The row between BP and its Russian partners should not hurt investment in Russia, Aleksei Kudrin, its Finance Minister, said yesterday. That is an extravagant denial of the certain consequences of treating BP like almost-redundant foreign hired help.

Investors cannot now dismiss the risks of doing business in a country whose government appears to attach no great value to the rule of law where that conflicts with its own interests. The point is surely that Russia does not particularly care if some investors are put off, for all the new President’s professions to the contrary. Oil at $140 a barrel gives too much reinforcement to a mindset that already tended towards the paranoid and isolated.

BP, and others in easily politicised businesses (that is, most of them), have few good cards to play. The bigger question is what other countries might do to persuade Russia that it is in its interest to respect the principles of international cooperation. In China’s case, that pitch has been won; in Russia’s, so far, it has not.

The dispute goes to the heart of whether investors should feel safe in striking deals in Russia and relying on the terms of the contract. It is hard to overstate the importance to BP of its five-year-old joint venture, TNK-BP, owned 50-50 with a trio of oligarchs. Its half-share of TNK-BP’s oil output is more than 800,000 barrels per day, more than a third of its total oil output last year. Without it, BP’s oil output would not have grown much in five years.

But oil and gas in Russia, even where nominally outside Kremlin control, are still subject to its whims. BP is facing a two-pronged challenge, from ministries and from its co-owners, which became sharply worse this week. Mikhail Fridman, the leading Russian shareholder, said that BP’s “arrogance” was a key reason for the oligarchs’ new challenge to its foreign management, accusing it of “the best traditions of Goebbels’ propaganda”.

The oligarchs deny political motives but many observers think that the attacks represent an attempt to wrest control of the company before a possible sale to Rosneft or Gazprom, the state-owned energy giants (although Gazprom’s chief executive officer denied such intent yesterday). Ministries have also challenged TNK-BP’s foreign staff over visas and work permits and questioned the company’s compliance with labour laws.

It is hard not to conclude that the quadrupling of the oil price during TNK-BP’s brief life has made it too valuable for some in the Kremlin to tolerate half its profits going abroad. But there are mixed signals. At the annual St Petersburg economic forum this month Igor Shuvalov, deputy to the Prime Minister Vladimir Putin, delivered a widely noted speech arguing that, to become strong in innovation, Russia needed to develop democratic institutions and meddle less in the economy. That is in tune with the first moves by the new President, Dmitri Medvedev, in protecting small firms from bureaucracy and talking of more competition.

China, in joining the World Trade Organisation, and in its search for energy, appears to believe that its own interests are often served by acting as a country prepared to be bound by laws and contracts. With oil at $140, Russia apparently does not.

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