Agency WPS
The Russian Oil and Gas Report (Russia)
January 29, 2007 Monday

RUSSIA MAY USE THE FUTURE JUMP IN OIL PRICES TO SET UP
POLITICO-MILITARY BLOCS

The World Economic Forum (WEF) is Davos is regarded as a symbol of
the world today. Corporate leaders, national leaders, and experts
meet in Geneva to discuss pressing problems and network. Russian
politicians and business leaders inevitably found themselves a focus
of attention at the WEF the early and mid-1990s.

Russia was a focus of attention again in 2006, when experts released
a report outlining three potential scenarios for Russia’s
development. One of the scenarios predicted that Russia would remain
unable to shed its dependence on oil exports, and would fail to
invest in infrastructure. The analysts argued that this scenario
would transform Russia into an outcast by 2025. In short, Russia is a
participant in a global plot again – but now the plot is centered
around a disaster scenario.

The overture was provided by the Parliamentary Assembly of the
Council of Europe (PACE). The resolution it adopted this week, based
on a report by Estonian lawmaker Marko Mihelson, urges Russia to
ratify the Energy Charter and to stop using "energy benefits in
politics." Mihelson pointed out that Gazprom doesn’t determine gas
prices by the laws of the market, because it is a monopoly. Because
of that, foreign experts doubt that Russia is a reliable and
trustworthy supplier.

These and similar fears were played on yesterday. Global Risks 2007,
a new report released in time for the WEF, proposed three scenarios
for a global catastrophe: a drastic rise in oil prices, a pandemic,
and climate change. The oil price scenario (or rather its
consequences) is the most likely disaster, according to WEF experts.
They maintain that Russia, Chile, and other oil exporters would use
the unprecedented price-rise to establish military-political blocs.
Russia is expected to try to "recapture" the former Soviet republics
which have no oil of their own (including Georgia, Uzbekistan, and
Armenia).

This outlook (Russia as a global threat) could make life difficult
for the Russian business leaders and politicians attending the WEF.
They include Senior Deputy Prime Minister and Gazprom Chairman Dmitri
Medvedev, Economic Development Minister Herman Gref, Russian Aluminum
owner Oleg Deripaska, Krasnodar Governor Alexander Tkachev, and David
Yakobashvili from Wimm-Bill-Dann. Experts believe that Russia’s image
as an untrustworthy country is extremely harmful.

Gazprom has just launched a $10 million campaign to improve its image
abroad, and Russia’s reputation as an unreliable partner could be a
serious blow to that. "We have never used gas exports as a political
weapon, and do not intend to. Fortunately, our foreign partners and
our investors understand it better then the PACE. So we don’t expect
this report to have any effect on the economic standing of the
company," said Gazprom spokesman Denis Ignatiev.

"It isn’t exactly rational to view Russia as an untrustworthy partner
or expect it to engage in some sort of conspiracy with countries that
are at odds with the Western community," says Agvan Mikaeljan, deputy
director of FinEkspertiza Consulting. "It’s like expecting that NATO
will suddenly decide to conquer all other countries, now that it’s
aware of its military superiority. The chances of this happening are
negligible. It doesn’t matter that this image of Russia is
inaccurate. What matters is that it exists and that it is damaging to
our economy. Viewing Russia from this standpoint, potential investors
see only risks in Russia, refuse to recognize Russian companies
abroad as their own equals, and actually experience fear."

Mikaeljan says that by insisting on Russia’s alleged unreliability,
the West itself is pushing Russia into an alliance with anti-Western
countries.

Source: Novye Izvestia, 25/01/07