Competition is still quite low and foreigners can succeed here even when they have failed elsewhere says Oleg

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"Competition is still quite low, and foreigners can succeed here even when they have failed elsewhere," says Oleg Tinkov. "That will end in time, but we are in a phase when anyone who wants to make money can do it. These would look unrealistic even at much lower oil prices than most analysts expect. The "Yukos effect" is expected to result in capital flight of $12bn this year, and the banking sector is still feeling the effects of a mini-crisis in May.All the same, there is a boom-town atmosphere about Moscow which has foreigners desperate to invest. It has yet to revise its economic targets, which envisage inflation falling to around 11 per cent this year and 7 per cent in 2005, as well as a decline in the rouble. The government is running huge surpluses, but all it has done with the influx of funds is to boost military spending - up 35 per cent since Beslan - and pay off foreign debt. How much authority should be placed on his words? Nobody is sure.The irony is that, partly due to the Yukos affair, world oil prices have soared, and Russia's energy-heavy economy is awash with money.

On Friday, however, Igor Shuvalov, another of the President's top economic advisers, warned other oil companies that they too could face demands for back tax. There is disquiet over some actions that have been taken, such as a tenfold pay rise for apparatchiks, and over many examples of inaction, including delays in promised reforms of national monopolies, notably telecoms.Some console themselves that despite the prominence of numerous bureaucrats of questionable competence, Mr Putin has liberal economists like Andrei Illarionov on his team. "The government statistics compare badly to somewhere like Turkey. Even somewhere like Romania has improved."While Russian businessmen insist that Yukos was a one-off, they have little access to the top and less insight into how decisions are made. "The Putin government was much more open in its first term, but since he was re-elected it has become worse," he said. "The aim is to concentrate political power, but with it has come power over the economy, and they don't know what to do with it."According to Alexei Moisseev, chief economist at independent investment bank Renaissance Capital, transparency has decreased in all areas of Russian government.

"The only standard of government now is personal loyalty to the President," said an entrepreneur in St Petersburg. Not that critics of the President can get on television to air their views, because every channel is now subservient to him.All these initiatives are for political reasons - most recently in reaction to the impact of the bloody school siege in Beslan - but there are economic consequences that may or may not be intended."The mistake the West makes is to see the state as overwhelmingly powerful," said a foreign banker. But other foreign companies who had felt it necessary to approach the authorities had been greeted with suspicion, and official condemnation of Mr Khodorkovsky for "lobbying" had heightened confusion over what was expected.The Kremlin's remote and autocratic image does not help. The difficulty today is knowing when you need a permission slip and when you don't. There is excessive blessing-seeking going on."One of Russia's richest men, who insisted on staying off the record, said it had been natural to seek government approval for the huge Siberian joint venture that brought BP together with Russia's TNK. "It was the biggest deal in Russian history, bigger than the sale of Alaska in the 19th century," he pointed out. The effect has been to bolster the President's popularity with the public but keep businessmen off balance."I don't think there will be another Yukos," said the banker, "but the threat is there.