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■"Russia Oil Output Is Showing Signs Of Leveling Off: Investment Decline Augurs Stagnating Production, Upward Pressure on Prices," by Bhushan Bahree and Gregory L. White, Wall Street Journal, 3 June 2005, p. A9.
Russia let in the foreign investors and oil companies in the early 1990s and production ramped up dramatically, absorbing in recent years almost half of the global oil demand spike led by India and China.
Then Putin goes after Yukos, and investors take the chill. Production stagnates and looks to settle into a long decline.
No, no, this is not some deterministic Hubbert's Curve effect. There is a lot of Russia still not well explored or well exploited.
This is the dead hand of the statist approach to economic development scaring off much-needed investors, and this trend will prove -- in spades -- Putin's ultimately limited ability to lead beyond reestablishing the authority of the center after too much had been lost. He's gone too far, and the big question is will Russia realize it by the 2008 election and choose a better path.
The upshot? Give the silovki (or power-types) enough time as rulers of Russia, and they will move it past the dreaded "oil curse" far faster than otherwise, forcing the society to develop, or perhaps just realize, their human capital potential sooner.
Paging Dr. Pink!
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