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    Friday, May 11, 2007

    The Kremlin's man comes to Canada - next stop Detroit?

    So Oleg Deripaska is making a $1.54-billion investment in Canadian auto parts giant Magna International. The Globe and Mail reports today on how buying into Magma could be a backdoor way for the oligarch to gain control of American auto giant DaimlerChrysler.

    While there's nothing inherently sinister about that, it's worth noting that Deripaska is seen as the closest to the Kremlin of Russia's remaining oligarchs, largely because he often does the president's bidding. The Globe also reports on how Magma boss Franch Stronach met with President Vladimir Putin before agreeing to the deal.

    Unlike his fellow billionaires Vladimir Gusinsky, Boris Berezovsky and Mikhail Khodorkovsky, Deripaska followed the "stay out of politics" warning Putin delivered to the oligarchs after he was first elected in 2000. Those who tested the new president soon wound up either in exile (Gusinsky, Berezovsky) or in a Siberian labour camp (Khodorkovsky). But Deripaska played by the new Kremlin's rules and emerged, by some counts, as Russia's richest man.

    It probably doesn't hurt that Deripaska is married into the family (often referred to as The Family, with all the mafiaesque implications intended) of former president Boris Yeltsin. But he's also played it smart, pandering to the current occupants of the Kremlin by investing in a way meant to please. Most obsequiously, his holding company last year poured $800-million into a sports complex near Russia's Black Sea resort of Sochi.

    If Sochi wins its bid to host the 2014 Winter Olympics, that might look like a smart investment. Otherwise, it's $800-million down the drain of appeasing the Kremlin, which in Russia is a smart investment anyway.

    The Magna investment is also likely to cheer the president. Consider Putin's Feb. 7 address to the Russian Union of Industrialists and Entrepreneurs (effectively the oligarchs' club): "The time has come to expand the participation of our enterprises in international cooperation and the realization of serious commercial initiatives abroad," he told them at a meeting inside the Kremlin walls.

    In other words, let's start using our new economic clout to increase our political influence in other countries. While he warned his audience not to use words like "conquer" or "expansion" when speaking of foreign markets, lest it frighten the locals into thinking the Russians are up to something, Putin said that "it goes without saying that the diversification of the Russian industry is becoming one of our main and common economic priorities."

    Almost three months to the day later, the deferential Deripaska has already delivered. If you're a Russian oligarch who acquired your money in a shady fashion in the 1990s, doing what the president asks of you is the smartest way to stay out of jail.

    1 comment:

    Russian said...

    Do you think you are smarter than Frank?