Monday
07Jul2008
brown falters in japan
Monday, July 7, 2008 at 9:03PM
So Brown has found it difficult to persuade the new Russian President, Dmitry Medvedev, to ease pressure on BP workers struggling with visas in the new Russia.
Shock. Horror.
Russia - like most of the oil-producing countries have already - wishes to release itself from the shackles of foreign oil conglomerates and take control of its own resources. While this may be bad form, considering the agreements it made following the collapse of the USSR, it is exactly the same path that most of the oil-rich nations have followed. However, Russia, unlike politically fragile nations such as those in the Middle East, has no reason to kowtow to the West and arrange special relationships with western governments that would go some way to re-balancing the relative trade-balances. It can - or feels it can - act independently. So it maintains frosty relations with the west.
Seriously, if we reject Russian oil and gas, where exactly are we going to go, and what options do we have?
None is the short-form answer.
Brown is between a rock and the proverbial hard place. And who, seriously, can blame the Russians? Okay, they probably don't have the off-shore expertise that the Western companies have, but do they really want to surrender so much profit to foreign companies? No. And it's an easy domestic victory to stick it to the companies who hope, so desperately, to profit hugely from the riches of Russia.
Russia probably should, if it has any desire for constructive diplomatic cooperation, hand over Andrei Lugovoy (a suspect in the Alexander Litvinenko murder), but then it has a commitment to never handing over Russian citizens to foreign powers (oh, for us Brits to enjoy such protection). Again another domestic political coup.
Only if British, and Western, politicians begin to understand and appreciate the current Russian body politik, will they ever hope to understand the motivations of the Russian state. Until then, I guess we'll have to accept these heavily biased news headlines.
Shock. Horror.
Russia - like most of the oil-producing countries have already - wishes to release itself from the shackles of foreign oil conglomerates and take control of its own resources. While this may be bad form, considering the agreements it made following the collapse of the USSR, it is exactly the same path that most of the oil-rich nations have followed. However, Russia, unlike politically fragile nations such as those in the Middle East, has no reason to kowtow to the West and arrange special relationships with western governments that would go some way to re-balancing the relative trade-balances. It can - or feels it can - act independently. So it maintains frosty relations with the west.
Seriously, if we reject Russian oil and gas, where exactly are we going to go, and what options do we have?
None is the short-form answer.
Brown is between a rock and the proverbial hard place. And who, seriously, can blame the Russians? Okay, they probably don't have the off-shore expertise that the Western companies have, but do they really want to surrender so much profit to foreign companies? No. And it's an easy domestic victory to stick it to the companies who hope, so desperately, to profit hugely from the riches of Russia.
Russia probably should, if it has any desire for constructive diplomatic cooperation, hand over Andrei Lugovoy (a suspect in the Alexander Litvinenko murder), but then it has a commitment to never handing over Russian citizens to foreign powers (oh, for us Brits to enjoy such protection). Again another domestic political coup.
Only if British, and Western, politicians begin to understand and appreciate the current Russian body politik, will they ever hope to understand the motivations of the Russian state. Until then, I guess we'll have to accept these heavily biased news headlines.
Reader Comments (6)
"Russia - like most of the oil-producing countries have already - wishes to release itself from the shackles of foreign oil conglomerates and take control of its own resources."
Hmm. I note that in Canada, the US and the UK, governments have been quick to throw off the shackles of foreign oil conglomerates... oh, wait, no, they welcome then in and tax them, because they're not stark raving bloody mad.
[yes, it's a populist move that panders to ignorant domestic bigotry - just as we oppose such moves in the UK, so we should also oppose them abroad...]
Only 12% of oil production is on a profit share basis. The vast bulk of oil is produced under the umbrella of privatisation.
And *all* of the oil in the US, UK and Canada is produced under the umbrella of privatisation - but those governments, as does the Russian government, charge royalties on extraction and tax companies (ie local subsidiaries of multinationals) on their profits from extraction, so it all works out just fine in the end.
I can just about see some argument for nationalising oil production and relying on Schlumberger, Halliburton et al for engineering competence - I don't think it's a good idea, but it fits autarky narratives that are quite popular in economically dubious places.
But I can see no reason whatsoever (beyond ignorant bigotry) to favour a bunch of domestic tycoons over a multinational that's an expert in the field, which is what the TNK-BP dispute amounts to.
Well indeed, nationalised industries in the main, do seem to make a few domestic billionaires rather than investing in creating opportunities and welfare cover for the many.
However, it's the 80/20 rule. Who gets the bulk of the profit? The country or the foreign monoliths? Most nations believe that their resources are their own. It's fine for developed nations to cooperate with private companies and claim the share as tax, yet it's less okay for smaller nations to do the same - great idea but it doesn't work like that. Political pressure and puppet administrations are usually employed, as was done with in South America during the eighties, and earlier in the Middle East.
Nationalised oil producers get to keep the lion share of the profits, as opposed to profit share models, but they also have to play ball with the West. The Saudis spends billions playing nice with the US, giving bumper contracts to American construction giants. The same is happening in Iraq. The new Iraqi oil law was approved by Washington and London even before the Iraqi parliament were allowed to see it. Why? Because it was written as to empower the oil companies. It's okay taking contrarian views, and citing western examples of successful private-public partnerships, but the history - and ongoing events - prove that we've invariably fucked these people over and it's no surprise they don't want to deal with us on our terms.
"Seriously, if we reject Russian oil and gas, where exactly are we going to go, and what options do we have?"
There's always the Iran 1953 option...
D-Notice,
I know, and look what a success that turned out to be!