Tuesday, 20 November 2012

Swedish economist: "Has Putin lost his mind?"

"Has Putin lost his mind?"

The Swedish economist and Russia expert Anders Åslund has written an excellent analysis of Vladimir Putin's recent energy decisions. Putin's strange measures contradict Russia's national interest, but the silver lining is that they will speed up the downfall of the dictator:
Putin's recent energy decisions are probably the most costly for the Russian energy sector since the de facto confiscation of Yukos in 2004, and they contradict Russia's national interests. Why did Putin do anything so harmful?
The most plausible explanation is that Putin's cronies want to rob Gazprom empty and turn Rosneft into their new slush fund. After one national champion has been robbed empty, a new one is created. But Rosneft is likely to fail as spectacularly as Gazprom. Because of Gazprom's unwise investment decisions, some people will extract tens of billions of dollars from Gazprom, while Novatek and Rosneft may pick up Gazprom's pieces for pennies after its collapse. This can be the robbery of the millennium.
If this is the case, corruption has gone completely out of all control. The recently exposed corruption cases of $100 million in the Defense Ministry, $200 million in the Glonass program and $500 million involving the funding of the APEC summit would appear to be diversionary maneuvers to hide the real catch.
Yet this cloud has silver linings. The extraordinary mismanagement of the Russian energy sector might actually speed up the country's economic diversification. The decline in energy rents will likely expose more corruption in the energy sector and weaken Putin's hold on power.
In all likelihood, Putin has just made the greatest mistakes of his political career. The biggest question is why Putin is carrying out this massive destabilization of his own political and economic regime. Has he lost his mind? Or does he desire destabilization to alter the nature of his regime?

Read the entire article here

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