Marketing Energy Imperialism and State Theft

In the first of a series of posts I plan on doing in regards to Vladimir Putin’s Annual Address to the Federal Assembly (Mark Mackinnon has already blogged about it), I wanted to address a claim that proceeds from the sales of Yukos assets would be dedicated toward the State budget for a housing program. Here is what the President said:

If we wish to move ahead we therefore must find additional sources of financing, at the very least for repairs, and for resolving an issue we cannot delay – that of moving people out of housing that is no longer fit for habitation. It would be amoral for the state to ignore these problems. A country with such big reserves built up through oil and gas revenues cannot accept to see millions of its citizens living in slums. … Of course, the question arises, where will the money come from? First, we have the money. Spending decisions are always just a matter of the choice of priorities at federal and regional level. Second, I have a concrete proposal, namely, to allocate considerable additional revenue to these tasks, including revenue obtained through improved tax collection, from the privatisation of state assets and also, perhaps, from the sale of assets belonging to YUKOS in payment of its debts to the state.

Creating a stronger public housing program is all well and good, but this suggestion that such a program would see a single ruble from the Yukos auctions is a big stretch. Such a claim plays into the “nationalization” myth of Yukos, which works to give the State popular approval to steal because citizens are under the illusion that the public will somehow benefit. The Russian Federation has gone to great lengths to try to legitimize the illegal seizure of Yukos assets, from forcing foreign companies to participate in stage-managed auctions to selling shares of Rosneft on the London Stock Exchange – but the latest whitewash effort by the authorities to claim that proceeds from the Yukos auctions will go into the State budget is the perhaps the most preposterous to date. As an attorney representing Mikhail Khodorkovsky, I challenge the RF to demonstrate where Yukos’ tax payments have gone and where the proceeds of the Rosneft flotation and other sales of Rosneft shares have gone. With this absurd claim, the Russian authorities are trying to don the mantle of public interest and nationalism to cover up the fact that a small group of siloviki insiders are lining their own pockets with these funds. The theft of Yukos hasn’t benefited the Russian people one iota – it only created a new class of oligarchs who enjoy the impunity of working within the Kremlin. That impunity, however, cannot last forever.