More commanding heights for Putin & Co.
Monday, January 23, 2006 at 6:07PM ARTICLE: “Russia Expands Bid For State Control: Top Nickel Producer Studies Merger With Diamond Firm That Is Run by Government,” by Guy Chazan, Wall Street Journal 19 January 2006, p. A8.
ARTICLE: “Explosions in Southern Russia Sever Gas Lines to Georgia,” by C. J. Chivers, New York Times, 23 January 2006, p. A3.
Not content with the energy sector, Putin and Co. now go after the precious metals. Norlisk Nickel is big—very big in precious metals. It’s a true global giant. I profiled the company once a while back for a client, and it has a lot more impact on global markets than the Russian oil companies (but not gas giant Gazprom).
And it’s talking merger with government diamond company Alrosa.
It’s hard to say whether all this focus on natural resources will lead Russia down the path of becoming another “trust-fund state,” but I don’t see it happening anywhere like it does in the Middle East, given the high literacy and educational rates in the former Soviet chief state.
And no one wants to see a Russian states that’s impoverished, what with that substantial pensioner class and a chunk of its current labor force that’s largely past its prime. And this flow of income helps a state that’s done reasonably well at taxing business without retarding it (except in those clear instances when the state uses taxes as a weapon in its re-nationalization strategy in the natural resource sectors).
And then there’s the perceived rise in national “power” that controlling such resources brings, which, in the end, I think Moscow will be sorely disappointed in, for as OPEC learned a long time ago, the number one goal of selling such resources is to continue the market for as long as possible, not to make the biggest killing and certainly not to try and wield political power over customers, who will typically respond quite negatively to such threats in the short term while increasing their protective hedges in the long term.
But expect Russia’s learning curve on this point to be a long one, especially with New Core pillars like India and China rushing around the planet cutting new deals all the time (like the upcoming Saudi-Chinese pact).
Yes, yes, there are plenty of experts who will point to all sorts of resource wars in the future, but pay them little attention. More customers mean more stakeholders in Gap stability. The sooner the Core as a whole recognizes that growing shared interest, the sooner the push to shrink the Gap gets real.
Russia’s silly short term actions, in this regard, just speed up the learning curve for states like India and China.
Reader Comments (1)
I think Russia might just need a clearing of all of the old comrades akin to the Old Testament/Torah tour of the Sinai. The old spymaster just can't shake his old habits.
It's actually almost a favor to all of the former students of the USSR. Like that other vampire, Vlad Putin's bad side just takes over and tries to reestablish government control pf industry.
India & China may take a brief lead on Russia, but Russia will catch up eventually.
Paul Cajka