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Power Plays

Vladimir Putin considers his next move

In December, Putin’s United Russia Party won a landslide victory in parliamentary elections. He has already put forward Medvedev as his candidate for the presidential elections in March. And Medvedev has nominated Putin for the position of prime minister.

The might of the Russian state is concentrated by the constitution in the hands of the president. The proposed new configuration of power would run counter to its spirit. Constitutional lawyers advising the opposition have questioned the legitimacy of such a development. But in the current illiberal climate of Putin’s Moscow, few people besides Western journalists look very deeply into their concerns.

Unperturbed by the coming election season, the Kremlin is going ahead with its ambitious energy market strategy. It is based on the assumption that Russia’s hydrocarbons exports in the next decade may well be limited only by its transport capacity.

Putin and Medvedev have just bullied hydrocarbons-rich Turkmenistan and Kazakhstan into selling their production cheaply through projected pipelines to Russia, which in turn plans to sell it on – expensively – to the West. The deal reinstates the Kremlin’s control over the remote Caspian region lost with the collapse of Soviet power. They are also building controversial pipelines beneath the Baltic and in southern Europe to bypass the overcrowded waters of the Turkish Straits.

Gazprom has signed a deal with StatoilHydro of Norway for the joint development of its Shtokman field in the Barents Sea, the biggest untapped offshore reserve ever known, holding some 3,700bn cubic metres of gas.

The Kremlin is filing a claim at the United Nations for the vast, resource-rich Lomonosov Ridge beneath the thinning Arctic ice-sheet. Russia argues that the territory, which holds vast hydrocarbons and precious metal reserves, is an extension of the Siberian continental shelf.

IN THE PIPELINE
Rising world energy prices
have spurred Russia’s
economic resurgence Putin has approved the merger of Sovkomflot and Novoship, the country’s two biggest shipping companies, to create one of the world’s largest tanker operators. The combined fleet will comprise 113 vessels and hold some $5bn in joint assets. He has also called for an urgent port infrastructure improvement programme.

In addition, Putin wants to bring home the bulk of the national fleet flying foreign flags of convenience, numbering perhaps 1,500 mostly young and modern ships, with a combined deadweight of 15 million tonnes.

Looking beyond the hydrocarbons economy, Russia is planning to build some 60 atomic power plants abroad. Most of them are intended for the Middle East, which is engaged in a nuclear construction race stimulated by Iran’s programme – which is also sponsored by Russia. And Russia is expanding a former Soviet military uranium enrichment facility to cater for the global civilian nuclear fuel market. The plant now serves the needs of power reactors in Russia as well as Britain, China, Germany, Finland, France, South Korea and the US.

All this of course hinges on the continuing rise of world energy prices, the main reason behind Russia’s unbroken, phenomenal GNP growth to nearly 7% a year during Putin’s rule. The markets have placed their money on the assumption that the trend will accelerate.

In Moscow, it is always wise to expect the unexpected. The momentum of expansion of Russia’s role in the world energy markets may now increase with the Putin-Medvedev duo positioning themselves to grab the top jobs – the big question is what happens if they succeed.

The Russian electorate distrusts backroom power and expects its tsars – even those in the guise of democratically elected presidents – to lead from the front. And Medvedev, who has no personal experience in elected office and who owes his entire career to patronage by Putin, may yet find the lure of real power hard to resist.

He has declared: “I have no doubt that in future, as before, Vladimir Putin will use his enormous political resources and his influence in our society and the world for the benefit of Russia. Together, as a single team, he and I shall be able to solve the most difficult and large-scale tasks...” Promises, election promises.

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