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Deripaska’s Mediterranean Foothold

The FT is running a report about Oleg Deripaska’s €48.5m investment in an aluminum smelting plant in Montenegro. Things are going so well over, and apparently the group is applying all the political pressure it can muster in order to secure lower utilities rates to make the plant turn a profit. Like several other Russian business initiatives in the Balkans, this one smells fishy:

Mr Deripaska, whose empire spans carmaking and aluminium, has cultivated close ties to the Kremlin and is known for aggressive business tactics. The government claims that the Central European Aluminium Company (CEAC), a subsidiary of Mr Deripaska’s Basic Element, was exerting “political pressure” in a bid for extended electricity subsidies. Russian investments in the Balkans sometimes appear to lack business logic, with tycoons instead bending to fit Moscow’s strategic priorities. The money-losing KAP acquisition stems from “the monstrous combination of awfully rich, but fearful, oligarchs, and a poor but powerful Russian government”, Mr Grahovac said.

Extensive Russian real estate investments could similarly be a front for Moscow to seize a Mediterranean coastal foothold and counter Montenegro’s Nato membership aspirations, western analysts say.But Russian officials say the KAP dispute is Mr Deripaska’s “private matter” – a fairly ordinary problem in a region where new power plants will not be ready in time to avert serious shortages in the next few years.