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Last Updated: Sunday, 2 November, 2003, 21:01 GMT
Kremlin urges caution on Yukos
Mikhail Khodorkovsky
Mikhail Khodorkovsky is said to be worth $8bn
The Kremlin's new chief of staff has urged Russian prosecutors to weigh up the economic impact of their crackdown on oil giant Yukos.

In an interview on Russian television, Dmitry Medvedev warned that a move last week to freeze nearly half the company's shares could have serious repercussions.

"This is a dangerous thing, as the consequences of measures not fully thought out will have an immediate effect on the economy and cause indignation in politics."

He also questioned whether the share freeze, which unnerved foreign investors and triggered a sharp slump on the Russian stock market, had been "legally effective."

Moderation

Mr Medvedev's comments are likely to stir hopes that the Russian authorities may soften their stance on Yukos.

They echo remarks on Friday by Russian Prime Minister Mikhail Kasyanov, who said he had been "deeply concerned" by the Yukos affair.

Yukos chief executive Mikhail Khodorkovsky

The crackdown began a week ago, when Yukos chief executive Mikhail Khodorkovsky, the most prominent of Russia's super-rich "oligarchs", was arrested on suspicion of tax evasion and fraud.

It is widely assumed that the move was a response to Mr Khodorkovsky's financial support for liberal opposition groups.

Analysts say this broke a tacit agreement to stay out of politics in return for avoiding investigation of his financial affairs.

Mr Khodorkovsky made his fortune in a series of murky privatisation deals during the mid-1990s.

US rebuffed

But Mr Medvedev's conciliatory tone was at odds with the Russian foreign ministry's blunt response to US and German criticism of the Yukos investigation over the weekend.

The US and Germany - Russia's largest trading partner - had sought assurances that the Mr Khodorkovsky's arrest was not politically motivated.

The US State Department spokesman, Richard Boucher, asked Moscow to dispel concerns that the case against Mr Khodorkovsky was of a political nature.

A Russian foreign ministry spokesman said the US criticism was "at the very least, tactless and disrespectful".

Referring to the US statement, the spokesman said it was "a continuation of a notorious policy of double standards".

"I cannot remember the State Department making such statements about other countries in similar cases," the spokesman told Russian television.

Mr Yakovenko accused the US of violating human rights in Iraq and at Guantanamo Bay in Cuba, where hundreds of Taleban and al-Qaeda suspects have been held without trial for more than a year.

Fallout

The head of the Russian parliament's budget committee, Alexander Zhukov, told the BBC on Saturday that, while he was bothered by the Yukos affair, it was unlikely to lead to any wider investigation of Russian businesses.

"The president has already answered that... most likely this will be the only case," he told BBC Radio 4's Today programme.

"It's not going to open up the door to everything."

The BBC's Ian MacWilliam says Mr Putin has sought to play down fears that the case heralds a wider campaign against the "oligarchs" - the small group of super-rich businessmen who grabbed control of the country's most profitable industries during the 1990s privatisations.

But some analysts say the events surrounding Yukos have created the biggest political and economic crisis of Mr Putin's three years in office.

However, the Russian president appears to enjoy widespread public support - at about 73% - according to the latest poll conducted by the VTSIOM opinion research centre across 100 Russian cities and towns.


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