Mutual Misunderstanding, he says that the political other is the problem,

“particularly as often portrayed in an over-simplified, headline-based approach. Each appears to be a major target for the mass media of the other, which tends to emphasise and often exaggerate the conspiratorial element of the other, usually framed in spies, hostile intelligence operations, ‘cloak and dagger’ intrigue and murder, and competition for international influence”.

That is indeed probably a pretty accurate description of how relations have been, but in many ways, it belongs to the pages of a John le Carré novel such as Smiley’s People. We need to think about how our perceptions of Russia can themselves come in from the cold.

In this regard, we need to recall how, going back through history, Russian-UK relations have been a strength. As far back as the Napoleonic Wars, the Great War and the Second World War, we have been on the same side; our interests have been aligned. When we are tempted to engage in that rather simplified gesturing towards Russia, it does little to improve our misconceptions. If we really want to understand the Russian people, we need to start reading a little more of Pushkin, Chekhov, Tolstoy and Dostoevsky and a little less of John le Carré, because Russia is today an important point of reference for us in foreign relations. If we want to do anything about the bloodshed and the appalling situation in Syria, if we want to do anything about Iran and its nuclear aspirations, there is no question but that we cannot do it without Russian engagement.

The Russians, in my limited experience, are fully aware of the shortcomings of their own systems of government, but they are also hugely proud of their country and implacable in their belief that it is solely their responsibility to sort it out, because they are the only ones who truly understand it. In that respect, at least, they are rather like us.