21 January 2009

Russia Wants to Be Your Energy Supplier

All efforts by the Kremlin to gain controlling stakes in energy companies, sign more contracts and increase the capitalization of Russia's energy giants, such as Gazprom and Rosneft, have taken place with larger strategic objectives in mind. For example, Gazprom's market capitalization was expected to reach US$1 trillion by 2014, turning it into the world's largest company based on market value , surpassing ExxonMobil. Russia also has coordinated its policies with those of other energy producers in the Middle East and Northern Africa and signed multiple contracts for developing energy capabilities in Latin America ._RussiaBlog
Russia wants to be able to dictate energy policy for the entire world, in the same way it dictates to Europe. The ability to control the world's energy markets and to decide who gets energy at what price, is something that Putin has wanted for Russia since 1997 when he wrote his doctoral thesis, while still governor of St. Petersburg.
Nobody really knows how deep the world economic crisis will be, how seriously it may still hurt Russia and how much time it will take Russia to get back on its feet. But one thing seems certain: its leadership has no other strategy [ed: than oil and gas] to help it recover its great power status and capabilities. The Kremlin has few other options than to preserve its model's principal petro-components, modify them by learning lessons from the crisis and hope for another opportunity to apply the model within the next five years or so. RussiaBlog
Without the help of western leaders, including Obama, Putin will never be able to wield that power of life and death over the nations of the western world -- including the US. If wise leaders in the west develop their own energy resources, Putin will never be able to use energy blackmail over them again. Unfortunately, Obama is already taking steps to reverse the pro-energy stance of the Bush administration, and threatens to put the US in a very vulnerable position vis a vis Russia and the Persian Gulf oil dictatorships.

A graph of Russia's population suggests a very interesting subtext underlying Putin's Machiavellian machinations. Russia is losing people, quickly. Most Russian women do not want to bring new life into an oppressive mafiacracy such as Putin oversees. Most Russian men are drunk and dying before they see 60. HIV and Tuberculosis are out of control. Most wealth and power are horded at the top levels of government while the majority suffer the waves of financial instability, crime, disease, and drug / alcohol use. No wonder the population shrinks.

Long-term, this presents Russia with a huge problem: How does it hold onto its vast land mass -- full of mineral wealth -- in the face of underpopulation within Russia and a vast and growing overpopulation in neighboring states? It is not a problem this year or next. But it will be a huge problem after 2030, if not before.

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4 Comments:

Blogger Mark Wethman said...

It's worth noting that Russia's rate of population decline has been nearly halved in recent years. The loss was estimated at around 700,000 people per year; it is now at an estimated 375,000. (The estimate is mine, based on the fact that Russia lost around 314,000 people in the first 10 months of 2008). So if current trends continue, the population drop-off the depicted in the graph is too steep.

Thursday, 22 January, 2009  
OpenID extropolitca said...

As Mark wrote, and as FuturePundit would argue, in the long term the fraction more fertile will grow and so the decline will be reduced.
A part of the declining trend is probably due to the inability (pointed here IIRC) of people raised in a totalitarian state to live in a responsible way.

The men and the women that fail to reproduce and die young are the weak willed, weak minded and weak educated. The others will find a way to recover from there, unless their habitat continue to force them to not reproduce. But, less people imply more resources per capita and more resource per capita imply more resources for the fertile ones.

Friday, 23 January, 2009  
Blogger al fin said...

EP, much of the fertile fraction of Russia has emigrated away, and will continue to do so as long as the Russian economy is in dire straits. We should not view Russia as a closed system. As long as there is an outlet for the more "life-loving" and ambitious Russians, they will take it, and get out.

Mark, the numbers are in a state of dynamic play. 6 months ago, Russia was riding high on the energy boom. Now, the picture is completely opposite.

Friday, 23 January, 2009  
Blogger Mark said...

Al Fin,

True, but that's why these graphs need to be taken with a grain of salt. Oil prices might rise again in 6 months--who knows? My point was only that Russia has already pulled back somewhat from the abyss it was staring into.

Friday, 23 January, 2009  

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