The Russian Oil Giant Yukos - When Business and Politics Collide

Analysts and the business elite in Russia criticized Putin stating that by targeting Yukos, he was risking the country's economic stability. However, according to Lilia Shvetsova, Senior Associate, Carnegie Moscow Center, Putin was ready to take the risk of thrashing investor confidence and the economy for three reasons. She said, "He does not think that this attack is creating problems for Russia's stability. He can see the opinion polls that indicate the majority of the population is opposed to oligarchs. Second, he has been persuaded that this involves more than just economic crimes. And, third, he sees the political ambitions of the old oligarchs as more dangerous for his own position than anything else."

In December 2003, Khodorkovsky's bail plea was denied and his jail stay was extended till March 25, 2004, well beyond the Presidential elections scheduled for March 14. In the same month, Wall Street Journal reported that Group Menatep had agreed to concede Yukos' control to Sibneft to save the merger. Yukos immediately issued a statement denying the news. In January 2004, Alexei Kudrin, Russia's Deputy Prime Minister, announced that the government would reform its tax laws to close the loopholes within the legal framework which were allowing evasion or minimization of taxes...