Here are parts of an article in the June issue of "Worth", titled 'Up from the ruble' about Putin and Russia.
>>>Putin has pushed a spate of structural reforms through the State Duma, which passed more than 140 bills during its spring session last year. New laws limit judges' immunity from corruption charges and substantially raise their salaries. A Land Code signed into law last fall allows private ownership and free trade of land for the first time since Stalin's rule. Most critical was replacing the convoluted tax code with a simple tax (13% for individuals, 24% for companies), which should help stop the flight of capital out of Russia; an estimated 200 to 300 billion was expatriated in the last decade. ........Standard and Poor's raised Russia's sovereign credit rating five times in the last 16 months and expects to raise it again from B+ to BB- later this year. Putin has also reigned in the oligarchs-- the power brokers in control of Russia's major companies who emerged after the privatization of state-owned properties. they have been put on notice that the government will not tolerate the siphoning off of capital or assets; companies' cash flow must be reinvested in their businesses to to grow revenue and profits. Putin jokes that in return for the oligarchs' embracing the interests of minority shareholders, he lets them keep their jobs.......The best example of the change under Putin is YUKOS, Russia's second largest oil company. In the 1990's, the company was famous for tricks such as barring minority investors from shareholders meetings where management would vote to issue more shares and dilute their holdings.....Then its owner realized that the best way to exploit his companie's sizeable assets was to treat shareholders well. He hired professional managers, instituted GAAP accounting, issued American Depositary Receipts, began paying real dividends, and put minority shareholders on the board.....YUKOS has $4 billion in cash, and no debt......Share prices across the Russian oil sector look cheap compared to their Western counterparts. Russia's major oil companies--Yukos, Lukoil, Surgutneftegas, Tatneft, and Sibneft--trade at roughly $1 dollar per barrel of reserves and $30 per barrel of production, verses $10 and $130 for large integrated oil companies such as Exxonmobil, and BP.....investors can buy shares of the five major oil companies an the US, where they trade over the counter as ADRs.....In March, Putin jump started reform by forcing out the head of the central bank, Viktor Gerashchenko, whom economist Jeffrey Sachs called "the worst central banker in history" the new chief is Sergei Ignatiev, a former deputy finance minister known for honesty and pragmatism. Putin has his critics, who decry his crackdown on Chechnya and his stifleing of the press. Russia, however, is used to strong leaders and autocratic governments, and Putin has a 70% approval rating, which spans both older and younger generations.>>>>>>
I think that Russian oil production is going to offset ANY OPEC/Saudi boycott attempts. The House of Saud will become irrelevant as a economic power, and sink back into the sands. The Russians want to be an economic power, and know which country to emulate, the United States. |
