U.S. Accuses Russia of “Coercion” and “Favoritism” in Yukos Affair

The Bush administration yesterday accused Russia of “coercion” and “favoritism” in the sale of a unit of the oil giant Yukos, warning Moscow that its handling of the matter could harm the country’s economy and its investment climate, The Washington Post writes.

After meeting with a lawyer for Yukos’ jailed owner, Mikhail Khodorkovsky, at the State Department, administration officials also expressed serious concern about Russia’s human rights record under President Vladimir Putin.

“We are having meetings with people who are interested or part of the Khodorkovsky case. This is a matter of continuing interest and concern for the United States,” State Department spokesman Richard Boucher said.

“It’s a matter that we do think affects not only the view of Russia’s human rights climate and judicial climate, but is also affecting the climate of investment in Russia, and therefore has implications for Russians, not only in the way their society is run, but also on their economy,” he said.

Mr. Boucher cited reports that Yukos’ Yuganskneftegaz unit might be sold for an amount much smaller than its market value.

“We have been concerned about the possible sell-off of the gas company that’s associated with Yukos,” he said.

“First of all, one has to assume there is some element of coercion or a forced sale involved,” Mr. Boucher said. “And, second of all, if sales are not made in the open market at fair market value, one has to assume there is an element of favoritism as well, and that affects people’s view of the business climate.”

The rebuke came a day after Mr. Putin appeared to back President Bush’s re-election.

During a visit to Tajikistan on Monday, the Russian leader said that terrorists mounting an insurgency in Iraq hope to help defeat Mr. Bush in two weeks and that such an outcome would give “an additional impulse in their activities”.

Russia’s Justice Ministry has valued Yuganskneftegaz, which is expected to be auctioned off for back taxes next month, at about $10.4 billion. The investment bank Dresdner Kleinwort Wasserstein issued an evaluation of more than $14 billion.

But on Monday, reports from Moscow suggested that the starting price could be the same as the outstanding tax bill the Russian authorities have served Yukos for 2000-01: $3.73 billion.

Moreover, Russian Deputy Economic and Trade Minister Andrei Sharonov was quoted by the Interfax news agency yesterday as saying that the Yuganskneftegaz sale might not be sufficient to cover the company’s debts.

Mr. Sharonov also said a firm affiliated with state-connected gas giant Gazprom could bid for the unit. Gazprom, the world’s largest gas company, has denied that it will participate.

Yukos produces about 2 percent of the world’s oil, with Yuganskneftegaz pumping more than 60 percent of it.

Mr. Khodorkovsky, Russia’s richest man, who was arrested nearly a year ago, has accused the Kremlin of targeting him because he financially backs opponents of Mr. Putin.

Lawyer Yuri Schmidt, who is visiting Washington this week, yesterday reiterated that charge and said the case signaled an anti-democratic trend in the country.

“What we are up against is the full and entire machinery of the government,” Mr. Schmidt told the Associated Press. “If they had any sense, there would be a fair trial with an independent court, and we would not be here now.”

(From The Moscow News, 20.10.2004)