Putin’s Petro State Approaching Empty

By Leon Aron Wednesday, June 5, 2013

Russia faces two challenges that will affect its preeminence as an energy supplier and its ability to wield oil and gas as geostrategic tools. At stake are the stability of the regime — and perhaps even its survival.

The centrality of hydrocarbons to Russia’s economy is hardly a new issue……... One of the two largest oil producers in the world, Russia accounts for 12 percent of global output. Russia is also the top producer of natural gas, accounting for about 20 percent of the world’s total.

Russia faces two challenges that will affect not only its preeminence as an energy supplier but also its ability to wield oil and gas as geostrategic tools. New technologies are helping other countries develop their own natural resources more easily and inexpensively, threatening billions of dollars of Russian state revenue. At the same time, to maintain the current level of production, not to mention increase it, Russia must make huge investments in exploring and recovering oil from virgin deposits…… The likely result is a significant thinning of oil and gas rents — jeopardizing the stability of the regime and perhaps even its survival.

President Vladimir Putin’s commitment to oil and gas as the mainstay of Russia’s progress stems from a deep and abiding conviction about its importance to the nation’s economy. Long before he came to power, he had believed that “the restructuring of the national [Russian] economy …To Read More….http://american.com/archive/2013/june/putins-petro-state-approaching-empty

My Take – What has happened in Russia and the massive energy income over these many years is similar to Saudi Arabia.  A handful of people become massively rich and the country remains dirt poor.  In Russia the corruption is so deep and so far ranging that it actually undermines the stability of the state.  It isn’t the loss of energy revenue that is the primary cause or concern in Russia....or China....it’s the corruption.  Socialist states have levels of corruption that would make organized crime blush.  Oh…wait….Russia is run by organized criminals who were once the organized oppressors from the security services….like Putin.   The result?  The economy is shaky at best, the military is either drunk, or left with rotten equipment and they are losing .5% of their population every year.  Of which a substantial percentage has serious alcohol problems and what is Putin's solution?  He wants to launch a bunch of nuclear submarines.  Most of his fleet is rusting rotting hulks that they can't afford to operate or maintain and he wants to launch nuclear subs.  Socialism will always put on “the big show” while always failing to be concerned about the “people”.  Why?  Because socialism is fundamentally misanthropic!  Socialism is all about the collective and the individual is unimportant. The collective is everything and the individual is nothing! Needless to say, when such radical thinking becomes mainstream they will happily sacrifice as many individuals as needed for the ‘good’ of the collective.  And they have suffered terribly ever since the French Revolution.  And generally the only part of the “collective” that benefits are the….”leaders”.