Streetwise Professor

June 24, 2010

In Another Sign of the Impending Apocalypse

Filed under: Commodities,Economics,Energy,Financial crisis,Politics,Russia — The Professor @ 3:25 pm

Igor Sechin is on a charm campaign.

Let me repeat that.   Igor Sechin is on a charm campaign.

There is a long piece about him in a recent FT:

As Russia seeks to shake off an economic crisis that wiped out layer after layer of the oil-fuelled gains of the Putin era, Mr Sechin – viewed with fear and awe for overseeing the state takeover of the strategic heights of the economy – is striking a new, surprisingly accommodating tone. The Kremlin, taken aback by how vulnerable Russia’s oil and gas-driven economy proved to be to the global financial crisis and recession, has started to change its tune.

I said Sechin is trying to be charming.  I didn’t say that he had gone so far as to actually tell the truth, or anything.  In fact, he makes a couple of complete howlers.  One relates to how Rosneft, and other Russian state  energy companies, came by some of their prize assets:

In his first public comments on how the reinvigorated Putin state managed to recover important energy assets from oligarchs who picked them up cheaply during chaotic post-Soviet privatisations, Mr Sechin says these properties were not “repossessed”. It was, he insists, a legal process where state companies paid market prices for assets that are now managed no differently from private ones.

Riiiiigggghhhhtttt.  Legal process.  Market prices.  Uh huh.  Tell me another one, Igor.

So he obliges:

Russia’s state-controlled companies cannot use their resources as political weapons, or “instruments to put pressure on consumers” as he puts it. The likes of Rosneft and Gazprom are, he adds, “normal public companies, working under international laws, and this makes it impossible for them to break their obligations to consumers”.

Stop it, you’re killing me!

But he can’t stop:

Russian companies are not subject to state fiat in the same way as national oil companies set up by the world’s other big producers.

“When we speak with our colleagues from Opec, they say that Russia should operate quotas just like they do. I tell them that unfortunately we have no such instruments, because Russian oil companies are private companies. Even those that are partly state-owned are private companies. They are working in the conditions of the market and have obligations to their partners which do not allow them to take unilateral decisions.”

Sechin has been peddling this line going back to late-2008, when he was playing Lucy and the football with OPEC.  As I wrote then, and in early-2009, it is complete tripe.  Not that I WANT Russia to cooperate with OPEC, but even given that it has some “private” companies rather than completely nationalized oil sectors, Russia can control exports at a whim, and has the policy tool to do so: its export duty.  By raising the export duty, Russia would reduce export volumes, just as by reducing output national oil companies can reduce export volumes; both actions raise the world oil price.  Russia tweaks its oil export duty all the time.  It adjusts other export duties as well, in order to achieve policy objectives.

In brief: if Russian (and Sechin) wanted to coordinate output with OPEC, it would have no difficulty in doing so via the export duty.  The truth is, it doesn’t want to coordinate output with OPEC; it doesn’t want to cut Russian output.  Quite rationally, Russia wants OPEC to bear all the costs of supporting world oil prices by cutting OPEC output, and to reap the benefit by producing as much as it can.  That’s what Russia has done.  Like I say, as a net short, I (and the US) benefits from Russia’s action; the world is a better place for it.  But it doesn’t do Sechin’s credibility any good for him to tell such laughable falsehoods.

Perhaps Sechin’s choir boy act indicates that finally, Russia has learned that you catch more flies with sugar than gall.  Perhaps.

But I wouldn’t consider this to be a sincere conversion.  It is, at best, a pragmatic trimming in response to changed economic and political conditions.  And if and when those conditions change again, don’t be surprised if the Old Igor, the Bad Igor, returns, fangs bared.

Whether it is with Sechin or Lavrov or Putin or Medvedev: anyone who puts their faith in their more moderate statements does so at their peril.  For as Sechin demonstrates, even when he tries to act nice, he does so with a stream of falsehoods.

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14 Comments »

  1. Looks like P. Obama has a new burger buddy and seems to have fallen for the “Ruskie” BS line.

    Comment by Bob — June 24, 2010 @ 8:34 pm

  2. Jobs told Dima he needs to change Russian mentality. Good luck with that, Dima. You can start with Sechin.

    Comment by La Russophobe — June 24, 2010 @ 9:00 pm

  3. Well what should Sechin have said? We lawlessly tore apart the best managed and biggest enterprise in Russia, arbitrarily imprisoned its CEO for his honesty and dedication to freedom and threw the morsels from our feeding frenzy to our silovik henchmen?

    Anyway, I think Russia’s opening has little to do with weakness and everything to do with the fact that it now feels geopolitically secure and unthreatened enough to better relations with some Western countries in order to get their technological knowhow for modernization.

    Comment by Sublime Oblivion — June 24, 2010 @ 11:43 pm

  4. I’m similarly bemused. What the hell did you expect Sechin to say? Are you really surprised that a politician would lie through his teeth? That is news to you? That is worthy of comment?

    I mean really dude “For as Sechin demonstrates, even when he tries to act nice, he does so with a stream of falsehoods.” What politician does that NOT apply to? Is there a single one in the entire world?

    Comment by Mark Adomanis — June 25, 2010 @ 12:12 pm

  5. @Mark–your cynicism is duly noted. But many people do actually put some weight on such comments, so as superfluous as it may seem to you, it is worthwhile calling bullshit when the bullshit is particularly egregious.

    Just so I can be clear, when reading your blog in the future I know that: (a) you will never criticize a politician for lying, and (b) you acknowledge that Sechin (and Putin et al) are lying sacks of you know what.

    The ProfessorComment by The Professor — June 25, 2010 @ 1:15 pm

  6. S/O & Mark: I think that if you give your argument some thought, you will conclude that it is facile and, quite frankly adolescent. It would have some superficial appeal if politicians lie with probability 1. If they always lie about everything, you can perhaps argue that it is worthless to point that out–but even that presumes that it is universally agreed that all politicians lie. If some people do not believe that politicians always lie, they can learn something when that is pointed out.

    But politicians do not lie with probability 1. They lie with probability greater than zero, but less than one. This means that there is merit to identifying the BS and the legitimate, and pointing out which is which.

    And even if they lied with probability 1, there is an uncountable number of possible lies, and why something is a lie is material. Therefore, even if politicians lie uniformly, analyzing their statements, and pointing out the nature of the lie and the implications of the lie can have value.

    The ProfessorComment by The Professor — June 25, 2010 @ 1:51 pm

  7. Of course I’ll criticize people for lying (it’s fun!), but I’ll leave the schoolboy moralism and mock outrage at the door. You seem honestly angered and/or shocked that Sechin would “spin.” Um, that’s what politicians do, that’s basically the job description of being in politics: there could be nothing less exceptional or unique than a politician lying in an interview.

    Maybe I’m wrong, but your post seems to suggest that this sort of banal mendacity “proves” that the Russians are uniquely evil or stupid or something. I just don’t get this sentiment, and I truly cannot understand (and I mean this honestly, I’m not just being sarcastic, I really am unable to comprehend) why you get so angered by the boilerplate constantly put out by people like Putin and Medvedev.

    Comment by Mark Adomanis — June 25, 2010 @ 1:59 pm

  8. If you sense shock or anger in what I wrote, you’re missing the point, and mischaracterizing the tone. That says a lot more about you than about me.

    You think I was surprised? Give me a break. The whole tone was one of mockery, not outrage. The whole point of the post is to point out that it is spin, just bullshit spin. What about “I wouldn’t consider this to be a sincere conversion” don’t you get?

    You are just way defensive about any criticism directed at Russians, even tools like Sechin. Did I say anything about “uniquely evil” or “uniquely stupid” as applied to Russians generally? Obviously not. You PROJECTED that into what I wrote. Was I angry? Again, no–mockery is different than anger, dontcha know. Again–you are projecting. Did I generalize about Russians? Again, obviously not: I wrote about one particular Russian, and tangentially about a couple of others. To repeat, your response is far more revealing about you than about anything I wrote.

    But I think that there are some people out there who are credulous (including, perhaps, Obama who seems smitten with his new buddy Dima–I fully expect next to see pictures of them holding hands), it is important to make it abundantly clear that Sechin is a liar, and a particularly sinister one at that.

    The ProfessorComment by The Professor — June 25, 2010 @ 3:26 pm

  9. And re surprise, I’ve been writing about Sechin’s mendacity with OPEC going back to Dec 08, dammit. I’d only be surprised if I had amnesia. Which I don’t.

    The ProfessorComment by The Professor — June 25, 2010 @ 3:27 pm

  10. Ok I guess I misinterpreted your tone, but still the whole mockery thing seems a bit off to me and not just because I’m “defensive.” I’m probably almost as convinced as you are that Russia is governed by corrupt thieves (it’s always been ruled that way), but I really can’t get worked up over it. I’m frankly amazed you can.

    I mean really, with all of the catostrophically stupid, wasteful, and expensive things that the American government has done over the last decade, you have sarcasm/outrage to spare for Igor Sechin? How? Why? I really like reading about Russia and trying to understand it, but I don’t get this need to feel superior to it via mockery (if we need to inflate our egos with comparisons to the Russians, things have really gotten a whole lot worse than I would have thought in even my most cynical moments)

    And please spare me the “defensive” label. I’m not “defending” Sechin, I’m just genuinley curious as to why you give a crap what he says or why it’s even vaguely noteworthy that he spouts propaganda.

    Comment by Mark Adomanis — June 25, 2010 @ 4:20 pm

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    Pingback by Tweets that mention https://streetwiseprofessor.com/?p=3924utm_sourcepingback -- Topsy.com — June 25, 2010 @ 5:40 pm

  12. “I mean really, with all of the catostrophically stupid, wasteful, and expensive things that the American government has done over the last decade”

    Mark, that’s just hilarious! Do you REALLY believe the US government stopped doing such things just because Barack “the One” Obama took over? If not, where is your sarcasm and outrage for the Obama administration, which has used a sham nuke treaty and and even bigger sham of a Iran sanctions deal as justification to turn a blind eye to egregious human rights violations, as clearly proven by the European Court for Human Rights. Where is YOUR outrage about the PRESENT administration?

    Seems to us you are at least as fixated on a U.S regime THAT IS NOT EVEN IN POWER as you accuse SWP of being where Russia is concerned.

    And you’re woefully out of touch with Russian history. Say what you like about US politicians, they didn’t built GULAGs, murder tens of millions, and cause a national collapse. Some people would say, therefore, that Russia needs to be a bit more careful about this kind of thing than America.

    Frankly, your remarks sound and awful lot like the old Soviet joke that tells of an American complaining to a Russian hotel clerk about poor services, and hearing the response “you lynch blacks.” What in the WORLD problems in other countries have to do with fixing problems in Russia — a country that doesn’t rank in the top 125 nations in the world for lifespan and whose own president admits there is a massive demographic criss due to a horrifying mortality rate — is utterly beyond our comprehension. Seems to us that all you are doing is helping Russia to justify failure.

    And for you of all people on the planet to question another blogger’s tone — you who use the word “whore” as if it were a pleasantry — is one of the most sensationally hypocritical statements we’ve seen come out of the blogosphere in many a year.

    Comment by La Russophobe — June 26, 2010 @ 10:20 am

  13. SWP:

    Now hear this! You are not allowed to expose any lies being told by the government of Russia until you have exposed each and every lie ever told by every other politician on the face of the earth, or are you allowed to criticize any such lie until you have criticized every other such lie.

    It does NOT matter if Russia destroys itself (again, for the fourth time in a century) as long as lots of other countries do the same.

    And Russia is NOT worse off than the USA even though it has (1) more than a DECADE shorter average lifespan, (2) TEN TIMES lower hourly wage (2) zillions of convictions for state-sponsored murder, kidnapping and torture in the ECHR (4) a FAR lower rating for official corruption from every independent body who has ever studied the question. Russia is doing just fine, thank you very much, and if you care to say otherwise you need to visit a readjustment hospital in Omsk for a few years, then you will surely see things differently.

    Even though Russia has collapsed over and over and over again and lives in a constant state of despair, it is no worse off than any other country and to suggest otherwise is merely evidence of a racist conspiracy on your part.

    Got that, buddy? 😉

    Comment by La Russophobe — June 26, 2010 @ 10:59 am

  14. More impressive work by Herr Sechin:

    http://www.themoscowtimes.com/business/article/in-gaffe-sechin-says-bp-chief-is-quitting/409290.html

    Comment by La Russophobe — June 29, 2010 @ 12:06 am

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