#9 - JRL 7251
July 16, 2003
THE GOVERNMENT IS WEANING YUKOS AWAY FROM THE WEST
Interview with Canadian analyst Eric Laflamme
Author: Boris Yunanov, Ottawa - Montreal
[from WPS Monitoring Agency, www.wps.ru/e_index.html]
WASHINGTON PLANNED TO USE MIKHAIL KHODORKOVSKY AND HIS YUKOS COMPANY AS A CONNECTING LINK FOR ESTABLISHING LONG-TERM PARTNERSHIP WITH MOSCOW IN THE ENERGY SECTOR. RIVAL COMPANIES HAVE CAUSED TROUBLE FOR YUKOS IN ORDER TO GET THEIR SHARE OF THE US OIL MARKET.
The YUKOS oil company scandal has a foreign trade subtext connected with the prospects for US-Russian contracts in the energy delivery sector. This is the opinion of some Canadian business experts - including Eric Laflamme, a well-known analyst based in Montreal.
Question: Why has the "American connection" arisen?
Eric Laflamme: The point is that the international economy is going through a historic moment: the Russian oil industry intends to enter the American market. It should be noted that these prospects were discussed before the Iraq war. Skeptics said that Russian oil barons had a "dark credit background". However, substantial changes took place earlier this year. Washington planned to use Mikhail Khodorkovsky and his YUKOS company as a connecting link for establishing long-term partnership with Moscow in the energy sector.
Question: Why YUKOS?
Eric Laflamme: The answer is obvious. YUKOS is the leader in corporate management in Russia. Its executives meet all Western standards and requirements. The US and Canada have already understood this. Washington has chosen the most transparent company in Russia. It's no coincidence that the US ambassador to Moscow has been the first to express his concern about the YUKOS affair.
Question: You said "earlier this year". Why was that?
Eric Laflamme: I kept track of Khodorkovsky's public statements in winter and early spring. He spoke of exporting 9-10 million barrels of oil a year to the United States; this would cover 15% of the US oil market. It's a matter of tens of billions of dollars. The main problem is how to transport the product. Obviously, it would be cheaper to build a pipeline to Murmansk than to transport oil via the Persian Gulf. Khodorkovsky agreed with this. I thought: isn't YUKOS seizing too large a slice of the pie, given its intention to build a pipeline to China as well?
Boris Yeltsin said when he was president: "Take as much as you can swallow." I think someone in Russia has decided that YUKOS is trying to "swallow" too much. That's the reason...
Question: Do you mean that the case was instigated by YUKOS rivals?
Eric Laflamme: I know that LUKoil and TNK are interested in American projects. I also know that these companies position themselves as companies loyal to the Kremlin and the pro-Kremlin United Russia party. The conclusion is evident.
Question: Let me explain how Russians interpret this story: Khodorkovsky has angered the Kremlin by his political ambitions. In particular, he intended to donate to liberal parties for their parliamentary election campaigns. The government reacted by using the security structures...
Eric Laflamme: I was forced to delve deeply into the webs of Russian politics when studying the Russian oil and gas market. Business and government are inseparable in Russia. I concluded that the Kremlin does not have a strong opposition. I think the Kremlin would not protest if YUKOS funded liberal parties. There are no serious differences between the Kremlin and liberal parties. However, there are differences between YUKOS and the pro-Kremlin business lobby. The government blames Khodorkovsky for his political ambitions. However, I think his main mistake was that to separate business from politics. I mean traditional Russian politics.
Question: How has Canadian business responded to the YUKOS affair?
Eric Laflamme: I cannot speak for all business circles, but the executives I have spoken to were not surprised by such developments: they said that the prospects for serious contacts and relations with Russia are premature.
(Translated by Alexander Dubovoi)