Bloomberg Businessweek reports:
Russian tycoon Mikhail Fridman on Monday unexpectedly announced his resignation as chief executive of TNK-BP, a sign of rising tensions between shareholders at the Russian venture of British company BP. TNK-BP has been plagued by shareholder conflicts since it was formed in 2003, and Fridman’s appointment as the chief executive three years ago looked like a sign of reconciliation between two rival groups of shareholders. But those tensions seemed to [have] resurface[d].
BP was hoping to sign a multi-hundred-billion-dollar deal with state-owned firm Rosneft to drill oil from the Artic, but the deal broke down after AAR blocked it, “claiming,” as Bloomberg reports, that “BP should be pursuing such deals through TNK-BP.” ExxonMobil closed an Artic drilling deal with Rosneft earlier this spring. (See CREF’s statement on that deal.)
The Associated Press reported that Fridman resigned because the equilibrium between BP and AAR’s investors has been lost and can no longer be maintained. TNK-BP’s board hasn’t met since last year and hasn’t been able to replace two directors who quit in December. Without a quorum, the board canceled to distribute dividends to shareholders. Read more on TNK-BP here.
The Center for Strategic Studies in Moscow reports that Vladimir Putin is facing discrete political and economic risks due to Eurozone turmoil.
Greece leaving the euro could trigger a global crisis that would drop the price of oil, writes institute chief Mikhail Dmitriev, meaning a worsened Russian economy. That could lead to increased anti-Putin sentiment and more political repression.
Ksenia Yudaeva, chief economist at Sberbank, the country’s biggest lender, said Russia’s economy could contract 2.1 percent, with $95 billion in capital leaving the country in a year, should the euro start to crumble.
“This [departing] capital,” added Dmitriev in Bloomberg News, “is flying into the epicenter of the global financial crisis, which is in Europe. That is actually the same as creating a food supply in the center of an atomic explosion.”
Bank of America sees Russian oil dropping to $60-$80 should Greece and other nations leave the Eurozone. Russian oil prices need to stay around $127 per barrel for the government to balance the budget this year.
Read more about the study in Bloomberg News.
Putin meets with his cabinet
Russian President Vladimir Putin announced his cabinet appointments earlier this week. Some Kremlin observers were hoping that a number of new faces would signal the chance for much-needed reform; instead, many of Putin’s closest key allies, the New York Times reports, are ”poised to preserve their clout.”
The few new names are career bureaucrats with ties to Putin, and none of the opposition leaders who emerged in the last six months of demonstrations was tapped for a government post. According to Dmitri Trenin of the Carnegie Moscow Center:
This is not a new force that has arrived on the Russian political scene; this is a rearrangement of personnel to preserve the power exercised by the various clans. It is more clear than ever that much of the power will be transferred to the Kremlin, and the government [i.e., the Duma] will be a tool of the all-powerful Kremlin.
Former Finance Minister Alexei Kudrin added, “It is not a breakthrough government. I have serious doubts that it will be able to cope with all the challenges that face Russia today.” More on the Russian cabinet here.
United Civil Front leader Garry Kasparov writes in the Wall Street Journal today that given Vladimir Putin’s repression of his own people and the way he cozies up to dictators (Chavez, Assad, Lukashenko), the U.S. should not be interested in a strategic partnership with the Kremlin.
Rather, he writes, U.S. lawmakers should do what they can to promote human rights in Russia, namely through the passage of the Sergei Magnitsky Rule of Law Accountability Act, which would “bring visa and asset sanctions against Russian government functionaries culpable of criminal and human rights abuses.”
Read Kasparov’s entire op-ed here.
The Moscow Times reports that market analysts in Russia are anxiously awaiting President Vladimir Putin’s picks for cabinet before prognosticating about the Russian economy.
Investors are waiting to see if Putin’s choices for top economic posts are serious about implementing the reforms necessary — stopping corruption, respecting property rights, tamping down the bureaucracy – to instill confidence in both domestic and foreign investors.
Alfa Bank chief economist Natalia Orlova told The Moscow News’ Natasha Doff:
The litmus test will be the announcement of a new cabinet and how committed the new team will be to reform. Putin has presented his goals, but the question of who will make sure the goals are implemented depends on the composition of the cabinet.
Deutsche Bank economist Yaroslav Lissovolik added: ”A specific list of priorities that may encapsulate a short-term reform program [...] is the biggest question mark for investors and it is something that will probably ultimately decide the overall vector of the stock and financial markets this year.”
After last December’s rigged Duma elections and post-election protests, investors pulled out of the market in droves, citing political uncertainty.
In a piece published in TIME magazine in time for Vladimir Putin’s inauguration, jailed former Yukos chief Mikhail Khodorkovsky writes about the lack of rule of law in Russia and how individuals looking for justice there can’t count on the judicial system, which remains under Putin’s influence.
“Perhaps an individual judge may be biased,” he writes,
but the judicial system as a whole can’t ignore both the law and self-evident facts. Therein lies the error in my reasoning. [...] The main feature of the Putin regime, though, is its deceitfulness—from the very top, all the way down. Corruption, stealing from the treasury, persecution of political opponents—all these are consequences of the deep immorality of this government, a government that is more comfortable with smears and evasions than with transparency.
Khodorkovsky closes by saying that more and more, the Russian people are standing up to the regime and that this disobedience will soon bear fruit:
For the [younger generation's] sake, we are beginning to stand taller at last. We are beginning to stand taller in the deceitful courts and on the streets of our cities. Yes, we are still afraid, but now, even more than that, we’re ashamed in the presence of our children. And we can’t be made to bend anymore.
Read Khodorkovsky’s full column here.
Russia Profile begins an article summing up Dmitry Medvedev’s presidency, which is coming to a close Monday, in a rather stark and negative manner:
Russia’s outgoing President Dmitry Medvedev probably never wished to end his term this way. His economic achievements, after four years in office, were minimal, and often had no visible impact in peoples’ day-to-day lives.
But the truth hurts sometimes. Medvedev came in with all the bluster of a reformer, but that sentiment wore off quickly, as he proved to be unable to enact meaningful economic reforms or emerge from the shadow cast by his predecessor / successor. The British Independent also has a scalding look-back on Medvedev’s tenure, quoting a Russian woman named “Masha,” who oversees the fake “Kermlin” Twitter handle:
[Medvedev's term] was like when it snows in the night and the machines come and clear it up before dawn. When you wake up, there is a vague feeling it has been snowing, but hardly any sign of it. That’s the level of impact he has made.
Read more on Medvedev in Russia Profile and the Independent.