VILNIUS - As the fate of Russia's largest oil company Yukos hangs in the air, Lithuanian officials are adopting a tactical wait-and-see policy on whether to take action in defending Mazeikiu Nafta, the country's oil refinery and largest enterprise that is majority owned by Yukos.
Yukos shares plunged in the first week of July after a Russian court overturned the oil company's appeal on July 1 against the government's demands that it turn over $3.4 billion in allegedly unpaid taxes for 2000. Since the decision, agents of the court have ransacked Yukos' corporate headquarters, and a consortium of banks has warned Yukos of an imminent default on $1 billion in loans.
Worse, the Russian tax authorities have threatened to slap Yukos with yet another mammoth tax bill for 2001.
When The Baltic Times went to press, an asset sale of the oil company seemed likely. As Russian Finance Minister Aleksei Kudrin said on July 9, "The shareholders and management of Yukos have assets they could sell to cover the tax liability. The sale of these assets may take some time, but this is allowed for by legislation."
Also, Justice Minister Yury Chaika said that task forces on collecting the back taxes and selling assets have been created in "every region where the subsidiaries of this oil company are located."
Meanwhile, in Lithuania officials have decided to wait out the drama across the border before deciding what action to take vis-a-vis Mazeikiu Nafta.
According to Saulius Specius, Prime Minister Algirdas Brazauskas' adviser who oversees Mazeikiu Nafta affairs, the government's plan is to allow the often-confusing events in Moscow to work themselves out, while Vilnius devises contingency plans for every possible outcome.
"We have worked on a number of contingency plans that have now been prepared. Other than that, we will wait until we see the results of the situation," he said.
Of primary concern to many Lithuanians is the possibility that Mazeikiu Nafta, one of the country's most strategic enterprises, will fall directly into the hands of the Russian government.
Conflicting reports from Moscow have raised the possibility that if Yukos does not reach a settlement with prosecutors or if banks press the company to pay back loans, the government could seize Yukos and make it a state-controlled object.
While some have argued that the Lithuanian government should intervene to keep Mazeikiu Nafta out of the Kremlin's hands, the prime minister's office is sticking to its stoical course, discarding calls for a possible - yet costly - buyback of Yukos' 53 percent controlling stake.
"What would really change if the Russian government took over Yukos? Our interest is that Mazeikiu Nafta should be controlled by an entity that will make sure that oil keeps flowing through the facility," said Specius.
Analysts from the business community agreed that, while seemingly unpatriotic, the government's strategy was the most rational option available for the time being.
"Perhaps my opinion isn't popular, but I think the government is doing exactly the right thing," said Remigijus Simasius of the Lithuanian Free Market Institute. "The government has to do what's best for Mazeikiu Nafta, and right now there isn't enough information to do anything. And while there is danger that the Russian government may take control, the Lithuanian government taking control wouldn't necessarily be any better."
"Let's remember what a poor job they did before Mazeikiu Nafta was privatized." Simasius added.
Mazeikiu Nafta's troubled history and its uncertain past are quickly propelling it toward the top of the public agenda at a politically sensitive time for Lithuania.
President Valdas Adamkus, who was sworn into office for the second time on July 12, oversaw the botched Mazeikiu Nafta sell-off in 1999 to the American petroleum firm Williams International. After failing to make a profit on the oil refinery, Williams handed it over to Yukos, much to the dismay of Lithuanians who wanted a Western owner for the facility.
Despite the swelling pressure on politicians to take more drastic action on forcing the government's hand, representatives of the ruling coalition are towing the government's line on Mazeikiu Nafta.
"The most we can do at this point is observe," said MP Vaclovas Karbauskis, chairman of the economy committee in the Seimas (Lithuania's parliament). "When things become clearer, then we will decide if there is anything we can or should do."
