PetroKremlin succeeds Red Kremlin

By Aussiegirl

In Russia, communism has been succeeded by a new statist and corporatist model of government which centralizes control of the vast energy resources of the country under Putin and a small cadre of insiders in order to project power overseas. Call it Post-Communism -- gone is the masking rhetoric about the masses, the proletariat, the caring and sharing and one for all and all for one, from each according to his abilities, to each according to his needs, etc. etc. The goal, as always, is the assertion of state power, domestically, as well as projecting power in foreign affairs. In furtherance of these aims the government has nationalized huge portions of the energy industry, sometimes seizing assets by illegally prosecuting and then imprisoning people such as the head of Yukos energy, Yuri Khodorkovsky and others. Phony accusations of tax evasion provide the excuse to imprison and then seize the assets of what were previously held corporations. In addition, by taking control of 51% of Gazprom, Russia's huge natural gas giant, Putin has managed to use the leverage of gas prices to pressure Yushchenko and Ukraine prior to the upcoming presidential elections. By offering sops to international financiers of minority ownership and also offering figurehead positions on the board to international figures such as Gerhard Schroeder (who has already accepted such a position), the government hopes to give their grab some international legitimacy and to attract foreign investment needed for further energy exploration and development.

Last week Kremlin economic advisor Andrei Illaryonov slammed what he called the transformation of Russia into a giant corporation. "The main outcome of this year is the formulation of a new corporatist model for political, economic, social, public, and international life," said the outspoken Mr. Illaryonov, who Tuesday offered his resignation. "Until recently, no one put any restrictions on me expressing my point of view. Now the situation has changed," the Associated Press reported him as saying.

Don't be fooled by China either. Most of those Chinese corporations and businesses are still state or military owned behind the scenes. Both of these "former" communist countries (China of course, still is officially Communist) have realized that the way to a hegemonic superpower status is to utilize the new business model in order to enrich the state which will then proceed to enlarge its military and its influence throughout the world. Meanwhile, international financiers and businesspeople see only petrodollars and profits in their future, and may be unwittingly selling them the rope with which they will eventually hang us, just as Lenin predicted we would.

We need a new name to describe this kind of emerging post-communist state.

Kremlin reasserts control of oil, gas | csmonitor.com

Call it PetroKremlin. A vast state-run energy conglomerate has been assembled over the past year, some experts say, to fuel Russia's bid to revive Soviet-style great power status.

To date, the Kremlin has effectively renationalized almost a third of the formerly private oil-and-gas sector. Other developments also point to growing state ambitions:


• A $15-billion Siberian pipeline, due to begin pumping in 2008, will shift Russian crude exports to Asia, particularly China, where Moscow is cultivating fresh strategic relationships.

• A 737-mile gas line being laid under the Baltic Sea will cut out middlemen Ukraine and Poland, whose relations with Moscow have recently soured, while locking in Russia as Western Europe's key energy supplier.

• State-run Gazprom has teamed up with several foreign partners to develop a vast Barents Sea gas field whose production, converted to liquefied natural gas (LNG), could begin supplying the US market by 2010.

• A long-delayed law on subsoil resources, to be passed by the Duma next year, is expected to ban foreign-owned companies from exploring or developing Russian oil fields and other key mineral resources.

"Amazing changes are happening swiftly, because Putin has understood that energy is Russia's key card to play at the international table," says Michael Heath, a political analyst with Aton, a Russian brokerage. "Instead of the military force the Soviet Union used to project its power, Russia is using oil as a major tool of foreign policy."

[...]Putin has appointed some of his top aides to run the Kremlin's newly acquired empire.The daily Nezavisimaya Gazeta estimated earlier this year that seven people from Putin's inner circle now control nine state companies with total assets of $222 billion, which is equal to 40 percent of Russia's GDP.

Last week Kremlin economic adviser Andrei Illaryonov slammed what he called the transformation of Russia into a giant corporation. "The main outcome of this year is the formulation of a new corporatist model for political, economic, social, public, and international life," said the outspoken Mr. Illaryonov, who Tuesday offered his resignation. "Until recently, no one put any restrictions on me expressing my point of view. Now the situation has changed," the Associated Press reported him as saying.

If the Kremlin is demonstrating that energy supplies can be dangled like a carrot, it has also realized they can be wielded like a stick. Ukraine, which broke free of Moscow's orbit in last year's "Orange Revolution," was hit last month with more than a quadruple price hike for natural gas supplies - from $50 per 1,000 cubic meters to $230. Kiev has protested that it cannot adjust to such a rapid price hike, but Gazprom has threatened to shut down gas deliveries to Ukraine on New Year's Day if it doesn't comply. Ukraine announced Tuesday an agreement had been reached but a Gazprom spokesman in Moscow denied the claim.

Meanwhile Belarus, Moscow's most loyal former Soviet ally, has contracted with Gazprom to pay just $46 per 1,000 cubic meters of gas.