Alaco

18.10.2013 | Political Football

On consecutive days at the end of August, Chelsea FC announced two big-name signings, first the Brazilian midfielder Willian and then Cameroonian striker Samuel Eto’o. Both were acquired from top-flight Russian club Anzhi Makhachkala, and were just two of a number of top players caught in a sudden and frenzied fire sale by Anzhi that raised eyebrows in the world of football journalism.

Just weeks earlier the owner of the Dagestani club, billionaire Suleiman Kerimov, had still been pursuing the high-rolling approach that had put the club on the map after he took it over in 2011.  Admittedly, Anzhi had underwhelmed in the first few games of the season, but there was little credibility to suggestions that the sell-off was part of a rethink by Kerimov of his strategy for the football club.  It did not escape the notice of the footballing press that Kerimov’s business affairs had also dominated the headlines in Russia in the month leading up to the sales.

Trouble in Potash
On 30th July Uralkali, the Russian potash giant that he controls, had made another surprise announcement: that it was unilaterally pulling out of a 2005 agreement with Belarusian state-owned counterpart Belaruskali to channel potash exports through the joint venture BPC.  Global potash prices plummeted following the news – as did Uralkali’s share price.

The move also provoked fury in Minsk, and in late August Kerimov was summoned to a meeting there, together with Uralkali’s CEO Vladislav Baumgertner and its Chairman Aleksandr Voloshin.  Of the three, only Baumgertner travelled to Minsk.  Upon arrival, he was arrested and imprisoned, facing charges of causing more than $100 million of losses to Belaruskali through abuse of office and breach of contract.  Days later, the Belarusian authorities also charged Kerimov and three other senior Uralkali managers in absentia, filing an application with Interpol for an international arrest warrant against Kerimov.  The Western press was awash with suggestions of a new breakdown of relations between Moscow and Minsk.

A Deeper Problem
Kerimov’s decision to slash Anzhi’s annual budget from £116 million to around £40 million almost certainly came from a need to tighten his belt, but it is unlikely to have been necessitated directly by the fall in Uralkali’s share price, which rebounded quickly.   In the longer term there were signs that the company might actually increase its revenues, for instance through the removal of limits on its trading with China. 

In fact, Kerimov’s stake in Uralkali does still face serious uncertainty – as a collateral target in a far more serious struggle for dominance in Russian politics.  Kerimov’s star was firmly in the ascendancy through the Presidency of Dmitry Medvedev.  He was widely seen as a member of a loosely-defined group of business figures from the Caucasus region who received support from the Medvedev team as a counterbalance to the Putin-aligned Siloviki.  Most of Putin’s closer associates favour increased State control over the commercial landscape; and since Putin’s return to the Kremlin in 2012, members of this circle have set about dismantling Medvedev’s reforms.

Despite rumours to the contrary, Medvedev looks likely to remain Prime Minister for some time and is even thought to have set his sights on the 2018 Presidential race.  Those who are keen to see him dislodged have begun working to undermine his support base, launching concerted administrative attacks against the businessmen that he built up during his Presidency, and seeking reallocation of the assets which they secured.  The attacks mounted on Ziyavudin Magomedov’s Summa Group through the first half of 2013 are a well-publicised example, and Kerimov looks to be the new target.

The Belarusian Gambit
The Kremlin has done little to quell media speculation of a renewed spat with Belarus over Uralkali.  On closer inspection, however, condemnation of Baumgertner’s arrest came almost universally from figures connected to Russia’s White House, particularly Medvedev’s Deputies Arkady Dvorkovich and Igor Shuvalov.  Even Izvestia, a renowned Kremlin mouthpiece, acknowledged that the Foreign Ministry’s official response was nothing more than perfunctory, while Putin’s press secretary, Dmitry Peskov, stated that the concerns of “particular corporations or businessmen” would not be prioritised over relations between Russia and its neighbours.  Multiple sources close to the corridors of power have confirmed that relations between the two governments remain positive and productive, and that Minsk’s reaction to the BPC dispute was not only tolerated by Moscow, but appears in fact to have been orchestrated there.  The struggle for control in Moscow, it would seem, is now being played out by proxy.

Of course, financially, it is in Belaruskali’s interests for Uralkali to resume exports through BPC, however it is of little consequence to the former whether its partner remains under the control of Kerimov.  In fact, Lukashenko quipped that he would personally drive Baumgertner to the airport once Kerimov had sold his stake – a clear signal that he supports those Putin associates who are keen to see this profitable and strategically important asset placed in more “suitable” hands.

Kerimov appears resigned to the fact that he will not be able to hold onto his stake in Uralkali.  Commentators suggest that he will have far less control over the timing or price of the sale, or indeed the identity of the buyer, than he would like.  Putin has made it clear that any new owner will be expected to return to BPC.  Various names have been cited as possible buyers, almost exclusively those carrying the Kremlin’s stamp of approval.  The current favourite for many is Vladimir Kogan, a banking figure known to be close to the President.  Kerimov’s stakes in other lucrative assets have so far escaped attention; however his apparent decision to assemble a war chest would seem expedient. 

Some may find irony in the fact that, in the course of this, he has sold two of his star footballers to a team owned by Putin’s purported “favourite oligarch”.