Streetwise Professor

February 3, 2007

Mocked by the Fates

Filed under: Energy,Russia — The Professor @ 11:04 pm

In an earlier post I mentioned Robert Service’s history of Russia post-1991. Reading it in the context of recent developments in Russia reminds me yet again of Fate’s twisted, ironic, sense of humor. When there was a serious commitment to reform under Yeltsin, rock bottom oil prices undermined the fiscal foundations of the Russian state, making the success of this reform all but impossible. Now, when the commitment to reform has vanished, and has been replaced by an obsession to restore the power of the Russian state to its past imperial grandeur, high energy prices are fueling an aggressive foreign policy. Seventy dollar oil (or even forty dollar oil) in 1995 would have gone far to cushion the impact of shock therapy and would have reduced the dependence of a penurious Russian state on the oligarchs; fifteen dollar oil in 2006-7 would starve the current Russian government of all of the geopolitical leverage that it is so zealously exercising. Timing is indeed 90 percent of life.

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