Don Vladimir Putin makes another offer that can't be refused

Spot the Difference


Irwin Stelzer, a business adviser and director of economic policy studies at the Hudson Institute, has written a superb piece on Putin and Russia’s current modus operandi regarding its energy resources and general foreign policy which, basically, is in agreement with what I have written here, here, here and other places too, just do a search of the blog for "Russia".

The spark for this article is what is very likely to be the next forced sale by a foreign energy company of its assets in Russian energy. Last time it was Royal Dutch Shell which was forced to cede control of its $22 billion Sakhalin-2 natural-gas project to Gazprom, the state-owned Russian gas mega-company. This time it's British Petroleum (BP) who are being forced to give up their share of another gas-field.

As Stelzer comments, echoing my very words here, “Putin takes his inspiration from Mario Puzo’s The Godfather rather than Adam Smith’s The Wealth of Nations, and makes potential sellers offers they just can’t refuse”.

He also states that “Putin’s goal is not the mere profit maximisation that guides decision-making in market economies. It is to gain influence over the foreign policies of European countries and, to a lesser extent, America. He has already shown that he is willing to cut off gas to Europe, and cooperates with Opec to damage the American economy by keeping oil prices high”.

Read the whole article here