Oligarchs want to improve Russia image with news deals

4th February 2009, Comments 0 comments

What is it that Russian oligarchs find so appealing about Europe's singularly unprofitable press?

Moscow -- An ex-KGB spy turned tycoon buys the loss-making London Evening Standard, while the 23-year old son of another Russian magnate gains control of France Soir, a French daily with a tiny circulation.

What is it that Russian oligarchs find so appealing about Europe's singularly unprofitable press?

Alexander Lebedev, who worked for the KGB at the Soviet embassy in London before making a multi-billion dollar fortune in banking, announced the purchase of the Evening Standard for a symbolic sum in late January.

Meanwhile, France has given the go-ahead for the son of another Russian banking oligarch, Sergei Pugachev, to take over the crisis-hit France Soir daily which only has a circulation of 23,000.

Alongside the sheer prestige of owning a newspaper, some analysts said the main attraction for the oligarchs was improving the image of their country at a time when suspicion of Russia is at post-Cold War highs.

Others said more commercial interests were also at stake.

"The Russian oligarchs are trying to have a greater influence and want to win political points from the Kremlin by buying media that can improve the image of Russia in the West," said Alexander Kolmakov, director of the Strategic Evaluations Centre in Moscow.

Lebedev is no close friend of the Kremlin and along with the liberal ex-Soviet leader Mikhail Gorbachev part-owns the Novaya Gazeta, one of very few publications in Russia to speak out against atrocities in the war in Chechnya.

But he describes himself as a "moderate" opponent and has not chosen the option of fleeing into full-time British exile like Boris Berezovsky, who frequently berates the Kremlin with broadsides of angry criticism.

At a news conference in late January, Lebedev acknowledged that improving perceptions of Russia was a major aim.

"The image of Russia is in fact disastrous," he said. "For sure, myself and Pugachev will work to ensure it does not get any worse," he added with a wry smile.

Russian figures from across the political spectrum have expressed dismay at the perception of the country abroad after its August war with Georgia and tussles with the United States over missile defense.

The latest blow to the country's image was its gas conflict with Ukraine, which left Central and Eastern European countries without gas amid a bitterly cold winter.

Lebedev has also presented himself as a champion of an independent and free media and pledged to spend tens of millions of pounds in order to ensure the future of the Evening Standard.

"It's a civic duty, to entertain people, to help the paper through the bad times and maybe one day it breaks even," he said.

Pugachev, who made his estimated two billion dollar fortune in banking and real estate, is seen as far closer to the Kremlin than Lebedev and is even reported to have issued credit cards for former president Boris Yeltsin.

Indeed, for analyst Yulia Latynia, Pugachev has built his career around close relations with the Kremlin. "By purchasing France Soir, he will render another service," she said.

A French court on Friday allowed an investment vehicle held by Pugachev's 23-year-old son Alexander to take an 85 percent stake in France Soir amid plans to turn around the struggling paper with a multi-million dollar investment.

For analyst Stanislav Belkovsky, the purchase of the newspapers is an altogether more cynical affair aimed at laundering assets that were obtained in Russia's frenzied and sometimes shady privatization of the 1990s.

"The purchase of Western media is aimed at legalizing the illegally obtained capital of the oligarchs in the West," he said.

Newspapers were the next area of interest for Russian oligarchs after Roman Abramovich bought Chelsea and Alisher Usmanov acquired a substantial holding in Arsenal, Belkovsky said. "After the purchase of sports clubs in Europe, these oligarchs are now moving into the media and hoping that all questions about the origin of their fortunes will be ignored and they find a place of honor in the Western elite. They are convinced that their newspapers will ensure their safe passage in the West."


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