Will Medvedev's Russia tread more lightly on business?

The intense state scrutiny of private oil firm TNK-BP, now facing an environmental review, echoes Putin-era takeovers. The president-elect is reputedly more liberal.

from the April 15, 2008 edition

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Bid to give Gazprom more power?

Other experts believe the pressure may be aimed at forcing the company's Russian partners to sell their shares to Gazprom or state oil company Rosneft.

"Experience shows that when a state company takes an interest in a property, all methods of influence can be switched on," says Mikhail Krutikhin, an analyst with Russian Energy, a Moscow-based consultancy. "In the case of TNK-BP, these include the counterintelligence agency, the police, the environmental watchdog, the tax authorities, and the immigration service. That hardly looks like a normal business deal."

TNK-BP has insisted, however, that nothing unusual is happening. "I don't think you can draw a link between any of these events," says Marina Dracheva, a company spokesperson. She says the spying charges against one employee are an "individual matter," the environmental review routine, and the visa problems a bureaucratic glitch that's since been largely resolved.

But whatever the outcome for TNK-BP, the story has a familiar ring to it.

Five years ago the Kremlin took aim at Russia's most profitable oil giant, Yukos, and brought the company down with criminal charges against its main owner, Mikhail Khodorkovsky, and back tax charges of over $30 billion. Most of Yukos's assets have since been absorbed by Rosneft.

In 2006, a consortium led by Royal Dutch Shell was forced to sell half its stake in the huge Sakhalin-2 gas fields to Gazprom at what most analysts say was a steep discount, after the Natural Resources Ministry accused the company of inflicting $50 billion in ecological damage on the Pacific territory. After Gazprom took over, all talk of environmental abuses evaporated.

President-elect Medvedev

In an interview last month with the Financial Times, Medvedev sidestepped a question about the TNK-BP situation, but suggested state sector growth at the expense of private enterprise might be reined in. "I would like to say that the number of state companies ... should be exactly the number required to ensure the interests of all the country but no more," he said. "We of course will continue the course that Russia has taken toward creating a full-fledged private economy."

But some experts note that Putin made similar promises when he became president in 2000, but under him the number of bureaucrats in Russia has grown from 1 million to 1.6 million, according to official statistics.

"One of the top priorities must be for administrative reform, to curb this growth of bureaucracy," says Yaroslav Lissovolik, chief economist with Deutsche Bank in Russia. "Medvedev is of a different generation and background than Putin, and the potential is for more liberal policy."

Others argue that the high price of oil will continue to encourage state officials who find power a handy way to acquire private energy assets cheaply.

"If the oil price keeps going up it's very unlikely that Russia will become more liberal," says Yevgeny Gavrilenkov, chief economist with Troika Dialog, a leading Russian investment bank. "With so much easy money, it seems likely [bureaucrats] will continue fighting over it, and nobody will want to undertake the hard reforms."

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