Royal Dutch Shell Group .com Rotating Header Image

G8 needs to tell Russia to apply the rule of law

By Damian Reece

Last Updated: 1:09am BST 03/07/2008

G8 needs to tell Russia to apply the rule of law

In Russia it’s all war and no peace for BP. The chances of a negotiated settlement in the battle raging over the oil giant’s joint venture, TNK-BP, seem non existent. Whatever Dmitry Medvedev said, on assuming the role of president, about upholding the rule of law now rings hollow.

  • Russian partners bid to remove TNK-BP chief
  • This is why it is crucial that Gordon Brown now bats for Britain (and all Western companies) at the upcoming G8 meeting and explains to Medvedev that now is the time for Moscow to show it is serious about the rule of law in Russia. BP’s experience is a test case for inward investment into Russia and at the moment Medvedev’s administration is failing, a failure that will hurt Russia as much as us in the long run.

    What has been noticeable about this current row is the lack of impact on the BP share price. BP shares are off 5.7pc over 12 months. So the market has been far from spooked about the company’s troubles in Russia, wisely attributing little or marginal value to the business.

    What the joint venture has done, however, is pay the Kremlin $70bn in tax. It’s also been a good payer, coughing up regular revenue for the Russian state. But its performance is at least in part down to a successful (until now) partnership with a Western oil company. Pumping oil, like many industries in Russia, needs partnerships with the West to succeed long term and create value for the Russian state. The Kremlin’s failure to support and protect BP’s interests will only serve to undermine these and future partnerships it badly needs. Not only does it require the West to help develop its industrial infrastructure, it needs the West’s markets for exports. Russia and its natural resources are important to the West, but the West is important to Russia as well.

    Brown has a chance to reassert our stature with Medvedev who must change course and learn that what’s good for the West is also good for Russia.

    [email protected]

    http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/03/ccom103.xml

    This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

    Comments are closed.