Why Was Russia’s Economic Minister Just Put on Trial?

If Russia is cracking down on corruption, apparently no one warned Alexei Ulyukayev. On Tuesday, Moscow’s anti-corruption Investigative Committee charged Ulyukayev, the government’s economy minister, with attempting to take bribes to approve a major oil company acquisition deal. But as with many high-profile arrests in Russia, there’s a lot more to the story beneath the state-run media headlines.

The Investigative Committee charged Ulyukayev with corruption after he “threatened” to create obstacles for one state-owned oil company, Rosneft, to acquire a 50 percent stake in another, Bashneft, unless he was paid a $2 million bribe. The Rosneft-Bashneft deal sparked a turf war between rivaling factions in Russia before Ulyukayev’s arrest, one source told Reuters.

Ulyukayev and economic liberals close to Prime Minister Dmitry Medvedev initially opposed the acquisition. Meanwhile, Igor Sechin, CEO of Rosneft and close Putin ally, fiercely lobbied for it. In October, Sechin’s faction won the power struggle. The government hoped the $5 billion deal could help tackle Moscow’s burgeoning budget deficit amid a recession fueled by the global oil price glut and Western sanctions.

Some Kremlin watchers are already questioning Ulyukayev’s guilt. Putin has a habit of consolidating power through high-profile arrests and prosecutions, as Mikhail Khodorkovsky (who, for the record, does not believe that Ulyukayev would solicit a bribe from Sechin) and Alexei Navalny know all too well. Ulyukayev could well be the latest in a long line of Russian power brokers to fall victim to Putin’s predilection for making a point through arrest.

“Putin’s logic in arresting the loyal and high-ranking Ulyukayev was to demonstrate his power over all government officials. The overnight arrest of a minister lets everyone know that anything can happen at any time,” Grigory Yavlinsky, leader of liberal opposition party Yabloko, told Russian radio station Ekho Moskvy.

“You would have to be crazy to threaten Rosneft and extract a $2 million bribe from Igor Sechin, one of the most influential people in this country, a month after the deal was given legal and political clearance,” Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs said, told Business FM Radio.

It is unclear if the arrest is meant to pave the way for the next stage of the privatization of Rosneft, or if it is a behind-the-scenes admission that the Russian economy is hurting and not likely to soon get better, or it’s a power play for the position of prime minister, or even if it’s simply to keep government ministers on their proverbial toes.

What is clear is that the trial is taking place on Tuesday. Prosecutors have apparently asked for the economy minister to be kept under house arrest during the trial. Ulyukayev could face up to 15 years in prison if found guilty. He is the highest-ranking official the state has detained since the dissolution of the Soviet Union — and, per Moscow-based journalist Joshua Yaffa, the first serving minister to be arrested since Lavrentiy Beria in 1953.

Photo credit: VASILY MAXIMOV/AFP/Getty Images