Russia politics: Quick View - Trial of former economic development minister begins

Content Type
Country Data and Maps
Institution
Economist Intelligence Unit
Abstract
No abstract is available.
Topic
Politics, News Analysis, Forecast, Political stability
Political Geography
Russia

Event

On August 16th the trial of Aleksei Ulyukaev, the former minister of economic development, began. Russian authorities accuse Mr Ulyukaev of asking for a US$2m bribe from Igor Sechin, the chief executive officer of the state oil company, Rosneft.

Analysis

Mr Ulyukaev, then a sitting minister, was arrested in November 2016. He is suspected of having asked for a bribe from Mr Sechin at a BRICS summit in India in 2016 in return for approving Rosneft's purchase of a controlling stake in another oil company, Bashneft. If convicted, Mr Ulyukaev faces up to 15 years in prison.

Before Rosneft acquired a majority stake in Bashneft in late 2016, Bashneft was a fast-growing state-owned oil producer. There had been significant opposition within the government to plans to privatise it. However, the deal went ahead after it was approved by Mr Ulyukaev, and Rosneft now owns a majority stake in Bashneft. Since then, Rosneft has remained a state-owned company, even though an offshore company acquired 19.5% of its capital at the end of 2016.

Mr Ulyukaev is the most high-profile political figure to be put on trial in Russia's recent history. The investigation into him lasted over a year. Vladimir Putin, the Russian president, says he was aware of the investigation from the start, which is not surprising. A series of procedural irregularities, which have been highlighted by Mr Ulyukaev, complicate this highly scrutinised trial, which has sent shockwaves through Russia's business community and political class.

We believe that Mr Ulyukaev will eventually be convicted, and that his trial could be used to divert attention from recent corruption allegations against prominent government figures such as Dmitry Medvedev, the prime minister. Such allegations sparked protests, led by the opposition leader, Aleksei Navalny, in Moscow and 60 other cities in March and June. Russian media have reported that other high-profile figures are under investigation. Furthermore, the trial may be seen as a message from Mr Putin to the rest of the apparatus that disloyalty will be met with criminal prosecution. It also suggests that the government does not intend to undertake systemic institutional reform.

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