Commentary: Yukos goes to Bratislava By Peter Lavelle UNITED PRESS INTERNATIONAL |February 14, 2005 http://www.wpherald.com/Viewpoints/storyview.php?StoryID=20050214- 024600-7390r MOSCOW -- The meeting of U.S. Secretary of State Condoleezza Rice and Russian Foreign Minister Sergei Lavrov in Ankara last week apparently went far worse than reported. Days later, the Kremlin signaled that foreigners looking for a majority stake in upcoming big-ticket tenders in Russia's oil sector are not invited. This decision alone suggests that the focus of the Feb. 24 Bratislava summit between Putin and Bush will be American "values" vs. Russia's sense of "national security." During her European tour, Rice is said to have "lectured" Lavrov on the basic tenants of modern democracy, focusing on Russia's perceived media limitations and the Kremlin's decision to appoint regional governors. The "Yukos affair" was also the subject of heated discussion. Lavrov defended the state of Russia's media and the Kremlin's right to re-order domestic political institutions. However, Rice and Lavrov appeared unable to "agree to disagree" on the subject of Yukos. This inability to "agree to disagree" on the Yukos affair is indicative of what continues to divide the United States and Russia. At Bratislava, Bush will most likely push an agenda concerning the importance of "shared values," with Putin falling back on the demands of "state interests and national security." This is why the "Yukos affair" is likely to figure highly during the summit because it is an issue that has everything to do with "shared values" and "state interests and national security." The Yukos affair is well known and does not need to be repeated in detail here. Western and Russian media have reported how the Yukos' core shareholders have been arrested and put on trial, with others residing abroad actively sought by Russia's authorities. Media have equally covered the forced breakup of the oil giant, with the opaque auctioning of the company's primary production unit - Yuganskneftegaz - by use of very aggressive and at times questionable application of the tax code. Based on media coverage and the opinions of a number of highly paid "Russia watchers," the outcome and meaning of the Yukos affair appears to be obvious: a Kremlin asset grab, persecution of "political enemies," a retreat from creating a competitive market economy, and the lack of the rule of law in Russia. Indeed, the Yukos affair has and should raise questions concerning Kremlin motives. After all, the Yukos affair is not only a Russia-specific event; it is event that has significant and dramatic international ramifications -- including bilateral relations with the U.S. However, the conventional wisdom concerning Yukos overlooks a number other issues that media either do not understand or purposely overlook, with the Kremlin seemingly unwilling to candidly explain its actions. It has been unwilling to explain its action in terms the rest of world truly understands, the lack of which harms U.S.- Russia relations and the international perception of Russia in general. In fact, the Kremlin is following the course of history. With the exception of the United States and the United Kingdom, all major energy-exporting countries have the state in charge of this important and lucrative export sector. During the last century, states time and again nationalized energy exports. Controlling this sector, more times than not, is done in the name of national security. Of course private companies protested, and a few lucky ones were actually compensated in some form after the fact. The Kremlin is doing the same, though it obviously does not appear to be interested in any form of compensation to former owners. The Kremlin cannot do this, as the majority of Russians deem the private ownership of the Russia's energy sectors illegitimate. At the same time, because of the opaque nature of the assault against Yukos, it remains unclear if the Kremlin is simply dethroning some oligarchs only to create new ones. These are very reasonable questions to ask, particularly as the United States has shown interest in developing a strong energy dialogue with Russia. What the Kremlin is pursuing in Russia's energy sectors is not directly aimed at "annihilating" political opponents or returning to some kind Soviet past. Rather, it is indeed catching up with the times and not unreasonably invoking state interests and national security. However, the appearance of the Kremlin's approach creates enormous skepticism. Without proper explanations from the Kremlin surrounding its moves, skepticism and mistrust are the inevitable results. Without proper explanations, greed, power, and indifference to property rights are issues reasonably raised by onlookers, particularly friends and potential allies. This is where "values" and "state interests" meet and will be discussed in Bratislava. When Rice met her counterpart Lavrov in Ankara to prepare the groundwork for the presidential meeting, media sources claim Rice said the Yukos affair should be resolved through Russia's own legal system. Her remarks surprised many in Russia and interpreted by some as an indication that the Yukos affair is no longer an issue that divides the United States and Russia. This interpretation is incorrect -- Yukos does matter very much. It matters because the legal circumstances surrounding and fate of Yukos is a "value" in of itself. That "value" is transparency and respect for the law -- particularly Russian law. Yukos' current travails worry many in the United States and should worry the Kremlin as well. With American companies already in Russia's oil patch and now told that their further expansion in Russia may be limited, the common "value" of a strategic energy alliance may now be in doubt. Bush will certainly be interested in the Kremlin's intentions surrounding decision to limit foreign investment in Russia's oil sector. Shared values and national security cannot be separated. Shared values, at the end of the day, create national security. This is why the "Yukos affair" will be on the agenda in Bratislava. Taking virtue from necessity, the "Yukos affair" could be used as stepping stone for both Bush and Putin to present how each understands "values" and "national security." Without a common understanding of both, development of U.S.-Russia relationships will remain difficult and an opportunity senselessly missed. -- Peter Lavelle is an independent Moscow-based analyst and the author of the electronic newsletter on Russia "Untimely Thoughts" untimely-thoughts.com. ------------------------ Yahoo! Groups Sponsor --------------------~--> Has someone you know been affected by illness or disease? Network for Good is THE place to support health awareness efforts! http://us.click.yahoo.com/RzSHvD/UOnJAA/79vVAA/NJYolB/TM --------------------------------------------------------------------~-> �������������������������������������������������������� This is ZESTEconomics. Post economics-related articles and event info to [email protected] If you got this mail as a forward, subscribe to ZESTEconomics by sending a blank mail to [EMAIL PROTECTED] OR, if you have a Yahoo! 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