Sun, Nov 02, 2003 - Page 1 News List

Yukos struggle tests Putin's presidency

REUTERS , MOSCOW

Russia's prime minister said on Friday he was deeply concerned by the freezing of shares in oil giant Yukos -- the closest any top official has come to publicly criticizing the Kremlin's handling of the crisis.

In its strongest comment since the gunpoint arrest a week ago of Yukos chief Mikhail Khodorkovsky, Russia's richest man, Washington said Russian authorities needed to "dispel concerns that the Yukos case is politically motivated."

"There's always the issue [in] a case like this as to whether it's a single event or whether it has some sweeping implication for the rule of law in Russia," State Department spokesman Richard Boucher said.

The escalating confrontation between the Kremlin and Yukos has presented Russian President Vladimir Putin with his biggest political and economic crisis in three years in power and raised fears over the future of economic reforms.

Political commentators see it as a drive by Kremlin hawks to quash the political ambitions of Khodorkovsky -- arrested on charges of fraud and tax evasion -- and reassert the state's authority over business.

the prime minister, Mikhail Kasyanov, came the closest of any top official to publicly criticizing the Kremlin's handling of the crisis.

On Thursday, prosecutors froze the major stake in Yukos held by Khodorkovsky and his allies and a top presidential aide quit in protest.

"I will refrain from any assessment but my concern is great," Kasyanov was shown saying on Russia's NTV channel.

Russian markets regained some ground after Putin restated his commitment to a market economy. But shares were still far below their levels before the arrest of Khodorkovsky.

The moves against Yukos have sent shudders of alarm through foreign investors, many of whom come from the US. Boucher called for the case to be "judged fairly and with full regard for due process of law applied in a non-selective fashion."

Hours after the freezing of the Yukos shares, Putin met a group of high-ranking foreign bankers at a lavish Kremlin hall. They said on Friday he had pledged to press ahead with reform, including that of state-owned Gazprom, the world's biggest gas company.

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