Thursday, November 30, 2006

Russian risks

We hosted Pizza and Politics last night. Dr Alan Riley came and delivered a most learned speech on the effect of the Russian energy situation. He argued that Putin's Russia is attempting to use her vast reserves of natural gas to build up her great power status and influence over neighbouring countries. The danger for Russia was that a fall in energy prices, possibly compounded by a decline in Russian production driven by under-investment, would greatly weaken Russia. This would be Russia's 'Suez' moment and would help expose her decline as a world power. The impact of that on the country would be bleak.

His paper on this can be downloaded from

Recent events involving poison have obviously made everyone far more aware of Putin's Russia but I was still delighted by the turn out to discuss the topic. A spirited conversation covered everything from the impact of Russia's energy situation on the rise of China, to the future of Qatar's gas fields, to new technology's impact on the environment to how we could use less energy in Islington.

I am especially concerned about the impact on Russia's democracy. Rising national wealth means that the population are more willing to turn a (short term) eye to the Government's increasing illiberal ways, whilst the sheer volumes of cash associated with natural resources will increase corruption ( In Russia this is compounded by the nature of the corporations in the energy industry who have been snapping up the Russian media to make them more biddable to the Kremlin. I used to work with Izvestia - a then-independent Russian newspaper - it is now part of the Gazprom group. That one potential Kremlin candidate for the Presidency is rumoured to be the current Chair of Gazprom (Russia's quasi-Governmental energy titan) tells its own story.

However, Russia's greatest wealth is its people - who are energetic, often embarassingly well-educated and not shy about saying what they think (my wife is Russian...). They will not put up with poor Government for ever. On those grounds at least I am less pessimistic that Alan.

Still the fact that I took away from the meeting was that Russia is estimated to flare (the burning off of surplus gas produced when oil is being pumped from the ground) nearly as much gas as the UK consumes. Thats a lot of energy conservation in Islington...

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