Some say that's healthy for Russian democracy, creating a counterweight to the power wielded by the Kremlin, but others worry that the influence of big business has gone too far. The role of business in the elections has become a hot issue since the Oct. 25 arrest of Mikhail Khodorkovsky, former chairman of oil company Yukos, and Russia's richest business tycoon. Although Khodorkovsky has been charged with tax evasion, many suspect he is really being punished for his political activities.

Grigory Yavlinsky, leader of the opposition Yabloko Party, talked to BusinessWeek Moscow Correspondent Jason Bushi about the forthcoming elections and the role played by big business in Russian politics. Yabloko, a liberal party noted for its concern with democracy and human rights, was one of the parties being funded by Khodorkovsky. The coming elections will pit Yabloko against a range of parties, among them the main pro-Kremlin party United Russia, as well as other opposition parties, including the Communist Party. Edited excerpts of their conversation follow:

Question: What makes these elections important for Russia?

Grigory Yavlinsky: These elections can show some important political trends: to what extent people support the bureaucratic structure, such as United Russia [the main pro-Kremlin party]. The elections will show to what extent people support the nationalistic wing, and to what extent they support the liberal forces.

For example, you have the Police Minister [Russia's Interior Minister, Boris Gryzlov] as the head of United Russia. You have an extreme nationalist as a leader of the Communists -- their No. 2, Mr. Kondratenko... You have my party, a liberal democratic party. We have a leader of the St. Petersburg group, Mr. Kovalev, who is a world-famous human-rights [activist] who was in prison in Soviet times. Whatever happens will send a very clear message.

Question: And if people vote in a similar way to last time -- United Russia comes first and Yabloko only gets 5% to 6% of the vote -- should we be pessimistic that Russia will never change?

Grigory Yavlinsky: If things happen like in previous elections then we must be very optimistic.... I would be encouraged that things will not get worse. In Russia today, if things do not get worse, then it's great. No news is good news.

Question: Business is playing a big role in these elections, financing parties and sponsoring candidates. What is it that makes these elections important for business?

Grigory Yavlinsky: In the mid-90s, a system was created in Russia that I would call "peripheral capitalism." Now, this system is getting stronger. And the major features of this system are that there is no independent justice at all; a 100% merger between business and the authorities. Such a system always gives business an incentive to be in the Duma and in the government. This system is a lame duck and it can't create a modern competitive market. It can only create a peripheral system, or, as the Russian people call it, "bandit capitalism."

Question: The role business has played in financing the elections has received a lot of attention in recent months, especially with the Yukos case, which some people have linked to Yukos' funding of political parties, including Yabloko. What do you say?

Grigory Yavlinsky: Yukos was substantially supporting Yabloko since April, 2002. But Yukos was not influencing our voting decisions. Khodorkovsky was supporting Yabloko as a democratic project, as something to support civil society in Russia. That's very easy to see if you look at our votes in the Duma.

You'll see there was no special political influence from Yukos on the votes of Yabloko. Very possibly they have influence on the votes of the Communists, but not on Yabloko.

Question: In general, do you see a risk of business buying the political process, given that it's so crucial to party financing?

Grigory Yavlinsky: Yes, but this is a problem of the system. There is no law about financing political parties. And this is wrong. It would be a very important step.

Question: What kind of regulations do you think Russia needs?

Grigory Yavlinsky: For example, if every voter voting for my party gave one dollar a year, that would be perfectly OK for me. It's easy to put into legislation, saying each party can get from the budget an amount proportional to the number of their votes. It's much better than relying on tycoons.

Question: Has Yukos entirely stopped funding Yabloko now?

Grigory Yavlinsky: After what happened with Khodorkovsky, yes.

Question: Do you think funding by other businesses has similar noble goals?

Grigory Yavlinsky: I can talk only about my own party. I was always attempting to resist any attempt for political influence from any oligarch. I've been trying to create a political party. Tycoons always want to have political influence.

Question: If one looks at the way the Duma works today and the way legislation is discussed, how big an influence does big business have on those decisions?

Grigory Yavlinsky: Politically, it doesn't. But in the economic area -- oil, raw materials -- it has been very influential.

Question: And were the methods legal? Or are we talking about corruption of Parliament?

Grigory Yavlinsky: There is no law about lobbying. There are no legal methods.

Question: The picture you painted at the beginning, when you said if nothing gets worse that's good news, actually sounds very pessimistic, very bleak.

Grigory Yavlinsky: It's not pessimistic. Maybe, if you think that Russia is Switzerland. But this comparison is not right. Russia is not Switzerland. In the current situation, it's not a pessimistic scenario for Russia. It's certainly necessary to do a lot of positive things, but they can't be done at the moment. They can be done only after the Presidential election -- if the President is prepared to move in this direction.

Question: And do you believe he will be?

Grigory Yavlinsky: That's a good question.

See also:

State Duma elections 2003

Business Week, December 8, 2003