Tour de Russe
Haven’t written much Russia stuff lately–too many competing stories, too much competing for my time, and too much same-old, same-old in Russia. But enough things have accumulated to deserve some comment.
First, to prove, as if more proof were needed, that Vladimir Putin is 110 percent Checkist, and -10 percent economist, he refuses even to countenance the possibility that his inane attempts to keep a lid on prices has caused shortages of gasoline. Instead, he sees dark conspiracies:
Russian Prime Minister Vladimir Putin accused oil companies on Thursday of a “conspiracy” to force up gasoline prices, as the world’s largest oil producer struggles to combat fuel shortages.
Putin rebuked Deputy Prime Minister Igor Sechin, his point man for energy, for suggesting at a government meeting that price rises had resulted from a lack of oil products offered for sale on commodities exchanges.
“It’s not a shortage. This is not about a shortage. This is a conspiracy. They are colluding,” Putin told Sechin, who serves on the board of state-controlled oil major Rosneft and is widely seen as the chief spokesman for the industry.
What a maroon. And Sechin. Oi Perhaps his remark on commodity exchanges was mis-translated, because otherwise I have no clue what he was talking about.
By the way, the price control bug is spreading: here’s a story about China using “legal” means to impose unofficial price controls, with predictable effects (note the empty shelves in the pic).
Story 2. When the Russia-China oil pipeline deal was signed, I predicted that the Russians would bridle at the super-secret pricing terms as soon as given the opportunity–and would attempt to renegotiate the terms later. (My surmise at the time was the super-secrecy was intended to conceal how unfavorable the terms were–and hence how desperate the Russians were.) The entertaining and informative John Helmer has some details:
This is unusual outspokenness from the state pipeline company whose chief executive, Nikolai Tokarev, has made a career of secretiveness. All the more curious, says a Russian analyst of state contracting practices, Alexei Navalny. He told Asia Times that the conflict with CNPC is not really with the pipeline company Transneft, but with the oil producer and exporter, state oil company Rosneft. Navalny has filed Moscow court actions as a shareholder of Rosneft for disclosure of the terms of the company’s contract to sell oil to CNPC. He believes the price formula set by Rosneft is “far from a market one”, and accordingly it is understandable why the Russian side wants now to extract more profit from the trade, while the Chinese insist on sticking to the contract formula. Navalny does not speculate on how the oil pricing is tied to Rosneft’s and Transneft’s repayments of their China loans.
Taking the longer-term Chinese view, over the 20-year contract term, with deliveries of about 2.3 billion barrels, at annual value at this year’s price average of not less than $10 billion, and if the price average holds up, a full-term value of $200 billion, this $2 per barrel dispute ought to be something the two sides can agree to share — without going to a court in London and without damaging the windfall both are enjoying. If they can’t, the usually reticent Tokarev will no doubt have to explain to Putin why not.
Not surprised. It would be very interesting to see those contract terms . . . somehow I think that if revealed, they would be more “colonial” than the PSAs (like the one for Sakhalin II) that Putin raged about in the mid-00s.
Speaking of oil, the Arbitrage Court has given BP the worst of all worlds: approval of the Rosneft-BP share swap, and the right to participate in Arctic exploration efforts–but only through TNK-BP. So now TNK-BP and BP–and now Rosneft–will be the Siamese triplets from hell for the foreseeable future. Good luck with that. Be careful what you ask for, Dud: you might get it, and in this case you did.
Last, Dmitry Gorenberg (whom I will meet when on a panel speaking about blogging as an academic at the Association for Slavic, East European, and Eurasian Studies meetings in November) posted the editor’s introduction from the new issue of Russian Politics and Law. Two of the articles by obvious Russophobes named Gudkov and Petrov present an analysis that is very similar to the natural state-based analysis I’ve presented on SWP over the last 4 years or so:
Lev Gudkov’s article on “The Nature of ‘Putinism’ ” judges Putinism to be a particular type of post-totalitarian authoritarianism in which the political police wields power on behalf of the private interests of bureaucratic clans or corporations. Furthermore, he argues that this system of power is not merely conservative but is designed specifically to block the development of the rest of society and to prevent its modernization. Control in this system is exercised by the security services, who seek to milk both the state and society for their own personal enrichment. [Emphasis added.]
Gudkov notes that this political system has a fundamentally different character from either the Soviet regime or a regular personalistic authoritarian regime such as that found in other countries. The new aspects of Putinism include its system for the legitimation of rule and its technology of power. Unlike Soviet-style totalitarian regimes, the Putinist political system is not a party-state, where the ruling political party has merged with the state. The regime also lacks an overarching ideology that seeks to justify its rule, nor does it engage in mass terror campaigns against political opponents. Furthermore, the population has partial freedom of access to information and the ability to engage in opposition activity as long as it does not threaten the ruling elite.
Unlike authoritarian states, the Putinist regime has a quasi-personalist and conservative character that focuses on restoring “Russian traditions” while engaging in ever-increasing corrupt activity. The personalism of the regime is particularly important, as Russia’s leaders have partially destroyed state institutions in order to cement their control of state power.
. . . .
The destruction of state institutions is the main focus of Nikolai Petrov’s “The Political Mechanics of the Russian Regime: Substitutes Versus Institutions.” Petrov argues that over the last ten years, Putin and his associates have eviscerated all state institutions except the presidency by systematically stripping them of any real power or purpose. What has been left behind are decorative institutions that appear to retain the powers of their former selves while actually performing few if any useful functions. The symbol of this transformation is the frequently cited remark by Boris Gryzlov, the Speaker of the State Duma, that the parliament is no place for political discussion. The substantive roles of both the Duma and the Federation Council have been handed over to various consultative councils, while the government itself as a decision-making organ was largely replaced by the presidential administration as long as Putin was president. Regional executives were, in turn, replaced by presidential representatives to the federal districts. The substitutions reached into the private sector, as well, with the replacement of independent large corporations with corporations controlled by the state and its top officials.
Petrov calls the system that results from this effort “highly managed democracy.” Its essential characteristics include strong personal power that is unlimited by institutions, the manipulations of public opinion through the mass media, and the holding of controlled elections. The consequences of building this type of government include excessive centralization, internal conflicts, inability to make decisions, and stagnation. These consequences in turn bring about a loss of flexibility and adaptability to changing circumstances on the part of the regime, followed by a gradual loss of effectiveness in governing. The system not only fails to react to crisis but also frequently causes its own internal crises because a lack of failsafe mechanisms prevents the authorities from realizing that they are making mistaken decisions. The crisis may come from a lack of resources to maintain the patronage system that keeps the government functioning, from an internal political conflict among members of the ruling elite that spreads beyond their ability to control, or from a local crisis that expands to engulf the whole country because of the leadership’s inability to deal with it. [Emphasis added.]
While the system is designed to maintain the current leaders’ grip on power, in the long run, Petrov believes, it guarantees its own failure as hostility to the system gradually develops among the population. Because the public lacks the ability to change the system, anti government attitudes build among the population until they reach an “explosive” level that may bring down both the leadership and the entire system of highly managed democracy.
The last italicized portion is quite similar to arguments I’ve made here, arguments rooted in theory of the political economy of the natural state.
Personalization and de-institutionalization are quite detrimental to the country’s long run prospects. Personalized, de-institutionalized regimes have little capacity for positive change and adaptation. They tend to become ossified if the personal leadership ages in place (which is the most likely outcome in Russia), or instead become wracked by conflict and revolution if struggles over leadership erupt (which is the second most likely outcome in Russia).
I’ve downloaded the articles and will read with interest, and will report any additional interesting insights that I glean from them.