Russia in the next decade

Russia is reasserting its control over its oil and gas resources after what Putin has called "colonialist" deals when Russia was weak and oil prices low. However, not all oil companies are going the way of Yukos which has ended back in government hands and whose boss, Mikhail Khordokovsky, now sits in jail. Large non-government oil companies, such as LUkoil and the less transparent Surgutneftgaz are also significant players.

Those oil resources that are being returned to government control are generally going to state-owned Rosneft, while state-controlled Gazprom controls gas production, transport and export. Both have clearly decided that there are benefits in working with foreign companies, but will have ultimate control of any project in Russia.

Russian gas accounts for about a quarter of EU gas consumption, and this is increasing rapidly. Russian concern about the vulnerability of its gas export routes through Poland and the Ukraine means it is seeking alternative export routes. Gazprom, in a joint venture with German companies, is building a pipeline to run under the Baltic Sea, thus bypassing transit countries; and another pipeline may take gas under the Black Sea.

Russia oil and gas exports to China are presently small, but a significantly enhanced Russia-China relationship on energy is unavoidable, and this may have implications outside the field of economics.

So Russia is presently a hybrid economy. The government is consolidating its control over the part of the parts of the economy that it considers most important for Russia’s future. But outside of these strategic areas, liberalisation will continue, and the service sector will continue to expand at a rapid pace.

Russia’s foreign and defence policies are also more understandable than portrayed by most Western media.

In 1812, General Caulaincourt, who had been French Ambassador to Moscow, had a five hour conversation with Napoleon Bonaparte trying to persuade him not to invade Russia; many years later Hermann Goering had a conversation of similar length on the same issue with Hitler; and, according to Colin Powell, as Secretary of State he spent two and a half hours with the George W. Bush trying to persuade him not to invade Iraq.

Russia, no-more than any other country, cannot afford to assume that other countries will not abuse their power and do something silly - and there are many ways of doing this other than an outright invasion.

Like most people in almost all countries, most Russians find it difficult to see things from the other side. In a recent survey, more than 60 per cent of young Russians said they sympathise with Putin’s calling the collapse of the Soviet Union the 20th century’s “greatest geopolitical catastrophe”. Another survey has found that just 10 per cent of young Russians think Russia should apologise for the Baltic occupation.

When Napoleon complained to Caulaincourt that “Europe” could not see that Russia was the real enemy, he replied: “As a matter of fact, it is Your Majesty who is the cause of everyone’s anxiety and prevents them from seeing other dangers. The governments are afraid there is going to be a World State.”

At the Munich security conference earlier this year, Putin said the US “has overstepped its borders in all spheres” and “has imposed itself on other states”. “This is a world of one master, one sovereign”, he said. Putin’s comment would not have been unpopular with Russians, and clearly indicate the thrust of Russian policy.

Finally, even if Putin remains president after March 2008 - and he says that he will not, and the present constitution says that he cannot - the rising middle-class has sufficient opportunities to bring about greater participatory democracy when it chooses to do so. And let me emphasis this point: when it chooses to do so. There is no ideology in Russia to stand in the way of a European-style democracy. There are something like 12,000 elected bodies in Russia, and without a common ideology these bodies will make pragmatic, locally based (and often corrupt) decisions - but they will make real decisions.