	Generational Dynamics
	Forecasting America's Destiny ... and the World's

\| HOME \| WEB LOG \| COUNTRY WIKI \| COMMENT \| FORUM \| DOWNLOADS \| ABOUT \|

Generational Dynamics Web Log for 18-Aug-04
Yukos still very close to bankruptcy as oil tops $47 per barrel

Web Log - August, 2004

Yukos still very close to bankruptcy as oil tops $47 per barrel

The U.S. State Department is expressing concern about the fate of Yukos. State Dept. deputy spokesman Adam Ereli says that the Yukos case should be resolved "in accordance with the rule of law and due process" and "without influence from political considerations."

That's going to be a good trick now, as the trial former Chief Executive Mikhail Khodorkovsky, whose trial on tax evasion and fraud, is just beginning. Khodorkovsky was jailed in October 2003 just after he announced plans to challenge Russian President Vladimir Putin politically.

I must have been dreaming when I wrote last Friday that the Kremlin had backed down on nationalizing Yukos without paying investors. Yukos' assets are still frozen, and the Kremlin is still making it clear that it will tear Yukos apart and sell the pieces to pay back taxes. It's pretty clear that the pieces will be sold to Kremlin-backed businesses at very low prices, effectively nationalizing Yukos at little cost to the Kremlin.

With its assets and bank accounts frozen, Yukos is now saying that the company is just a few days from bankruptcy. If that happens, then the first in line to get paid will be the major shareholder Group Menatep, which is controlled by Mikhail Khodorkovsky. This will be very displeasing to the Kremlin, which will, we can be sure, find a way to prevent Khodorkovsky from benefiting in any way from bankruptcy.

Analysts had been hoping that oil prices would come down, once the uncertainty surrounding last weekend's Presidential recall referendum in oil producer Argentina had been resolved. That uncertainty now seems to be removed, and prices did fall slightly for a few hours on Monday, but the concern over a Yukos bankruptcy pushed them back up again. Today they reached yet another modern record, at over $47 per barrel. At this writing (12:15 pm ET), the price is $47.16.

The State Department statement says, "The appearance of a lack of due process and a threat to private property rights have resulted in both the Russian and the international business communities being on their guard. The way the case has been handled also raises questions about respect for investment rights in Russia and has led to increased capital flight and a decline in new investment that is certainly having an impact on the Russian economy." (18-Aug-04) Permanent Link
Receive daily World View columns by e-mail
Donate to Generational Dynamics via PayPal

Web Log Pages

Current Web Log

Generational Dynamics Web Log for 18-Aug-04 Yukos still very close to bankruptcy as oil tops $47 per barrel

Web Log Pages

Generational Dynamics Web Log for 18-Aug-04
Yukos still very close to bankruptcy as oil tops $47 per barrel