Streetwise Professor

July 21, 2006

Russia Roundup

Filed under: Politics,Russia — The Professor @ 9:32 am

Many stories on Russia in general, and Russian energy policy in particular, due to the recent G-8 summit in St. Petersburg.

My article on Gazprom (“Just Say No–To Gazprom”) appeared in this months World Energy Monthly. It echoes many of the arguments I advanced in past months on this blog.

Apropos Gazprom, in the wish I’d said that category, Bulgarian Ivan Krastev wrote “for the last two years Russia completed a spectacular transition from a one-party state to a one pipeline state.” Krastev also said that “[t]he policy consequence of this is that any genuine democratization of Russia is going to be possible only after the liberalization of the Russian energy sector.” Here, here.

An article from today’s FT summarizes my views quite well. The article’s author, Philip Stephens shares my disdain for the Western “leaders” who let Putin humiliate them in St. Petersburg. Stephens echoes my earlier contention that Putin has a very weak hand–a pair of sevens, as he phrases it–but is playing it with steely resolve.

In some respects, I like the fact that Putin speaks his mind and avoids mealy-mouthed diplomatic pieties. Such pieties are usually just lies and thinly hidden cynicism. However, Putin exhibits a true lack of class when he needles and insults. Deflating pieties with humor and irony is one thing. Brutually insulting one’s “guests”–who were quite magninimous in letting him host a party for a group he has no business belonging to–is quite another. Rather than sounding like Churchill skewering a political opponent, Putin is more of the style of an insult comedian–Don Rickles or Andrew Dice Clay goes to Moscow, as it were. Moreover, he plays the moral equivalence card to the hilt in order deflect any criticism of Russia and his rule. He whines about any speck in the eyes of the UK or the US or anyone else to distract attention from the beam in his own.

And the fact remains that Putin’s hand is very weak. He is riding high now, but lives at the whim of commodity prices. Maybe he should have a chat with Nelson and Bunker Hunt to see how that can turn out.

Moreover, it is very discouraging–ineffably sad, in fact–to see how Putin and the Russian political establishment are using their sudden oil wealth windfall. Yes, they are repairing state finances. But they are mainly using it to re-establish Russia as a world power. How sad, how very sad. Russia has crushing problems. Its health care system is a shambles. Public health problems abound–notably AIDS and TB. The non-energy economy is weak. Even the energy economy is not that strong–high prices are camouflaging declining or stagnant output. The Russian population is literally dying in front of his eyes. But what appears to be Priority One? Recapturing the glory days when Russia mattered to the world. This suggests a very deep insecurity, and a very warped sense of priorities.

Unfortunately, the rest of the world will have to suffer for this vanity. The Russian government has played a very unconstructive role in mestastisizing world conflicts. It has been ambivalent with North Korea. It has shielded Iran from any consequences for its nuclear ambitions, and is in fact aiding the Iranian nucelar program (by constructing the Busheir reactor.) It has provided arms to Syria, and has criticized Israel for its assault against Hezbollah. It has been of zero assistance in the revitalization of Iraq. Putin seems not to be very choosy about his friends. They can be unsavory as they come, as long as they impose a strategic burden on the US.

Little Vlad may strut upon the stage now, but all of these machinations will not revitalize Russia. Great nations are not built on foundations of economic rot, political corruption, and demographic decline. The mineral wealth of the New World allowed Spain to matter–for a while. But eventually its systemic weakenesses condemned it to decline and irrelevance. If Putin truly wants to make Russia more than the “neant” that Bismark saw, he should spend less time and resources on military and foreign policy adventures, and more on building a strong civil society in Russia. Don’t hold your breath.

One last Russia item. Rosneft began trading on the LSE today after a British court refused Yukos’s request to forstall the IPO on the grounds that Rosneft had profited from the theft of Yukos assets. Good luck, suckers.

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