Sunday, March 04, 2018

Money for Oil

There's a lot of excitement about a potential Trump - Russia strand that runs through the partial privatization of Rosneft in which the Qatar Investment Authority was part of a group (with Glencore) that bought a 19.5 percent stake in the company. For example, in Slate, there's a shaky logical chain running from that deal to Jared Kushner not getting a loan from the Qataris later in 2017, orchestrating the June crisis in the Gulf, and later getting a loan from a Qatari-backed entity. The link back to the Rosneft deal is supposed to be through the Qataris, but the link back to Trump is supposed to be through a Carter Page angle to the Rosneft deal - which never happened!

Anyway, for the present purpose, the point is that the actual flows of money associated with the Rosneft deal are not clear. From the start, well informed Russians and outside analysts suspected that the deal was actually a round trip of Russian state bank cash into the Russian exchequer, with the Qataris and Glencore agreeing to put their name to the transaction in exchange for (1) a nice fee, (2) being pals with Putin, and (3) an understanding that the shareholding would eventually be placed with someone else.

Evidence for this interpretation includes that the two shareholders put up almost no cash for their stake. Instead, the money came mostly from a loan to them from an Italian bank, Intesa, which had trouble offloading the loan through syndication (because of sanctions) and eventually found a solution in the sale of the share to a Chinese company. To say the least, finding any simple Trump angle in such a convoluted transaction is not easy.

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