Thursday, July 18, 2024
 
 

Arrest of Russia’s top economic official highlights power struggle

Experts say action might have been initiated by Rosneft or the siloviki

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Russia’s Economic Development Minister Alexey Ulyukayev was detained earlier this week on suspicion of taking a $2 million bribe that allowed Russian oil giant Rosneft to wrap up the deal on purchasing the government’s 50% stake in Bashneft, TASS reported.

But the detention of one of the Kremlin’s top officials is unlikely to affect the energy deal, Slava Smolyaninov, a strategist at BCS, a brokerage firm in Moscow, told New Europe by phone on November 15. “It’s hard to say right now. It appears that there should be no implication for the deal,” he said.

Ulyukyaev, who is an economic liberal, is the most prominent figure to be accused in the latest anti-corruption probe. “It’s totally unexpected for many obviously,” the Moscow-based BCS strategist said. “But it seems to be a specific person in focus rather than liberal wind or anything like that. That’s the impression people are getting,” he said.

A Rosneft spokesman told TASS the Russian oil giant sees “no risks for the deal, the deal was absolutely correct”.

“The stake in Bashneft was purchased in accordance with Russian legislature on the basis of best commercial offer made to the operator bank,” a representative of Rosneft said.

Russian President Vladimir Putin named Ulyukayev, at the time a first deputy governor of the Bank of Russia, economy minister in June. Kremlin spokesman Dmitry Peskov said on November 15 that charges against Ulyukayev are very serious.

Russian Prime Minister Dmitry Medvedev has discussed the matter with Putin and spoken out in favour of a thorough investigation, the cabinet press service said.

Ulyukayev previously opposed the state companies’ participation in privatisation deals calling for Bashneft’s stake sale on a competitive basis.

Chris Weafer, a senior adviser at Macro-Advisory in Moscow, told New Europe by phone on November 18 that the view this is still more to do with an internal dispute rather than something that should affect the broader investment climate.

“Possibly it could be an action that in some way might have been initiated, perhaps started by Rosneft that has clearly been frustrated by the involvement of the economy ministry and finance ministry in their recent purchase of Bashneft,” Weafer said, adding that the ministries were opposed to selling Bashneft to a Russian company. “They wanted to sell it to a third party and bring in new money to the system,” he said.

“One of the assumptions is that it could very well be Rosneft firing a warning shot to ministries ahead of the expected privatisation of the 18% of the surplus equities the finance ministry has in Rosneft,” Weafer said.

The other speculation is that it could also be a warning shot from the security forces – the siloviki – to the more liberal minded people in the cabinet in the struggle over budgeting and power and restructuring, Weafer said.

“We have to wait and see what happens next and particularly what position President Putin takes,” Weafer said. “In the end, what everybody is hoping for is that, however this is progressed, is that the President makes it clear that he remains firmly committed to economic changes and to improving the investment climate and taking actions to attract more foreign investments to the country.”

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Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

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