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Russian Events Leave White House Wary

Turmoil in Kremlin stemming from an oil tycoon's arrest is met with dismay. U.S. seeks to encourage Moscow to change course.

November 01, 2003|Maura Reynolds | Times Staff Writer

WASHINGTON — Just a few weeks ago, Bush administration officials were upbeat about relations with Russia, holding a chummy Camp David summit with President Vladimir V. Putin that both sides said put tensions over Chechnya and Iraq to the side.

But the arrest of Russia's most powerful oil magnate a week ago triggered turmoil in the Kremlin that has left official Washington searching for a response to a Russian power struggle with potentially far-reaching consequences.

Administration officials said they were still trying to understand how the arrest of Mikhail Khodorkovsky -- head of Russia's largest oil company and the country's richest man -- caused a crisis in the Kremlin that led to the resignation of Putin's chief of staff and raised the specter of a KGB resurgence at the highest levels of the government.

Disappointment with Russia was palpable in Washington.

"After Camp David, there was hope the relationship could take on a more concrete basis," one administration official said. "What happened this week is not going to help that in the least."

Russia watchers have long been fixated on the Kremlin rivalry between two camps loyal to Putin -- former KGB officials on one hand and crony capitalists allied with the chief of staff, Alexander S. Voloshin, on the other. It has often been seen as a kind of struggle for Putin's soul, with both sides cast as devils: one side seeking a return of police-state controls and the other promoting the interests of corrupt oligarchs.

"There are no white hats," said Fiona Hill, a Russia scholar at the Brookings Institution in Washington.

Understanding that, U.S. policymakers have long steered clear of thematic goals like promoting democracy or free markets and focused instead on concrete U.S. interests, including anti-terrorism cooperation and improving the climate for business investment in Russia.

Administration officials were still debating whether Bush should telephone Putin for a heart-to-heart, and suggested that such a chat might be in the offing in the near future. But they have not been idle in the interim. Several sources said the administration has repeatedly communicated with Russian officials in recent days, including some occupying high posts in the Kremlin, to express concern about the Khodorkovsky case.

The official language has been cautious.

"The manner in which this case is being handled has raised significant concerns about the state of the rule of law and the investment and business climate in Russia," said National Security Council spokesman Sean McCormack. "It is important for Russian authorities to dispel concerns that this case is politically motivated."

U.S. officials said privately that the language was carefully chosen to suggest that the administration does, in fact, believe Khodorkovsky's arrest and the seizure of his assets were politically motivated.

U.S. interest in the development of Russian democracy has waned in recent years, but at least three constituencies remain: human rights advocates, the nuclear nonproliferation community and investors.

Of those, the first two see Russia as a problem; only the investment community has viewed Russia as it wishes to be viewed -- as a partner. In that light, several officials said Putin miscalculated, believing that a crackdown on Khodorkovsky would stir little interest outside Russia. Instead, it threatens to undermine the nation's strongest supporters in the United States.

"It is much easier to destroy than to build investor confidence," Eugene Lawson, president of the U.S.-Russia Business Council, warned pointedly.

Another council official, Executive Vice President Blake Marshall, said several business deals worth hundreds of millions of dollars have been held up in the last week because of concerns about Khodorkovsky.

"The much bigger concern is whether any of this might mean some kind of renationalization," Marshall said. "Uncertainty is the worst enemy of foreign investors."

Among many Russia watchers, there has been frustration in recent years that the U.S. government -- the Clinton as well as Bush administrations -- has made security and business concerns such high priorities that they soft-pedaled matters of principle such as establishing the rule of law and protecting human rights.

Some observers are now arguing that the United States should take a strong public stand criticizing Russia.

Richard Perle, a former Reagan administration official whose neoconservative views have been influential behind the scenes in Washington, called Friday for Russia to be excluded from the Group of 8 industrialized nations.

"If the G-8 have any standards at all, Russia no longer qualifies for membership," Perle said.

The Khodorkovsky case "shows they are prepared to seize assets and persecute entrepreneurs for their political behavior. That falls below the standards of the other members."

But officials within the Bush administration said they were not yet considering anything so drastic.

Instead, they said it was important to respond in a way that would not back the Kremlin into a corner, but instead encourage it to shift course.

"All hasn't been lost," another administration official said. "Their initial reaction has been terrible. But the important thing is to act to galvanize events in a way that sets up the next step forward."

U.S. officials expect to follow their existing schedule of contacts with their Russian counterparts, he said. The agenda "is moving forward. There is nothing that has happened in the last week that has moved that backward."

At least, he suggested, not yet.

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