I’ve been skeptical of investing in Russia for quite some time, though I also do personally have some money invested in that country through a closed end fund (Vostok Nafta, trades in Sweden). It has not been an easy few weeks for those who are invested in the Great Bear.

Why?

It’s still largely political, as you might imagine — Putin continues to meddle in Russian companies, and retains such a hold on power — even though his hand-picked successor is technically in charge — that even offhand comments regarding Russian companies or markets have a big impact on their shares.

While the big news now is from the Russian steel company Mechel, the largest impact on Vostok Nafta in recent weeks has probably been it’s holdings in TNK-BP, BP’s star-crossed ol joint venture with a Russian tycoon. The company has been successful operationally, it is producing a lot of oil, but the disputes about control have gotten completely out of hand, with BP trying to maintain control through their hand-picked CEO and the Russians essentially controlling everything else and trying to force out BP employees and start exploration in the Sudan, Iran, and Cuba (none of which are OK with BP).

Unfortunately, this was set up as a 50/50 deal, so it’s going to take something external to find a winner here … and in Russia, “something external” probably means the government further forcing BPs hand, just as they forced Shell out of its Sakhalin project and made them sell to Gazprom (or was it Rosneft? Doesn’t much matter). On the other hand, perhaps the Russian partners are honestly just trying to force BP’s hand without Putin’s help, I have no idea — there is a good article on the whole sordid TNK-BP story in the Washington Post today, worth a read if you’re interested in Russian investments.

I’m still holding my shares of Vostok Nafta, which now owns a big Russian yellow pages and advertising company, a large slice of Western Russia/Ukraine farm operator Black Earth Farming, and, yes, TNK-BP and a bunch of other companies, many of them in mining and infrastructure. I do think that Russian infrastructure and agriculture will eventually have to become more open, and I hope that outside investors will retain some rights. The whole market has collapsed, and with oil also falling a little bit I think it’s at least possible — ...