MOSCOW Russia has opened a criminal investigation into the chief executive of potash producer Uralkali, Vladislav Baumgertner, and will request his extradition from Belarus, federal investigators said on Monday.
The step by Russian authorities opened the door for a face-saving resolution of a tense situation in which the head of the world's biggest producer of the fertilizer component is under house arrest in Moscow's neighbor and close ally.
Belarus detained Baumgertner, 41, at Minsk airport in late August, about a month after Russian company Uralkali abruptly pulled out of a potash sales cartel with a partner in Belarus.
Uralkali's withdrawal from the alliance with state-run Belaruskali rocked the global potash industry and threatened Belarus, which is heavily dependent on cheap Russian energy and financial aid, with losses.
The soil nutrient accounts for 12 percent of Belarus's state revenues and about 10 percent of export income, and the cartel's demise angered Belarussian President Alexander Lukashenko.
Belarus said last week that it had started selling potash on its own, but Lukashenko urged the two sides to put the lucrative partnership back together again. The cartel accounted for 40 percent of the world market worth around $20 billion a year.
WILL KERIMOV SELL?
Baumgertner was initially put in pre-trial detention but later moved to house arrest. Charged with abuse of power and embezzlement, he faces up to 12 years in prison if convicted.
Russia's federal Investigative Committee, which answers to President Vladimir Putin, said it had opened an investigation into Baumgertner on suspicion of abuse of power and would request his extradition.
The extradition could save face for Lukashenko, who has said his country could hand over Baumgertner as long as Russia took steps to prosecute him.
An extradition would not necessarily lead to a trial, however, and it could reduce pressure on the main owner of Uralkali, Russian billionaire Suleiman Kerimov, to sell his stake so that the cartel can re-form.
It would, though, put the asset more firmly in Putin's hands. There has been intense lobbying by businessmen with past ties to the Russian leader to buy Kerimov's 21.75 percent stake in Uralkali. With two partners, Kerimov controls a third of the business.
Both the Kremlin and Belarus have tried to play down the arrest by suggesting bilateral ties between the Slavic neighbors, allies in Russian-led security and trade groups that are important to Putin, should trump business disputes.
But Baumgertner's return to Russia would remove an irritant in relations and end a situation that critics say is embarrassing for Putin, because it makes him appear powerless to influence even a relatively small and friendly neighbor.
Uralkali, which has previously denied Belarus' accusations against Baumgertner, declined to comment on the Investigative Committee's statement.
But two sources close to Uralkali expressed confidence that the Russian criminal investigation was little more than a cosmetic measure aimed at returning Baumgertner to Russia.
"They are using the criminal investigation to try to bring him back," one of the sources told Reuters.
Kerimov's investment vehicle also declined to comment.
(Editing by Steve Gutterman, Douglas Busvine and Mike Collett-White)