From Russia With Greed

No matter what settlements British Petroleum eventually pays for the 2010 oil spill, BP’s problems in the US seem a mere skirmish compared to the losing war it has been waging in Russia for the last several years. In 2007, a BP executive admonished me for telling an audience that Russia would seize the company’s Kovykta gas field. Allegedly BP’s negotiations with the Russian government were truly serious and progressing well. I replied that having studied Russia for thirty years I knew my market. Two weeks later, BP announced it was surrendering Kovykta to a new firm created out of TNK-BP, its joint venture with Moscow. In 2008, the British head of TNK-BP, Robert Dudley, now CEO of BP, had to flee Moscow lest he be arrested after Russian police raided the company and arrested an analyst on charges of industrial espionage. Thus Mikhail Khodorkovsky’s travails, though more serious, are hardly uncommon; nor is Russia’s theft of his Yukos Corporation unusual. Rather these cases are of a piece with Russia’s never-ending game with BP, and the predatory personality this conflict reveals. Russia wins, but the price of victory is high: despotism, backwardness, underinvestment, capital flight, and the discrediting of President Medvedev’s calls for reform.