■"Kremlin Reasserts Hold on Russia's Oil and Gas: U.S. Court Moves to Halt Auction Plan for Energy Giant," by Erin E. Arvedlund and Simon Romero, New York Times, 17 December 2004, p. A1.
The Kremlin was all set to have one of those "auctions" where the preferred, government-backed buyer cleans up. This time it was to be government-owned Gazprom buying up the lucrative oil giant Yukos.
But the thing is, Yukos is a private company, and apparently this private company took the unusual step of seeking bankruptcy protection in a U.S. federal court, and apparently this judge agreed with the Yukos' request to block the auction and so issued an injunction. Yukos' CFO is an American, and this guy argued that American stockholders would be harmed by this unfair auction process. Other Euro banks involved in the process said it was unfair for the CFO to take this case to the U.S., since Yukos is a Russian company with no U.S. employees save the CFO.
Pretty tricky move by the CFO, huh?
But Putin is unlikely to be deterred. He wants Russia to parlay its oil, but especially its natural gas, into an economic superpower status:
"The Kremlin wants to set the strategic economic agenda, and that means not leaving the long-term strategies and decisions about how revenues should be spent to private companies," Ms. Hill said. "The state wants control of the commanding heights. This is how Russia positions itself as a superpower."
With a bulked-up Gazprom, Mr. Putin will take a leaf out of the book from China, Japan and South Korea, where governments worked hand-in-hand to champion certain industries and build successful corporate leaders. Mr. Putin was probably paying close attention when China's high-technology giant, the Lenovo Group, bought the personal computer business of I.B.M. this month.
The Kremlin hopes to create huge world-class corporations in important sectors - what Vladimir Konovalov, a member of the Petroleum Advisory Forum, a lobbying group, has called "ship of state" companies.
How bad is it that Putin is "re-Sovietizing" the oil and gas industry? It's not a good sign, but you have to expect Russia to take advantage of what it can under the circumstances. Oil and gas are what get Putin a seat at the table in both Europe and Asia, and it makes him someone the U.S. can't ignore on that basis either.
[Just to preclude the inquiring emails: NOC stands for National Oil Company. I know, energy is not a good business to make pun of.]
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