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Russia Rattles Energy Markets
By Dariya Fadeeva, Russia
While the United States is preoccupied with its difficulties in Iraq, Russia has been busy developing its oil and gas assets in an effort to overtake American economic hegemony throughout the world.
"…a majority of the Russian people consider this move to re-nationalize as a rejection of free market forces. The government is seen as re-exerting authoritarian control over its citizens and asserting its political power over former Soviet Union states like Ukraine and Chechnya through energy reliance. " -Dariya Fadeeva
An aggressive economic-based Russian foreign policy was not entirely unexpected. Since the break up of the Soviet Union, Russia's influence has been almost entirely confined to its nuclear arsenal. While it has taken over 10 years to rebuild its military and economic might, today Russia stands poised to rattle U.S. markets.
The Russian economy is as strong as it has ever been. Its GDP (2006) was $986 milliard - four times that of 1997. This enormous increase is largely due to Russian reserves of oil and gas that are creating huge windfalls.
The re-nationalization of Russian resources has enabled the government to become a major player in the world economic arena with such newly state-owned energy corporate giants like Gazprom and Rosneft.
But not everyone is pleased, most especially a majority of the Russian people who consider this move to re-nationalize as a rejection of free market forces. The government is seen as re-exerting authoritarian control over its citizens and asserting its political power over former Soviet Union states like Ukraine and Chechnya through energy reliance.
But establishing energy reliance is not as easy as it would seem and countries like Ukraine are causing Russia challenges. Strained relations between these two countries since the Orange Revolution have caused Russia to find alternate routes for their Lukoil pipeline to reach European markets through Serbia. Yet this route has raised other red flags - most notably with the U.S. led effort to guarantee independence to Kosovo, a province that the Serbs consider their historical territory.
Russia's difficulties in garnering authoritarian headway have spread to other former Soviet Union countries as well. These countries are refusing to pay international market prices for their gas because they had been paying subsidized prices when they were a part of the Soviet Union. Russia, now viewed as a ruthless enemy, is being challenged in its intent to use its energy reserves to strategically extend its political authority.
In addition to these energy woes, Russia's demographic situation is appalling. Life expectancy is about 20 years shorter than in the United States and birth rates have fallen since 1960. The country's population has declined by at least 700,000 a year. Even national projects, like Zdorovie which are aimed at boosting birth rates by increasing financial incentives for families to have babies, have not caused a rise in the living standards of most Russians.
While an independent press could do much to spread awareness and spawn solutions, the government isn't allowing that to happen. Recently Vladimir Gusinsky, owner of the independent news, NTV was arrested on what he considered to be political charges. His crime? His media group had adopted an anti-government stance on a number of issues including the war in Chechnya. But then, even the BBC World Service was not deemed to toe the government line and was forced off the airwaves by Russian authorities.
Further, many Russians are beginning to realize that the government's political promises carry little weight. Proposed security measures and political reform topped President Putin's rhetoric in the wake of the terrorist attack at the Beslan school no. 1. in 2005. Yet a little more than two years later, people believe that his response was deliberately calculated to put an end to community elections of governors. Today these posts are filled by government appointees.
But none of these internal conditions has caused the Russian government to rethink its positions. Its interests lie almost exclusively in asserting its economic power. In August the Russian expedition team of Chilingarov and Gruzdev laid claim to the Artic waters surrounding the North Pole. In an attempt to prove Russian sovereignty, they even went so far as to plant the nation's flag at the bottom of the ocean. This roiled the global community, most especially the U.S., Canada, Norway and Denmark which are also interested in the Artic's vast undiscovered energy reserves that include oil, gas and minerals.
But provoking the international community doesn't seem to bother Russia. Russia is currently developing alliances with Asian countries to counterbalance the European Union and NATO. Certainly Russia's reputation as an oil-exporting and arms-selling country helps create a solid foundation upon which new friendships with the likes of China, Iran and Venezuela can be made.
Prepared for possible confrontation in the future, Putin is heavily investing in renewing Russia's military power. Indeed, military expenditures rose from 22 to 27% in the last two years.
Putin's Russia will not be defeated. Indeed, President Putin is looking to extend his leadership to make sure this doesn't happen. While he cannot run for a consecutive third presidential term (the Russian Constitution bars him from doing so) he has joined forces with Russia's dominant political party, United Russia, and he hopes to become Prime Minister and then consolidate power by running again for President.
No matter what official position or positions Vladimir Putin holds, he will strive to lead Russia his way. He certainly has his supporters - people who have benefited under his regime. But the inequality in the distribution of wealth will continue to haunt him. His detractors see Russia's economic "development" coming at a grave cost - the weakening of democracy.
