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.
Source: Financial Times


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.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

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