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59 Energy Policymaking in Russia: From Putin to Medvedev Mikhail Kroutikhin Mikhail Kroutikhin (Ph.D., Academy of Social Sciences in Moscow) is Co-Founder and a leading analyst of RusEnergy, an independent Moscow-based energy consultancy, and Editor-in-Chief of The Russian Energy weekly newsletter. Dr. Kroutikhin can be reached at . 60 Executive Summary This article analyzes Russia’s energy policy under President Vladimir Putin—outlining the decisionmaking groups and their impact on the long-term and short-term energy strategy—and uses this analysis to give light to the energy policy decisionmaking process under his successor, Dmitry Medvedev. Main Argument: Putin’s success in seizing control of Russia’s political apparatus lies is a result of his ability to both leverage support from and balance the conflicting interests of three main influential groups: the “St. Petersburg lawyers,” the siloviki, and the “Family.” Dmitry Medvedev is still just a nominal head of state; he has not yet amassed a significant group of influential allies of his own and has not yet achieved a high degree of personal control over the country, including the vital oil and gas industry. How Medvedev handles Putin, and whether or not he appoints his own patrons to key positions, will determine what Russian energy policymaking looks like in the future. Policy Implications: • Medvedev will likely follow Putin in continuing to strengthen Gazprom’s monopoly; he may also attempt to gain control over Rosneft and other companies that are currently managed by the siloviki—or at least attempt to restrict the powers of this group. • Under Medvedev, no immediate liberalization is likely in the oil and gas industry while worldwide oil prices remain high. Hostile attitudes toward foreign investors are also unlikely to change while Vladimir Putin remains in effective control of the energy sector. • Medvedev’s relations with Putin may experience some conflict in the near future. The outcome of their confrontation is unpredictable: financial tycoons of the Yeltsin “Family” might interfere to establish some sort of a balance, or they might discard Medvedev to reinstall Putin • An expected energy supply shortage in Russia may be the main stimulus to change the current attitude of Putin and Medvedev, by forcing them to behave in a less hostile manner toward foreign corporations and governments. 61 kroutikhin T he most obvious policy trend in Russia during the rule of President Vladimir Putin was a steady strengthening of the role of the state in the management of vital industries. Putin himself indicated on several occasions that state capitalism, accompanied by only a trace of private business, was the best remedy for Russia’s economic shortcomings. During his tenure at the Kremlin, Putin managed to establish a fine-tuned system of centralized control over the Russian political system right to the level of regional governors. This control has encompassed, to a very great extent, the nation’s main source of hard-currency revenue, Russia’s oil and gas industry. Under Putin, energy exports accounted for over 67% of export revenues within the Russian budget. Energy export flows have, moreover, occasionally been used as a political tool internationally. This article explains how energy policymaking and investments were conducted under Putin’s tenure—outlining the various avenues of influence in Russia’s energy policy—and examines the potential changes within energy policymaking under President Dmitry Medvedev. Putin has played his position well, balancing interest groups against each other to preserve his own dominance. Medvedev faces significant challenges if he intends to wrest any power away from Putin or these interest groups. Energy Decisionmaking under Putin: The Gazpromization of Russia Decisionmaking in today’s Russian oil and gas industry is opaque and riddled with controversy. Although Putin has established an almost feudal system of control over the political and administrative system in Russia, he did not fully control the industry alone. Putin’s ability to leverage support from, and balance the conflicting interests of, three main influential groups—the “St. Petersburg lawyers,” the siloviki, and the “Family”—was critical to Putin’s successful seizure of control of Russia’s political apparatus.1 By acting as a referee between different groups as they struggled for control over commercial interests and revenue flows, Putin often limited conflict— and prevented any one group from prevailing over the others. The St. Petersburg lawyers are essentially technocrats, generally believed to have relatively liberal views on the state’s role in the economy, foreign policy, and civil liberties. The siloviki, on the other hand, are former KGB...


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