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RIA Novosti
April 16, 2004
THE PUTIN GLOBAL ECONOMIC DOCTRINE
MOSCOW (RIA Novosti political analyst Vladimir Simonov)
In the past, the West and Russia rivalled in the number of warheads targeted at each other. Today, the oil pipelines are more important than silo-based missile launchers. The rivalry of military arsenals has given way to a fierce economic competition on global markets. And Russia has claimed the part of a large and influential player.
One fine morning, the world woke up with a feeling that Russia has more energy resources than many Arab countries, and that Russia is ready to do good business with them.
In the East, China and Japan are eyeing each other jealously, waiting for access to Siberian oil. In the West, many European countries are seeking the favours of Gazprom, Russia's gas exporter. In the South, RAO UES, the electricity concern, is consistently buying up the shares of energy companies in Armenia, Georgia and Kazakhstan.
Taken together, this creates a policy that is more and more frequently called "the Putin global economic doctrine." But, if it exists, it is not limited to power engineering alone. The President and his new cabinet tend to encourage the surge of Russian companies to world markets, and the Russian business wholeheartedly supports this aspiration.
"Unless you move to foreign territories, foreign creditors will come to your market and try to defeat you at home," warns multimillionaire Kakha Bendukidze, head of a major machine-building concern. "In short, you must take part in the global economic game or you will be defeated both abroad and at home."
Bendukidze does not want to lose and hence has co-authored a draft law designed to simplify the rules of the transfer of investment capital abroad. But his big business colleagues did not wait for the law to come into force this summer. Using their own capital and frequently foreign financial resources, they rushed into the jungle of the global market - with impressive results.
In the past few months, Severstal acquired the Michigan Rouge Industries for $286 million, while Norilsk Nickel paid $1.16 billion loaned from the US Citigroup for a 20% stake of the South African gold mining firm Gold Fields, the largest so far foreign deal made by a Russian company.
One should know modern realities in Russia to assess the success of these transactions. Russia does not have programmes of state support to export-investment activities, such as Germany and the USA have. The Russian authorities do not loan money for these transactions and do not insure risks (this is a task for the future). So far, Russian corporations willing to invest money abroad pay for loans a much higher price than their foreign rivals do.
Meanwhile, Moscow has made several interesting moves in the game, presumably to snatch the chair of the intermediary in the drawn-out and rather tense US-OPEC confrontation.
The other day, Economic Development and Trade Minister German Gref made a sensational statement: 2004 will be the last year when Russia will allow its oil export to grow so fast. Just another 14% of growth to 266 million tons this year would suffice. After that, the upward curve will become horizontal, with slight annual fluctuations of 2%.
This turn of events will surely disappoint the USA, as it actually means that Russia is working for rapprochement with OPEC. The cartel has long been curbing oil production to keep oil prices high in order to make up for the US deliberate actions to bring the dollar rate down.
This is a hard time for OPEC, which is running a high temperature because of a crisis in the Middle East peace settlement. Moreover, centrifugal forces are gaining momentum in the cartel, threatening the loss of Nigeria and Venezuela. Seen against this grim background, Russia's decision to actually freeze its oil exports growth may save OPEC.
Analysts close to the cartel do not rule out the possibility that Russia's "prize" may be the Arab's renewed regard for Russia as a trusted ally and, consequently, the growth of Russian influence in the Arab world.
There are economic signs of this: LUKoil has joined the narrow group of foreign companies granted the right to do prospecting and develop a potentially large gas field in Saudi Arabia. No US oil giant has been offered the honour.
President Vladimir Putin said in his address to the country in December 2003 that competitiveness on the world markets can become the new national idea that would unite post-Soviet Russia. I sincerely hope that he is right.