Russia and Yukos: Canute in the Kremlin

President Vladimir Putin’s efforts to revive state control over the Russian economy resemble King Canute’s attempt to halt the tide. It is true that Canute, according to the story, conducted his exercise to demonstrate its futility, while Putin, so far as we know, is not carrying out an experiment for the education of his courtiers.

The World Today
Published 1 February 2005 Updated 15 October 2020 4 minute READ

Professor Philip Hanson OBE

Emeritus Professor of the Political Economy of Russia and Eastern Europe, University of Birmingham

Indeed, Putin really can put the state back in charge. But, as the Yukos case shows, he will succeed at a cost, and the cost already looks rather worse than a soaking. This re-assertion of state power depresses economic growth and puts Moscow at odds with the wider world in which the president wants his nation to take an honoured place.

On Sunday, December 19, the main production subsidiary of the Yukos oil company was sold by the Russian Federal Property Fund for $9.35 billion to Baikalfinansgrup. Nobody had ever heard of Baikalfinansgrup. Its address is at 126 Novotorzhskaya Street, in Tver. That address, it turned out, is shared by the London Bar, a liquor store, a food store, some mobile phone and jeans shops and one hundred and fifty invisible shell companies. The barman at the London told Kommersant newspaper that he hadn’t noticed any customers with $9.35 billion lately.

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