If Vladimir Putin is Peter the Great, then the Yeltsin-era oligarchs and their executives are the streltsy. Once again, the main business of the Tsar appears to be to impress upon Russia that there are no stable, durable, intermediary powers that can stand against his will:
A Fistful of Euros: Yukos And The Russian Oil Card: The Financial Times is reporting that all senior executives of the Yukos oil company have left Russia. The FT suggests they fear for their safety amid a flurry of arrest and search warrants issued by Russian prosecutors for oil company managers.
“There is not a single member of the management board left in Russia at the moment,” a person familiar with the situation said on Wednesday. Yukos, which has been crippled by tax claims of over $20bn (€15bn) and faces the forced sale of its main production asset, is now managed by remote control, according to the person.
Is the timing of these warrrants a mere coincidence? Hard to say. Little at this level in Russia tends to be simply random. It is clear that given the backdrop of a global oil scarcity Putin & Co have been using the Russian leverage on the margin to play around with the Yukos affair. Whether this latest intervention is an attempt to exert pressure on the EU, or whether it is an attempt to make hay (with the oil company’s assets) while the sun shines (or rather storm clouds threaten) is hard to say. Until we know more about Putin’s final end-game none of this will be very clear, but obviously, if your going to be taking a lot of stick anyway, why not see what you can get away with. That could be one reading.
The EU leaders were noticeably softer on Putin in the aftermath of the Beslan tragedy than were their US counterparts. This was noted and regretted on a number of occasions here at Afoe. The suspicion did exist that our dependence on oil, and the sensitivity of our economies to price fluctuations could have been playing a part in this.
Yesterday Colin Powell again took the lead in strongly warning the Russians. Again, it would be premature to draw any conclusions about what leaders like Chirac and Schroder may be doing. There is clearly a place for a ’hard cop/soft cop’ play at the diplomatic level, with Washington waving the stick while Europe tries to achieve a negotiated settlement. This may be more coordinated than it appears from the outside, so I wouldn’t be jumping to any precipitate conclusions just yet. Things aren’t always what they seem to be.
If you buy the historical interpretation that one of Russia's eternal problems in economic development has been an over-mighty state, this looks like a very big step backward.
Posted by DeLong at November 27, 2004 02:17 PM | TrackBackhttp://www.nytimes.com/2004/11/26/business/worldbusiness/26yukos.html
Fearing Prosecution by Kremlin, Top Executives of Yukos Leave Russia
By ERIN E. ARVEDLUND
MOSCOW - Top executives at the Russian oil giant Yukos, including the company's American chief executive and chief financial officers, have left the country, saying they fear prosecution as part of the company's continuing power struggle with the Kremlin.
All six members of Yukos's management committee have now left Russia, including the company's chief executive, Steven M. Theede, an American citizen. Mr. Theede will be traveling in Europe and the United States in the coming days, a Yukos spokesman said.
Bruce K. Misamore, also an American and the chief financial officer of Yukos since 2001, said he did not plan to return to Russia until he was certain that his safety and that of his family was not in jeopardy. Earlier this week, the Russian general prosecutor's office asked Mr. Misamore to come in for questioning, but he was in London for a previously scheduled Yukos management meeting and decided not to return, he said.
No formal charges have been filed against any American or other expatriate employee at Yukos.
Prosecutors are shifting their attention to Yukos senior executives as part of the state's crackdown on the company, and that could pave the way for the Russian government to become the new owner of the oil concern, industry analysts said. With top managers leaving Moscow, "this could give the state legal grounds to install outside management," said James Fenk- ner, head of research at Troika Dialog brokerage firm here.
So far, oil production at Yukos has not dropped off, despite the company's wrangle with the Kremlin. Yukos produces 1.7 million barrels a day, or about 2 percent of the world's oil supply.
The company came under fire from the Kremlin after its founder, Mikhail B. Khodorkovsky, was arrested in October 2003 in what was widely considered to be retaliation after he challenged President Vladimir V. Putin politically. Mr. Khodorkovsky remains in prison and is on trial on criminal charges of tax evasion, fraud and embezzlement.
Essentially, choice assets of Yukos will be auctioned off at a significant discount to a Russian government pleasing consortium. What is left of Yukos will come under another government pleasing consortium. Vladimir Putin is Peter the Great. Gazprom alone control 20% of the global natural gas supply. Then, there are the Yukos assets. Then there is Rosneft, which will soon be merging with Gazprom. Oh well.
Posted by: anne at November 27, 2004 02:57 PMhttp://www.nytimes.com/2004/11/27/business/worldbusiness/27yukos.html
Notice that Yukos is pumping merrily along all this time.
Posted by: anne at November 27, 2004 03:13 PMSo basically the Russian State is reacquiring the assets that were stolen from it by the Oligarchs.
At the end of the day that oil will still be sold on the global market, Russia doesn't really have a choice, they are a poor country with very limited means to get access to hard currency.
Posted by: Don Quijote at November 27, 2004 04:45 PMSo basically the Russian State is reacquiring the assets that were stolen from it by the Oligarchs.
At the end of the day that oil will still be sold on the global market, Russia doesn't really have a choice, they are a poor country with very limited means to get access to hard currency.
Posted by: Don Quijote at November 27, 2004 05:23 PMI agree with Don Quijote. It's been a slick, if unsubtle, move-- using tax evasion charges to gain control of one of that country's major revenue-producing assets.
From Putin's point of view, I don't think that a dependable state revenue is something he'd want only for its own sake. Given Russia's historic encirclement fears he'd have to be girding Russia against that, and especially so now that Rice will be at State. There are all those bases on the southern CIS perimeter that just coincidentally happen to be close to the Caspian fields, an area Rice has been personally involved with for years. No one could expect Russians not to see encirclement when they're already predisposed to see it, and no one could expect Putin to just roll over and cede something the Russians have claimed for over a century.
Don Quijote: While there was undoubtedly some stealing from the state, much of it was tricked from the population by effectively purchasing privatization vouchers below fair value.
I know that some of the cheers for the efficiency gains at Yukos have been propaganda, but didn't Yukos actually thrive under private management? Didn't it stop pissing petroleum into the water table and start getting it to export terminals? Didn't Russia go through a long post-Soviet period of western investors not knowing what level of government was in charge (who to bribe), thereby slowing investment and tech transfer to the oil sector?
I'm not sure that Russia's big issue is whether oligarchs stole from the people - much as it galls to see that sort of thing. I have to think Russia's big (economic) problem is the same as everybody elses - getting the most welfare out of natural and human resources.
Posted by: kharris at November 29, 2004 08:47 AM