It's Yukos Time Again
By PHILIPPA RUNNER, EuObserver 22.9.08
Sep 23, 2008 - 10:38:16 AM
A €23 billion legal claim against the Russian state over the break-up
of oil company Yukos will test EU-Russia energy relations and Russia's
fitness to rejoin the international "political family," the plaintiffs
Yukos' main shareholder, GML, has brought forward the legal challenge,
arguing that Russia violated a major international energy pact - the
Energy Charter Treaty (ECT) - by snatching Yukos assets back in 2004.
The ECT is binding on Russia because it signed the charter even if
ratification never took place, GML says, with the first hearing in the
legal arbitration to take place in The Hague on 17 November.
If GML wins, it may end up enforcing payment by using European courts
to grab the foreign assets of Russian state-owned energy company
The case could also set a precedent for Western firms such as British
Petroleum and Shell, which have struggled to protect their investments
in Russia's energy sector in recent years.
GML director Tim Osborne told EUobserver that Russia's behaviour in the
ECT arbitration will affect its ambition to become a respectable trade
partner, with Moscow's reputation already damaged by the Georgian war.
"Russia is very keen to portray itself as a responsible member of the
political family, and if it wants to join the WTO and the OECD and
other rules-based organisations, at some stage it's going to have to
abide by those rules," he said.
The case will also test the EU's commitment to the energy charter in
the face of a more pragmatic approach to Russia.
The EU helped negotiate the original ECT, which was designed to protect
Western firms willing to make badly-needed investments in the cash-poor
Russia of the 1990s. But EU officials opted not to make the charter
part of a draft new EU-Russia treaty, fearing that unrealistic demands
in the energy sector could set back negotiations for years on the
broader bilateral pact.
"The Russians are making every effort to portray the ECT as a lame
duck, a still-born instrument," Mr Osborne said. "The EU and Russia
can't unilaterally change a multinational treaty. There are plenty of
other countries which are signatories."
"The [EU] can help our case immensely by stating Russia is bound by the
ECT," he added. "A statement by the people who negotiated it that says
they believe Russia is bound, as the UK government has said and as
other European governments have said, would be helpful."
The philanthropic Mr Nevzlin
The break-up of Yukos on tax evasion charges was seen in the West as a
political attack on its CEO, Mikhail Khodorkovsky, in a watershed event
for private property rights in the new Russia.
Mr Khodorkovsky, portrayed in Western media as a liberal reformer, no
longer owns GML shares and remains in prison in Siberia. His former
business partner and GML-majority shareholder, Leonid Nevzlin, lives in
Israel and has ceased to be politically active, focusing on
philanthropic projects instead, GML's Mr Osborne said.
Both Mr Nevzlin and Mr Osborne fear to step foot in Russia, with Mr
Nevzlin sentenced in absentia on charges of organised murder and Mr
Osborne feeling "bullied" by Russian suspicions that he engaged in
criminal activity as part of his Yukos work. GML itself is registered
in the UK.
But the view from Russia is different, with Mr Nevzlin noted for
connections to anti-Kremlin exiles in London and his reputation marked
by the in absentia murder trial.
Mr Nevzlin met with ex-KGB agent Alexander Litvinenko in Israel in 2006
to discuss research into Kremlin action against ex-Yukos executives.
The murder charges against him include the killing of Yukos critic
Vladimir Petukhov, who was shot dead on Mr Khodorkovsky's birthday on
26 June 1998.
Source: Ocnus.net 2008