ON SUNDAY Russian authorities staged an event that bizarrely but eloquently conveyed President Vladimir Putin's contempt for international financial and legal norms. At a government-run Moscow auction, one of the world's largest oil production companies was "sold" for $9.3 billion -- about half its estimated worth -- to a previously unknown firm of undisclosed ownership that had appeared three days before. The new petroleum giant gave as its address a building in a provincial town housing a cafe and a cell phone store. In this way Mr. Putin and the circle of former KGB operatives around him seized the prime asset of Yukos Oil Co., which until last year was emerging as Russia's most dynamic private company and the firm that had gone furthest to adopt Western standards of accountability. In doing so they ignored not only Russian law but the legal rights of Yukos's Western investors and creditors -- whose claims they apparently seek to dodge through the creation of the front company.
This brazen assault on private property and the rule of law stunned even the most jaded international investors, who rushed yesterday to sell Russian shares in Moscow and other markets. Yet almost incredibly, it appeared to have no impact on President Bush, who at a news conference insisted that he intended to preserve the "good personal relationship" he has with Mr. Putin. Without so much as a mention of what must rank as one of the largest thefts of private property in history, Mr. Bush added, "I told Vladimir that we would work in a new term to see if Russia could be admitted to the WTO." That would be the World Trade Organization, a body whose principal purpose is to extend the rule of law to the global economy.
Never mind the mysterious auction: Mr. Bush's behavior is considerably more puzzling than Mr. Putin's. The Russian president is seeking with the subtlety of a sledgehammer to re-concentrate political and economic power in the Kremlin and to create a state modeled less on the democracies of the West than on the former Soviet Union. In just the past few weeks he has abolished the election of provincial governors and aggressively backed an attempt to impose a pro-Moscow president of Ukraine through fraud. Now he has destroyed his country's strongest private company and turned its biggest asset over to an entity that will surely emerge as being under some form of Kremlin control, even as international banks had pulled back from the deal in response to an injunction against the auction from a federal judge in Houston on behalf of the company's U.S. investors. And Mr. Bush's response is to publicly promise Mr. Putin help in joining the WTO?
Mr. Bush's defenders argue that it only looks as if he's oblivious to the behavior of his friend Vladimir. The president understands what Mr. Putin is up to, they say, but has chosen not to confront him publicly, both because a U.S.-Russian standoff would be counterproductive and because Mr. Putin's restorationist project is failing without any help from Washington. It's true that Mr. Putin is looking more and more self-destructive. His neo-imperialism helped touch off a democratic revolution in Ukraine, and his attack on Yukos has driven billions in capital from Russia. Yet Mr. Putin is unlikely to change course as long as he believes that he can push through outrages like Sunday's auction while preserving "a vital and important relationship" with the United States. That's how President Bush described their ties yesterday, adding, "I intend to keep it that way." What's the theft of an oil company, between friends?