Kremlin-Yukos Struggle Has Investors Worried

The struggle pitting Russian President Vladimir Putin's Kremlin against the head of the huge Russian oil company Yukos has analysts and investors concerned about the future of political and economic reform in Russia. Of most concern is the belief among some leading analysts that the methods being used in the case are reminiscent of the Soviet era. In a pre-dawn raid on October 25, Russian secret service agents moved in to arrest Yukos Chief Executive Mikhail Khodorkovsky at gunpoint, while he was on a business trip in Siberia. Mr. Khodorkovsky was flown to Moscow for questioning, and shortly thereafter was charged with seven counts of tax evasion and fraud. The dramatic move against Russia's richest man made him the third senior Yukos official to be arrested since the crisis over Russia's largest oil company erupted four months ago. The dispute began in July with the arrest of major Yukos share-holder Planton Lebedev on theft charges, and a wave of raids on Yukos-affiliated companies by Russian prosecutors. In an escalation of the crisis on Thursday, Russian prosecutors seized a controlling interest in the huge Russian oil company. And President Vladimir Putin's chief of staff, Alexander Voloshin, resigned, amid apparent disagreement over the tactics being used against Mr. Khodorkovsky. Russian business leaders see the government's moves against Yukos executives as a disturbing trend in law enforcement that could lead to a massive redistribution of assets gained during the privatization of the 1990's, and, they say, economic calamity.