- Hardcover: 660 pages
- Publisher: Harvard University Press (6 Nov. 2012)
- Language: English
- ISBN-10: 0674066472
- ISBN-13: 978-0674066472
- Product Dimensions: 16.9 x 3.8 x 24 cm
- Average Customer Review: 5.0 out of 5 stars See all reviews (4 customer reviews)
- Amazon Bestsellers Rank: 476,908 in Books (See Top 100 in Books)
Wheel of Fortune Hardcover – 6 Nov 2012
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More About the Author
For specialists in geopolitics or global energy, this exacting and lucid account should be required reading. Publishers Weekly 20121008 Gustafson notes that the Russian oil economy is at a crossroads, with no clear signal ahead. It might well revert to state control, or it might become a free-market leader...A useful, readable primer in a specialized but strategically important corner of geopolitics. Kirkus Reviews 20121101
About the Author
Thane Gustafson is Professor of Government at Georgetown University and Senior Director of IHS Cambridge Energy Research Associates.
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Top Customer Reviews
This weighty, arduously researched book of just under 700 pages split by 13 chapters does justice to the art of scrutiny when it comes to examining this complex oil and gas exporting jurisdiction; a rival of Saudi Arabia for the position of the world's largest producer and exporter of oil. It is about power, it is about money, it is about politics but turning page after page, you would realise Gustafson is subtly pointing out that it is a battle for Russia's 'crude' soul.
In order to substantiate his arguments, the book is full of views of commentators, maps, charts and tables and over 100 pages of footnotes. The narrative switches seamlessly from discussing historical facts to the choices Russia's political classes and the country's oil industry face in this day and age. The complex relationship between state and industry, from the Yeltsin era to Putin's rise is well documented and in some detail along with an analysis of what it means and where it could lead. In a book that I perceive as the complete package on the subject, it is hard to pick favourite passages - but two chapters stood out in particular.Read more ›
This is by no means just a retelling of events. The is some serious analysis of Russia's situation which makes the book more interesting.
I would recommend to anyone who wants an insight into what happened in Russia in the 90s and who wants to understand how the country came to its current state after the fall of the Soviet Union.
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The book shows Gustafson's substantial knowledge of the petroleum industry as well Russia itself. His knowledge of the details is so amazing that it prompted me to mention the intelligence community link above. He has a number of anecdotes and personal observations to offer. His perspective is American, not Russian; but I think he did his best to be in the Russian shoes -- which is not easy (believe me, I lived in Russia for 30 years).
To me the book was a breath of fresh air because of its "realist" position. Many Anglo-American authors show Russia's "Petrocracy" as a threat to America's interests. Neoconservative think tanks and other organizations keep harping that Russia is sliding into "despotism" and continue blackening Russia's image by churning up a distorted coverage of critical events and policies. Soon after Khodorkovsky was arrested on charges of multiple fraud and tax evasion back in 2003, numerous publications and articles with titles such as "Russia on Trial" and "The Kremlin's Mafia" appeared to promote the image of Khodorkovsky as a courageous opposition leader acting to challenge "despotic" Kremlin.
I am skeptical about that image. So appears to be Mr. Gustafson who is not inclined to prettify neither Khodorkovsky nor Yukos. Yet the book is not treating Khodorkovsky consistently, although the theme of Yukos is central. Khodorkovsky's image varies from page to page. In the end, he appears (at least to me) as an unbalanced and reckless operator. A techno-nerd who acquired the crown jewel for a pittance and who was quick to challenge anyone who opposed him -- including the Kremlin -- with unnecessary ferociousness. That doesn't look to me like a sane mind even though may be a brilliant one. He turned Yukos into "rogue elephant". It's just my impression.
The book, while excellent, has two defects in my opinion. There is a contraction in the book and a missing part.
A missing part is obvious: it is a (missing) international perspective. The oil market is global. It is affected by global events. One cannot speculate about the future of Russian oil without putting it in global context. Yet Gustafson seem not interested in that.
The survival of the Russian oil industry will be in the international environment. The Russian government has little control over it. Yet the international environment has an effect on Russia. America's economic future -- which is a big unknown -- is a key. The fate of Oil depends on the fate of the US in two ways. One -- is via "the mighty dollar" since the oil is traded in the US dollars. The value of dollar is bolstered because it's a lubricant for the international oil trade. But there is more -- the fate of the oil will depend on whether the US might be bogged down in more wars; and whether it would reform its economy. Another wild card is Iran: any disturbance there will have profound consequences for the price of oil and a profound effect on Russia. Gustafson is silent about all of these issues. They are outside his survey.
The Russians are passive price-takers at the "global oil exchange" and they know it (so does Gustafson). This is causing resentment. The global oil market is dominated by the US heavy-weights and the price of oil is itself fixed in the US dollars. This means that Russian prosperity depends on American whimsy. Obviously the Russians realize that and work hard to safeguard themselves. Much of what the Russians have been doing and WILL DO could be explained by that.
The contradiction of the book is rather more serious in my view. The author is calling for a radical overhaul of the Russian system. This is on the basis that ONLY this serious overhaul can stop the slide of oil production levels. He is right that the Russian state depends on oil revenues to subsidize its social programs. The revenues are poised to decline unless the state reforms itself and reforms the oil industry. But this contradicts his premise that the Russian state is not modern precisely because it depends on the oil revenues too much. Perhaps if the Russians stop being dependant the oil revenues would be a good thing after all? We are in a conundrum.
I think the idea of radical overhaul is wrong. Leave Russia along, let Russian economy evolve. The radical measures will not bring any good -- they rarely do. Russian petroleum production was destroyed after the collapse of the Soviet Union. There was so-called "shock therapy" which was in fact shock without therapy. The advice and economic justification for the "shock therapy" came from the West. The "therapy" implemented by the unwitting Russians "young democratic economists" such as Egor Gaydar and others based on "half-baked" ideas of the Harvard economists. It caused significant destruction of the Russian industry, removal of the "social net", and social dislocation. It is unlikely that Russians will listen to the advice coming form the West again. This is inevitable.
Like a phoenix, Russia today is dynamic and vibrant economically which is not stressed by Gustafson enough in my view. Regardless of oil's decline or rise, Russia will be the largest consumer products market in Europe by 2020. Already the Russian growth is consumer-doriven. The oil will gradually be removed from the pedestal. The last thing Russia needs is another revolution: political or economic. The changes the author enumerates at the end of the book will amount to a political revolution. Perhaps Russia needs change, perhaps not, I am skeptical.
Russian oil production had risen from one million barrels per day after the collapse of the Soviet Union to 10.5 million last year. This is despite a popular image (see the latest Foreign Affairs magazine) of the "Russian Bear" who is drinking oil from an easy source. The truth is the reverse: Russians have been working on it very hard. Russia is number one world producer and exporter today because of their hard work in very difficult conditions of Siberia.
Gustafson only half-explained how it was possible with ostensibly outdated methods and wrong organization. I think to the contrary. I think Russia has created a new paradigm where the oil industry is not nationalized (like in Mexico or the Saudi Arabia) but not completely private (like in the US). In this paradigm, the Russians created a unique, Russian fusion of the state and private business. The case in point is not just Rosneft, which is a quasi-autonomous business organization. It is not your typical Soviet "Ministry of Oil" anymore. Meanwhile the two top Russian oil companies (Lukoil, # 2 and Surgutneftegaz, # 5) are still not nationalized and are having a good run. Let the Russians be Russians. They will never be like Americans. Let them continue with the organic development.
Are there problems in Russian oil industry? Sure. But they are not about the state's excessive involvement. For me the problem number one Gustafson doesn't mention at all. It is Russia's exclusion from the lucrative global $20 trillion dollar trade of oil and its PAPER derivatives. Obviously, trade of the derivative securities is much bigger the trade of physical oil. Most of the trade is controlled from the US and UK: it is carried out in London, New York and Chicago. The city of Moscow is not even on the map, it is a VERY junior partner. Moscow must become one of the centers or die. The Russian state must take a more energetic leadership role, not withdraw. The book reflects the ingrained "free-market" pieties of the American elites. These pieties still linger. But like in Russia in 2003, the replacement of "free market" by American economic nationalism has been an ironic turn of events given a messianic devotion to universal free markets exhibited by the policy makers and economic writers in recent years. Overall I liked the book and I recommend it.
Many of the events Mr. Gustafson is talking about happened when I lived in Russia. However, just like a regular ordinary Russian I experienced these at a 5 foot view.. The book helps the reader rise high above and look at the situation at a 30 thousand foot view. It does so by drawing on relations between laws of economics, politics and culture. Despite providing a great 30 thousand foot view, the book contains plenty of detail and anecdotal information to give the reader a feel for what Russia and ordinary Russians went through in the last twenty years.
There is no Detroit without the Big 3. There is no New York without Wall Street.. What the book makes quite clear is that there is no Russia without oil. (Even more clear than I ever imagined.) Understanding the dynamics of the world oil markets and economic policies of the Soviet and then Russian Govt goes a long way towards explaining the path Russia has taken in the last quarter century and the challenges it is facing today.
Russian policy makers should heed to the advice and lessons presented in the book as they navigate the country through the transition embarked on almost 30 years ago.
Finally, I was quite impressed with some of the Russian sayings and proverbs the author quotes in the book. I did encounter several that I had not heard before, despite being a native Russian speaker.
A wonderful book.