THE GAS SECRETS NON-DISCLOSURE AGREEMENT

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Russia has jobs for Gerhard Schroeder and Don Evans

The business interests established around President Putin are starting to resemble a holding company that might be provisionally described as Russia Inc. It seems to be preparing for a powerful and qualitative breakthrough – entering international markets, and becoming more like a transnational corporation.


The business interests established around President Putin are starting to resemble a holding company that might be provisionally described as Russia Inc. It seems to be preparing for a powerful and qualitative breakthrough – entering international markets, and becoming more like a transnational corporation. The lobbying powers of the head of state himself have been used to promote the gas pipeline to Europe project.

The Russian political elite has become more pragmatic than it used to be in the Yeltsin era. Boris Yeltsin had good relations with many world leaders. But what did he gain from these relationships? Nothing at all. Vladimir Putin has good relations as well, but with a practical point of view. For instance, his friend Gerhard (Schroeder) arranged things in the respect of a gas pipeline on the bottom of the Baltic Sea for Russia and Germany, and got fixed in a job in the company which would construct it. It is well known, that gas for Russia is Gazprom, while Gazprom is a business of the President’s friends. At the same time, former US Commerce Secretary Don Evans, a friend of George W. Bush, is being courted by Rosneft, which played a notorious role in the takeover of YUKOS, to replace Igor Sechin, a friend of Vladimir Putin, who is also a good friend of Bush.

The only things that matters is that in the West they do not understand such informal relationships. In Russia, it’s acceptable for a senior state official to find a job in a related industry after leaving office. Besides, the situation when a man who gained some profit for his country converts some part of that into his own personal gain, is not condemned by society.

Still, in the West it is believed that state officials are guilty of a crime even if they make everyone happy and steal only 10%. Officials must not profit from their political activities. This is not a mindset. It’s axiomatic.

Schroeder was perfectly aware fo that. Otherwise, official representative of the government Bela Anda and Secretary General of SDPD Claus Uwe Benneter did not refuted fervently the possible job placement of Herr Gerhard to the structures of Gazprom, using such terms as “shameless speculation” and “bad rumors.” These are speeches of those who are really accused of something awful. Their motives could be easily explained: it the truth had been in the light at that time, the “pact of Putin-Schroeder” would not probably have taken place. Now, the scandal happened post factum. And one would not be able to bring an action against Schroeder, since his actions (from the point of view of the Western mentality) are amoral, but rather legal.

In a word, it is clear what Herr Gerhard needed that for: he got a good job, having swindled both his voters and, probably, new employers. It is unclear, however, whether his new image would be good for him or not.

Another question is more relevant: how does Russia Inc. stand to benefit from this?

Version one, coinciding with the official one: Gazprom hopes to use the former Bundeschancellor as the lobbyist of its interests in the European Union. They could not even imagine the possible scandal; see above about the discrepancy between the mentalities.

Version two, actively discussed by the merciless German public: Schroeder got such wonderful job not for gas pipeline, but for the German policy in the respect of Russia. That is true – when Schroeder ruled the country, Germany did not criticize us for Chechnya, YUKOS, reduction of democratic liberties etc. The beauty of a political debt is in its payment.

The vital ability of this version depends on whether Mr. Evans would be the chairperson of the board of directors in Rosneft. If so, it is not tactics, it is strategy.

The important people from abroad could be of importance in three connections. First of all, they are the live grant of the fact that megaprojects are really being created. It is more important for Rosneft, which is going to run IPO, i.e. public quoting of shares in the western exchanges, paying attention to its risks in the respect of Yuganskneftegaz. Then, it is not excluded that our officials, not willing to improve their methods of work according to the Western standards, are willing to improve the Western methods according to our ones. What is the main instrument of the state business in Russia? It is the administrative resource. Within the frames of this logic, it would be needed in the foreign activity as well. Though such attempts are doomed, since in the West, despite Russia, there is a layer of a civil society between the state and the business, which, as the scandal around Schroeder demonstrated, has more influence than separate officials.

At last, it is not excluded that top-managers of our state prepare “a reserve airfield” for themselves. Schroeder, in spite of the public obstruction, is still an influential and effective person. In case he could do a favor for both friend Vladimir and colleagues from Gazprom. He could do it that way for them to have a place to stay in case of possible departure from Russia.

One way or another, it’s clear that Russian companies associated with President Putin’s inner circle are trying to enter the international arena. As well as the reaction of tearing away that it has produced in the West. But, judging by the feelings, this attempt is apparently not the last one. Who knows how many Western officials would have to vindicate themselves before the voters?

Andrei Movchan, president of Renaissance Capital Asset Management:

Schroeder headed the construction of the North Europe Gas pipeline for to lobby Russian interests in this project, who needed man having much influence in Germany. Schroeder would have to arrange things about contracts, prices of gas pumping, sort out problems with environmentalists, and so on. Schroeder will have to solve problems that can only be handled by a good lobbyist. And he is a good lobbyist.

He is still one of the most influential political figures in Europe, and one cannot exclude the situation of his being the Chancellor again. Even Poland would have to settle accounts with Germany, which turned out to be in unprofitable satiation; besides, Schroeder has been a good friend of Warsaw.

It is a logical story for Russia, and very logical from the point of view of Schroeder. One must not think that he is interested in money only. Schroeder is interested in cheap Russian gas for Germany – to become history and return to the politics at the expense of a bargain of the century, which is compared by the fall of the Berlin wall by some people.

Evans is being recruited to ensure that the IPO of Rosneft, planned for 2006, will go smoothly.

Rosneft is a rather complicated company from the structural point of view and it is treated in the West variously as a result of both its state membership and its history. Evans must convince the West that everything goes fine and that this state corporation accepts the rules of the game written by the civilized world. But I don’t think that even such a man as Evans would be able to change something in the management system of Rosneft, turn it to the market system and provide the reputation of a market player. Such could be achieved only at the expense of coordinated work of the company’s management. One could hardly speak about the scale arrival of influential foreigners to the Russian politics and business. There are not much bug state companies left in this country. For instance, two such giants as Alrosa and Rosenergoatom do not need the lobbyists from abroad, since these are closed companies, which are monopolists in their markets. But if a state metallurgy company would be established – everything goes towards it – than a famous, for instance, American could enter the board of directors. The interests of such company would much depend on the US attitude towards it. But these are separate precedents, dictated by the common sense, but not a global trend.

Russian officials must understand that figures of the Schroeder and Evans’ level would not lobby interests of some concrete figure, not depending on their chair in Russia. They treat their reputations seriously and would not let Russian projects do any harm in the West.

Valery Nesterov, analyst at Troika Dialog:

Very risky business activities and politics are always linked. It is good that they are linked – the project seems to have future. But the point is that it is profitable for Russia. Among our neighbors it is rather disputable, and the political support would provide initiators and promoters of the project with confidence.

Is it worth paying much money for that? The salary level mentioned in the media is on a par with the salaries of senior executives in transnational oil corporations.

In my opinion, he was a good Chancellor for Germany, and there is nothing supernatural in his new job. And our President would find a good job as well after 2008.

I think that the desire to blame Schroeder is connected with the political struggle around the project. The figure of Schroeder is bad for our Baltic neighbors and Polish, since it weakens their positions in this respect.

As for the possible arrival of Evans to Rosneft, this is a pure speculation at present. Another speculation – Surgutneftegaz purchases Rosneft. No place for Evans at all.

Overall, presence of foreign executives in the Russian oil industry has many positive effects. If a company wants to get high investment rating, attract foreign investments, and run international expansion – the presence of foreign managers would do only good. You shall see, both Gazprom and Rosneft would operate in many countries soon.

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