In 2003 and 2004 the Russian government deliberately and systematically trashed the Yukos oil company so that the government-owned company Rosneft could acquire its assets at a fraction of their real value. U.S. citizens may have lost $6 to $7 billion in investments in Yukos because of this. How did the U.S. government respond when its citizens' assets were expropriated?
Fecklessly. Anders Aslund of the Peterson Institute explains what happened (US-Russia Economic Relationship: Implications of the Yukos Affair):
On September 27, 2003, three months after the arrest of the Yukos executive Lebedev, President George W. Bush had the following warm words to say about President Putin, after having hosted him at Camp David: “I respect President Putin’s vision for Russia: a country at peace within its borders, with its neighbors and with the world, a country in which democracy and freedom and rule of law thrive.” Not surprisingly, Mr. Putin felt reassured and went ahead with the arrest of Khodorkovsky four weeks later.
Several senior US officials intervened once—in October 2004—but only to express in private messages to Russian counterparts their fears that Russia’s oil production would decline during the then expected Russian confiscation of Yugansk. Instead of condemnation, on October 18, 2004, [then] US Secretary of State Colin Powell uttered his forceful support for Putin: “The Russian people came out of the post-Soviet Union era in a state of total chaos—a great deal of freedom, but it was freedom to steal from the state and President Putin took over and restored a sense of order in the country and moved in a democratic way.” It is difficult to read this statement issued just before the Yugansk confiscation as anything but a tacit approval of the confiscation of billions of dollars of assets, partly held by US funds ad invidviduals.
In the end, President Putin let Yukos be confiscated through arbitrary taxation and kangaroo courts. All the remaining assets of Yukos were sold off last summer in auctions that were biased in favor of Rosneft, which acquired most of the assets cheaply.
The Yukos affair also changed Russia’s economic policy. After all, the accusation against Yukos was that it followed the letter of the new tax code and utilized one of its loopholes. Putin’s program of structural reform came to a screeching halt. The Yukos affair showed the KGB men around Putin that they could seize Russia’s biggest private companies if they just lied. The road to large-scale renationalization through lawless government interference lay open.
President George W. Bush, however, has not wavered in his publicly expressed confidence in Putin. On July 1–2, 2007, Bush honored Putin by inviting him to his father’s summer house in Kennebunkport, Maine. At the ensuing press conference, Bush revealed: “But one thing I’ve found about Vladimir Putin is that he is consistent, transparent, honest and is an easy man to discuss our opportunities and problems with…. I know he’s always telling me the truth.”
In no way has the US government expressed public concern about the confiscation of billions of dollars of bona fide American investments in Yukos shares. No protest against this multibillion dollar confiscation has been apparent.
Aslund also talks about the legal recourse for U.S. shareholders. U.S. shareholders are in a significantly worse position than E.U. shareholders, who can can look for redress under the provisions of bilateral investment treaties with Russia, the provisions of the Energy Charter Treaty of 1994, and through the European Court of Human Rights. None of these venues are available to U.S. citizens. U.S. citizens are generally left to look for securities crimes committed by "relevant Russian companies and individuals in the United States."
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