Dec 7, 2006

Watchdog’s Bark Worse than Its Bite

Shell’s weblog reprinted a commentary by Ben Aris, the editor of Business New Europe in which he discusses the recent wave of spats between Rosprirodnadzor, the Russian environmental watchdog, and some high-profile industrial groups. The most illustrious example is the recent finding of environmental negligence in the Sakhalin II project. Russian companies are targeted as well as shows the case of Lukoil whose environmental licenses Rosprirodnadzor questioned in October. As we discussed in an earlier post, “the Sakhalin case has done more than anything to popularize the idea that assaults on companies using environmental laws as a weapon represent a new phenomenon in Russia, but the threat has been present since the Kremlin began its more aggressive industrial policy in 2004.” However, despite the rhetoric, Rosprirodnadzor has not yet followed through on any of its threats. But the memory of Yukos (which did not collapse on environmental grounds but because of Kremlin’s crusade against the socalled tax-optimization schemes) is sure to keep the investors on their toes.

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