Does Medvedev really believe in the rule of law? The fate of TNK-BP is the test
Is President Dmitri Medvedev of Russia — who looks and sounds like a liberal-leaning modern technocrat — really his own man, or is he merely the stooge of his predecessor, the sinister, warmongering Vladimir Putin? The mad situation engulfing BP’s Russian joint venture, TNK-BP, is surely the test of this question. Its BP-appointed chief executive, Robert Dudley, has met such hostility from the gang of oligarchs who are BP’s partners in the company that he is now trying to run it by email from a secret address somewhere in eastern Europe. The oligarchs, led by the combative multibillionaire Mikhail Fridman, claim BP has managed TNK-BP (which accounts for a quarter of total BP oil production) more like a subsidiary than an independent venture, refusing to let it pursue opportunities where it might cross other BP interests. In consequence, they say, TNK-BP has underperformed Russian rivals such as Lukoil.
They may have a genuine case, or they may just be trying to run BP out of town in the lawless Russian cowboy-capitalist style usually associated with the Yeltsin era. But what is outrageous is the way in which various arms of the Russian state, including the visa authorities, have been deployed to make life as uncomfortable as possible for BP’s expatriate managers, to the extent that BP is now close to losing any effective control of its massive investment. The Kremlin has done nothing to indicate disapproval of all this — even though Putin gave his public blessing to BP’s participation in the original venture in 2003, and neither Fridman nor his fellow investors, Viktor Vekselberg and Leonard Blavatnik, are known as Kremlin favourites. Frankly, no one really knows what’s going on, but one theory is that Putin wants control of TNK-BP to pass to Gazprom, the state-owned conglomerate which is his weapon in international energy politics — and is not bothered whether that is achieved by bullying BP out of Russia or by forcing the oligarchs to part with their own stakes, or both; the oligarchs, naturally, prefer the first of those scenarios. Either way, the Russian legal system would be ruthlessly deployed to serve Putin’s objectives.
Yet when Medvedev was sworn in as president in May, he promised to ‘fight for a true respect for the law and overcome legal nihilism’; he has since ‘ordered’ state agencies to stop harassing businesses, and repeatedly said he wants Russia to be more attractive to international investors. My man with his ear to the Kremlin wall tells me that as a lawyer from a family of lawyers, Medvedev actually means what he says about the rule of law, and is beginning to show his colours in some of his appointments: Alexander Konovalov, his new justice minister, was his university classmate and is known to share his views; more obscure, but intriguing to Kremlinologists, is Medvedev’s choice of Boris Ebzeyev, a former judge of the constitutional court, to be president of the troublesome Caucasian republic of Karachayevo-Cherkessia. A modest start, perhaps, but as BP chairman Peter Sutherland has said, ‘The fate of TNK-BP will be an early test of the ability of President Medvedev to turn his vision into reality. Much of the world is watching.’
Aux marchés libres
At this time of year I retreat, editorial duties permitting, to a delightful French village called St Pompon (after a 6th-century bishop of Naples whose corpse oozed miraculous fluid, since you asked). St Pompon turns out to be as fertile a source of economic parables as my Yorkshire home town, Helmsley, which fulfils that role in this column for the rest of the year. In May, our commune elected a new mayor, displacing the village butcher who had held the post for several decades. The surprise victor — St Pompon’s Boris — is a young man with dynamic new ideas, and the contrast between the two regimes is instructive. The butcher, like most of the older French political class, believed in development through public spending: he was a dab hand at securing regional funding for the paving of the mediaeval streets, the repair of the church spire and even the building of a new mini-supermarket which was then leased to a suitable commercial chain. His successor, however, has adopted a radical, marketdriven approach which looks set to give St Pompon a sharp competitive edge against rival villages in the southern Dordogne through the impending economic downturn. I mean ‘market-driven’ in a literal sense: not only do we now have a Friday-morning street market offering all kinds of excellent local produce, but we also have a Saturday soirée gourmande at which stalls offer moules frites, spit-roast chickens, magret de canard, lightly grilled foie gras, bargain-priced local wines and much else besides. All this, plus a discotheque, takes place in the main village street, and by nightfall through-traffic has to weave among a crowd of 400 good-natured revellers. ‘Helmsley must have one of these,’ I shouted above the din — but then I thought of all the obstacles of health’n’safety, food hygiene, public disorder and liability insurance, not to mention weather, that would instantly be erected against such a proposal anywhere in England. So I just raised my plastic beaker of rosé to the triumph of free markets and lost myself to rock and roll in the middle of the road.
Beluga bid
Speaking of delicacies, Saturday’s Guardian carried a small ad inviting tenders for a consignment of 1,000 kilos of Iranian caviar. Perhaps the export agency in Tehran chose the Guardian because the London embassy had reported — a little while ago, obviously — that New Labour plutocrats like nothing better than to dip their fingers into buckets of beluga before writing big cheques for their peerages. Those days may be over, but there are still plenty of hedge-fund players around who like to bet on any commodity that moves, and I wondered how they would assess the risk of a very long position in caviar. If conflict breaks out over Iran’s nuclear plans, scarcity will surely drive caviar prices sky-high; if peace breaks out, increased demand for caviar to celebrate will keep the price underpinned; if your hedge fund goes bust in the meantime, at least your freezer’s full of caviar. It looks like a win-win proposition to me, and my tender is in the post to the sponsor of the ad, the ‘Ministry of Jahad-eAgriculture’ — though I assumed that to be one of the Guardian’s celebrated misprints, and spelled it ‘Jihad’.
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