IT HAS taken almost a year of shadow-boxing, farcical court-room antics and downright bullying, but we now know the end-game for Yukos: expropriation and nationalisation. Russia’s biggest company is to be ripped apart and Yugansk, its largest subsidiary — a unit that produces more oil than Iraq — is to be seized by bailiffs and sold quickly at state auction. Assets that have been conservatively valued at $12 billion (£6.4 billion) — the company claims $30 billion — may be shuffled into the pocket of a state-controlled entity to satisfy a $3.4 billion tax bill.

That bill could send bigger bills flying worldwide if the Kremlin’s sledgehammer ends up shutting the Yugansk oil taps. Opec’s immediate spare production capacity is less than one million barrels per day; shutting down Yugansk would remove 1.7 million bpd.

We may be about to witness a state-sanctioned corporate rape. Oddly, there may not be immediate financial consequences. Moscow analysts are tying themselves in knots in damage limitation. They have a huge investment in preserving the Russian bull market and encouraging foreign investment. The emasculation of Yukos and the absorption of its oil production by Gazprom or Rosneft will not necessarily frighten investors, at least not for long. After the initial shock, soothing voices will insist that Yukos is a special case and, thanks to the high oil price, Russian credit is good.

Look deeper and the outlook is darker. The origins of Yukos are murky: a disgraceful sale of a valuable Russian asset for a song by Boris Yeltsin to a man, Mikhail Khodorkovsky, who then engaged in a corporate war against his minority shareholders.

However, it was his change of strategy, conversion to corporate transparency and a political campaign against the Kremlin, that put him in jail.

For his sins, Yukos may be destroyed. Accused of tax evasion, the company has tried, in vain, to pay its fine, but has been frustrated by legal chicanery. Whether or not it engaged in tax fraud, it was a beacon of corporate efficiency in a morass of Russian bureaucracy. For it to be destroyed to pay a tax bill would not just be unlawful, but a stupid waste.

Minority shareholders will no doubt sue if the expropriation proceeds, but it is Russia that will pay the bigger price. And, should Yukos end up parcelled off to cronies and state bureaucrats, how will Putin’s legacy differ to that of Yeltsin?

Daimler’s cut for the bosses

GERMANY has made up its mind. The EU’s Working Time Directive and the entrenched 35-hour week are as good as dead. It will remain in statutes but honoured more in breach than observance as, one by one, factories demand that their staff work longer without a cent more in pay.

Daimler will win its battle with IG Metall as Siemens did before it. Other firms will follow: Volkswagen, MAN, Opel and Phillips are said to be in talks over working hours and Bosch has even won over its French workforce. The threat is real — German manufacturing jobs are going to Poles, Czechs and Slovaks, and no amount of investment in technology at home can offset a 30 per cent payroll advantage in Eastern Europe.

Germany is slow to stir but when a consensus is reached, it moves fast. Chancellor Gerhard Schröder, a longstanding friend of German labour, has been silent as Siemens and Daimler launched their brutal assault on the 35-hour week. It was left to the French Government to cry “blackmail”, as Bosch threatened its Lyon workforce with redundancies.

Germany once assumed that skilled work, research, design and development would stay at home. Vorsprung durch technik is not just an advertising slogan, it is Audi’s assertion of its German identity.

But for how long? Siemens is already designing mobile phones in China using Chinese engineers, investing $1 billlion in building up its Chinese operations. German industry has been forced to question whether its technological lead over the East is permanent. According to IW, the Cologne economics think-tank, the productivity advantage of Germany is being eroded, not just by wages but also by improvements in productivity overseas. European workers are finding their position undermined by pay and brainpower.

But Daimler’s bosses showed the way yesterday, offering to cut their own pay by 10 per cent, an acknowledgment that management blunders were in part to blame for the pain. If Eastern Europeans and Asians are beginning to undercut white-collar Europeans, might the Daimler executives have a niggling concern that one day they, too, might be sidelined? After all, these are multinational businesses.

carl.mortished@thetimes.co.uk

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