A capitalist revolution

By Mark Almond, a history lecturer at Oriel College, Oxford (THE GUARDIAN, 07/01/09):

Russia’s energy giant, Gazprom, is at the heart of a new cold war pitting the Kremlin against Washington. In the old cold war, Soviet gas still flowed west at the height of rows between Reagan and Brezhnev - but postcommunist Russia is proving less pliant than the “evil empire”.

Gazprom is at the heart of modern Russia. Its former chairman is the country’s president, and many key executives work part-time in the Kremlin. It is, above all, not only Russia’s biggest company but the world’s biggest energy supplier. Back in the sleepy Brezhnev days it was run like the gas board here under Harold Wilson, and with as much geopolitical significance. Now the west’s fear is that Gazprom is beginning to play a role like that of America’s oil companies or BP in the days when the west’s energy interests determined who ran countries such as Iran.

Gazprom’s dispute with Ukraine is multilayered. The west prefers to focus on the strategic significance of Russia’s desolate neighbour, while the Russians put money first. It makes sense for Washington to see the issue solely in great power terms because America doesn’t depend on Gazprom like the EU.

Last month, in the dying days of the Bush administration, Kiev signed a “strategic partnership” with Washington. Keeping Russia hemmed in is why Ukraine matters to America. Apart from its status as a geopolitical pawn, Ukraine is little more than a pipeline route for Gazprom’s exports.

Washington’s indignation about a Russian energy oligarch sitting in the Kremlin does not extend to Ukraine’s energy oligarch, Yulia Tymoshenko, sitting as prime minister in Kiev. Qualifying as a market economy used to be about buying cheap and selling dear, but now politics trumps economics in western estimations.

Although its EU allies pay around $500 per unit, Washington wants Gazprom to subsidise the anti-Russian coalition government in Kiev by charging the poor Ukrainians only $175. Gazprom’s response is market economics red in tooth and claw.

The west wanted Russia to be a market economy, but Russia never asked how countries become market economies. Is a political-economic juggernaut like Gazprom just a relic of Soviet days? Didn’t so-called chartered companies - monopolies in effect - like the East India or Hudson Bay companies play a huge role in the development of Britain’s model market economy? Without their protected profits and ability to call on Westminster to back up their trading practices with power, would Britain’s economy have taken off 300 years ago?

This spat at the gas tap has hit western Europe, but the region is yesterday’s growth market so far as Gazprom is concerned. Apart from Britain, where the blinkered market-makers set free by Tony Blair failed to anticipate demand, let alone invest to meet it, there are no new importers from Russia in the EU.

New pipelines via the Baltic to Germany and through the Balkans to Italy are primarily to cut out the risk of destitute ex-Communist states “doing a Ukraine” and siphoning off unpaid gas while demanding their rich EU partners stick up for them in Moscow.

Gazprom is looking for new clients, and US policy helps. American sanctions on Iran suit Russia well; Washington has pressed Turkey not to buy gas from Iran, so Gazprom offers the alternative. Chaos in Afghanistan has hit the prospect of a pipeline from Turkmenistan to India - which, with Japan and above all China, is tomorrow’s market for Gazprom. While western Europe sweats over whether to pressure Ukraine to pay so Russian gas can flow, or to fight Washington’s new cold war by proxy, Moscow is building new routes east and south. Medvedev announced a new pipeline to China on entering the Kremlin.

Western triumphalists marked Russia down for inevitable decline. Certainly so long as Yeltsin let his crony capitalists plunder the country and deposit the loot in London and New York, pessimism was justified. Now, however, Russia’s capitalist crew are not fly-by-night asset-strippers but ruthless capitalist politician-businessmen of the sort Britain used to produce.

Gazprom’s executives are the 21st-century equivalent of Britain’s 18th-century pioneers of unscrupulous national power and wealth. Suddenly, yesterday’s proponents of the unbridled free market have discovered a distaste for the brute realities of supply and demand. Rather like poker players who have won all the chips on the table, western states recognise that the odds will turn sharply against them, so they insist on the economic equivalent of a whist drive. But will the hard young men running Gazprom take up this granny’s game?

Fuente: Bitácora Almendrón. Tribuna Libre © Miguel Moliné Escalona