Political Sketch
The internet giant Yahoo! is to combine forces with the Russian government, it was announced this week, in what is estimated to be the biggest merger in history. The move comes in the wake of the recent merger between AOL and Time Warner, but is valued even higher; Yahoo!, which is yet to make a profit, has a market capitalisation equal to Russia's $796bn GDP. Investors in the internet search engine will receive a controlling share of the new corporate state, though each of Russia's 150 million citizens will have a vote at the AGM.
Chief Yahoo! Jerry Yang said the move would revolutionise business. "This is the future... By taking over a major industrialised economy, we have shown that the internet has now come of age." Yang, 29, will head up the new venture from Yahoo! headquarters in his parents' garage in Santa Clara, California. No name has yet been chosen, though Yang said that he personally favoured a more consumer friendly name, "like CBeT, the Russian for 'light'"
Yang described the deal as "a major opportunity for Yahoo! and the Russian people... By taking direct control of government, we will be able to provide our own services more effectively to Russia's countless toiling masses", he said. "The Russian economy will also receive a much needed injection of virtual money, allowing us to develop in markets new to both of us."
Analysts hailed the deal as forging a new pattern for the relations between multinational business and struggling economies. "This will set the tone for the twenty-first century" said Jonathan Samuels of Dresdner Kleinwort Benson. "Having business in primary control of government is a logical outcome of globalisation, signalling as it does a move to a more streamlined system. Elected governments, too often concerned with petty nationalisms and isolationist policies, have been recognised as a wasteful layer of bureaucracy by the business community, and we fully expect this sector of management to be downsized, opening up the potential for massive profits for Yahoo! shareholders"
Worth upwards of $1 trillion, the deal has set stock markets racing across the world, with other internet stocks and troubled economies' government bonds soaring. Rumours abound in the world's financial districts that the merger is the first of many. Amazon.com is reported to be holding talks with Peru, and Wall Street sources suggest that Lycos Inc is preparing a hostile takeover bid for Pakistan.
Acting Russian president Vladimir Putin takes much of the credit for negotiating the deal over several months, and his abrupt accession to supreme office allowed him to put into practice what he calls "a bright opportunity for a new corporate autocracy... For centuries Russia has groaned under the torments of incompetent and tyrannical leadership. CBeT will ensure this continues well into the twenty-first century." Putin will remain in executive control of Russia's government, and is rumoured to be personally receiving 10% of the shares in CBeT. It is also understood to be a prerequisite of the deal that Yahoo! commit to the stepping up of the war in Chechnya, which Yang defended as "an unprecedented opportunity for our executives to learn at first hand about the cut-throat nature of international competition. "Reactions among ordinary Russians to the change in their constitution were mixed. Dimitri Mishkin, a Moscow labourer, said Yahoo! was "a tool of American imperialism... trampling on the soul of the Russian people", but his wife Katerina was more upbeat, expressing hope that her new rulers would help stem the chronic corruption and inefficiencies which plague the Russian politico-economic system. "To have built a business worth so much, [Yahoo!] must really know how to produce results." Yang pledged that the new partnership would be able to stop the huge shortages and waste which cripple Russia by "moving towards an internet based economy, [which is] flexible and responsive to individual needs." He conceded though, that this was a long-term goal, since at present only 0.01% of Russians have access to computers.
Such difficulties though, did not deter world leaders from welcoming the merger as a new force in global business. British Prime Minister Tony Blair praised the deal as "a shining example of how the public and private sectors can work together in a fully integrated way over the coming millennium". He refused to comment, however, on reports that his government is involved in talks with Freeserve.
20th Jan 2000