OIL AND RUSSIA’S POLITICAL REGIME AT STAGES IN POST-COMMUNIST DEVELOPMENT: CONTINUITY OF RENT SEEKING WITHIN THE RAW-MATERIAL PARADIGM
Abstract
On 28 April 2010, during a business trip to Astrakhan on the Caspian, Russian Prime Minister Vladimir Putin personally pushed the button to start the region’s first drilling unit on the Korchagin platform. This moved Russia offshore in its sector of the Caspian and confirmed that the Kremlin was as determined as ever to remain within the raw-material paradigm; the nature of the political stimuli in the corridors of power became much clearer.
It should be said that the rent-seeking angle throws the most typical features of Russia’s political regime into bolder relief.
Here I have examined the rent-seeking phenomenon of Russian power at various stages of post-communist development in the oil sphere, the country’s key resource, and the correlation between the raw-material opportunities and the principles of political organization in Putin’s Russia.
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See: Rossia v tsifrakh, Goskomstat Rossii, Moscow, 2000, pp. 356, 368-369; V. Inozemtsev, “Porvat s traditsiey,”Ekstra tekst, Issue 2, Part 4, 2009, available at [http://www.politstudies.ru/extratext/lm/flm009.htm].
See: S. Glaziev, “Diskussia ‘Mezhdu vyborami.’ Ekspertny opros gazety Zavtra,” Zavtra, 30 January, 2008, p. 1.The situation continued into 2010 when oil and gas brought 3.194 trillion rubles to the federal budget out of total revenues of 6.95 trillion, or 32.3% of budget spending in 2010. It was calculated that even if only direct oil- and gas-produced revenues (severance tax and export dues) are taken into account, 62% of the 2010 federal budget depends on oil prices, available at [http://rusanalit.livejournal.com/814654.html].
See: K. Ivanov, “Propast mezhdu regionami—ugroza tselostnosti Rossii,” Ekobomika i zhizn, No. 8, February 1997,p. 1. This trend was obvious in the 2000s. In the last 10 years, the regions (as well as urban and rural communities inside the regions) have been demonstrating obvious inequality in revenues. The stunning oil prices (and oil revenues) of 2000-2008 merely intensified the trend.
See: E. Khartukov pioneered investigations of this new phenomenon in his “Bankers Becoming New Masters of Oil Companies,” Petroleum Economist (London), Vol. 64, No. 2, February 1997, pp. 6-8.
This concern was obvious even before the “petroleum era” habitually identified with Putin (see, for example: Kvitko, “Neft vmesto reform. Interview s ispolnitelnym direktorom Ekspertnogo instituta A. Neshchadinym,” Moskovskie novosti, 4-10 April, 2000, p. 10).
See: A. Åslund, “Reform versus ‘Rent-Seeking’ in Russia’s Economic Transformation,” Transistion, Vol. 2, No. 2,26 January, 1996, pp. 12-16.
For more detail, see: A. Magomedov, R. Nikerov, Bolshoy Kaspiy. Energeticheskaia geopolitika i tranzitnye voy-ny na etapakh postkommunizma, Ulaynovsk, UlGU, 2010, pp. 36-94.
See: NG-Regiony, No. 15, 1998, p. 4; Obshchaia gazeta, 7-13 September, 2000, p. 6.
D. Lane, Introduction, in: The Political Economy of Russian Oil, ed. by D. Lane, Rowman & Littlefield Publish-ers, Inc., Lanham, Boulder, New York, Oxford, 1999, p. 10.
Vecherniaia Elista, 26 January, 2002
The International Herald Tribune, 30 January, 2009.
J. Browne, “Regardless of What Putin Stands for, He is Exceedingly Competent,” The Times, 5 February, 2010.
M.I. Goldman, Petrostate: Putin, Power, and the New Russia, Oxford University Press, USA, 2008, p. 16.
Well-known analyst William Engdahl offers the details and preliminaries of this court case in: W.F. Engdahl, “The
Emerging Russian Giant Plays its Cards Strategically,” Global Research, Canada, 20 October, 2006.
M.I. Goldman, op. cit., p. 87.
The fact that the heavyweights from the Kremlin and the Cabinet: from Gazprom (A. Kudrin, D. Medvedev, Miller, V. Khristenko); S. Oganesian (who headed the Federal Energy Agency); and from Rosneft (S. Bogdanchikov and Sechin) were involved in the conflict, which lasted from December 2004 to February 2005, shows that the victory was hard won. The battle was accompanied by both sides’ numerous public commentaries in the media (see: D. Skorobogatko, Butrin, I. Rybalchenko, E. Kiseleva, “Gosudarstvo raskololos na neft i gaz. Borba za control nad ‘Rosneftiu’ pereshla v otkrytuiu fazu,” Kommersant, 2 February, 2005, pp. 1, 13).
See: A. Illarionov, “Drugaia strana,” Kommersant, 23 January, 2006; G. Kasparov, “Vykhoda net. Kakoy stroy segodnia v Rossii?” Interview at Echo of Moscow radio, 2 May, 2008; Z. Brzezinski, “Putin’s Choice,” The Washington Quarterly, Vol. 31, No. 2, Spring 2008, pp. 95-116.
See: S. Peregudov, “Biznes i biurokratia: osobennosti simbioza. Mozhno li schitat Rossiiu korporativnym gos-udarstvom?” Nezavisimaia gazeta, 11 March, 2006; idem, “Politicheskaia sistema Rossii posle vyborov 2007-2008 godov:
actory stabilizatsii i destabilizatsii,” Part 2, Polis, No. 3, 2009, pp. 158-159.
See: P. Orekhin, E. Samedova, “Korporatsia ‘Kreml’ uspeshno porabotala,” Nezavisimaia gazeta, 26 July, 2005,pp. 1, 3; O. Vinogradova, “ ‘Puting’ v deystvii,” Neftegazovaia vertikal, No. 15, 2007.
See: Vedomosti, 9 June, 2008; S. Peregudov, “Politicheskaia sistema Rossii posle vyborov 2007-2008 godov: fac-tory stabilizatsii i destabilizatsii,” Part 2, p. 150.
See: T. Gomart, “Russia Alone Forever? The Kremlin’s Strategic Solitude,” Politique Etrangere, Vol. 73, Issue SPECI, 2008, pp. 23-34.
See: O. Mordiushenko, D. Rebrov, “‘Gazpromu’ predlagaiut sdat aktsii. Chtoby vosstanovit kontrol gosudarstva nad monopoliey,” Kommersant, 22 October, 2009.
Ph. Hanson, “The Resistible Rise of State Control in the Russian Oil Industry,” Eurasian Geography and Econom-ics, No. 1, 2009, pp. 14-27.
See: R. Shleynov, “Kto tretiy vladelets ‘Gunvora’?” Novaia gazeta, 12 October, 2009, pp. 2-3.
See: R. Shleynov, “Neftetreyder ‘prozrachnoy vody’,” Novaia gazeta, 24 August, 2009, pp. 2-3.
See: Ibidem.
See: C. Belton, N. Buckley, “On the Offensive: How Gunvor Rose to the Top of Russian Oil Trading,” Financial Times, 14 May, 2008; Ph. Hanson, op. cit., p. 25. The same happens in other branches. The Arbitrary Court in Zurich rec-ognized former RF minister for information technologies and communications L. Reyman as the only beneficiary owner of the Bermuda IPOC fund and owner of a number of offshore companies registered under several jurisdictions and connect-ed with IPOC business. The Russian authorities refrained from any comments; they merely blocked this information for the Russian media (see: I. Tsukanov, R. Dorokhov, “Svidetel No. 7. Arbitrazh Zurikha priznal ego benefitsiarom POC,” Vedo-mosti, 23 May, 2006).
O. Gaman-Golutvina, “So-doklad k dokladu A. Evina, ‘Dilemmy evropeizatsii v svete sopernichestva vnutri elit.
a sravnitelnom opyte Turtsii i Rossii’,” in: Russkie chtenia, Issue 1, December 2004-June 2005, Gruppa ekspert, Moscow,2006, p. 83.
A. Samarina, “Pervaia desiatiletka V. Putina. Evolutsia ot agonii separatizma k gosudarstvu-mifu,” Nezavisimaia gazeta, 7 August, 2009.
See: V. Cherkessov, “Nelzia dopustit, chtoby voiny prevratilis v torgovtsev,” Kommersant, 9 October, 2007;O. Shvarzman, “Partiu dlia nas olitsetvoriaet silovoy blok, kotory vozglavliaet Igor Ivanovich Sechin,” Kommersant, 30 No-vember, 2007.
This is confirmed by former BP head who described his meeting with Khodorkovsky in the following words:
Bespectacled, soft-spoken Khodorkovsky could at first glance be mistaken as unassuming… He began to talk about get-ting people elected to the Duma, about how he could make sure oil companies did not pay much tax, and about how he had many influential people under his control… But there was something untoward about his approach” (J. Browne, op. cit.).
The Washington Post, 27 June, 2006.
See: S. Peregudov, who relied on information supplied by “elitologists,” wrote about the increasingly important role the business elite played in state governance. In 1993, only 1.6% of civil servants had previous experience in business; in 2002 their share increased to11.3%; in 2008, to 39.8%. The economic and political elites are intertwining even more: big business is invited to elaborate the “party line” of the United Russia Party, which incorporates business into the power system (see: S.P. Peregudov, “Politicheskaia sistema v Rossii posle vyborov 2007-2008 godov: factory stabilizatsii i destabilizat-sii,” Part 2, p. 146).
S. Markedonov, “Trikolor separatizma,” Gazeta, 1 April, 2009.
See: V. Volkov, Lecture: “Transformatsia rossiiskogo gosudarstva posle 2000 goda,” Polit.RU. Public lectures.
See: R. Cameron, “Putin Marks 10 Years of Extraordinary Achievement,” The Sydney Morning Herald, 11 Janu-ary, 2010.
See: D. Badovskiy, “Problema bezbiltenika,” Gazeta, 23 June, 2008.
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