26 Nov 2004 Putin’s Russia: An Air of Politburo

Yukos Oil surrenders, as its top executives flee Russia.

This story explains:

Eight months into President Vladimir Putin’s second term, momentum for economic reform in Russia has all but halted as vested Kremlin interests fight for control of the nation’s resources and purse strings, economists and analysts say.

“What’s happening in Russia at the moment is an asset grab across the board,” said UBS Brunswick economist Al Breach…

The reform of state-controlled Gazprom, now “dead in the water” according to the World Bank, as well as steps to rein in monopolies, are key to Russia’s long-delayed entry to the World Trade Organisation…

“These guys … don’t believe in a free market. They don’t believe in liberties…”

Alfa Bank analyst Chris Weafer said part of the government’s strategy for growth is to take a chunk of available cash flows from the natural resource industries.

He said this would eventually hurt Russia’s economic boom, which has seen annual growth rates in excess of eight per cent in the early months of 2004.

“Why bother with privatisation when the state can enjoy the benefits of ownership… We were all being naive, expecting reforms,” Weafer said. “Now there is an air of Politburo to the place.”

Read the entire story here.

Or, if you are in a hurry, you can just read my thirty-word version of the Yukos saga: Yukos Oil was Russia’s top blue-chip company. Then its CEO became known as a possible political rival to Putin. So Putin used the power of the state to crush it.