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#10 - JRL 7167
The Electronic Telegraph (UK)
May 5, 2003
Exiled Berezovsky turns Russian bear
By Malcolm Moore

Boris Berezovsky, once the richest man in Russia and with a fortune estimated at anywhere between 1 billion and 2 billion, said yesterday that the Russian economy is close to collapse.

"I think Putin is already in trouble. Russia is in the same position now as it was in 1989. It is near to collapse," said Mr Berezovsky. "If you look at the growth of gross domestic product, it was 8pc in 2000. In 2001 it was 6pc and in 2003 it will be 4pc. The question is why."

Mr Berezovsky's views run against the general perception that the Russian economy, which is attracting increasing foreign investment, is now more robust than ever.

Igor Kostikov, the chairman of the Russian Commission of the Securities Market, the financial regulator, points to tough corporate governance laws encouraging a 120pc rise in the value of the domestic stock exchange in the past three years.

Earlier this year, BP decided to invest $6.75 billion in buying up half of Russian oil company TNK in a move that was widely proclaimed as heralding a new dawn for Russia's economy. More recently, Yukos and Sibneft have agreed on another multi-billion dollar oil merger.

The last month has seen "extraordinary" activity in the Russian equity market, according to bankers at the United Financial Group in Moscow. Mr Berezovsky, who claims to hold shares in Sibneft through an offshore investment vehicle, said it was only in the oil sector, which he describes as "energetic", that any growth was apparent.

A large measure of his wealth was created when he founded Sibneft by buying oil assets in the privatisation of the industry during Boris Yeltsin's tenure as president. Back then, he was unable to win Western financing for Sibneft, despite courting bankers and financiers including George Soros.

He is currently living in exile in Britain and faces extradition to face fraud charges in Russia if he loses a court case later this month. Mr Berezovsky has not visited Russia for the past two-and-a-half years and claims the current regime is persecuting him and his associates.

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