After months of pre-election confrontation with President Vladimir Putin's Kremlin, the move seemed calculated to demonstrate who was boss to the fabulously wealthy "oligarchs" who control post-Soviet Russia's natural resources and industry.

It may also be a prelude to confiscating assets acquired in chaotic privatization's in the 1990s, investment analysts said.

"They want to cut him down to size," one international official in Moscow told Reuters.

A spokeswoman for the General Prosecutor said Khodorkovsky was grabbed on the tarmac at Novosibirsk after failing to appear for questioning in Moscow on Friday. State security agents flew him back to the capital where he was charged on seven counts, some relating to purchases of former state assets a decade ago.

"It was decided to oblige him to appear," she said.

A Moscow court later ruled that Khodorkovsky, who has backed liberal opponents of Putin and has been cited as a possible successor, should be held in jail, Interfax news agency said.

The prosecutor, in a statement, said an "unprecedented" $1 billion and more of "damage" was done by Khodorkovsky and Platon Lebedev -- a key YUKOS shareholder held in jail since July.

Prosecutors made clear the charges were brought against Khodorkovsky, a 40-year-old former Communist youth leader turned workaholic banker, both as an individual and as head of YUKOS.

"ENDGAME" IN THE AIR

Russia's biggest oil firm, YUKOS recently engineered a merger with smaller rival Sibneft. U.S. oil major Exxon Mobil is said to be interested in taking a stake. Neither Exxon nor another possible buyer, Chevron Texaco, commented on how the new turmoil might affect their intentions.

Analysts said the arrest could open the way to Khodorkovsky and his associates being stripped of their stakes in YUKOS.

"This is clearly an endgame of some sort," said one foreign banker. "I think we have a very powerful change in the making."

Russia's "$11-billion-man" has been embroiled in a war of words with the Kremlin ahead of parliamentary elections in December and Putin's expected bid for re-election in March. His firms and associates have been subjected to major investigation.

Putin, a former KGB agent whom supporters hail for bringing order to the tumultuous nation that emerged from the rubble of Communism, is expected to stroll to victory in the spring.

Russian television showed Putin chairing his weekly meeting of top law and order officials on Saturday without comment.

Putin has preserved a lofty detachment in public from the disputes with YUKOS and other business empires. But he has made clear he does not wish to be in thrall to big business in the way his predecessor Boris Yeltsin was to the "oligarchs."

Less fond of the champagne lifestyle of other tycoons that grates on Russians thrust into poverty, Khodorkovsky's political ambitions have won him no more favor with the Kremlin than wealthy former Yeltsin allies like Boris Berezovsky or Vladimir Gusinsky, now both cast into uneasy exile by looming lawsuits.

"He is being pressed to give it up or sell out. People high up in administration do not want...their most powerful opponent running the most powerful company in Russia," the international official said.

YUKOS spokesman Alexander Shadrin said Khodorkovsky's aircraft was approached during a refueling stop by officers identifying themselves as members of the FSB intelligence service, the domestic successor to the Soviet KGB.

He was ordered out of the aircraft and taken away.

"POLITICAL PRISONER"

Khodorkovsky once responded to the Kremlin by saying he would rather be a "political prisoner" than a "political emigre."

Others may be taking the hint, however, and getting out. Aluminum and oil baron Roman Abramovich hit headlines by buying London's Chelsea soccer club and setting up a home in the city.

"The Russian business community believes that recent actions by law enforcement agencies and their leaders have considerably worsened the atmosphere in Russian society," said electricity utility boss Anatoly Chubais, former architect of privatization.

"We believe that only a clear and unambiguous position by Russian President Putin can stop these extremely dangerous developments," he said after meeting fellow business leaders.

Two liberal parties -- Yabloko and the Union of Right-Wing Forces -- backed by Khodorkovsky said in a joint statement the arrest would "change the political situation and place in doubt the immutable nature of Russia's constitution." Communist leader Gennady Zyuganov said he was "extremely concerned."

Some politicians saw the case against Khodorkovsky as justice being done for decade-old wrongs.

The leftist speaker of the Duma lower house, Gennady Seleznyov, said economic crimes "must be investigated and those who conceal their income from authorities brought to account."

Nationalist Vladimir Zhirinovsky welcomed the charges. "I will be delighted to bring him a food parcel in prison."

See also:

YUKOS Case

Reuters, October 25, 2003