Posted on 12/24/2004 10:48:13 PM PST by neverdem
The White House deserves kudos for protesting Russian President Vladimir Putin's sale of the main production unit of the oil giant Yukos to a company that no one had ever heard of before. Sure, the rebuke came a full day after President Bush passed up a chance to publicly criticize his good friend, Mr. Putin, for the Kremlin's clumsy efforts to smother Yukos and other private enterprises in Russia, but at least it happened.
The tale is just about as sorry a story as business enterprise can get in Russia, and it keeps getting weirder. Mr. Putin, bent on destroying Yukos and its jailed founder, Mikhail Khodorkovsky, was preparing for what was to be the final swing of his dull ax, the "auction" of Yukos's most critical asset to Gazprom, the Russian state energy behemoth. But Yukos's remaining managers, now wisely living abroad, hit on the idea of filing for bankruptcy protection in Houston.
More amazing, the judge there issued an injunction against the auction. Russian authorities predictably jeered the ruling and declared that they were going ahead with the sale of the subsidiary, known by the catchy name Yuganskneftegaz.
Still, the ruling by Judge Letitia Clark had an immediate impact: Western banks, which had put together a multibillion-dollar loan for the sale, balked at defying an American court. When the auction opened last Sunday, the Gazprom representative suddenly had to leave to answer his cellphone. When he came back, the only bidder left was a shell company named Baikal Finans Group, which lists the address of a cellphone store 170 miles from Moscow.
Baikal picked up Yuganskneftegaz for only $500 million more than the starting price of $8.87 billion, which was already obscenely low for a company that pumps 11 percent of Russia's oil.
It hardly came as a surprise when Baikal was swiftly bought by Rosneft, a state-owned Russian oil company. From the jailing of Mr. Khodorkovsky in October 2003, through a progression of ever more ridiculous tax bills and made-for-TV searches, Mr. Putin has left little doubt that the goal is to get the Russian oil industry back into the hands of the state.
Nobody argues that Yukos, a product of the piratical privatizations of the early 1990's, is an innocent victim. Russia certainly can choose to nationalize the industry. But reversing a piratical privatization through a piratical nationalization only confirms that doing business in Russia remains highly risky.
on an earlier thread someone posted an article in late 03 that showed a couple of US oil companies were interested in buying a stake in Yukos. Likly the Russians weren't too keen on this idea.
The whole story ought to be made into a movie. Its like some some mafia state that runs with certain rules and then changes the rules half-way through the script. You have to be an absolute fool to invest money in Russia. I read that Ikea, which is a major Swedish furniture company...had a huge successful operation open in Moscow last summer. Was making tons of money the first 60 days. Then they decided to open a second store...and this plan has really fallen badly. Apparently, the Russian government is playing hardball and wants a higher cut of the money. Ikea is standing there...making huge amounts of profit off store number one and thought it would be the same story with store number two.
Gonna take capitalism a while to take root in Russia. Somebody needs to take Putin aside and point out to him that governments NEVER do a better job of running businesses (Ya year that, Dubya?).
Putin would do better to throw a few corrupt bureaucrats and robber barons into the Lubyanka to rot (and PLEASE do the US a favor and include Soros, okay, Vlad?)
<< The whole story ought to be made into a movie. Its like some some mafia state that runs with certain rules and then changes the rules half-way through the script. You have to be an absolute fool to invest money in Russia. >>
In Russia?
Sure. -- Astute observation.
And also in any of 150 foreign Hell holes from A to Z with "china"/Hong Kong at the top of the list and especially including such of Asia's petty dictatorships as Malaysia, Singapore and Thailand, all of Central and South America -- and totalitarian canada.
Ping
The newspaper that never loses a chance to champion Castro, admires Jimmy Carter and bill clinton for providing North Vietnam with nuclear materials, did dirty propaganda work on behalf of Stalin, and still takes pride in the Pulitzer Prize they won for covering up his Ukrainian genocide, should hesitate to criticize the President of our country for trying to stay on good terms with Putin and Russia.
Well . . . as the Gipper liked to say, I WANT to give Reagan credit for defeating the Soviet Union. But those darned Soviets make it tough to make a convincing case.
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