Failed Oil Play Reflects Dangerous Broader Trend in the Late Putin Period, Pastukhov Says

Paul Goble     

            Staunton, April 13 – The Kremlin’s decision to challenge OPEC on oil prices, an action originally viewed as equivalent to Suvorov’s crossing the Alps, can now be seen at best as the oil equivalent of the Brest Peace, a defeat Moscow will require enormous efforts to overcome, Vladimir Pastukhov says.

            But the real danger it highlights, the London-based Russian analyst says, is that the Putin regime now is acting not on the basis of an analysis of the actual situation but instead on the basis of its likes and dislikes, things that change less than the environment and that it continues to act on by inertia (mbk-news.appspot.com/sences/nelyubov-sechina-ili/).

            That has landed it in trouble this time, Pastukhov says; and it has the potential to get the regime in even greater difficulties at home and abroad in the future.

                The play in this case was based on Igor Sechin’s longstanding hatred of the ability of US producers to extract shale oil. He wanted oil prices to fall so low that the production of such oil would be unprofitable, that the Americans would have to stop, and that Russia could take over numerous markets and even lead to “an oil Congress of Vienna or a gas Potsdam.”

            Russians often refer to such dreamy utopian thinking as Manilovshchina, a reference to a character in Gogol’s Dead Souls.  It is always risky and sometimes downright dangerous, especially if as now those who engage in it ignore the world around them and launch such projects at anything but suitable times, as during the economic downturn from the pandemic.

            When it first looked as if this play would work, “it had one father known to all, Sechin.” But when it collapsed, the deal has turned out to be like “a single mother: there is a child, but no one acknowledges paternity.” That is bad enough but there are two reasons why this episode is far more important and unfortunate.

            On the one hand, this history isn’t over. Russia is going to pay heavily for its miscalculation. And on the other, it typifies politics in the late Putin period. “We ever more often observe” that decisions are taken not on the basis of a clear-headed evaluation of the situation but rather on the basis of ideas untethered to reality or longstanding likes and dislikes.

            Sechin’s dislike of shale oil is longstanding, and he finally got to act on it. There was no one in the leadership to stop him. Instead, this “inertia” pushed things alone all the way to a disaster. And the collapse of oil revenues is hardly the most “horrific” thing that may happen if the most important future political decisions are made on the same basis, Pastukhov says.