This worked also to discourage professionalism. The tsar did not permit any organization or governmental institution to develop that would determine the law of the state. The Senate, which acted as a cassation court after 1864, did to a certain degree, but this was cut off of course by the Revolution. The tsarist government allowed independent court decisions in most legal cases, but limited the courts when it came to political justice. Another result was to forge informal hierarchies of power outside the administration — client networks. These could involve the nobility or governors who shared the tsar's disdain for legal restrictions. A governor's ability to transgress the law, to do what he wants, to act arbitrarily, in a way was an indication of his authority.

This alliance between the police and the procuracy persisted and developed much further in the Soviet period. This encouraged not so much contempt for the law as a sense that the law was made for underlings, and that one's status depended on one's evasion or immunity to the law. In the Soviet period, this was widespread, of course, particularly in the economy. When I started going to Russia, in the 1960s, you usually didn't do things through ordinary channels. You did things through blat (personal connections), or nalevo (in an underhanded manner). What was going on was in a way rather attractive — a spontaneity of action with disregard for the state. The state was weak in the 1960s, it was stronger in the 1970s, but this went on nonetheless.

The other side of the coin is that while everything in a way is permitted, almost nothing that goes on, then, is legal. So you have a sense of universal culpability — not psychological culpability, but personal, legal culpability. The sense is that one cannot act according to law. Therefore one acts in disregard for the law, as of course the oligarchs did on a wide scale. Then anything they did was subject to the intrusion of the Executive, which would come down arbitrarily on anyone the Executive Power — in this case the President — didn't like. This is really counter to a system of rights.

We've seen this in two recent incidents, and, of course, with many of the oligarchs and particularly Khodorkovsky. Whenever these people came in contact with power, law was ignored. Khodorkovsky made the mistake of politicking, trying to become President, influencing the Duma, on the one hand. On the other hand, he tried to reach a deal with Exxon-Mobile, which would have traded off Russia's major resource to us. It was no surprise that Putin not only slapped his hand, but slapped him into prison. Then all sorts of wrongdoing came out. All of it was correct: Khodorkovsky didn't get where he was by obeying the law. That was quite clear. But other oligarchs who showed the same disregard of the law are flourishing.

In an incident that is closer to us, in the last few weeks, many of you may know about it, St. Petersburg European University was just closed. It was closed formally because it had violated fire rules, though it had never been in violation of those rules before. They appealed to court, and the court upheld the fire department's ruling, so it's going to be closed for three months, perhaps longer. It looks as if the university may be destroyed. It is one of the great universities in Russia at the present time. The reason this happened was that they received a European Union grant of about 160,000 Euros to investigate election procedures in Russia. One requirement was to train monitors for the election, but they had withdrawn from that program. Well, Putin might have 70 percent popularity, but he didn't want organizations supported by foreigners monitoring the Russian political system, or monitoring the Russian sovereign. In a sense this then extends down through the system and is a feature of its political culture. I would agree that it's not a disrespect for the law in terms of remedying particular grievances, but it is a kind of legal nihilism when it comes to wielding power and making governmental decisions.⁴

In the last few years, there have been changes, and the whole situation is extremely ambiguous. There's been more law, and less law. There's been more capitalism, and less capitalism, and we're having a mix here. The only thing I would emphasize is that unlike China and some other cases, conflicts between the executive branch and other parts of Russian society, particularly the intelligentsia, are endemic to Russian history, and I don't think they are going to stop. I would not look forward to a period of great stability, though it's possible that the rates of return on investment would be higher in those circumstances.

MR. ROTHSTEIN: Thank you, Richard. Questions before we go on? Katharina?

PROF. PISTOR: Thank you very much. It's a pleasure to be here.

Let me first make one footnote to the two previous presentations. I don't think that they're irreconcilable. Actually they mesh quite well. You have people on the ground seeking justice and having a desire for that. Russians are not genetically deficient in any way, trying to have justice and maybe even the rule of law. But there's a different discourse among the political elite, and I think the critical issues are really whether there are constraints on the Executive, on those in power, and how those with either control of economic resources or political power relate to each other and what the role of law is in that particular context.

I think here the transition period since 1991 is really a very interesting period. We know from comparing the data, of course, that any country that tries to transform from a more autocratic regime to a more democratic one faces huge obstacles. Usually, if they haven't been a stable democracy for at least ten years, they tend to collapse again. There is a high failure rate in the early years, so you shouldn't be surprised that there are failures in Russia, as there have been in so many post-colonial countries, or also in countries like Germany or Italy in their transformation to a more democratic type of regime. And given the upheavals in Russia that were described earlier, it's not surprising that they did struggle, certainly. Nonetheless, I think 1991 was a turning point that could have been used in different ways that might have increased the probability — in no way guaranteed — but increased the probability of building the rule of law. I think some major mistakes were made.