the rise of vladimir putin -- 8/4/22

Today's encore selection -- from The New Map by Daniel Yergin. Putin, a judo champion and KGB operative, rose to rule the country:

"In 1976, the Leningrad Evening News reported that a previously unknown local 'judoist' had won a judo competition and had 'for the first time joined the ranks of champions.' It predicted that peo­ple would hear more about him in the future. This was Vladimir Putin, age twenty-three. He went on to join the KGB, which sent him as an operative to East Germany. In 1990, after that country's collapse, he hurriedly burned secret KGB files and drove home with a valuable memento -- a washing machine that sat atop his car. His home city was now no longer known as Leningrad but once again as St. Petersburg. He went to work for the reformist mayor and became deputy mayor.

"In 1996, after the mayor lost a reelection bid, Putin found himself unemployed. He pursued a degree at the local geological institute. He also went to Moscow looking for a job. The result, beginning in the state property office, would be a meteoric rise up the ranks of govern­ment, until finally, in 2000, he became Yeltsin's designated successor as president of Russia. Once in the Kremlin, Putin's objectives were to re­impose order, stabilize the economy, renew the authority of the state, and restore Russia as a major player in the world. Over the two decades since, he has proved himself, as predicted in 1976, a champion 'judo­ist,' but on a global scale, capitalizing on other countries' weaknesses or mistakes, seizing on opportunities and openings. Energy would be central to that entire agenda. He understood the power that came from Russia's oil and gas. Western interlocutors would be consistently surprised by his detailed knowledge of the energy industry and energy markets and the fluency with which he discussed the intricacies -- as much like a CEO, they would say, as a head of state.

"Under Putin, the government reasserted its control over the energy industry. Mikhail Khodorkovsky, the head of Yukos, one of the biggest of the new oil companies, and among the most powerful of the new oli­garchs, challenged Putin directly, and ended up spending ten years in a prison camp. Yukos assets were absorbed by the state company Ros­neft. The company's CEO is Igor Sechin, formerly deputy prime min­ister, who had worked with Putin in the mayor's office in St. Petersburg in the early 1990s. In 2013, Rosneft took over a major company, TNK-BP, in a $55 billion deal that made it a larger oil producer than ExxonMobil. In 2016, it acquired another company, Bashneft. Today Rosneft produces 40 percent of Russia's total oil. The government owns just over half of the company and has the controlling share.

Putin in 2018

"Similarly, the Russian government holds the controlling stake in the giant gas company Gazprom, headed by Alexey Miller, who was also with Putin in the mayor's office in St. Petersburg in the early 1990s. In 2005, Gazprom acquired Sibneft from another oligarch, renaming it Gazprom Neft (meaning Gazprom Oil). Its CEO, Alexander Dyu­kov, had headed the St. Petersburg port. Today, only a handful of private oil companies remain. LUKOIL is the largest. Its CEO, Vagit Alekperov, started his career working offshore in the Caspian and then in West Siberia before coming to Moscow as a deputy energy minister in the late 1980s, where he developed the idea of starting a Western-style oil company in Russia.

"Both Mikhail Gorbachev and Boris Yeltsin had bad luck when it came to oil, with price collapses that sent the economy spiraling down­ward. By contrast, Vladimir Putin had very good luck, for petroleum prices recovered as he came to power in 2000 and continued to rise during the BRIC era. Output, which had fallen by almost half with the collapse of the Soviet Union, rebounded. This was made possible by new investment. That included investment by Western companies, which also brought Western technology and practices -- all of which had been shut out during Soviet times -- and was blended with tradi­tional Soviet capabilities. By the end of 2018, Russian output reached 11.4 million barrels per day, as high as at the peak for Russia in Soviet days.

"The value of Russia's oil exports increased eightfold between 2000 and 2012, from $36 billion to $284 billion a year. The annual value of gas exports over the same period increased from $17 billion to $67 bil­lion. As oil and gas revenues mounted, Russia went from economic weakness to strength, paying off international debts, raising wages and living standards, increasing pensions, saving money in 'stabilization' funds, spending more on defense, and financing its restoration as a great power."



Daniel Yergin


The New Map


Penguin Press


Copyright 2020 by Daniel Yergin


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