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Messing with Putin
On Putin and Oligarchs

Russian authorities have placed Vladimir Yevtushenkov, an oil-baron oligarch who is the 15th richest man in Russia according to Forbes, under house arrest and charged him with money laundering. In contrast to the high-profile arrest of oligarch Mikhail Khodorkovsky, Yevtushenkov has not made himself a public political enemy of Putin. He may have gotten himself on Putin’s bad list another way, though; Yevtushenkov heads the oil firm Bashneft, which has refused to be acquired by Rosneft, Russia’s largest oil company. Rosneft is run by Igor Sechin, one of Putin’s closest allies. The Financial Times has the story:

“Mr Sechin has been exerting immense pressure on them to sell Bashneft on his terms,” said a tycoon who controls a rival business group. […]

Rosneft has repeatedly stated that it is not in negotiations to buy Bashneft and is not interested in the asset.

However, people close to Mr Yevtushenkov say Mr Sechin raised the possibility of buying Bashneft last year and was rebuffed. Mr Yevtushenkov then appealed to Mr Putin and the matter appeared to be put to rest.

Over the next 12 months, the Kremlin appeared to shift. In early July, when Bashneft faced a sudden lawsuit from certain minority shareholders, Mr Yevtushenkov found he was no longer able to secure a meeting with Mr Putin, a person close to the company said.

Investors and analysts say Mr Yevtushenkov’s arrest signals a new order in a Moscow roiled by heightened geopolitical tensions and western sanctions, and raises concerns that other apolitical or even Kremlin-friendly billionaires could be forced to part with prized assets in a similarly aggressive manner.

It remains to be seen how Putin’s regime will fare as the Russian public weathers a weakened economy. One thing is becoming clear, however: Commentators who predicted that Western sanctions on Russia would hurt Putin’s power in the short term by angering the oligarch class were wrong. The oligarchs, forced by sanctions or prudence to keep assets in Russia, are even more at Putin’s mercy. The FT‘s unnamed tycoon, speaking about Bashneft, proves the point: “With Russia under threat from sanctions, no one dares argue against the case that strategic assets like this one must be in state hands.”

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