The criminal case opened this week against Russian opposition
leader Alexei Navalny shows the Kremlin's prodigious ability to
hurt itself just when things are going relatively well.
[caption id="attachment_69249" align="alignright" width="300"
caption="Putin seemingly finds it hard to shake his bully-boy roots
from the KGB"]
[/caption]
The government's Investigative Committee hauled Navalny, a
charismatic anti-corruption blogger turned anti-Vladimir Putin
activist, in for questioning on an embezzlement case that it closed
itself a few months ago. The prosecutors put off formal criminal
charges for the moment, but took Navalny's passport and restricted
his movements to greater Moscow.
This latest display of kangaroo justice comes at a time when
Russia was enjoying some rehabilitation in the eyes of global
investors. On May 30, superstar economist Nouriel Roubini published
an op-ed proclaiming that Russia
should be "black-balled"
from the elite BRIC club. Considering how the other BRICs have
fared since then, Dr. Doom's argument looks laughable.
India is plunged into chaos as we speak from power failures that
have affected half the nation. China's economic miracle is
stumbling amid widespread speculation that stellar economic
statistics
have been fabricated
in the past.
Brazilian state meddling
with its banks and the industries have turned it into a black
sheep. Russia has looked like an island of stability by
contrast.
The widely traded Market Vectors Russia ETF (
RSX
,
quote
) has gained 11.5% in the two months since Roubini issued his
fatwa, compared to a 3.5% gain in the iShares' global emerging
market fund (
EEM
,
quote
).
So the Kremlin's timing in trying to intimidate Navalny is
abysmal -- although any time would be abysmal for a case like this.
Navalny, looking relaxed and jocular in blue jeans for the news
cameras as he showed up at Investigative Committee headquarters,
himself underlined the parallels with Mikhail Khodorkovsky, the
Yukos oil tycoon who was locked up on dubious economic charges in
2004 and remains in prison.
But Putin had much more justification for going after
Khodorkovsky, whose company boasted about its aggressive
tax-avoidance strategies, and who personally boasted about
controlling 20% of the Russian parliament through liberal
contributions to legislators.
The case against Navalny turns on the incredible assertion that
he
engineered the theft of $500,000 worth of timber
from the northern province of Kirov while he was a political
advisor to the governor there. Earlier this year, he was cleared of
charges that his bad advice had caused a loss of $30,000 to the
local Kirov forest products company. Nonetheless, he could get 10
years for the new alleged crime.
It will be clear to almost everyone outside Russia that this
legal campaign is aimed at hobbling Navalny's budding political
career, and more broadly, frightening the inchoate but persistent
opposition to Putin. That is increasingly clear to everyone inside
Russia, too. A new poll from the respected Levada agency shows just
29% of Russians believe that various legal actions taken against
opposition figures are justified, a number creeping continuously
lower.
So why do it? The optimistic interpretation of the Navalny case
is that it reflects a personal vendetta by Investigative Committee
chief Alexander Bastrykin. Navalny has been raking muck on
Bastrykin in his blog lately, turning up undisclosed real estate
investments in the Czech Republic and other embarrassing details.
According to this scenario, once Navalny sweats for a while, the
case will be quashed again by the general prosecutor's office, the
Investigative Committee's arch-rival.
That all makes sense according to Moscow logic. But it's a
pretty pessimistic sort of optimistic interpretation. Putin's
faithful No. 2, ex-president and current prime minister Dmitry
Medvedev, declared war three years ago on the "legal nihilism" that
he rightly saw as rotting the core of Russian economics and
society. If a top law enforcement official using the machinery of
state to pursue a personal peeve is not legal nihilism, it's hard
to say what is.
Putin, for his part, has set radically improving Russia's
business climate as one of the goals for his third presidential
term, which began in May. He wants his country to leap into the top
20 in the
World Bank's annual ease-of-doing business
global survey, from 120th place now.
He could start by publicly stepping in to call off the Navalny
farce. That might give investors a shred more assurance that their
companies will not be subject to prosecutorial fiat if they fail to
pay off the right person in the right way.
But of course Putin won't. To him it would seem, the ability of
the state to act arbitrarily is part of its strength. That is a
grave weakness that Russia will just have to live with for the
foreseeable future.
