Monday, July 22, 2019

Arctic Another Place for Kremlin to Divert Tax Money to Its Friends without Benefiting Russia, Kovalenko Says

Paul Goble

            Staunton, July 18 – Even though Western sanctions mean that Russia lacks the equipment to develop oil and gas fields in the Arctic anytime soon, Moscow is using Arctic development as the occasion to divert enormous sums of tax money from ordinary Russians to the Kremlin’s friends, Aleksandr Kovalenko says.

            What that means, the analyst who blogs under the screen name Zloi Odessit says, is that for the next decade or more, the Kremlin’s friends will benefit from Arctic development but the Russian economy and the Russian people won’t ( reposted at

            According to Kovalenko, “the Russian Federation is not capable at present of developing the Arctic shelf because of it lacks the necessary technologies, practically all of which are Western and currently under the sanctions regime.”  Indeed, the Russian natural resources ministry admits as much.

            In a new planning document, the ministry says that the major oil and gas fields in the Arctic it has already identified won’t begin to produce “until 2030,” more than a decade from now, the blogger continues. And that means that they will not be able to compensate for the exhaustion of other Russian fields on the mainland now projected to occur in 2020-2021.

            Kovalenko says that there are reasons to be pleased about this and also reasons to be very concerned. On the one hand, it means that Moscow will have less oil and gas income to spend on its “hybrid” wars.  But on the other, it means Moscow assumes sanctions will remain in place until at least 2030 – and won’t change its policies in ways that would lead to their lifting.

            Moscow has no intention of pulling back from its pretensions in the Arctic even if it won’t be able to develop the region soon. It will instead focus on two things – expanding its military presence there and using the prospects of economic development of the North to divert even more tax moneys from the population to its friends and supporters.

            This week, for example, Igor Sechin, the Rosneft head, asked Vladimir Putin to give Russia’s oil companies “an unprecedented tax break of 2.6 trillion rubles” (40 billion US dollars) in the name of Arctic development on top of even more money that the Kremlin has committed to sending to these allies.

            Thus, the blogger says, Arctic development, even if it isn’t going to produce any benefits to the Russian economy or the Russian people anytime soon, is already bringing serious “profit” to those who support the Putin system and know how to exploit its underlying reverse Robin Hood policy of taking from the poor and giving to the rich.

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