#6 - JRL 7277
Vedomosti
August 5, 2003
AN AMNESTY IS HARMFUL...according to World Bank
economist
Is capital flight getting worse because of the YUKOS affair?
Author: Anastasia Onegina
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
CHRISTOPHER RUL, SENIOR ECONOMIST FOR THE WORLD BANK IN RUSSIA, SAYS THAT INVESTORS ARE NOT WORRIED BY THE YUKOS SCANDAL. THEY ARE WORRIED BY THE FACT THAT OTHER VIOLATIONS DATING FROM THE 1990S ARE NOT BEING INVESTIGATED. THE ECONOMIST SAYS AN AMNESTY FOR PRIVATIZATION DEALS WOULD BE HARMFUL.
The value of the YUKOS oil company has fallen by over $6 billion (to $26.3 billion) since Platon Lebedev's arrest on July 2.
State officials worry about the impact of the scandal on the investment climate. "Such matters [the YUKOS case - Vedomosti] inevitably affect the market," Economic Development Minister Herman Gref has said. Last Friday, he complained of capital flight from Russia. He added that the "YUKOS situation" has speeded up capital flight, which is usually high in the third quarter of the year.
Christopher Rul, senior economist for the World Bank in Russia, considers all these fears exaggerated. Rul does not think that capital flight is any worse then usual. Rul attributes reduction of the gold and hard currency reserves of the Central Bank by $1.1 billion to debt servicing ($438 million is to be paid to the IMF and World Bank, and $321 million for Eurobonds) and to increased demand for foreign currency across Russia before the summer vacation season. "Consider all factors carefully, and you may even end up with an influx of capital rather than capital flight," Rul said. "There may be some negative effect with regard to investors who planned to come to Russia, but this is not something that can be expressed in figures."
Rul believes investors are worried by the possible legalization of such deals, not by the YUKOS scandal. "Irreversibility of privatization or an amnesty for all deals is bad from the point of view of support of free market reforms," Rul said. "Unless the matter is settled, it may eventually become political. Particularly criminal deals should be annulled."
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