The "Yukos Affair", its Motives and Implications

Key points

1. When interpreting the "Yukos affair", it is hard to focus on any single particular motive or explanation that would easily rationalise the government's actions against the company. The "Yukos affair" is a multi-layered process with a number of different reasons for its cause. When one scrutinises the events around the company, the impression may be obtained that the Kremlin seemed at first not to have had any ultimate strategy; the authorities' position evolved as time went by. At first, the conflict was mainly of a political nature; economic factors did not arise until later, when the oil sector was undergoing changes in ownership.

2. The "Yukos affair" was an important stage in the evolution of Russia's political system, indeed one of its turning points. The attack on Yukos took place - not coincidentally - just before the parliamentary elections, and influenced their results. The authorities' conflict with Russia's largest oil company has brought about a crisis within the political elite, and has ultimately led to a key shift within Vladimir Putin's inner circle. As a result, the 'old' Kremlin elite has lost its one-time significance and political influence, which it had acquired thanks to the former president Boris Yeltsin. Furthermore, the "Yukos affair" brought about serious changes in the relations between government and big business - the business representatives have been ultimately deprived of any possibility to act autonomously.

3. The "Yukos affair" has been a catalyst for a fundamental transformation in the Russian oil sector and the energy sector as a whole. As a result, it has become the key element of these sectors' reorganisation, and has led to the strengthening of the state's position in this sector and the restoration of the state officials' domination thereof.

4. The Kremlin's policy towards the oil sector started changing radically after the presidential elections in March 2004. This was a result of the attack on Yukos, but was also to an extent one of the reasons for this attack. After the elections, the government made noticeable attempts to establish a 'national' oil company controlled by the Kremlin. Initially, the plan was to merge Gazprom and Sibneft; however this scheme failed because of the specific ambitions of individual groups within the Kremlin elite. Later, some attempts were made to establish such a 'national' company on the basis of Rosneft. In each of these scenarios, a sine qua non for establishing the 'nationa' concern was the dismantling of Yukos - as all or most of Yukos' assets were to form the basis for this company.