Russia’s rise to today’s energy super power ensured Putin intervened to ensure the victory of the state over powerful private interests, mostly the oligarchs who gained control over Russia’s prized energy assets after the demise of the Soviet Union. Putin won the struggle to centralise the Kremlin’s energy authority, by setting out the plan of attack and its implementation.
Putin, the Chekist – secret policeman- began his career as a KGB agent in East Germany for at least 15 years, he returned to his home city of St Petersburg where he was a municipal official until, in 1998, President Yeltsin appointed him as head of the Federal Security Service, the Russian Federation’s successor to the Komitet Gosudarstvennoi Besopasnosti (KGB). In 1999 Yeltsin resigned and Putin, as Yeltsin’s prime minister, became president and served until winning his first term as president March 27, 2000 and then was re-elected 2004. Putin intends to remain in power until 2020.
Putin completed a doctorate at the St Petersburg Mining Institute in which he stated how energy production could contribute to the re-emergence of Russia as a great power. ‘Putin argued that Russia’s natural resource base will not only secure the country’s economic development but will also serve as the guarantor of the country’s international position.’ Putin was determined to reverse the ceding of control of Russia’s energy resources to the oligarchs.
Putin chose Mikhail Khodorovsky, the wealthiest man in Russia the CEO of Yukos one of Russia’s leading oil producers as his first target. Khodorovsky paid $350 million for an enterprise worth $31 billion. Khodorovsky set up a Bank Menatep by means of some illicit dealings and by 2003 Putin and Khodorovsky were on a collision course, Khodorovsky was arrested in 2003 and was sentenced to 9 years in prison. A stock swindle sell out of Yukos shares ensured Rosneft assumed ownership of Yukos thereby ensuring the whole operation was in the hands of Putin and his associates. Modern Russia is a kleptocracy, political journalists, former FSB agents, political opponents, even very vocal critics are murdered and arrested no one believes Putin’s denials because anytime spent in a Siberian prison guarantees intractable often lethal TB.
Gazprom was Putin’s next target. Since 2005 Putin assumed responsibility for Gazprom’s accounts. Sibneft, owned by billionaire Roman Abramovich, was next, though safely based in London, sold his interest for $13 billion.
The deplorable attitude of Russia towards the environment was fully reversed at the Sakhalin-2 oil and gas exploration fields when with strict environmental protection laws ended with Gazprom securing 50% of the $7.45 billion venture with Exxon and Shell selling their shares. Similarly the Lake Baikal natural gas field exploration licence was sold by BP to Gazprom.
Putin ignored US President Bush’s approaches on energy co-operation with Putin threatening Ukraine and Georgia with a gas cut off in mid-winter, a portent of future military conflict. Issues over pipelines delivering oil to China and Japan led to no commitment from Putin.
Putin used its energy clout to exact concessions from former Soviet Republics. The EU relies on Russia for 23% of its gas supplies and are not as critical of Russia’s threats to Latvia in 2017.
Putin will remain in control of Russian energy: ‘I formulated tasks for the development of Russia from 2010-20, the fate is taking shape in a way that I have a possibility to participate directly in achievement of these goals,’ Kremlin press conference, February 14, 2008.
Source: Rising Power, Shrinking Planet, Michael Klare, Oneworld Oxford 2008