The resignation of Kremlin chief of staff Aleksandr Voloshin was announced this morning in Moscow amid a deepening crisis around the Yukos oil giant. Yesterday, the Prosecutor-General's Office froze a controlling stake of Yukos shares, unsettling markets and investors.
Moscow, 31 October 2003 (RFE/RL) -- The Yukos crisis has taken another dramatic turn as Russian investigators froze a major stake of the oil giant's shares, shocking the market just hours before the Kremlin announced it had accepted the resignation of its pro-business presidential chief of staff Aleksandr Voloshin.
Reports indicate that Voloshin offered his resignation on 25 October in apparent protest over the arrest that day of Yukos boss Mikhail Khodorkovskii on tax evasion and fraud charges. It is unclear whether Voloshin meant his resignation as a last-ditch attempt to wrestle a compromise out of the Kremlin over Yukos, or if he was simply throwing in the towel.
Voloshin will be replaced by moderate Dmitrii Medvedev, the first deputy chief of staff and the chairman of the Russian natural gas giant Gazprom.
The step triggered an 8.1 percent fall in the RTS Russian stock index, and shares for both Yukos and its smaller partner Sibneft plunged.
Natalya Vishnyakova, a spokeswoman for the Prosecutor-General's Office, tried to calm market fears over the move when she spoke about the seized assets.
"The shares remain in the accounts of the bank trust and the seized shares are only those [belonging to] those who have criminal charges against them, such as Mikhail Khodorkovskii and [Yukos shareholder] Platon Lebedev [who was arrested in July]. The shares of other investors are not subject to seizure," Vishnyakova said.
Alexei Gerasyuk, a spokesman for the Moscow Currency Exchange, spoke with journalists today about the market's fall and recovery today.
"Yesterday, there was a fall of about 30 percent for Yukos shares and 30.5 percent for Sibneft shares. The same goes for the main blue chips. Our index fell about 10 percent, and this reflects the situation on the Russian market. But today the market started with a correction and the index for that period of time grew about 3.5 percent. Yukos and Sibneft shares grew about 5 percent from the previous day," Gerasyuk said.
Most analysts view Voloshin's departure as a defeat for the oligarchs -- those who acquired riches and power thanks to the lenient economic policies of former President Boris Yeltsin -- and a victory for the so-called siloviki, former colleagues from Russian President Vladimir Putin's days in the security service who believe in a strong state. They are suspected of wanting to acquire more direct control over large private businesses in Russia.
When the Prosecutor-General's Office confirmed last night that it had frozen Yukos assets, it looked like a step in exactly that direction.
Erik Wiegertz is deputy chief analyst for the UFG investment fund. He says it's not as bad as it looks. "It's not like assets are being confiscated. As crude as it is, it is following some sort of legal path here."
Wiegertz says the frozen shares cannot be sold, a fact which may put an end to Yukos's reported negotiations with a large-scale foreign shareholder.
"The main practical implication [the share freeze] has is that in order to sell a stake of their shares in Yukos to Exxon Mobil, those plans have probably been put on ice [postponed] now, because you can't do any transactions with shares that are frozen," Wiegertz said.
Yukos spokesman Aleksandr Shadrin and the Prosecutor-General's Office both appear to agree that the owners of the impounded shares will keep their voting rights and still receive dividends.
The freeze fueled growing concern among foreign investors, with Standard and Poor's saying it has placed Yukos' corporate credit rating under review. Russian Prime Minister Mikhail Kasyanov said today he is "deeply concerned" over the move, calling the economic consequences "difficult to predict."
The "Financial Times" quotes an unnamed investment baker who said that all merger and acquisition projects with Russia have been "put on ice."
But Russian markets recovered today after plunging yesterday on the Yukos news.
Putin yesterday met with foreign investors, a meeting the Kremlin says had been planned before Khodorkovskii's arrest.
Oleg Martynenko, the head of sales for Alfa Bank, says "Major developments were connected with President Putin's meeting with investors and the fact that Mr. Voloshin, the head of the presidential administration, stepped down. The market considered the meeting as very positive and Putin made very important comments especially on Gazprom and Sberbank. The liberalization of the Gazprom market within a couple of months is considered to be very good news for the market."
According to the "Financial Times," Putin expressed "economically liberal views" and stressed that the arrest "was not an attack on business as a whole." The British daily quotes Igor Sagiryan, president of Renaissance Capital, a Moscow-based investment bank, as saying: "Mr. Putin was very clear that it would be a catastrophe if Yukos fell apart as a company. He said innocent employees and innocent investors should not suffer as a result of the investigation."
Arkady Dvorkovich, a deputy to Economic Development Minister German Gref, expressed what sounds like a warning to foreign investors. He is quoted in "The Moscow Times" as saying "the risk that past sins will be re-examined exists and this risk should be included in all [investment] projects in Russia."
Last week, Deputy Prime Minister Alexey Kudrin also warned that "actions [taken against] Yukos must be lawful. They are affecting the economy."
Concern about developments in Russia are also surfacing abroad.
In Washington, State Department Spokesman Richard Boucher said the United States is concerned about the "rule of law" and what he called the "basic fairness" of the Russian judicial system. The U.S. spokesman said there was not yet enough information available about the Khodorkovskii case to assess whether it was what he called a "selective prosecution."
Earlier this week, the European Union's foreign policy chief, Javier Solana, in an interview with Russian NTV television, called the Yukos crisis "an internal matter" but warned that "Russia could suffer if it appears that the rule of law is not being completely implemented."