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Chrystia Freeland on the Lessons of TNK-BP

Chrystia Freeland of the FT talks to Nightly Business Report about the TNK-BP events in Russia. Steve LeVine also has a blog post worth reading.

JEFF YASTINE: Tonight’s commentator says companies doing business overseas could learn a thing or two from a situation playing out in the Russian oil market. She’s Chrystia Freeland, U.S. managing editor at the “Financial Times.” CHRYSTIA FREELAND, US MANAGING EDITOR, FINANCIAL TIMES: Especially away from home, CEOs tend to be more concerned with profits than with pluralism and the stability of dictatorships can often seem a safer bet than the chaos of young democracies. But the struggle between Russian and British shareholders at TNK-BP (ph), once the flagship western joint venture in the Russian oil sector, is a powerful reminder that the security authoritarian regimes offer is often illusory. Recently, British oil company BP has been under severe pressure from its Russian partners, possibly acting in concert with the Kremlin. The end result could well be a significant dilution of BP’s stake in the Russian company in favor of the Russian shareholders and the Russian state. BP looks to be the injured party in his episode, but it is no innocent abroad. The company triumphantly sealed its deal with TNK in 2003, the year Russian oil baron and oligarch Mikhail Khodorkovsky lost his company and was jailed on politically motivated charges. But BP was confident its Kremlin ties and savvy local comrades would allow it to avoid a similar fate. Now, that no longer seems to be the case and BP is crying foul. Other western oilmen are joining the chorus, like Exxon’s Rex Tillerson, who told a St. Petersburg conference a few days ago that there is no confidence in the rule of law in Russia today. That’s what Russia’s beleaguered political opposition has been warning for the past eight years. It’s high time for western investors to understand that authoritarianism can imperil their rights, too. I’m Chrystia Freeland.