Russia's railway boss

[John Ashworth]

Russian railway boss Vladimir Yakunin is trying to keep his company, country and President on track

One of the most powerful men in Russia, Vladimir Yakunin, talks to Alistair Osborne.

Telegraph
By Alistair Osborne5:55PM GMT 18 Mar 20121

Vladimir Yakunin would like to make one thing clear. He may be many things, but he’s not crackers. “Look at me. Do you see any signs of lunaticism in me?” asks the president of Russian Railways with a hearty laugh – the cue for similar guffawing from his rather jumpy entourage.

I have just asked if he fancies taking over one day from Vladimir Putin. After all, his name crops up on lists of potential successors to a Russian president who’s just been freshly elected amid allegations of vote-rigging.

The pair, both from St Petersburg, go back a long way – though Yakunin, 63, dismisses as “fairytale” talk that he is part of a crony elite all with neighbouring dachas. Even so, he has one of the most powerful jobs in Russia. And, being something of an ideologue, he’s added a populist twist. His extra-curricular activities include the promotion of traditional Russian values and religious orthodoxy – both of which have political currency.

Yakunin’s not averse to the odd reactionary rant, either, over “the way the minorities are taking over” – one topic being what he sees as “homosexual propaganda” over same-sex marriages. Married himself for 42 years and with two grown-up sons he declares at one point: “I would like my family to develop normally. I am fond, you know, of the beauty of the nature of the ladies. Should I be criticised for that?”

All in, it adds up to quite a bit for a railway boss – but stops short, he insists, of wanting to run the country as well as the trains.

“I am not against responsibility,” he says, in his accented but fluent English. “I am not terrified of responsibility, but I know my level. I like my job and would like to fulfil as manager those projects I have started.”

Yakunin, who last year had his position at the state-owned rail company extended for another four years, can put it more colourfully, too, once noting that he loved his job and “when you’re in love, you don’t ogle other women”.

The job, put simply, is to run one of the world’s most important railways. He reels off its 85,200km of track (third only to the US and China), 1bn passengers a year (fourth after the previously noted countries plus India), 1.2bn tonnes of freight and 1m employees. He shows his steely side, too. One junior with the temerity to chip in with his own statistic is told bluntly: “Don’t interrupt me, please.”

No statistics convey, though, the geo-political significance of a network that links Europe to Asia (not least China) and which has become a crucial barometer for the Russian president.

“Mr Putin once said that if you want to know the status of the Russian economy, you should look at the papers of the president of Russian railways with the daily reports of the amount of cargo, the directions of delivery and amount of passengers,” says Yakunin.

Current figures show that the rail network is “still 7pc below the level of pre-crisis operations but getting better”. Restoring volumes is only part of the job, though. Yakunin is also implementing a plan, announced in 2007, to spend a colossal 13 trillion Roubles (£280bn) by 2030, upgrading and expanding the network. The 2018 World Cup is one deadline for improvements.

It partly explains why he has pitched up in London. Between now and 2015, Russian Railways intends to invest R600bn. But, as Yakunin explains, “we have a shortage of financing of approximately R400bn. So we are planning to borrow on the financial markets."

This week, he will return for the start of a roadshow for a potential R70bn eurobond issue – part of a plan to raise about R100bn of debt from investors annually over the next few years. Russian Railways, which had a turnover of almost R1.2 trillion last year and net income of R67bn, has the same BBB rating as the state and Yakunin says: “Judging by the interest from banks in the West who are approaching me with different plans, we are very positive.”

The fundraising is part of a plan to add 30,000km of track by 2030, including improving links from Siberia to Far East ports and to St Petersburg and Murmansk, as well as beefing up security. “Now the world has gone crazy, we need to spend a lot of money to secure the security of our passengers and our operations,” says Yakunin.

He relates how the railway, which employs 30,000 armed security guards, has had two recent attacks. The latest was 2009’s bombing of the Nevsky Express between Moscow and St Petersburg, which killed 26 people.

The Russian government is also kicking around a part-privatisation, with rumours it could sell a 20pc stake. “I cannot say that this is a plan,” notes Yakunin. “A plan is when you have a paper from the government and a signature. This is just evaluations.” He accepts that privatisation is “one of the possible ways” to better develop the network but cautions that even Deutsche Bahn balked a few years ago at a sell-off. “They stopped because it is too vulnerable for the entire economy to make mistakes with the privatisation of infrastructure,” he says.

Putin appears fairly hands-on, too. Last October he ordered Yakunin to Siberia to sort out a shortage of rail cars for shipping coal and then declared, during a televised meeting: “I hope that next time you won’t wait to be told but will stay on top of the situation yourself.”

The incident does not appear to have damaged their relationship. “Mr Putin knows me for quite a time,” says Yakunin. “We came from the same city and even if it is 4.5m people, some circles are quite narrow. I’m supportive of the policy to create re-industrialisation of Russia. I’m positive about the creation of civil society in Russia and those are the features of Mr Putin’s Russia.”

To the observation that, from the outside, “lawlessness” appears another feature, Yakunin bridles. He has just stressed that the Russian language has three words for “morality”, scribbling "nravstvennost" on a pad and declaring it means more than duty.

He’s also professed his belief in God and explained: “I was brought up in the Soviet Union. I know the brightest side of this system. I know the darkest side. The major education we got was to be faithful to society, to your state and to carry your responsibility in the best way you can.”

What does he make then of Britain’s courts being filled with warring oligarchs (think Roman Abramovich versus Boris Berezovsky, for example)? Or how BP’s attempt to strike a deal with Rosneft led to a litigious scrap with four Russian billionaires?

“Disgusting,” is his one word take on that, before explaining that the situation reflects badly on both sides. He says, not only British lawyers, but the “great British society” seem quite happy to “shake hands” with litigious Russian oligarchs. “Why don’t they feel this is disgusting. That is the question,” he says.

He would like to distance himself from all of them as he attempts to tap investors for funds. “Listen, ask the president of Barclays or JP Morgan. Or the CEO of Siemens or Alstom if they have any problems in communicating and doing business with Russian Railways and Mr Yakunin. I am positive you will get a positive answer, that they don’t need any support, they don’t need any protection in dealing with me.”