Samizdata

Nicolas Bourbaki presents a very interesting insider’s view of the how things are developing in Russia. Several of the article’s links require registration at the linked site.

The summer of 2007 was a busy year for the Russian oil and gas business. In April of that year, the state-run energy company Gazprom finally exerted enough pressure on the Sakhalin II consortium to wrest control of the giant project in Russia’s Far East from Shell, who had hitherto been the majority owner and manager of the development. In return for a cash payment of $7.45bn, at the time seen as a knock-down price, Gazprom acquired a 50% plus one share stake in the project. The deal was struck after months of the Russian environmental regulator exerting pressure on the consortium, Sakhalin Energy, resulting in works being delayed, stopped, and threats being made to withdraw the license to continue the development altogether. Despite there being genuine concerns regarding environmental damage incurred by the development, not to mention the doubling of project costs to $22bn, few believed that the governmental pressure exerted on Sakhalin Energy was anything other than a naked attempt by the Russian government to gain control over the project, its resources, and its revenues by force. Sure enough, within weeks of Gazprom taking the keys to Sakhalin II, the environmental regulator cheerily announced that all concerns had been resolved to its satisfaction and not a peep has been heard from them since. The outcome at Sakhalin II was presented by the Russian government, and accepted by many Russians, as a significant victory of the resurgent Russian state in reversing their exploitation at the hands of foreign powers when they were weak, and regaining control over Russia’s strategic resources, its wealth, and its independence.

Buoyed with confidence from their coup on Sakhalin, the month of June saw the Kremlin use alleged breaches of license obligations to ‘persuade’ BP to sell its 62.85% stake in Siberia’s Kovykta development to Gazprom for $900m in cash, a figure many people thought better than what was feared, i.e. nothing. Two months later, in August 2007, the Russian government moved to deny the Exxon-led Sakhalin I consortium the right to export gas from its development in an attempt to force the sale of the gas to Gazprom at artificially low domestic prices, after which Gazprom would be free to export it via pipeline or LNG carrier at international prices.

Now that Russia’s foreign-run developments were back under government control or suitably compliant, the government ensured that all future developments would remain similarly tied to the Kremlin with limited foreign influence. In April 2008, the Russian parliament approved a new law which effectively handed monopoly rights for all future developments of the Russian continental shelf to just two companies: Gazprom and state-owned Rosneft. By now, the bulk of Russia’s enormous hydrocarbon wealth both present and future was firmly in government hands, a situation which was looked on with gleeful satisfaction by Russians and allowed them to wield considerable influence beyond their borders. Soon followed grand plans for Gazprom to build a pipeline across the Sahara desert, buy all of Libya’s gas, and build LNG plants in Nigeria. Energy nationalism at home and the loudly announced forays abroad as personified by Vladimir Putin helped ensure the Russian population returned approval ratings of over 80% for their then president, now prime minister. Russia had picked itself up off its knees, Russia was strong once more, Russia could once again command respect from others. Russia was back. → Continue reading: Russia’s descent into reality

Just when you start believing Russia has returned to its old ways, something like this happens. A religious group attempted to get the license of a TV station pulled because it felt a South Park cartoon was hateful to Christians and Muslims. In return Russians rallied behind South Park, demonstrated, collected signatures on petitions… and… won????

The people’s voice, apparently, was heard. On September 25, Russia’s Federal Competitive Bidding Commission on Broadcasting voted unanimously to recommend that 2×2’s license be renewed. The final decision is up to another federal agency, but it is expected to follow the recommendation. 2×2, in turn, will comply with the commission’s request to expand its programming to include TV movies and non-animated series, as stated in its official description; the channel’s general director Roman Sarkisov has promised that the new fare will be “faithful to the style of 2×2.” Meanwhile, South Park stays on the air except for the “offending” episode, which has been shelved pending further investigation of “extremism.”

I think this shows the danger of oversimplifying your view of a large nation with a complex political history. Russia is what it is and does not fit neatly into any of the categories we have heretofore used to describe it. Russia is no longer a simple ‘evil empire’. Today it is simultaneously many things, some of which are opposites. It is a place where organized crime has great power; where ex-KGB officers long for the old days; where very smart and well educated people create new ideas and companies; where old imperialist ideas and suspicion of foreign influence exist and the Orthodox church has regained much power over society. It is such a hodge-podge of pulls and counter-pulls that virtually anything I can say about it will be wrong.

This of course makes it a fascinating place to watch.