When Vladimir Paranoid Talks . . . .

Putin's comments drive a company's stock down $6 billion

When Vladimir Putin talks, investors in Russia listen. And some head for the door.

Speaking at an industry conference this week, Putin, Russia's former president and now prime minister, spoke five sentences critical of one of his country's big steel companies, Mechel, and its billionaire chief executive, Igor Zyuzin.

In a sign of Putin's enduring power in Russia and around the world, that criticism came with a price: about $1.2 billion per sentence in lost shareholder value.

Such is the power of Putin's words - even after "stepping down" to prime minister in May - that shares in Mechel, a coal mining and steel company, plunged almost 38 percent on the New York Stock Exchange after Putin complained that the company was charging more to its domestic customers than to its foreign ones. The comments wiped out, at least for a day, about $6 billion in stockholder value.

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On the heels of the imprisonment of one tycoon and some bare-knuckled corporate raids and renegotiations of large energy contracts under Putin, the market did not take this talk lightly.

Over all, the Russian stock market slid more than 5 percent Friday, on fears that Putin's comments might presage another attack on a company similar to the destruction of the Yukos oil company in 2004.

The remarks also coincided with the departure of the American chief executive of the British energy company BP's joint venture in Russia, which is under pressure from its Russian partners and the government, in another glum sign for investors here.

Putin's speech began simply enough.

"We have a respected company, Mechel," Putin said in introducing his subject.

"By the way, we invited the owner and director of the company, Igor Vladimirovich Zyusin, to today's meeting, but he suddenly got sick. Meanwhile, it is known that in the first quarter this year the company exported raw materials abroad at half the domestic, and world, price. And what about the margin tax for the government?" He added: "Of course, sickness is sickness, but I think Igor Vladimirovich should get better as quick as possible, otherwise we'll have to send him a doctor."

You're absolutely hilarious, Putie Putirovich! Just ask former KGB agent Alexander Litvinenko about getting 'sick' all of a sudden, as it seems that the new Soviet Russian flu bears commonality with the old Soviet variety.

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With inflation soaring in Russia, particularly for manufacturing inputs like steel, government officials are concerned about the impact on a vast infrastructure rebuilding effort that is a centerpiece of Putin's economic program.

The government is also seeking to diversify the economy away from dependence on raw materials exports, to provide employment and protection against a possible retreat in global commodity prices. Putin has asked business owners to comply with this approach, even at the cost of profits.

What a nitwit. It has more everything to do with the cost of their 'health'. Then again, we mustn't take the chance that Vlad Paranoid might become offended.

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If there were any doubt over who holds sway over Russia's oil-fueled economy, the power of Putin's words could be seen putting that to rest. Indeed, his successor, Dmitri Medvedev, has spoken often of the need to burnish Russia's investor image and improve the rule of law, so far with little effect.

The Bush Adminstration's Russian expert was unavailable for comment.

Read the rest at IHT.com