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Last Updated: Friday, 31 October, 2003, 17:21 GMT
Russian PM wades into Yukos affair
Russian Prime Minister Mikhail Kasyanov
Mr Kasyanov is a veteran politician who rose to power in the Yeltsin era
Russian Prime Minister Mikhail Kasyanov has said he is "deeply concerned" about the crisis enveloping national oil giant Yukos, which is pitting big business against the Kremlin.

It is being viewed as criticism at the highest level yet of actions that have seen Russian prosecutors freeze almost half the shares in Yukos and imprison its chief executive.

A BBC correspondent in Moscow said Mr Kasyanov appeared to have ignored a direct warning from President Putin to stay out of the affair.

Many Russians believe the case against Yukos boss Mikhail Khodorkovsky, thought to be Russia's richest man, is politically motivated.

He has funded opposition groups, breaking what analysts say was a tacit agreement to stay out of politics in return for avoiding investigation of his financial affairs.

It will take a huge stroke of leadership [for Mr Putin] to repair the damage
Andrew Kuchins, director, Carnegie Moscow Centre
Some analysts say the move against Mr Khodorkovsky and Yukos has created the biggest political and economic crisis of Mr Putin's three years in office.

Investors are reassessing Mr Putin's credentials as manager of one of the world's largest emerging economies while political commentators are interpreting the action as a drive by Kremlin hardliners to suppress political dissent.

"He's gone pretty far in tarnishing his reputation," said Andrew Kuchins, director of the Carnegie Moscow Centre think-tank.

"It's not beyond the realm of possibility that he turns this around, but it will take a huge stroke of leadership to repair the damage."

Veteran

Mr Kasyanov said the Yukos share freeze was "a new phenomenon, the consequences of which are hard to assess".

The comments come amid speculation that the prime minister's own position may ultimately be under threat.

Mr Kasyanov is a veteran of Russian politics, having risen to power under former president Boris Yeltsin in the climate that saw Yukos and other lucrative assets privatised in murky circumstances.

Mr Putin's chief of staff Alexander Voloshin, a fellow Yeltsin-era appointee, was replaced on Thursday.

Reports said he had resigned the previous day, angry at the judicial campaign against Yukos.

There were also strong words from Anatoly Chubais, another powerful figure in Russia, who runs the country's energy monopoly.

He warned on Friday that recent events could be interpreted as a change of course.

Unfrozen

Meanwhile, foreign advisers to Yukos said they were planning to lobby Western governments on the firm's behalf.

According to Stuart Eizenstat, ex-US Deputy Treasury Secretary and member of the International Advisory Board to the company that controls Yukos, the board members are preparing to use their influence in Washington, London and Berlin to push for support for Yukos.

"We do not see any justifiable legal basis" for the Kremlin's actions, he told BBC News Online.

"We are each trying to activate our respective governments."

Among his fellow board members are a former German economics minister and a British ex-MP.

Russian prosecutors on Friday lifted the freeze on some of the blocked shares.

The unfrozen shares - amounting to about 2% of Yukos, or 4.5% of the 44% that was earlier frozen - are said by prosecutors to belong to individuals unrelated to the fraud and tax evasion case against Mr Khodorkovsky and key allies.

Trading in Yukos shares remained volatile, while the wider stock market and the rouble steadied.

Yukos shares closed 7.5% higher, clawing back some of Thursday's losses.

'Crackdown'

According to Mr Eizenstat, Yukos' foreign advisers discussed the situation on the phone on Wednesday and members expressed "grave concern" about what was happening both to Yukos and to Russia.

Yukos chief Mikhail Khodorkovsky

"This is part and parcel of a broader crackdown" threatening Russian business and democracy and attacking the rule of law, he told BBC News Online.

"It runs the risk of harming the Russian economy, dampening enthusiasm for foreign investment and raising questions about whether it is safe to do business in Russia."

There are also human rights questions, he said, which the board was hoping to raise with United Nations and European bodies.

Russia's leading business newspaper, Vedemosti, said in an editorial: "The president should open his eyes and finally discover that prosecutors are destroying in one day what took years to create.

"Business can react to such a development only by shutting down."


WATCH AND LISTEN
The BBC's James Ingham
"This is threatening to turn into a major crisis for President Putin"



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