NG: A Sorry-Looking White Knight

The Russneft affair: Gutseriev, Deripaska, and the Kremlin’s strategy  

The Kremlin has decided that strengthening the state requires all major oil-and-gas assets to be concentrated in the hands of President Putin’s friends. Like any other sensible oligarch in the post-Khodorkovsky era, Oleg Deripaska is prepared to assist the state in growing stronger – for a price.

Mikhail Gutseriev, president of the Russneft oil company, declared in an open letter that he is being forced to sell his company under pressure from the authorities. Obviously, such letters will not pass unanswered. Before writing the letter, Gutseriev had reached agreement with Russian Aluminum chief Oleg Deripaska to sell Russneft at an acceptable price; but after the letter, the Lefortovo district court froze 100% of Russneft’s shares.

To be fair, we should note that in the interval between the letter’s publication and the court decision, Gutseriev retracted his statements – but that’s equivalent to delivering a slap in the face, then retracting the slap.

Now, depending on Deripaska’s kindness, Russian Aluminum might pay the price it originally agreed to pay for Russneft – or it could reduce the price. And oligarchs aren’t known for their kindness. So Gutseriev’s open letter might end up costing him $1 billion or more.

To be fair, we should note that Deripaska has not taken Russneft from Gutseriev. Deripaska has played the “white knight” in this story. A white knight, Russia-style, is the person who helps you fight off your enemies, then takes away whatever the enemies were trying to take away from you. Deripaska has also acted as an intermediary: his interview with the Financial Times, where he said he is prepared to give all his assets to the state, came out just as the Russneft negotiations were at their height – and this comment appeared to be about Russneft.

The Kremlin has decided that strengthening the state requires all major oil-and-gas assets to be concentrated in the hands of President Putin’s friends. This is seen as a prerequisite for strengthening the state. And if Deripaska hoped to grab Russia’s fifth-largest oil company for himself, he obviously would have been going against strengthening the state. Deripaska isn’t the kind of person who would do anything against strengthening the state. Like any other sensible oligarch in the post-Khodorkovsky era, he is prepared to assist the state in growing stronger – as long as the state pays him a commission. After all, anyone who goes against strengthening the state risks following in the footsteps of Gutseriev or even Khodorkovsky.

It’s clear why Gutseriev wrote his open letter. Taking Russneft away from Gutseriev is like taking a child from its mother. But many have had their assets taken away – yet only Gutseriev wrote a letter. Even Shell CEO Jeroen van der Veer thanked Gazprom for its cooperation after Sakhalin-2 was taken away from Shell – although Mr. Van der Veer clearly didn’t face any risk of ending up in a Siberian prison. The point here is that business isn’t about honor. It’s about money. Rather than writing a letter, it’s more financially advantageous to thank the Kremlin for how well it has used you. So Gutseriev was behaving like a highlander, not like a businessman.

The reasons why Gutseriev has been punished are clear. Firstly, as I noted earlier, the Kremlin has made a strategic decision to concentrate all major oil-and-gas assets in the Kremlin. Secondly, Gutseriev was buying up the remnants of YUKOS without permission. Thirdly, Gutseriev is an ethnic Ingush; and President Murat Zyazikov of Ingushetia, whose region is being swept by a wave of bombings, needs to come up with some sort of explanation to present to the Kremlin. There are only two possible explanations: either Zyazikov has completely lost control over Ingushetia – or Ingushetia is peaceful and prosperous, but Gutseriev is funding terrorists. The latter explanation is more convenient.

But here’s the interesting point. Each time someone is led off to the slaughter, the rest of the business community finds weighty explanations for that. Gusinsky? “He was using the NTV network to blackmail everyone!” Goldovsky? “He went too far – he was stealing from Gazprom!” Khodorkovsky? “It was his own fault for playing at politics.” Avisma? “The idiots – they should have sold to Vekselberg when he offered.” AvtoVAZ? “Listen, it was those red directors who made a mess of the factory.” Gutseriev? “He broke the rules of the game: why was he buying up pieces of YUKOS?”

And it’s all true. One broke the rules, another was stealing, another played too many games, and another – imagine! – failed to sell when requested to do so.

The question is when the oligarchs will realize that everyone’s turn will come eventually, and each of them will be found guilty of something, and sooner or later their oath of loyalty (“I’m prepared to give everything to the state!”) will be met with a calm “Hand it over.”

The answer: the oligarchs are well aware of this. But that’s business – playing the game according to the Kremlin’s rules, not creating new rules. Each oligarch knows that they will come for him eventually; but each oligarch hopes that they’ll come for his neighbor first, and that he might even make some money by re-selling some of his neighbor’s assets to the state.

Translated by Elena Leonova

Novaya Gazeta August 13, 2007 Author: Yulia Latynina.

FacebookTwitterGoogle+LinkedInVKWordPressBlogger PostLiveJournalTumblrTelegramWhatsAppSMSEmailGoogle GmailOutlook.comMail.RuPrintFriendly

Leave a Reply