Al Breach is the chief economist at the investment bank Brunswick UBS in Moscow and one of the most highly regarded analysts of the Russian economy. "Yukos was the big one for us in the markets. No question," he told RFE/RL. "[The government] ended up hurting minority investors very substantially, along with [the company's] core investors."
Breach's business is to advise investors -- including many foreign investors -- on which Russian companies and stocks to buy. Breach and his customers saw the price of Yukos shares on the stock exchange fall from 15 dollars to essentially zero in a matter of months.
Private investors lost billions of dollars and, understandably, they are reluctant to risk another Yukos.
The chill is seen in recent data on foreign investment. This week, the Russian statistical office said direct foreign investment in Russia in 2004 fell to $6.6 billion -- down from $7.5 billion the previous year. That number could be even lower this year.
The Russian government justified its action against Yukos in legal terms, arguing the company failed to pay taxes for several years. Officials said the forced sale of Yukos's main asset, Yuganskneftegaz, was needed to pay those arrears.
Yukos's owners, on the other hand, contend that the forced sale of Yuganskneftegaz was illegal and that the action was politically motivated to punish Yukos's founder, Mikhail Khodorkovskii. They have mounted a legal challenge and have promised a lifetime of litigation to any company taking part in the sell-off.
Yuganskneftegaz eventually was purchased by state oil company Rosneft, giving rise to speculation the government was reversing privatization and renationalizing companies in key industries like oil and gas.
Breach says Russia's economy is still growing quickly -- at more than 7 percent a year -- and is advising investors not to give up on Russia altogether.
"We advise people not to panic [and] sell [their Russian holdings], not to give up on the place," Breach says. "This is a very sensible place to be putting a substantial part of money going forward. But one should be a little more [cautious]. There's less 'blue sky' and less room for upside than there was. And one should be a little more cautious and not have as much [invested] here as we used to be advising."
Russia got an unexpected boost at the start of the month from the New York-based ratings company Standard & Poor's, known as S&P. The company's job is to evaluate the risks of investing in countries and companies.
S&P recently upgraded its investment opinion of Russia -- citing the country's dramatically improved fiscal situation.
"The decision [to upgrade Russia] was really supported by recent significant improvements in the government debt level and external liquidity, and reflecting very high oil prices and also prudent fiscal and debt management," Helena Hessel, an analyst for S&P, tells RFE/RL. "Russia's government fiscal balance sheet [and] also its external balance sheet strengthened in a very significant way in 2004."
She concedes, though, that a future upgrade is unlikely anytime soon, owing to what she calls Russia's ongoing "political risk," including the risk of government intervention in the economy as with Yukos.
"It is something that does not take place immediately," she says. "It is much easier [for the country] to destroy its image among foreign investors by the Yukos affair than kind of improve it immediately."
The question for investors now is whether Yukos remains an isolated incident or whether other companies will eventually be seized and gutted.
Breach rejects the contention the Russian state wants to renationalize key companies, but admits that he, too, has no idea what the government is planning.
"What is the likelihood of another [Yukos]? Frankly, I haven't got a clue," he says. "But we think it's unlikely that another [Yukos] is going to happen in the shorter term because of the politics and, furthermore, it's unlikely that another person is going to challenge the administration as hard as Khodorkovskii did."
Breach says he's confident officials recognize the important role foreign capital and investment will have to play in Russia's development.