A Yukos Autopsy

Yukos, once Russia’s leading oil company and a favorite of international investors, is in its death throes. At what many perceived to be a rigged auction, the company’s best assets were sold off to a previously unknown bidder and are now back in the hands of the Russian state. The shell of what remains continues to challenge the company’s fate, notably in a Houston, Texas courtroom. But these spasms will not revive the corpse. What matters now is whether Russia’s economy will share Yukos’s fate.

The damage to Russia’s economic growth prospects from the Yukos affair may yet prove temporary, barring a repeat performance with other companies. But whether the Yukos affair proves to be an isolated case, as the Kremlin insists, depends on a reading of Russian President Vladimir Putin’s motives.

One possibility is that Putin is not sincere about his aim of doubling Russia’s GDP in a decade. Recent opinion polls suggest that this is the view of much of Russia’s cynical public. On this view, the privatizations of the 1990’s were a scam serving only the powers that be.

But any reversal of those privatizations – such as the effective expropriation of Mikhail Khodorkovsky and his Menatep partners in Yukos – signifies not the dawn of social justice but rather a new group of bosses “expropriating the expropriators,” as Lenin used to say.