Gazprom, the natural gas company controlled by the Russian state, is in crisis. It is likely to fall victim to the shale gas revolution that is under way across the US. The shale gas revolution will probably have telling consequences for Russian state capitalism and President Vladimir Putin’s power.
This crisis erupted suddenly. With its surge in shale gas production the US has become self-sufficient in natural gas. It has overtaken Russia as the biggest natural gas producer. Crucially, US natural gas is cheap. Domestic US natural gas prices are only a quarter of Gazprom’s oil-linked eastern European prices. Such large price differentials cannot possibly last for long.
Many countries had prepared to produce liquefied natural gas for export to the US. Now these large volumes of LNG are being diverted to Europe, where spot prices have fallen to half of Gazprom’s prices. In Germany, Gazprom has been forced to accept large price cuts, but it insists on maintaining high contracted prices in eastern Europe, although oil and gas prices have delinked on the market.
A second big blow to Gazprom came on September 4 when the European Commission opened formal proceedings against the company for anti-competitive practices in eight central and eastern European countries. The European Commission is investigating Gazprom for having “divided gas markets by hindering the free flow of gas across member states”, “prevented the diversification of supply of gas” and “imposed unfair prices on its customers by linking the price of gas to oil prices”.
Given that the European Commission won its far less convincing cases against Microsoft and Intel, its victory over Gazprom looks close to assured. As a consequence, Gazprom would have to give up its price policies, perhaps halving European prices, which would devastate its revenues and eliminate its profits.
Curiously, in 2011 Gazprom was formally the most profitable company in the world with purported net profits of $46bn, but these profits were hardly real. Investment analysts opined that no less than $40bn disappeared through inefficiency or corruption. Gazprom’s cash flow was barely positive.
In their 2010 booklet Putin and Gazprom , Boris Nemtsov and Vladimir Milov, the opposition politicians, detailed how assets were being stripped from Gazprom through large kickbacks on pipeline construction and cheap sales of financial and media subsidiaries to Putin cronies. Since shareholders have realised that only their dividend yield is material, Gazprom’s market value has plummeted by two-thirds from $365bn in May 2008 to $120bn today.
For years, many analysts have said that Russia will reform only when the oil price falls because Gazprom seems to be the Kremlin’s main slush fund, which is now being drastically reduced. The Kremlin will have little choice but to forsake its mega-projects. It has already abandoned the mastodon Arctic Shtokman field. The next steps should be to back out of South Stream, the superfluous and exceedingly expensive pipeline project, as well as the planned gigantic sky-rise headquarters in St Petersburg. But that will hardly suffice. This dysfunctional former Soviet gas ministry will have to be cut up into real companies, which need to be privatised.
Gazprom’s demise looks likely. With its demise, Russia’s revenues would dwindle. Mr Putin‘s model of state capitalism would suffer a devastating blow from Gazprom’s fall. If not even Gazprom is viable, which Russian state company is? Such an insight could give market economic reforms new impetus. After all, Russia just privatised $5.2bn of shares in Sberbank, the state savings bank.
Russia’s Foreign Intelligence Service (SVR) has ordered three systems worth about US$1 million that will automatically spread information on the Internet.
The systems were ordered in a three separate tenders and the official client’s name is Military Unit 54939, but Kommersant Daily newspaper, which broke the news, writes that according to its sources this military unit belongs to the Foreign Intelligence Service’s structure.
The first system is called Dispute and is responsible for overall monitoring of the blogosphere and social networks in order to single out the centers where the information is created and the ways by which it is spread among the virtual society. It also looks at factors that affect the popularity of various reports among internet users.
The second system, Monitor-3, will develop the methods of organization and management of a “virtual community of attracted experts” – setting of tasks, control over work and regular reports on chosen issues.
The third, and probably most important, of the systems is Storm-12 – its task is to automatically spread the necessary information through the blogosphere, as well as “information support of operations with pre-prepared scenarios of influence on mass audience in social networks.”
The first two systems are to be ready by the end of 2012 and the third by 2013.
According to Kommersant, all three tenders were won by the company Iteranet, headed by a former deputy head of the Russian Cryptography Institute, Igor Matskevich, who previously worked on top secret state orders.
The newspaper claims that the tenders were held in a top secret mode and does not specify how the information was obtained or the reasons for deciding to disclose it.
Experts were cautious in their assessments of the new initiative. Russia’s leading startup manager of internet projects Anton Nossik said that imbedded spam filters will resist the automated opinion-making systems and suggested that part of the budget must be spent on means to overcome this.
Another expert who preferred not to be named told Kommersant that the system can only be effective if its activities go beyond the legal sphere – like hacking the administrators’ rights on social networks, mass messaging or even infecting the users’ computers with automatic “bot” programs.
The head of the Russian association Center for Safe Internet, Urvan Parfentyev, said that the news was a natural development of conventional propaganda means, like the Voice of America and RFE RL radio stations, only on the internet.
Una realtà che gli europei farebbero bene ad accettare, come ben illustra James Rogers:
[...] And this brings us to the crux of the problem: Europeans do not like to think about power. For most Europeans, power is associated with struggle, conflict and war – and thus, with being human. Instead, many Europeans prefer to think themselves above power and strategy, even above being human (insofar as Europeans think of themselves as actually being ‘human’, they have an idealised, even utopian, vision of what being human actually means). This leads them to engage in fantasies over the character of international relations, whereby they develop an ongoing smorgasbord of well-meaning but nevertheless fluffy new concepts like ‘normative power’, ‘effective multilateralism’, ‘inter-polarity’ and – to use the title of the latest paper from the European Union Institute for Security Studies – ‘Citizens in an Interconnected and Polycentric World’ (which is Orwellian doublespeak if ever there was any!).
How can this be changed? Frankly, I am not sure if it can be. But logically, Europeans must realise that the world will continue – should China, India, Turkey, Russia and co. continue to surge (or re-emerge) – to become progressively and determinedly more multipolar, much like early twentieth century Europe after the collapse of British primacy. Then, as increasingly, now, several great powers fiercely protected their interests and competed aggressively to influence not only one another, but also, and perhaps more importantly, the smaller countries in between them. What will matter in this world is the ability to exercise power – power understood not so much as the ability to make other people do things that they might not otherwise want to do (although that is important), but rather as the ability to prevent people from thinking things that they might otherwise be encouraged to think through strategies of disaggregation. It means that Europeans must come to understand – as they did in the past – that the world is not heading towards a liberal conclusion based on the individual or ‘citizens’, but that it will remain a decidedly political place, centred on national ideological groups (no matter how absurd they might often appear to be).
In short, the European Union – and particularly its civil society, both at the European and Member State levels – must engage in a detailed re-examination not so much of how to achieve security, but rather how to undertake political geostrategy, i.e. how we as Europeans might better exercise power over subject areas that are of particular importance to us and our allies. Of course, this includes thinking much harder about how we can resist and combat foreign powers’ own political geostrategic advances, which will become ever more resourceful if those powers continue to grow in relative mass and velocity, even more so if they adopt missionary foreign policies that are incompatible with our own (which they surely will). Consequentially, rather than a new European security strategy, replacing or complementing the European Union Institute for Security Studies with a ‘European Union Institute for Strategic Studies’, which is well-led, considerably larger, better connected with civil society, and stationed and integrated in Brussels, might be a better idea. And the formation of a ‘European Strategic Council’ – integrated with the leading European strategic think tanks and policy institutions, strategists in universities, and, critically, the foreign and defence parliamentary committees, both in Brussels and the capitals of the Member States – might be another.
Una video-analisi della Stratfor.
“La Russia vuole il «soldato futuro» made in Italy” – Il Sole 24 ore.
Un Carnegie Paper per una domenica di studio (si fa per dire…): “The End of Putin Era“.
Wired traccia un bel ritratto del famoso esperto cyber*.
*Insomma, l’equivalente russo del nostro Jack…
… un po’ di report assortiti: “The Long Goodbye: Waning Russian Influence in the South Caucasus and Central Asia“, “Crisi e nuovi equilibri nel Golfo“, “Bahrain: Beyond the Impasse“,”Unleashing the Nuclear Watchdog: Strengthening and Reform of the IAEA“, “The P5+1, Iran and the Perils of Nuclear Brinkmanship“.
L’Agenzia Internazionale per l’Energia ha pubblicato qualche giorno fa un report speciale dal titolo “Golden Rules for a Golden Age of Gas“.
Dalla lettura del report Fareed Zakaria (e non solo) formula alcune ipotesi sull’impatto geopolitico dello sviluppo del c.d. Shale Gas.
Un report del Valdai Discussion Club sulla “Primavera araba”, gli assetti in Medio-Oriente e gli interessi russi: ”Transformation in the Arab World and Russia’s Interests“.