June 29, 2006 by AK
This WaPo article by Steven Pearlstein sends the right message by absurd means: it is a sensible story told by an idiot (it would seem), or, rather, a poorly informed person, or a propagandist. Quoting Garry Kasparov, who believes in Anatoly Fomenko’s theories, on politics, is nearly as convincing as quoting Bobby Fischer. Garry argues that “the only way to deal with a bully like Putin was to throw him out of the [G-8] club and stop the flow of investment capital.” Well, in case you didn’t know, Russia needs no foreign “investment capital” as it has experienced large capital surpluses for several years and accumulated large currency resources sitting idly at the Central Bank. The only way to change that is to make oil prices drop or to prevent Europe from buying Russian oil and gas, which is, I’m afraid, impracticable at the moment.
Moreover, Bush has no reason to censure Vlad, who has been such a pliable buddy with his habit of raising hell and backing down. Putin has backed down on Ukraine twice and Georgia a couple of times; there is no question he will soften on Iran and the rest of the world provided he is properly compensated. The phantom of the Cold War is just that, a phantom for the gullible. For all practical purposes, Putin is Zbigniew Brzezinski’s and Richard Pipes’ wet dream, a politician leading Russia down the path to disintegration — or, which also sounds bad to me — de-Russification [via population replacement].
Now if Bush really wanted to put some heat on Vlad, he would threaten to freeze his foreign assets and have European countries follow him.
This said, the message of Pearlstein rant is this: the bulk of Rosneft’s assets have been stolen. Stolen, that is, from YUKOS, whose former subsidiary, the E&P company Yuganskneftegaz, is now Rosneft’s key asset. It is not a good idea to buy stolen property. Yet I am sure the Rosneft IPO will go ahead, likely at the inflated price that puts the company’s value at $65 or $70 billion. Who’s going to buy the stock then?
— Risk-loving foreign investors (the usual suspects)
— Risk-loving and ignorant Russians
— Russian companies depending on the Kremlin’s approval, such as Surgutneftegaz, Sberbank and other banks, pension funds and lesser fish
What’s the bottom line? Well, don’t buy Rosneft: there may be a speculative rally in the first days or weeks (though the fundamentals would still say “sell”), but as long as you’re not into fencing, stay away. But there’s no ultimate bottom line, really: what’s going on is too absurd, I’ve given up on finding meaning in it.