Russia’s First Major Political Arrest in Decades
Russia’s Minister of Economic Development, Alexey Ulyukaev, was arrested early on Tuesday morning on charges of taking a $2.0-million bribe. The minister received the money in return for assurances that his ministry would back an agreement with a major oil company.
Specifically, Ulyukaev promised to offer a favorable opinion on the deal that saw Rosneft acquire a 50% stake in Bashneft (a $5.0-billion deal), according to Russian investigators.
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Rosneft and Bashneft are both Russian oil companies, but Rosneft is state-controlled and has close ties to the Kremlin. The 60-year-old Ulyukaev has been a minister in the Dmitry Anatolyevich Medvedev government since June 2013.
It is significant that Ulyukaev is the first sitting Russian government official to have been arrested since a failed coup against then-President Mikhail Gorbachev in 1991. Meanwhile, oil prices were rising as Brent Crude gained $0.73. Oil was trading at $45.16 per barrel as the Organization of the Petroleum Exporting Countries (OPEC) production cuts were on the agenda again. That’s most likely what caused Russian markets to move up. (Source: “Russian ruble, stocks higher after Economy Minister arrest,” RT, November 15, 2016.)
Russia’s Presidential Press Secretary Dmitry Peskov appeared surprised. He told reporters that he did not know whether President Vladimir Putin had been informed of the incident, given the early hour. But the details reached the media at lightning speed, which is unusual.
The minister was caught red-handed while receiving the $2.0-million bribe. Uliukaev was under investigation for a year, and the arrest was an entrapment, set up by the Federal Security Service of the Russian Federation (FSB) agents, which is something akin to the U.S. Federal Bureau of Investigation (FBI). The minister now faces up to 15 years in prison. Uliukaev has earned the reputation of being a strong free-market proponent, and he had expressed skepticism about Russia’s economic performance.
But corruption is not unusual, and the arrest might signal more of an internal political conflict than a new crusade against bribe-taking. Still, Putin had preferred to keep a pro-free market economic core of ministers, and the arrest might not have had his approval. It could be a coincidence, but the minister was arrested a few hours after Putin spoke to U.S. President-elect Donald Trump on the phone.
