Are the Russian authorities really considering a pardon for Mikhail Khodorkovsky? The markets sure seem to think so.
Deutsche Bank AG and Troika Dialog both said this week that the former Yukos CEO, who has been incarcerated since October 2003, has a 50-50 chance of being granted early release.
In a note to clients on March 26, Yaroslav Lissovolik, Deutsche Bank’s head of research and strategy for Russia, said Khodorkovsky's chances of being freed were “significantly higher than anytime in the past."
The Khodorkovsky case is widely seen by investors as a metaphor for the absence of the rule of law in Russia.
Khodorkovsky, once Russia's richest man, is serving a 13-year sentence for two separate convictions for tax-evasion, fraud, and oil embezzlement that critics say are punishment for opposing Vladimir Putin's authority.
Releasing him, analysts say, would have a bullish effect on the Russian stock market.
Both Lissovolik and Roland Nash, chief investment strategist at Verno Capital in Moscow, told Bloomberg News that this could add as much as 10 percent to the value of Russian shares.
What exactly is driving these market expectations? In large part, they are a reaction to signals being sent by the Russian authorities.
On March 5, President Dmitry Medvedev ordered Prosecutor-General Yury Chaika to review Khodorkovsky's case, as well as others raised as politically motivated prosecutions by opposition activists in a February 20 meeting with the outgoing Kremlin leader. Chaika has until April 1 to complete the review.
Moreover, earlier this month, the Kremlin’s human rights council urged Medvedev to pardon Khodorkovsky before Putin's May 7 inauguration. The council, which is strictly advisory, called Khodorkovsky's conviction “a fiction,” adding that there was “no evidence” to support the charges against the former oil executive.
And as "Nezavisimaya gazeta" reports, two key members of the council, Chairman Mikhail Fedotov and former Constitutional Court Justice Tamara Morschakova, said that there was no legal requirement that Khodorkovsky admit his guilt as a precondition for receiving a presidential pardon. Khodorkovsky has repeatedly said he would never admit his guilt.
Russia's human rights ombudsman, Vladimir Lukin, also suggested last week that a Khodorkovsky pardon might be on the table.
"I think there is an increasing number of indications that the authorities are considering this issue, although I personally am not aware of it," Lukin told Interfax on March 23.
"I have discussed it with the president; he knows that he has this legal power. However, I don't know how events will unfold.... I believe that the sooner humanity is shown toward Khodorkovsky, in one form or another, the better it is for everybody, including the authorities, civil society, and him too."
It seems clear that Medvedev, who has said in the past that releasing Khodorkovsky would not be dangerous, favors a pardon. But if this long saga is really moving toward an endgame, it would require the blessing of Putin, who in reference to the case has said that "a thief must sit in prison."
Moreover, as Igor Yurgens, an adviser to Medvedev who heads the Institute for Contemporary Development, told "Nezavisimaya gazeta," there are also powerful forces in the ruling elite opposed to releasing Khodorkovsky. These include the law enforcement hierarchy and those connected to the oil industry who benefitted from the break-up and redistribution of Yukos's assets (see Rosneft and Sechin, Igor).
"There is the whole vertical of law enforcement agencies objecting to Khodorkovsky's release. They will see this as a slap in the face," Yurgens said. "Even should Khodorkovsky himself decide to keep a low profile afterward, Yukos's foreign shareholders might demand compensation from Russia."
But that said, those familiar with the case say there has been a noticeable shift in favor of a pardon as more of the ruling elite come to the conclusion that keeping Khodorkovsky in prison has become a liability for the Kremlin, while the benefits of his continued incarceration diminish.
-- Brian Whitmore
