The Khodorkovsky trial - an Unfinished Symphony.

Most comments on the Khodorkovsky trial start with the inevitability of a guilty verdict. Yet there were whispers from serious people that a not guilty verdict might be possible, that the trial is an embarrassment to Medvedev and his people. One enterprising bank economist said that there was a 40% chance that Khodorkovsky would be acquitted. This a clever position that allowed him to claim to have been the most optimistic about a not-guilty verdict, if this were the outcome, but also not wrong about a guilty verdict. But clever fence-sitting will never actually tell you how to bet.

Khodorkovsky and Lebedev have been pronounced guilty, but the trial still drags on while the judge reads the conclusion. No doubt the judges will claim the maximum possible recess while considering sentencing. And then there will be an appeal. This story will not be closed for some time, which to my mind reflects that fact that there is no clear political view on Khodorkovsky, and so the decision hangs in limbo. In a way this is good news - if the forces of darkness really were in the ascendant in Russia, then the trial would have been quick, and Khodorkovsky back in Siberia, freeing up prosecutorial manpower to harrass some other unwilling-to-share oligarch.

The trial balloon about swapping Bout for Khodorkovsky was a sign of the Russian leadership's lack of options. They know that there is no real benefit to keeping Khodorkovsky in jail, as no oligarch will again try to gain the sort of power that he claimed, and the proceeds of Russia's mineral wealth will mostly accrue to the State. On the other hand, once Khodorkovsky is out, his enemies fear him, as all bullies fear anyone who might fight back. So Putin and his team need to keep Khodorkovsky in jail, even though Medvedev and the people around him would like to let him out.

The main issue here is that investment in Russia is woefully low, below 20% of GDP (China is around 40%), and letting Khodorkovsky out would greatly help the economic authorities to persuade foreign and domestic investors that Russia is a good place to put their money. At the moment, it's telling that if you look at the various public filings, not one Russian oligarch holds his wealth onshore, whether in his own name or via a corporate entity. All of them, without exception hold their wealth in offshore jurisdictions. So if the most connected people with the best lawyers don't trust the Russian legal system, why should any other investor?

There is another issue, which is that if you ask just about any ordinary Russian, they are well aware that most murderers get let out after 10 years or so. So the Khodorkovsky sentence is getting harder and harder to justify, and Putin is painting himself into a corner. It's not enough to throw mud at Khodorkovsky, and say that his associates were responsible for murder. Does that mean that Putin or Medevedev should take responsibility for everything that their subordinates do?

The Bout-Khodorkovsky swap is an elegant tactical move, which is why it appeals to the securocrats - it makes them feel clever. They are concerned that Bout, unlike Khodorkovsky, will happily agree terms with his captors in order to avoid jail. And Bout knows a lot about which senior Russian officials have taken which payoffs in regards to Russian illegal arms shipments and other trades, and can probably direct the CIA to the relevant bank accounts. Why else would the Russians exert such massive pressure on the Thai government in order to prevent the extradition of a private individual who has not really lived in Russia for the past two decades?

The problem for the Russians is that Khodorkovsky does not mean a lot to the Americans, and if anything, he is worth more to them in jail, because he’s a stick with which to beat Medvedev. And also a symbol of Medvedev’s impotence. YUKOS did pay a lot of money to Washington lobbyists, and there probably is some residual goodwill, but there is no political capital to be made in the US by supporting a Russian oligarch. Post-crisis, and post-Macondo, rich foreigners from oil companies are not so popular in America. Furthermore, Bout must have some useful information about sales to Al-Quaeda and similar groups, and that's obviously a big priority for the US.

And of course Khodorkovsky would have to agree to any deal, which is also not that likely. It would be tantamount to admitting that he was an American agent, and probably any deal would require his exile. He might have accepted exile in return for avoiding jail, but now that he's done his time, why pay the price twice? This is how the Russian elite are good at tactics, and bad at strategy. They scored a massive tactical victory by putting Khodorkovsky away, but now they are in a strategic corner. They fear Khodorkovsky out of jail, but to keep him in jail, they have to abandon the myth that Russia has an independent or fair legal system. Once he is out of jail, he no longer has anything to fear, and he has plenty of resources to fight back.

When the South Africans jailed Mandela, they had no idea they were creating a martyr (and Mandela was not a very attractive character back in the 1960s, head of the Soviet sponsored Stalinist wing of the ANC). By the end, the Botha regime were desperate to let him out, which meant that it was Mandela who dictated the terms of his own release, even delaying the time he walked out of jail, to show that it was he, not the regime, who was in control. It's the same with Khodorkovsky, the longer he stays in jail, the more people will remember him for the injustices that were done to him, than for the injustices that he did to others. The regime knows this, which is why there will be no final decision until after the 2012 election.