ARTICLE: “Putin is pressed to liberalise energy: Head of electricity monopoly seeks more reform,” by Arkady Ostrovsky, Neil Buckley and Christina Freeland, Financial Times, 10 February 2006, p. 1.

Anatoly Chubais, who runs Russia’s electricity monopoly, publicly demands that Putin support the break-up of that network so that it can be privatized and reshaped by the resulting flow of private capital. Rising demand and years of underinvestment hit a wall this very cold Russian winter (the coldest in 30 years). Putin may want to retain the commanding heights, but it’s going to get a helluva lot chillier up there unless he gets access to more foreign investment, and people don’t invest in what they can’t own.

Yegor Gaidar, the architect of such liberalization strategies in the 1990s, says the gas industry is moving down a similarly dysfunctional path: “The gas sector reminds me of the oil sector in the early 1980s and I know what follows: a very serious crisis. The absence of competition, the under-investment, all of this creates risk . . . I do not like the way Gazprom is run in Russia.”

And neither do a lot of European leaders, who speak more and more openly of collective energy strategies to reduce dependence on the unreliable Russians.

This is the lesson that Putin will learn, just like OPEC did a generation ago: If you have customers, then your natural resources are indeed valuable. If you scare them away with high prices or unreliable service, then all you have is a lot of worthless stuff underground.