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MOSCOW — There are so many different battles now going on for the assets of Yukos, inside the company, between the management and the shareholders, between different shareholders, between Yukos and Sibneft, and between the company and the state authorities, it is easy to mistake the plot.

Last week, Yukos CEO Simon Kukes took out a fulf-page advertisement in the Financial Times of London. When it was the alter ego of Mikhail Khodorkovsky, Yukos never had any trouble getting its message across through the news and feature columns of the FT’s ever-obliging editors and reporters.

That Kukes had to pay for space in the conventional way signals just how much has changed in the dynamics of spoon¬feeding by the Yukos PR machine and its rival, the Abramovich PR machine.

For months after Lebedev’s arrest last July, the Yukos headquarters near Paveletskaya train station in Moscow was the general head quarters for a Yukos-bankrolled war against President Vladimir Putin. But after it became clear that Khodorkovsky was going to lose his political battle with the Kremlin, the senior executives of the company panicked. They told associates they would leave the company by January. Months later they are still there, explaining that out of foyalty to their imprisoned ex-chairman they are duty-bound to stay and try to keep the company together. But this isn’t the same company, as the one Khodorkovsky, Lebedev and their partners Leonid Nevzlin and Mikhail Brudno believe they still own.

Legal experts, who have taken time to assess the cases built against Khodorkovsky, his partners and the company itself, have become increasingly certain that prosecutors will get convictions on many, if not all the grounds of their indictments. The initial thrust of the Yukos fighting machine was a political battle against the Kremlin, hoping that U.S. pressure and Western bad press would cower the presidential administration into abandoning its strong hand. But it has totally misfired, and Khodorkovsky is reduced to hapless begging for amnesty in exchange for a promise of good behavior.

Out of the legal crisis that has faced the Yukos shareholders, an opportunity was spotted, not just by Roman Abramovich and his Sibneft group, but also by the management headed by Kukes and his allies, Bruce K, Misamore, the chief financial officer and Steven M. Theede, chief operating officer, and president of YUKOS-Moscow

Abramovich ambushed Yukos intending to ingratiate himself with the Kremlin to protect his own assets, and not only those of Sibneft locked up in the Yukos-Sibneft merger. Whether or not Abramovich hoped there might be an opportunity to reverse the Yukos-Sibneft merger, and to win Kremlin permission for him to capture Yukos, he had a more urgent priority late last year. That was to protect himself from Khodorkovsky’s fate. By proposing to be subservient and even useful to Putin in private, Abramovich accomplished quickly what Khodorkovsky waited too long to attempt. After Putin had won both the Duma and presidential elections so handily, he didn’t need either of them.

Now that Putin is fully in command, there are three scenarios for Yukos. AH of them are what we call the Kukos scenarios. In the first one, Khodorkovsky is released from prison on parole, retakes the reins of his company, and everything ends almost as it had started —Yukos remains Khodorkovsky’s Kukos. This is unlikely.

In the second scenario, the Kremlin dismembers Yukos by subjecting it to tax claims it cannot pay, and accepts shareholdings to clear the debt and penalties. That would create the Kremlin’s own Kukos, possibly for resale later. This option has met with resistance from some of the economic advisors in the Putin administration who have been arguing that the costs to be inflicted on the domestic investment market would far outweigh the benefits to the state. They have also argued that Putin would potentially compromise himself if the outcome of the case against Yukos were to be a form of ^nationalization. Besides, Putin’s policy, according to the argument, has clearly advocated reducing the extent of the state’s stakes in the energy sector if control can be achieved by other means.

The third scenario now emerging is a Kukos with Kukes and his team in charge, in cahoots with the Kremlin.

Some time ago Yukos executives suggested that Yukos’ troubles were a hostile takeover scheme arranged between Abramovich and the Kremlin. But the Kukes group don’t apparently believe that any more. They have begun to attack Abramovich, but they have stopped insinuating that Putin was in on that plot.

In effect, there is increasing evidence that Kukes, Misamore,Theede and other senior executives are hoping to arrange a cheap-price management buyout of Yukos. Accordingly, they have been negotiating with the government and Kremlin, first to deter their support for a takeover by Abramovich and his Sibneft gang; and secondly, to lower the price at which the Kremlin will agree to divest the old shareholders and replace them with new ones. In pursuing this strategy, the three U.S. citizens must also do their best to disavow their nationality, and promise not to trade the company away to ExxonMobil or ChevronTexaco — at least not now.

The appearance of a page-long advertisement by Kukes in the Financial Times is a signal that this Kukos strategy is making
headway.

If Khodorkovsky is having the nervous breakdown that some journalists are reporting and that his mistimed, misjudged letters and notes are intimating, it is little wonder. He has begun to realize that his enemies may include his employees. He may think he can secrete a sizeable pile of cash away from the Kremlin’s retribution, although foreign litigation and court-ordered freezes may limit his ability to spend it for a while. He may think of negotiating a compromise with the Kremlin that would include sizeable penalties and the loss of some of his shares. But if the third Kukos strategy turned out to be effective, whatever plea bargain Khodorkovsky might secure from the Kremlin, he would be left without any significant economic base from which to operate, either commercially or politically, after his release. Without cash, ail Khodorkovsky’s talk of liberalism will prove to be tepid air.

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