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. Last Updated: 07/27/2016

INSIDE RUSSIA: Uranium Next Field of Battle For Oligarchy

Nuclear Power Minister Viktor Mikhailov was discussing plans for the future with his deputy when he was called in to see Prime Minister Viktor Chernomyrdin. After a short conversation, the prime minister rangthe president to inform him that Mikhailov wanted to step down and would be returning to scientific work. If that's what he wants, so be it, came the answer.

On the eve of Mikhailov's resignation, the newly appointed Security Council secretary, Andrei Kokoshin, had been holding a long conversation with the president about Mikhailov. They were speaking mostly about the sale of uranium.

In 1993 the United States reached a deal with Russia by which Russia would convert 500 tons of highly enriched uranium from nuclear warheads into low-enriched uranium for reactors. The U.S. Uranium Enrichment Corporation, or USEC, paid for the conversion as well as for the uranium itself. Then the state-owned U.S. uranium enrichment company was privatized, and Russia got the chance to sell $4 billion worth of uranium independently.

The Nuclear Power Ministry chose the obscure Pleiades Group, which promised to pay for the uranium within 2 1/2 years after the first delivery. The firm was headed by a close friend of Mikhailov's, Alexei Shustorovich. It is Shustorovich who is considered to have organized the controversial deal to import U.S. supercomputers into Russia.

Pleiades was cut out of the uranium deal last spring because of resistance from Uneximbank and the State Duma, or lower house of parliament. But by the end of the year, Pleiades once again became the main player in the contract.

Part of Russia's uranium is exported to the United States through the Swiss-based Global Nuclear Service and Supply, or GNSS. Fifty-one percent of GNSS belonged to Russian company Tekhnabexport and 49 percent to the American millionaire Oren Benton.

Benton declared bankruptcy Sept. 23, and his 49 percent share in GNSS was put up for auction. After Benton declared bankruptcy, it was Pleiades that should have bought his share in GNSS. But Uneximbank, which services part of Tekhnabexport's accounts but has difficult relations with it, also had a claim on a share of GNSS.

Then the auction was put off indefinitely. But GNSS itself established a daughter company in Delaware, 49 percent of which was sold to Pleiades for $245,000. In December, Tekhnabexport received permission from the Central Bank for a two-year deferment in the payment for the uranium and announced that the uranium would be sold through GNSS, Delaware.

The irony of the story is that Uneximbank and Alfa-bank were interested in having Mikhailov dismissed. But as a result of their efforts, the post of nuclear power minister was filled not by Valery Lebedev, director of Krasnoyarsk-26, who is sympathetic to both banks, but Oleg Adamov, who is very close to business magnate Boris Berezovsky. It is clear that the new minister will do everything to remove Uneximbank from Tekhnabexport. The uranium business itself will become, along with Svyazinvest and Rosneft, yet another battlefield for the oligarchs. And independent ministers like Mikhailov, who work only for themselves, will become fewer and fewer.

Yulia Latynina is a staff writer for Expert magazine.