Johnson's Russia List
#6119
7 March 2002
davidjohnson@erols.com
A CDI Project
www.cdi.org
[Note from David Johnson:
1. Interfax: Russian investment abroad tops foreign investment in Russia.
2. Interfax: Russian investment abroad up 11% in 2001.
3. Moscow Times: Pavel Felgenhauer, Kremlin's Risky PR Game.
4. The Guardian (UK): Yevgenia Albats, Russia. (re women)
5. Reuters: Lavish Berezovsky presentation falls flat in Russia.
6. Vremya MN: Vladimir Gurvich, Strong Union of Democrats and Bureaucrats;
Philosophy of Administrative System Wins Out In Era of Liberal Reform.
7. UPI: Sam Vaknin, A Russian Roulette - Agriculture.
8. The Moscow Tribune: Dmitry Polikarpov, Russian 'devushka' to overwhelm
Simpsons. (Masyanya)
9. Forbes: Paul Klebnikov, The Oligarch Who Came in from the Cold.
(Mikhail Khodorkovsky)
10. The Independent (UK): Paul Taylor, Russia's new revolution Russian
theatre
is finally addressing modern concerns - thanks, in part, to the Royal Court.
11. Reuters: Russian Borodin found guilty on laundering charge.
12. Trud: Pavel Voshchanov, WHAT IS RUSSIA LIKE AFTER WINTER DEVELOPMENTS?
13. AP: Moscow Faces Oil Export Scrutiny.]
*******
#1
Russian investment abroad tops foreign investment in Russia
MOSCOW. March 6 (Interfax) - Russian investment abroad last year exceeded
foreign investment in Russia by $2.583 billion.
Russian companies invested $16.841 billion abroad in 2001, while foreign
investment in the country totaled $14.258 billion, the State Statistics
Committee reported on Wednesday. In 2000, when the figures were respectively
$15.154 billion and $10.958 billion, the difference was even greater, with
Russian investment abroad topping foreign investment in Russia by $4.196
billion.
However, Russian investment abroad is largely short-term (and often
speculative) and is usually withdrawn within a month. As a result, the stock
of Russian investment abroad was only $3.364 billion as of January 1, 2002,
while the stock of foreign investment in Russia was $35.624 billion. This
means that the bulk of Russian investment abroad has already returned to the
country, while foreign investment remains in Russia.
*******
#2
Russian investment abroad up 11% in 2001
MOSCOW. March 6 (Interfax) - Russian investment abroad rose 11.1% to $16.841
billion in 2001, from $15.154 billion in 2000, the State Statistics Committee
reported on Wednesday.
This included only $495 million in direct investment (2.9% of total
investment abroad) and $70 million in portfolio investment (0.4%), up from
respectively $382 million (2.5%) and $31 million (0.2%) in 2000. The bulk of
Russian investment in other countries was so- called other investment, which
rose to $16.276 billion (96.7% of total) from $14.741 billion (97.3%) in
2000. Other investment included $6.944 billion in trade credits, $8.998
billion in bank deposits and $257 million in other credits, compared to
respectively $2.165 billion, $12.558 billion and $11 billion in 2000.
Some $8.545 billion, or 51% of Russian investment abroad last year went to
the United States.
Since Russian investment abroad is largely short-term and is usually
quickly withdrawn, the stock of Russian investment abroad was only $3.364
billion as of January 1, 2002. This included $2.384 billion in direct, $211
million in portfolio and $769 million in other investment.
The largest amounts of accumulated Russian investment were $518 million
(15.4% of total) in Iran, $366 million (10.9%) in the Netherlands, $261
million (7.8%) in Cyprus, $227 million (6.7%) in Liberia, $101 million (3.0%)
in the British Virgin Islands, and $100 million (3.0%) in the United States.
*******
#3
Moscow Times
March 7, 2002
Kremlin's Risky PR Game
By Pavel Felgenhauer
Last week, many Russian commentators bemoaned the planned deployment of
U.S. troops in Georgia as a grand fiasco that would diminish Moscow's
influence in the region. Pro-Kremlin State Duma deputies announced that
they may in revenge call on the government to recognize Georgia's breakaway
province Abkhazia as an independent state.
The Abkhaz leadership has itself for many years expressed its desire to
leave Georgia and join Russia. But annexation of a major province of a
neighboring state is hardly a proportionate response to the planned
deployment of up to 200 U.S. servicemen, and it's hard to see how enhanced
ties with Abkhaz separatists will improve Russia's influence in the
Transcaucasus region. Nevertheless, the provocative anti-Georgian and
anti-Western statements received favorable and extensive coverage in the
government-controlled media -- a sure indication that the campaign was
conducted directly from the Kremlin. Then suddenly, last Friday, a smiling
and relaxed President Vladimir Putin announced at a press conference in
Kazakhstan during a summit of leaders of former Soviet republics that the
planned U.S. troop deployment in Georgia was "no tragedy."
The anti-Georgian and anti-U.S. din subsided abruptly. The Duma continued
to discuss the matter but was given much less coverage by state-controlled
media than before. In any event, any anti-Georgian, pro-Abkhaz Duma vote is
not legally binding -- only the Kremlin can initiate the annexation or
diplomatic recognition of a foreign land.
The week before last, during the Salt Lake City Olympics, Russia also
experienced a national fit of xenophobia and anti-Western sentiment. After
the passions partially subsided, a high-ranking Russian sports official,
Shamil Tarpishchev, told reporters that Putin personally prevented a
boycott by the Russian team of the last events of the Olympic Games and
stopped the crisis from getting completely out of hand. What Tarpishchev
did not mention was that the Kremlin itself initiated the fracas in the
first place.
There are today up to 30,000 Russian soldiers with hundreds of tanks, heavy
guns and warplanes stationed in the Transcaucasus -- up to 20,000 of them
in Georgia. There's a big garrison in Tbilisi. Just north of Georgia in and
around Chechnya is concentrated the lion's share of Russia's combat-ready
troops -- over 150,000 men with lots of heavy weapons, including ballistic
missiles. The stationing of several hundred U.S. servicemen in Georgia
cannot possibly shift the balance of military power in the region, and
Putin was totally right when he said the U.S. deployment was no tragedy.
So why did Russian officials and the state-controlled media make such a
hullabaloo? Apparently, as during the Olympics, the aim was to give Putin
the opportunity to present himself to the West as the only force for reason
and moderation in Russia -- a father figure who can control the spread of
xenophobia and at the same time lead the reluctant nation to progress.
The Russian press and the democratically elected Duma seem to be openly
anti-Western. So the West should fully support suppression of press
freedom, turn a blind eye to vote-rigging and to human rights violations,
as long as Putin's policies seem to be pro-Western.
And the tactic seems to be succeeding. Last week in Washington, Michael
McFaul, a well-known specialist on Russia at the Carnegie Endowment for
International Peace, in testimony to the U.S. House of Representatives
Committee on International Relations expressed a position that fully
coincides with what Kremlin propagandists want the West to believe: Putin
is a force for good and deserves increased support because he is surrounded
by nationalistic and anti-Western wolves.
But the deliberate fanning of nationalistic sentiment to make Putin look
good in the West's eyes, while at the same time consolidating the nation
behind him, is a counterproductive and very dangerous tactic. Economic
reforms are stalling; the military is not being reformed and still looks at
the West as its main enemy. The dirty war in Chechnya continues unabated,
handicapping Russia's international standing.
Putin's propaganda machine may be highly successful in the short run, but
it cannot correct the lack of long-term strategic understanding of the
nation's true needs. The nationalistic authoritarian state Putin is
building can never be truly integrated into the West, and the current
"liberal" reforms will always remain half-baked.
Pavel Felgenhauer is an independent defense analyst.
*******
#4
The Guardian (UK)
7 March 2002
Russia
By Yevgenia Albats
Imagine that one day you woke to find that the country where you lived no
longer existed; that your relatives - from Ukraine, say - were now officially
foreigners; that the welfare state that once took care of the basics had
ceased to exist; that an inflation rate of between 50% and 80% a month ate up
all your salary; and that prices had gone up by an average 245%, apart from
necessities including bread and milk, which were up by 1000%. On top of that,
you have a couple of children and a husband who has suddenly lost his job,
his status and whatever career plans he had, and has fallen into a black
depression.
That was the reality that millions of Russian women faced in the early and
mid 90s. They survived it - they had to - but learning how to live in a
society undergoing such radical upheavals requires no little skill and
ingenuity. I have often wondered whether people in the west, with all their
excitement about the failure of the regime in the USSR (and let me stress, it
is mutual), recognise the degree of psychological trauma the people of Russia
have gone through in the past decade or so.
That Russian society has not entirely collapsed is due in large part to its
women.
Russian babushki (grandmothers) - women who had lived their entire lives
without ever being exposed to words such as "private property" or "free
market economy" - turned out to be pioneers in the emergent Russian
capitalist economy. My former neighbour Larisa, then in her mid 60s, managed
to supplement her monthly retirement payments by re-selling mineral water
that she bought at a cheap price at the state-owned stores. Another neighbour
who lost her job as an engineer made her living by selling stuffed dumplings
on the streets. Another friend, while continuing in broadcast journalism,
opened a small gym.
No one knows how many small businesses in the new Russia are run by women,
but some studies put the figure in Moscow at 60%. None of the women I know
have had any specialist business training, though all but one are well
educated, having been forced to give up careers in order to provide for their
families.
The collapse of the Soviet regime had a profound effect on the intellectual
classes. Men who had made money from writing or teaching or science suddenly
found themselves in a position of low status and almost certain poverty. It
is no coincidence that the suicide rate almost doubled in the first five
years since the reforms.
But women did not have the luxury of regret and blame, and so were more
likely to sacrifice their intellectually challenging careers in favour of
more lucrative affairs such as opening a shop.
Russian women still have many challenges; infant mortality is as high as in
some of the poorest countries in Africa. Less than 8% of MPs are female;
there is one woman in the federal government; women are paid less on average.
Forty one per cent of Russian women have never heard the word "feminism".
But while they remain poorly represented on a federal level, women are
starting to make inroads into politics in the small cities and towns.
According to Elena Mizulina, the member of the state Duma responsible for
women's issues, about 50% of positions in local legislatures in central
Russia are held by women. Slowly but surely, Russian women are acknowledging
that too many things are at stake to pass on the decision-making process.
Yevgenia Albats is a columnist and political analyst in Moscow.
*******
#5
Lavish Berezovsky presentation falls flat in Russia
By Ron Popeski
MOSCOW, March 6 (Reuters) - Self-exiled businessman Boris Berezovsky appeared
on Wednesday to have made little headway through a lavish London presentation
in persuading Russians the Kremlin was aware in advance of a 1999 series of
city bombings.
Television stations, the main source of information in the world's largest
country, broadcast reports of Berezovsky's news conference as it was taking
place in London on Tuesday, but a day later devoted no further attention to
his elaborate video screening.
The dramatic footage was used to press Berezovsky's case that the FSB
domestic intelligence service had staged the bombings which killed around 300
people. The media magnate also enlisted the help of a former FSB officer and
explosives expert.
Even Berezovsky's own Kommersant daily, which devoted a front-page spot to
the story, had reservations.
"Anyone expecting Boris Berezovsky to present a document with (Russian
President) Vladimir Putin's signature on it acknowledging the FSB's
involvement in the bombings was disappointed," it said.
Gazeta.ru internet news service was doubtful about allegations by ex-FSB
agent Nikita Chekulin that authorities had secured large amounts of
explosives throughout 1999 and 2000.
"What does Putin have to do with this when all Berezovsky's information
involves proof of theft of state property, even at the behest of the FSB?" it
said.
An FSB statement said it did not wish to become involved in a polemic with
Berezovsky and repeated long-standing suggestions that he could be charged
with financing Chechen separatists.
Berezovsky said the FSB had staged the bombings because it believed Putin
could not otherwise win the 2000 presidential election. Putin, prime minister
at the time of the attacks and former FSB head, "knew such things were taking
place," he said.
BOMBINGS REMAIN UNSOLVED
Putin, hugely popular nearly two years after his election, and other
officials blame Chechen militants for the explosions, though no one has yet
been charged. Within weeks of the attacks, Russia launched its second war
against Chechen separatists.
Berezovsky was a close confidant of former President Boris Yeltsin and helped
ensure the election of Putin, his annointed successor. He later broke with
Putin and has remained in western Europe since late 2000, saying he feared
for his safety.
Berezovsky's TV6 network, then the only nationwide channel outside Kremlin
control, was closed down in January on grounds of insolvency. That gave the
Kremlin de facto control of all major channels for the first time since the
Soviet era.
Dmitry Volk of the Heritage Foundation think-tank said the minimal impact was
inevitable given Putin's popularity and Berezovsky's poor public reputation.
"Berezovsky is no longer influential and is widely seen as a pariah," he
said. "Many people have suspicions about the 1999 blasts, but don't believe
Berezovsky. In the current political situation any attempt to criticise Putin
is doomed to failure."
******
#6
Success of Russian Economic Reform Initiatives Examined
Vremya MN
2 March 2002
[translation for personal use only]
Article by Vladimir Gurvich: "Strong Union of Democrats and
Bureaucrats; Philosophy of Administrative System Wins Out In Era of
Liberal Reform"
About a month ago, Minekonomrazvitiye [Ministry
of Economic Development and Trade] received instructions from the
apparatus of the Government of Russia to analyze the course of
fulfillment of the medium-range economic program for 2002-2004.
According to the acting director of the Ministry's Department on Economic
Development Programs, Oleg Fomichev, all the measures specified in this
historic document have been compiled into one table. It contained 110
points. Officials came to the favorable conclusion that the government
had achieved impressive success. The Tax and Labor Codes had been
adopted, as well as the Concept for Development of Small Business. An
entire series of vitally important laws have already been approved by the
legislative branch, or are about to be issued...
Oleg Fomichev presented his conclusions at a seminar held at the
Higher School of Economics, where they also decided to discuss how the
program of economic reform is actually being fulfilled. Almost 2 years
have passed since the start of implementation of the program of reform,
which is also known by the name of its main developer, German Gref. As
participants in its development recalled, at that time a grandiose
attempt had been made to bring together in a single document all the
problems and tasks which were facing the country. The result was an
impressive 400-page report. Later, it was reduced to 200 pages, and
then the medium-range program for economic development was separated out
from it.
However, it was unclear how this program was to be implemented. It
did not answer the question: On what resources and social forces could it
rely? That is, this program was largely one of good intentions.
In the opinion of many of the seminar participants, the current
reforms are being implemented by the official apparatus. And therefore,
they largely correspond specifically to its interests. As one of the
speakers noted, we see that the bookkeeping approach to implementing
reforms has prevailed in government, and essential analysis has been
replaced by qualitative [analysis]. There is a struggle going on for
placing as many check-marks as possible. And from this standpoint, we
may admit that things are going successfully.
But is it successful? Executive vice-president of the Troyka Dialog
Investment Company, Oleg Vyugin, asks the question: The vital laws and
codes have been adopted, but what has really changed in society and in
the economy? The Labor Code has gone into effect, but have there really
been any changes in this sphere? Tax reform has passed. But has it
become any easier for entrepreneurs to work? In other words, there is a
big disparity between what the government decides and what actually
happens. What is the reason for this? It consists of the fact that,
even though correct, progressive ideas have been formulated, the task of
implementing them was taken up by that very same bureaucracy, which had
not changed since Soviet times.
Two diametrically opposed philosophies have clashed in society: The
administrative-command [philosophy], which is represented by the Russian
bureaucracy, and the liberal philosophy, which is embodied in the text of
the governmental program. And although the bureaucracy often gains the
upper hand, it is still premature to speak of its total victory. The
process of reform is dragging on for a long time. In the opinion of
Yevgeniy Yasin, the scientific director of the Higher School of
Economics, it is time for society to point out to the authorities what is
working out for them, and what they are doing wrong. And first and
foremost, to announce that, in regard to the main question--modernization
of the economy--no progress has yet been achieved.
******
#7
A Russian Roulette - Agriculture
By Sam Vaknin
UPI Senior Business Correspondent
SKOPJE, Macedonia, March 6 (UPI) -- In Soviet times, Kremlinologists would
pore over grain harvest figures to determine the fortunes of political
incumbents behind the Kremlin's inscrutable walls. Many a career has ended
owing to a meager yield.
Judging by official news releases and interviews, things haven't changed that
much. The beleaguered vice-premier and minister of agriculture of the Russian
Federation admitted openly last October that what remains of Russia's
agriculture is "in a critical situation," though he has since hastily
reversed himself.
With debts of $9 billion, he may well be right. Russian decision makers
recently celebrated the reversal of a decade-old trend: meat production went
up 1 percent and milk production by 2 percent.
But the truth is a lot rosier. Agricultural output has been growing for four
years, last year by more than 5 percent. Even much maligned sectors, such as
food processing, show impressive results of up 9 percent.
As the private sector takes over what was formerly government-owned
agriculture throughout Russia is being industrialized. Even state and
collective farms are on a halting path to revival.
In a recently announced deal, Interros will invest $100 million in
cultivating a whopping 1 million acres. Additionally, Russia is much less
dependent on food imports than common myths report, importing only 20 percent
of its total food consumption.
Despite this astounding turnaround, foreign investors are still shy. The
complex tariff and customs regulations, the erratic tax administration, the
poor storage and transport infrastructure, the vast distances to markets, the
endemic lawlessness, the venal bureaucracy, and the questionable legal status
of ownership of agricultural land keep them at bay.
The Agricultural sector is puny and disastrously inefficient, having fallen
halfway since 1991. It contributes about 8 percent to gross domestic product
and employs about 11 percent of active labor force.
Agricultural exports, which make up about $3 billion annually, are equal to
one-fourth of Russia's agricultural imports. This is despite a fall of 40
percent after the 1998 meltdown.
The average private farm is less than 50 hectares large. Though in control of
6 percent of farmland, private farms account for only 2 percent of
agricultural output.
A mass of Russia equal to about 1.8 times the area of the contiguous U.S. is
lacking in soil, climate, or both. Thus only 8 percent of the land is arable
and less than 40,000 sq. km. are irrigated.
Pastures make up 4 percent of Russia. The soil in these pastures is
contaminated by what the CIA calls "improper application of agricultural
chemicals." It is often eroded, and ground water is toxic.
The new law, which is still a long way off, permits private quasi-ownership
of agricultural land and may reduce the high rents that rendered Russian
farmers non-competitive.
In the meantime, general demand for foodstuffs has declined with disposable
incomes and increasing unemployment.
The main problem is not lack of knowledge, management, or new capital, but an
unsustainable mountain of debt. Even with a lenient "Law on the Financial
Recovery of Agricultural Enterprises" currently being passed through the
Duma, only 30 percent of farms are expected to survive. The law calls for
rescheduling current debt payments over 10 years.
The irony is that Russian agriculture is now much more viable than it ever
was. More than half of the active enterprises are profitable, compared to 12
percent in 1998. The grain harvest exceeded 90 million tons, far more than
the 75 million tons predicted by the government.
The average crop yield for the years 1993 to 1997 was 80 million tons. In
1997, the yield was 88 million. But grain output was decimated in 1998, at 48
million tons, and 1999, at 55 million tons.
Luckily, grain is used mostly for livestock feed, and Russians consume only
about 20 million tons annually. But by mid-1999, Russian grain reserves
declined to a paltry 2 million tons, according to USDA figures.
The problem is that regions of Russia's grain belt restrict imports of this
"agricultural gold" and hoard it. Corrupt officials make a quick profit from
the resulting shortage-induced price hikes.
The geographical location of an agricultural enterprise often determines its
fate. In a study of two Russian regions conducted by Grigori Ioffe, of
Radford University, and Tatyana Nefedova, from the Institute of Geography of
the Russian Academy of Sciences, in August 2001, the authors found that: "...
farms in Moscow Province are more productive than farms in equivalent
locations in Ryazan Provinces, while farms closer to the central city of
either province do better than farms near the borders of that province."
It seems that well-located farms enjoy advantages in attracting both
investments and skilled labor. They are also closer to their markets.
The vicissitudes of Russia's agriculture are of geopolitical consequence. A
hungry Russia is often an angry Russia. The U.S. food aid in 1998 and 1999
was worth more than $500 million and coupled with soft PL-480 trade credits.
The EU also donated a comparable value in food. Russia asked for additional
aid in the form of animal feed in the years 2000-2001, and the U.S. complied.
Russia's imports are an important prop to the economies of its immediate and
far neighbors. Russia also consumes up to 40 percent of all U.S. poultry
exports. It is an importer of meat products from the European Union because
its livestock inventory has been halved by the transition from government to
private ownership.
If Russia accedes to the World Trade Organization negotiations that have
dragging on since 1995 it may become even more appealing commercially.
If it joins the WTO, Russia will have to reduce its import tariffs. The
current tariff on poultry is 30 percent and the average tariff on
agricultural products is 20 percent.
Russia is also likely to be forced to scale down, gradually, the subsidies it
doles out to its own producers. Privileged trading by state entities and
non-tariff obstructions to imports would also be changed. Whether the
re-emerged center will be able to impose its will on the recalcitrant
agricultural regions still remains to be seen.
A series of apocalyptic economic crises forced Russian agriculture to
rationalize.
Russia has no comparative advantage in livestock and meat processing. It is a
small wonder that imports of meat products skyrocketed. It is questionable
whether Russia possesses a comparative advantage in agriculture as a whole,
given its lack of natural endowments.
Russia's insistence on producing its own food (especially the High Value
Products) has failed with disastrous consequences. Perhaps it is time for
Russia to concentrate on the things it does best, and agriculture is not one
of them.
********
#8
The Moscow Tribune
March 1, 2002
Russian 'devushka' to overwhelm Simpsons
By Dmitry Polikarpov
What is necessary to create a national hit? One may say that it is
impossible to succeed without decent financing, a well-planned media
campaign and an idea that would appeal to wide circles of society.
However, a cartoonist and artist from St Petersburg, Oleg Kuvayev,
seems to disagree with these estimates. In four months, his mult.ru
website appears to have become one of the most popular in the .ru
zone, attracting 15,000 visitors daily. Kuvayev has already won fame as
the "creator of Russia's Simpsons" among national Internet users.
Meanwhile, the means to success seem rather modest: two PCs, a rented
apartment in St Petersburg, an assistant and a trade-mark cartoon
character called Masyanya.
Masyanya is the name of the heroine of Kuvayev's cartoons, who has
already became a household name among young Russians.
"This word does not have any meaning in Russian or any specific
allusion. It's just pleasant sounding," said Kuvayev, presenting his
cartoon star, a typical representative of St Petersburg's
non-conformist youth.
He originally planned to have Masyanya appear as one of the characters
in the new cartoons. However, her growing popularity made Kuvayev
change his initial idea, and the teenager became the main heroine.
The plot of each of several dozen episodes of the series is rather
primitive -- a mixture of popular jokes and typical comic situations.
However, unlike Beavis and Butthead, American cartoon characters once
popular among Russians, Masyanya and the other characters of Kuvayev's
cartoons captivate viewers with their wittiness and typical national
features like romanticism, impracticality and irresponsibility.
"Masyanya is you and me, dear," welcomes visitors to the mult.ru site
and this is, perhaps, the key reason for its increasing popularity.
Becoming a new part of the national folklore, the cartoon has already
attracted 2.5 million viewers from both Russia and abroad. Most
visitors of the site predict wide success for Masyanya, saying that
with decent promotion on TV, "Masyanya will overwhelm the Simpsons and
Beavis and Butthead."
However, Kuvayev himself does not seem too enthusiastic about prospects
of promoting his cartoons on TV, despite several proposals that have
already come from Moscow producers.
"I am as afraid of big money and Moscow as my heroine is. Besides, it
takes much more time to make the same cartoon for TV than for the
Internet," Kuvayev said.
*******
#9
Forbes
March 18, 2002
The World's Billionaires
The Oligarch Who Came in from the Cold
By Paul Klebnikov
Not long ago Mikhail Khodorkovsky was vilified in the West as a crony
capitalist who stiffed foreign business partners. Now he is Russia's richest
man and appears to be the West's best friend.
If your business benefits from cheap energy, send a note of thanks to the
Russian oligarch Mikhail Khodorkovsky. It may seem strange to attribute power
over world energy prices to this soft-spoken 38-year-old. Even though he is
Russia's richest man, with an estimated net worth of $3.7 billion, and
controls the country's second-largest oil company, his business is still
dwarfed by Aramco, ExxonMobil and Royal Dutch/Shell.
But Khodorkovsky is in the right place at the right time. Russia, the world's
second-largest exporter of oil and oil products (after Saudi Arabia), has
recently come under intense pressure from OPEC to join it in cutting exports
and pushing up oil prices. Oil at $30 would be much better for the Russian
economy than oil at $15, but the Russian government has declined to make
anything more than a symbolic cut in exports.
What is behind this policy? Keeping OPEC at bay may be one of the concessions
that Russia's president, Vladimir Putin, made to George W. Bush when he
visited the American president in November. But the Russian government is
also responding to pressure from its own oil magnates.
This is where Khodorkovsky comes in. His company, Yukos, accounts for 17% of
Russia's oil production and has significant influence in the Kremlin. One
former employee was until recently the minister of fuel and energy (he is now
a member of parliament); another of Khodorkovsky's former sidekicks is
Putin's deputy chief of staff. Khodorkovsky is the leading advocate among
Russian oilmen of ignoring OPEC's demands and expanding production as rapidly
as possible. Which he is doing: Yukos has expanded production by 35% over the
last two years, to 1.2 million barrels a day. Cap some wells? He won't do it.
Though other Russian oil giants, such as Lukoil, have spoken in favor of
accommodating OPEC, it is Khodorkovsky's side that is winning in the Kremlin.
The stakes are huge--both for world oil prices and the world economy.
To visit Khodorkovsky, you drive an hour west of central Moscow to Zhukovka,
an elite suburb that was once home to members of the politburo and army
generals. There Khodorkovsky and a half-dozen of his partners have built a
compound of luxury houses among the pine trees. The houses are tasteful, and
the place is beautiful, but the compound itself resembles a prison camp. It
is surrounded by high walls, with powerful lights every 30 paces. Guards with
machine guns patrol the perimeter. At the massive entrance gate, mirrors
check the underside of visitors' vehicles for bombs. Americans have been
preoccupied with security only since September; Russian executives have
needed bodyguards ever since capitalism came to the country.
Khodorkovsky is an unassuming man. The oldest of his four children is in a
Swiss boarding school; otherwise Khodorkovsky seems to avoid the nouveau
riche trappings of other Russian oligarchs. Doesn't he have a villa on the
Riviera? "My wife and I don't like the beach much," is his reply. "This past
winter holiday we spent happily in a small hotel in Finland."
Khodorkovsky has an earnest demeanor, and his high-pitched voice is often
difficult to hear, but appearances are deceiving. This is a tenacious and
ruthless businessman.
Amoco, now part of BP, can testify to that. Until a few years ago, Amoco had
placed great hopes on the Priobskoye field in western Siberia. Some 3.5
billion barrels of oil lie beneath this desolate stretch of marsh and arctic
forest. The field, which Amoco was developing together with a subsidiary of
Yukos, promised to be a gusher. But in 1998, at the moment when large-scale
production there was set to begin, Amoco was sent packing; it had to eat the
estimated $300 million it spent on the project.
Today BP declines to say much about the affair; here is Khodorkovsky's
version of what happened: "This was the result of their own hesitation," he
says. "Amoco was granted exclusive rights to negotiate for the Priobskoye
field and continued these negotiations for five years. In 1997 [when I gained
full control of Yukos], I inquired whether there was any document that
required us to continue negotiations with Amoco." There wasn't.
With Amoco out as an equity partner, Khodorkovsky brought in other Western
companies on a fee basis: oil service outfits, such as Schlumberger (see
story, p. 32) and the Anglo-Norwegian Kvaerner, to help him tap Priobskoye
and to revive older fields. Production at Priobskoye is rising briskly, from
40 million barrels last year to a likely 90 million this year.
Though Yukos' proven reserves (12 billion barrels of oil equivalent) put it
in the league of ChevronTexaco, its financials make it only middling by
Western standards: Yukos earned $3.7 billion on revenue of $7.3 billion last
year, estimates United Financial Group, a brokerage in Moscow. Khodorkovsky
has grand international ambitions, though: He plans to buy refineries and gas
stations in Europe and to take the lead in a $1.7 billion pipeline to pump
Siberian oil to China.
Khodorkovsky has come a long way from his impoverished childhood. He grew up
in a cramped communal apartment in Moscow; he and his parents shared two
rooms. Khodorkovsky was a model Soviet youth. He was a good student, finished
the Mendeleev Institute of Chemical Technology and became deputy head of the
Communist Youth League there.
He was fortunate to be embarking on a career just as Mikhail Gorbachev was
reforming the Soviet Union. It was under the aegis of the Communist Youth
League that Khodorkovsky went into business. With half a dozen partners, he
started a private cafe, peddled new technologies to Soviet factories and
imported PCs. He even sold French brandy.
By 1988, fewer than two years after he started his trading business,
Khodorkovsky was hauling in revenue of 80 million rubles a year ($130 million
at the official exchange rate; $10 million at the black market rate). This
made him one of the most successful of Russia's new breed of wheeler-dealers.
Was this the result of good contacts with the political elite? He says no.
Flush with cash from the trading operations, Khodorkovsky and his partners
established Bank Menatep. As one of Russia's first privately owned banks,
Menatep expanded with dizzying speed, not only by financing Khodorkovsky's
lucrative trading operations but also by handling state money, such as the
funds allocated to the victims of the Chernobyl nuclear accident. By 1990, a
year before the fall of communism, Menatep was conducting operations
offshore. It was first a client and later a shareholder of a private bank in
Geneva called Riggs Valmet.
This was when Russian private banks were widely suspected of spiriting away
billions of dollars belonging to the Communist Party into anonymous offshore
accounts. Khodorkovsky says that his banks kept their hands clean. "Our bank
was subjected to rigorous checks on this score," he says. "And I can say that
at least in our bank no such funds were found."
After communism fell and Boris Yeltsin came to power, Menatep's fortunes
continued to rise. It was authorized to handle the funds of the ministry of
finance, the state taxation service, the Moscow city government and the
Russian arms export monopoly. Meanwhile, Khodorkovsky's trading operations
had taken on international commodity shipments. There were deals with Marc
Rich and a big oil-for-sugar deal with Cuba.
But it was in acquiring Yukos that he hit the big time. His chance came in
the loans-for-shares auctions in 1995, when the government unloaded its
majority stakes in Russia's top oil and metals companies to a group of
well-connected financial companies.
Bank Menatep was put in charge of processing the bids in the Yukos auction.
The winner turned out to be a company controlled by Khodorkovsky and his
partners. A rival bid by three big Russian banks, which offered more money,
was disqualified on technical grounds.
The $350 million that Khodorkovsky and his partners paid for control of 78%
of Yukos was quite a bargain. It implied a value for the whole company of
$450 million. When the shares began trading fewer than two years later,
Yukos' market capitalization was $9 billion. Today it's closer to $15
billion.
"In those days everyone in Russia was engaged in the primary accumulation of
capital," Khodorkovsky recalls about the anarchic Yeltsin years. "Even when
laws existed, they were not very rigorously followed. If you conducted
yourself too much in a Western manner, you were simply torn to pieces and
forgotten."
Khodorkovsky's next big challenge came in August 1998. Hardly had he finished
consolidating his control over Yukos and shooing Amoco off when the Russian
financial system collapsed. Looted by its crony capitalists, Russia was
bankrupt. The government devalued the ruble and defaulted on most of its
debt. Most of Russia's big private banks went under--including Bank
Menatep-Moscow.
Khodorkovsky and his partners salvaged what they could from the rubble,
transferring their good accounts to a sister bank called Menatep-St.
Petersburg. But they were still left with the question about what to do with
their angry creditors. Chief of these was a group of foreign banks that had
lent Menatep $266 million, secured by a 33% stake in Yukos.
Khodorkovsky's group urged the foreign banks to accept a three-year repayment
plan, secured by oil exports rather than shares in Yukos. But the two largest
creditors, Daiwa Bank and West Merchant Bank (a subsidiary of Westdeutsche
Landesbank), refused. They took ownership of their collateral (representing
29% of Yukos' shares) but made it clear that they were primarily interested
in getting their money back. After negotiations between the banks and
Khodorkovsky's people collapsed in the summer of 1999, Daiwa and West
Merchant dumped their shares on the market. The sale price has not been made
public; it is estimated that they got back only half the value of their
loans.
On the surface, it was a crazy decision. Why the hurry? If the two banks had
waited a few months for the initial stock market panic to pass, they could
have made a handsome profit from selling their Yukos shares. What spooked
them into selling?
At the same time that the Khodorkovsky camp was negotiating loan
restructuring terms with West Merchant and Daiwa, it announced pending share
offerings in Yukos and its subsidiaries that would have diluted Daiwa's and
West Merchant's 29% stake to insignificance.
"This was a normal defensive maneuver," says Platon Lebedev, the director of
Group Menatep, the holding company that represents Khodorkovsky and his six
partners. "We had to save Yukos, so we had to have a share issue to raise
more equity capital. If the banks wanted to own shares of Yukos, they should
have acted like shareholders and subscribed to the share offering."
Meanwhile, Yukos was selling some of its prime oil-producing assets to
obscure entities offshore. It seemed likely to become a shell company. Not
surprisingly, Daiwa and West Merchant folded their hands. Khodorkovsky and
his partners bought back most of the stake. The share offerings were
canceled, and all the assets that had been moved offshore were returned to
Yukos in Russia.
It is hard to say whether Yukos has fully repaired its relations with foreign
banks since it has no credit rating.
Today a new era is dawning in Russia. Vladimir Putin is in charge of the
Kremlin. The Russian monstrosity that even liberal politicians call "gangster
capitalism" is giving way to a more civilized market. The financial
free-for-all is yielding to an ethic of reinvesting in your business. And
among the old-time oligarchs, Khodorkovsky is leading the charge.
"By now we understand how business is done in the West," he says. "As a
shareholder, I earn money in dividends and with the increase in the market
capitalization of my company."
To that end Yukos has published three years of accounts that meet U.S. GAAP
standards, has issued adrs and is paying a meaningful dividend (a trailing
12-month yield of 2.8% on the $98 ADR). There are five foreigners on the
board, and the chief financial officer is an American. Yukos shares are up
more than tenfold in two years, though that may be as much a function of the
small free float (15% to 20% of the shares outstanding) as of operating
results.
"Previously we were all focused only on the cash revenues of our business,
since no one believed that the situation would last," says Khodorkovsky. "Now
that things are stabilizing, people are more interested in increasing the
value of their property."
Yes, things have changed in Russia. "How? Well, for instance," says Russia's
wealthiest man, "I recently bought my first house," indicating the Zhukovka
compound. "I simply feel more comfortable in Russia these days."
Outside, though, the guards with their machine guns still keep a wary eye out
for intruders.
******
#10
The Independent (UK)
6 March 2002
Russia's new revolution Russian theatre is finally addressing modern
concerns - thanks, in part, to the Royal Court. Paul Taylor went to see how
a London theatre helped Moscow's dramatists to find a voice
BY PAUL TAYLOR
In one of the oldest parts of Moscow, to the east of Red Square, there's a
stocky white building called the English Court. It was restored in honour
of the Queen's state visit to Russia in 1994 and it boasts (if that's the
right word) a framed photograph of Her Majesty signing the visitors' book.
Ivan the Terrible, who had unavailing marital designs on Elizabeth I,
donated the house as a kind of embassy for the English traders who began
commerce with Russia in 1553.
A fortnight ago, I visited this place in the company of a young Moscow
dramatist, Alexander Rodionov, and confronted by one of the rooms, we both
burst out laughing. In opposite corners, there's an exhibition of relics
and facsimiles of the wares that the two countries initially exchanged.
Sixteenth-century England does not come out of this comparison smelling of
roses. In the Russian corner, the items are all pacific and nurturing
(honey, furs, rope, caviar and mica) while the English corner is a sheer
blast of belligerence, bristling with muskets, pikes and gunpowder.
My Moscow trip comes as a direct result of a recent, more constructive
British intervention in Russian cultural life. We in England are just about
to reap the rewards, in the shape of a showcase at the Royal Court of the
highly impressive work that has emerged from the interchange. The season is
to include a full promenade production(with an English director and cast)
of Plasticine, a clear-eyed and bitterly comic look at provincial life in
Russia today from the hot young playwright Vassily Sigarev, and
verbatim-project pieces from two fresh Siberian companies, which will
plunge us into the experiences of workers in a mining commune, into the
revealing correspondence between Russian conscripts sent to Chechnya and
their mothers and lovers back home, and into the lives of a poverty-
stricken fishing community adrift on an ice floe.
As I learn quickly, Moscow is on the move in many senses. Even the street
names are refusing to stay put. My first meeting is scheduled to take place
at a trendy new night-spot called Klon (aka Clone). But the British
Council's Russian driver drops me off outside a different establishment
altogether, where there's a panic-inducing paucity of people who can
understand a word I utter. I've been in a mad rush because of a flight
delay, so I am without roubles or a map (or any Russian), and the one girl
who speaks a tiny amount of English denies that this is even the street I'm
expecting (Pushkinskaya) and directs me to a parallel road.
I find out later that she both is and isn't right. The names of the streets
in the area are in the process of changing and migrating. It's only because
Oskolkova, the drama and dance manager at the British Council in Moscow,
has asked for a description of me that I'm not still lost. She hails me
from another door and introduces me to Elena Gremina and Mikhail Ugarov,
who run the pioneering new-writing project. The following night, this pair
are going to launch a venue that would have been inconceivable a couple of
years ago: a centre for contemporary playwriting, right in the centre of
the city, called Theatr.doc.
Klon is achingly hip and minimalist. Tatyana notices me frowning in
puzzlement at the www.youneverknow.ru logo etched out in large, stone
letters over the dining area. Having spent her life in international
relations, Tatyana has a broad, humane culture and learned wit. She teases
me that the logo is an allusion to the French fashion designer Chanel, who
even slept in full make-up on the grounds that "you never know" when you
will meet your man and so should always look your best. I relax and think
to myself: I'm going to enjoy this trip.
It's enjoyable and inspiring to meet a gifted generation of new
twentysomething playwrights, whose sense of their own creativity was
legitimised by an intervention from a happy hook-up between the British
Council and the Royal Court's international department. In 1999,
Plasticine's fine translator, Sasha Dugdale, then the council's cultural
chief in Moscow, invited the Royal Court to take part in a seminar about
new writing, which included translated excerpts from the work of Sarah
Kane, Mark Ravenhill and Patrick Marber. The turmoil of post-Communist
experience has not been reflected on the stages of Moscow's 200-plus
theatres. During my own recent visit, there were 16 productions of
Chekhov's The Seagull to choose from and only 10 new plays. So, at that
packed seminar, the effect was electrifying when the Court's literary
manager, Graham Whybrow, delivered a speech about the principles and vision
of a theatre that puts the living writer at the centre of his practice.
Everyone you speak to in Moscow theatre says that talk caused a revolution.
The stranglehold of officialdom had been such that Russian dramatists who
held similar views had kept them bottled up. The cork was now drawn, and
the response, said one of my interviewees, bordered on "the irrational".
Russian dramatists began to talk to one another, and then, as a result of
follow-up work by the Court, they began to talk to the people on the
streets. Elyse Dodgson, the head of the international department, went out
to hold workshops on verbatim theatre - on how to gather and shape personal
testimony to create drama of intense immediacy. Stephen Daldry flew over
and spearheaded a piece that drew on conversations with the homeless who
doss down in Moscow's railway stations. It resulted in a wave of
monologues, collectively entitled Moscow: Open City, which became the rage
of the metropolitan nightclubs, a cross between stand-up, drama and
personal witness.
And now I'm on my way to Gorky Leninskiye, Lenin's country retreat. Inside,
a gigantic white effigy of him still looks down from the top of a sweeping
red-carpeted staircase. This place used to be a mecca for tourists, but it
is now in the throes of a creative-identity crisis. Before Lenin, it was
the home of a hero of Borodino and of the merchant Morozov, who, strangely,
gave money to both Stanislavsky's Moscow Art Theatre and the Bolsheviks.
Post-Communism, who would have thought it would ever become the workshop
for a new-writing project? It's comparable to rehearsing Brecht in Hitler's
bunker. Yet for 10 excited, sleepless days last autumn, that is precisely
what it was turned into, again through the input of the British Council. My
guides are the young playwright Sergei Kaluzhanov, the theatre director
Alexander Vartanov and the museum's deputy director, Alexandra Kalyakina.
They tell me of how they did a piece on the museum's attendants, people who
have worked there for more than 30 years, and on the myths about the place
that they have stoutly cherished. They relate how Maxim Kurochkin, regarded
by many as the most talented of the new wave of dramatists, had so
internalised the testimony of the vagrants he had worked with that he
performed without a script, taking questions from the audience and
answering in character. It's not just writers who benefit from verbatim.
The process releases actors, too, from the prison of a literary tradition
that has left them unused to evoking the contemporary on stage.
A whirlwind tour one day with Vassily Chernov, a young theatre producer,
makes me feel that every place where we alight has potential for drama:
whether it's the new Bagration Bridge - a river-spanning megalopolis of
shops and banks; or the Park of Sculptures, a fascinating knacker's yard of
discredited iconic monuments; or the poverty-stricken apartment in the
centre of the city where an old lady occupies half a former baronial
ballroom, but has no toilet or bathing facilities.
The opening festivities at Theatr.doc are high-spirited and
low-maintenance. The venue, with its studio-sized performance space, is
still a bit of a building site and, to symbolise the abrasive intent of the
project, the writers, directors, and friends and supporters are each given
a square of black emery paper to nail to the walls. There are tributes to
and from the Royal Court, and future verbatim schemes are outlined - one
involves asking Russia's elderly folk, who have gone through violent
vicissitudes in the past century, what ambitions they have for the rest of
their lives. I have read the work they have done in translation, and the
quality is extraordinarily high. I tease some of the playwrights that the
time will come when there's no community left to explore. I also suggest,
fancifully at first, that they should do a verbatim piece about the
dramatists of the immediately preceding generation, whom history dealt a
dud hand. Too late to be of the Alexander Gelman anti-Soviet-corruption
school, and too early to take full flight with this new generation, to
which some of them react, apparently, with understandable jealousy.
Then it occurs to me that this might not be a bad idea: the young making a
real imaginative effort to understand their immediate forebears, as Russian
new-writing theatre moves forward into what looks set to be an exciting
future.
International Playwrights Season, Royal Court, London SW1 (020-7565 5100).
`Steps to Siberia' to Sat. `Plasticine' opens 15 Mar
*******
#11
Russian Borodin found guilty on laundering charge
GENEVA, March 6 (Reuters) - A Swiss prosecutor found former Kremlin aide
Pavel Borodin guilty for money laundering, legal sources said on Wednesday,
attempting to bring to an end a case which has soured relations between
Switzerland and Russia.
Prosecutor Bernard Bertossa, who had initially charged Borodin with
aggravated money laundering, convicted him on a lesser charge of simple money
laundering and ordered him to pay a fine of 300,000 Swiss francs ($177,000).
In Switzerland, prosecutors can pass sentence in a case providing the offence
is not too grave, but the accused can reject the decision and opt to go to
trial.
Borodin, who was close to former Russian President Boris Yeltsin and is still
secretary-general of the nebulous union state between Russia and ex-Soviet
neighbour Belarus, was told of the ruling by the Geneva prosecutor but had
not yet decided whether to accept it, defence lawyer Vincent Solari said.
The Russian, who has frequently travelled from Moscow to attend the hearings
in Geneva, always maintained his innocence and has the right to appeal.
"We have not taken a decision (but) there would be advantages to accepting
it," Solari told Reuters. "Our client is interested in turning the page and
not having to keep coming back (for hearings)," he added.
Asked why he had opted for the lesser charge, Bertossa told local RSR radio
he felt it was the best he could achieve in the circumstances.
"My judgment was that this was the best way out," he said.
Switzerland issued an international arrest warrant for Borodin in December
1999 on suspicion of laundering up to $30 million linked to lucrative
renovation contracts for the Kremlin awarded to two Swiss-based construction
companies.
He was arrested in New York in January 2001 and extradited to Switzerland in
early April. After spending a few days in jail, he was freed on $5.0 million
bail paid by the Russian Federation.
Russia dropped its own investigation into the money laundering charges,
saying there was no case to answer.
Borodin's defence lawyer said the fact the Russian Federation would get its
bail money back quickly under the Bertossa ruling was another factor in its
favour.
"He does not want his country to suffer any loss," he said.
*******
#12
Trud
No. 38
March 6(?), 2002
2002
WHAT IS RUSSIA LIKE AFTER WINTER DEVELOPMENTS?
By Pavel VOSHCHANOV, political observer
Last winter's developments revealed a smouldering conflict
in Russia's power elite and serious problems in its relations
with allies. Besides, it is becoming more and more obvious that
the Russian government either fails to respond to arising
challenges or does it too late.
Of course, it is simpler to continue making optimistic
statements about the achieved unity of political forces, about
economic stabilisation and other pleasant things. But if one
takes an unbiased view of what is going on in the country, the
picture will be quite different. Over the last few months, the
Kremlin has received something much more serious than the loud
opposition of the Boris Yeltsin times. There has emerged a
dangerous paradox in the top echelons - concealed discontent
behind feigned approval. In Russia, this has always served as a
sign of future bureaucratic upheavals. Perhaps, many people
have noticed the reappearance in the Russian press of numerous
articles about future changes in the Kremlin, masterminded by
someone.
The number of potentially discontented people is great.
They include the political elite of the Mikhail Gorbachev and
Yeltsin times, officials with extensive ties in the government,
governors with "petty" presidents, and major capitalists of the
times of "radical market reforms." They can be denied access to
the Kremlin and "royal favour" and pushed down the power
ladder, but this will hardly reduce their ability to influence
events.
Indeed, many people now hold their tongue and do not hurry
to comment on what is going on in public. But even this
wait-and-see attitude passes. Take, for example, Anatoly
Chubais who has lately more and more often been displaying his
opposition to the Kremlin, although he does it in an "export
version." A week ago, he sharply criticised the regime in
Russia in an interview to The Financial Times, an influential
British newspaper. This can hardly be explained only by his
wish to remain at the head of Unified Energy Systems. Chubais
is a major political player rather than an ordinary fighter for
banknotes.
He knows much better than others how little big money means in
Russia without much power.
Even half a year ago, nothing of the kind took place in
the country. What detonated these developments? To all
appearances, the hidden opposition understood what had
previously remained unnoticed: Russia's condition is so grave
that it can hardly be changed for the better without changing
its state structure.
Meanwhile, the West will surely demand a high price for its
assistance (last winter's developments confirm this): the
establishment of a government capable of carrying out
transformation of the present federation into a confederation
adapted to the world order - and doing this softly and
painlessly for the rest of the world.
It is not accidental that many Russian politicians have
hurried to make visits to the United States and Europe. It is
there and not in Russia that they voiced, or at least hinted
at, their critical attitude towards the Russian regime.
Last winter, Russia was unequivocally shown its place. It
seems the West has set itself the task of bringing Russia's
ambitions in the post-Soviet space into line with its
present-day realities. This follows from a series of events
that took place in recent time along Russia's borders.
After the beginning of the antiterrorist operation in
Afghanistan, countries in Central Asia actually came under U.S.
military protection. Moldova has been swept by anti-Russian
protests. In the Crimea, politicians advocating closer
integration with Russia have been removed from elections.
Georgia is expecting the arrival of U.S. special forces who
will allegedly fight Chechen terrorists that have infiltrated
into the country. One has an impression that Russia is finally
losing its ability to influence the situation near its borders.
Nevertheless, Russian politicians find "satisfactory"
explanations of even that. They say that what is going on is
the result of backstage agreements achieved after long and very
frank negotiations between the leaders of the two superpowers,
with both parties standing to win and with Russia winning even
more.
But what? Tashkent, Dushanbe and Bishkek have assured
Moscow of their invariable friendship, but everyone understands
that this is mere politesse.
It is not surprising that Washington already speaks of
sending a NATO force to settle numerous local conflicts caused
by the breakup of the Soviet Union in South Ossetia, Abkhazia,
Nagorno-Karabakh and the Dniester Region. Of course, people
suffering from bloody clashes care little about who will bring
peace and order to them. But Russia is acquiring an image of an
impotent and therefore useless partner. No wonder that Russia's
relations with the West often look like a condescending tap on
the shoulder. For some reason we have forgotten that in the
early 1990s our present-day friends, when discussing Russia's
future after the Soviet Union's breakup, unanimously concluded
that, sooner or later, it must disappear from the world's
political map. What could make them change their views of the
Russian state's destiny? Nothing, because the West has always
fought not so much the political regime as the state itself and
its potential. Therefore it is difficult to understand what
makes present-day Russian politicians speak of "strategic
partnership" and "coincidence of interests." One has to draw a
bitter yet obvious conclusion: Russia does not fit into the
present world and will not fit into it unless it is changed.
Alas!
*******
#13
Moscow Faces Oil Export Scrutiny
March 6, 2002
By MARA D. BELLABY
MOSCOW (AP) - Russia has not kept its pledge to OPEC to cut its oil exports
by 150,000 barrels a day, the head of the International Energy Authority said
Wednesday.
``According to our preliminary figures, Russia's crude exports are holding
up,'' Robert Priddle told a conference in Moscow, without giving any numbers.
Russian officials immediately denied that Moscow had broken its promise.
``The customs report shows that Russia has not been exporting more than it
promised to OPEC in the past two months,'' Deputy Energy Minister Oleg
Gordeyev told reporters after the conference. But, citing a source in the
State Customs Committee, the Interfax news agency reported Wednesday that
Russian exports probably only fell by about 126,000 barrels a day.
Under heavy pressure from the Organization of Petroleum Exporting Countries,
Russia agreed to cut its oil exports by 150,000 barrels a day for the first
quarter of this year. At the same time, OPEC promised to cut its output by
1.5 million barrels per day in a bid to stabilize the slipping price of
crude.
But many oil analysts immediately questioned Russia's commitment to the cuts.
Russian oil companies, which have used past OPEC cuts to expand their market
share, reportedly were strongly opposed.
Russia's government also relies heavily on revenues from oil exports, which
have driven the country's economic growth since 2000.
Priddle said Russia was in a difficult situation, trying to attract
investment to finance its much-needed energy reforms and cut oil exports at
the same time.
``Indeed it is difficult to attract investors when the environment is not the
one you expected to be the day before,'' he said.
OPEC secretary general Ali Rodriguez came to Moscow earlier this week in a
bid to encourage Russia, the world's second-biggest oil exporter, to continue
the export cuts. Russian officials did not immediately commit to extend them.
Most of the other non-OPEC countries that agreed to restrict exports for the
first quarter, such as Norway and Angola, have already agreed in principle to
continue the restrictions in the next three months.
******
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