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Generational Dynamics Web Log for 5-Aug-04
Incredible! The Kremlin has frozen Yukos' assets again, sending international oil prices to yet another record high

Web Log - August, 2004

Incredible! The Kremlin has frozen Yukos' assets again, sending international oil prices to yet another record high

Putin's herky-jerky policy may signal a serious split in Kremlin leadership.

It was just a couple of days ago that the Kremlin appeared to be backing down on Yukos, after the previous harsh handling had shocked the international oil markets and also shocked investors in Russian businesses into rethinking any further investments. The obvious intent was to nationalize Yukos, and use its income and assets to enrich the Russian treasury.

On Tuesday, Russia's Justice Ministry reversed itself and gave Yukos access to its own bank accounts again, so that Yukos wouldn't go bankrupt. The international oil markets reacted positively, and oil prices fell slightly.

Today, the Justice Ministry reversed itself again, claiming that Tuesday's decision was a mistake because it "contradicts legal norms." Oil prices spiked to brand new highs, and Russian investors will certainly feel that their worst doubts about Russia are being confirmed.

One Yukos employee is quoted as saying, "It feels like we're being toyed with---like a baby seal being batted back and forth by killer whales."

These wildly mercurial policy changes raise serious questions about a possible split within the Kremlin itself. On the one hand, you see the official policy since 1992 of being an open free-market economy, willing to play by all the rules, encouraging and rewarding international investment.

But the Yukos incident reflects and older, darker policy of confiscating any assets the Kremlin pleases. The prototype of this policy was the seizure of the Russian Orthodox Church's assets, including gold treasuries accumulated over centuries, to finance the Bolshevik Revolution in 1917. Since then, until Communism ended in 1991, the Kremlin has felt free to take any assets it wanted, for any purposes it desires.

Russia is in a very troubled period, close to war in the Caucasus, and dealing with a chaotic economic infrastructure. The daily Yukos flip-flop circus is a sign of increasing problems. (5-Aug-04) Permanent Link
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Generational Dynamics Web Log for 5-Aug-04 Incredible! The Kremlin has frozen Yukos' assets again, sending international oil prices to yet another record high

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Generational Dynamics Web Log for 5-Aug-04
Incredible! The Kremlin has frozen Yukos' assets again, sending international oil prices to yet another record high