U.S. puts pressure on Putin over oil

MOSCOW -- Alarmed by record-high election-year oil prices, President Bush in recent days has sent repeated appeals through intermediaries to the man he calls "my good friend," President Vladimir Putin, asking him to calm the politically charged crisis surrounding Russia's giant Yukos Oil Co. in the interest of settling down world energy markets.

The Putin government's effort to seize control of Russia's giant Yukos Oil Co., which pumps 2 percent of the world's crude supply, has helped drive international oil prices to record highs in recent weeks, exacerbating economic anxiety in the United States just 80 days before the Nov. 2 presidential election.

National security adviser Condoleezza Rice telephoned Putin's chief of staff last weekend to express concern over the case's impact on international markets. The State Department on Thursday publicly called on Russia to put aside internal "political considerations" to resolve the Yukos matter. Energy Secretary Spencer Abraham called his Russian counterpart Friday to reinforce the message, and Commerce Secretary Donald Evans planned to do the same, officials said.

"Obviously from our standpoint the market seems to respond to any kind of bad news and hardly ever to good news," said a senior U.S. administration official, who spoke on condition of anonymity because it is not his job to brief reporters. "So to the extent they can help remedy this situation, that's good for the market."

It was unclear what if any impact the American calls were having. Putin has made no comment about Yukos in two months, and his staff has said nothing publicly about the calls by Rice and Abrahams.

Russia's oil-dependent economy is enjoying immediate benefits from the current $45-a-barrel prices, but the country also faces substantial losses if Yukos shuts down production because of the government's freeze on company bank accounts.

Russian Federal Energy Agency Director Sergei Oganesyan told reporters this week that a Yukos shutdown would have drastic consequences and said he was trying to persuade the government leadership to unfreeze the accounts

U.S. officials said they weren't trying to interfere in the legal cases against oil baron Mikhail Khodorkovsky and his company but expressed concern about the conduct of the matters. "In our view the appearance of a lack of due process and threat to private property rights have resulted in both the Russian and the international business communities being on their guard," State Department spokesman J. Adam Ereli said Thursday.

The concern in Washington underscored the global impact of the battle over Yukos. "It affects everybody in the world now. It's no longer just about (Putin) and Khodorkovsky," said William Browder, chief executive officer of Hermitage Capital Management and a leading American investor in Russia.

Other factors are also pushing prices up. Instability in Iraq, soaring demand in China and a national referendum in Venezuela to be held Sunday have all fueled the uncertainty. But Yukos alone pumps 1.7 million barrels of oil a day, the same amount that Venezuela provides the United States and nearly as much as Iraq produces when its pipelines are operating.

In the Russian case, Bush finds himself at odds with one of his closer overseas allies. Bush has held out his relationship with Putin as a signal achievement of his foreign policy, declaring after their first meeting that he had gotten "a sense of his soul." Their division over the war in Iraq was short-lived, rarely personalized and quickly papered over.

But Khodorkovsky's arrest by masked Russian agents last October troubled many U.S. officials, who saw it as selective justice against a political rival to the Kremlin. The escalating legal attack on Yukos this summer has pushed the matter onto Washington's agenda because of its impact on world oil prices.

"There is an irony and there is a paradox" that Bush's friend Putin would be causing problems for the American president, said Tatyana Parkhalina, director of the Center for European Security Problems, a Moscow research organization. But Parkhalina doubted that Putin would back off just to help Bush. "He will listen, of course, but he will behave as he thinks is right for Russia. Frankly, I don't think Mr. Putin will change his approach toward the Yukos affair."

U.S. involvement could stir resentment in the Kremlin. "All kinds of declarations concerning internal affairs are not welcomed, and from time to time this creates problems for the image of the United States," said Yevgeny Kozhokin, director of Russia's Institute for Strategic Studies.

Although Democratic nominee John F. Kerry once said that many foreign leaders were privately rooting for him, many analysts here feel that Putin would not be one of them. He has built a constructive working relationship with Bush and privately his advisers say they want to preserve that.

In the view of the Russian political establishment, Republicans have a more pragmatic approach to Moscow than Democrats, unburdened by moralism over human right abuses, the crackdown on independent media or the war in Chechnya.

"Under the political circumstances now, Republicans are practical to the level of cynicism and take care of geopolitical interests and make more convenient partners than Democrats, who care more about freedom, rights, etc.," said Sergei Karaganov, chairman of Moscow's Council on Foreign and Defense Policy and an adviser to the Kremlin.

Putin does not express such sentiments publicly, but twice lately has made statements that appeared designed to bolster Bush against Kerry.

During this year's annual summit of leaders from the Group of Eight industrialized nations, held on Sea Island, Georgia, the Russian president rose to Bush's defense against Democratic criticism of the war in Iraq, even though Russia had opposed it. The Democrats, Putin said, "don't have any kind of moral right" to criticize Bush since "they conducted exactly the same kind of policy in Yugoslavia," a reference to the NATO alliance's 1999 bombing campaign there.

A few days later, as Bush was being accused of exaggerating the ties between deposed President Saddam Hussein's Iraq and Osama bin Laden's al-Qaida, Putin jumped into the debate again. He told reporters in Kazakhstan that after Sept. 11, 2001, Russian intelligence agencies gave the Americans "information to the effect that the official bodies of Saddam's regime were preparing acts of terrorism" against the United States.

The second statement was "probably the best thing an international leader could say to assist Bush without seeming too straightforward," said Boris Makarenko, an analyst at Moscow's Center for Political Technologies, a private study organization.

Putin has been less forthcoming with energy aid. Although he and Bush heralded a new "energy dialogue" in 2002 intended to bring the world's largest oil importer together with the world's second- largest oil exporter, officials on both sides acknowledge that the dialogue has stalled.

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