The transformation of the energy sector is one of the most significant changes that have occurred as part of the transition to a market-based economy in post-Soviet Russia. Strangely the oil and gas industries have taken strikingly different paths; the former towards full privatization and the latter away from privatization and towards a highly centralized state entity whose capital saturates every function of the state. The path to privatization that the oil industry followed is important because it sheds a light on the forces that shaped and influenced the transition of the Russian economy. By describing the actors, structures, and economic environment of the Soviet transition Li-Chen Sim gives an in-depth review of the oil sectors path to privatization. The successes and failures of oil privatization he describes are important to understanding the huddles any formerly nationalized sector of the Soviet economy faced.
Li-Chen Sim is an adjunct Assistant Professor in the Department of Humanities and Societal Sciences at Zayed University (Abu Dhabi), United Arab Emirates. The great success of her analysis is not using the Oligarchs of post-soviet Russia as a scape-goat and instead focusing on other actors such as the "young reformers," the Soviet-era oil-industry managers, and the politicos around President Boris Yeltsin. Li-Chen Sim argues that the conventional wisdom that post-Soviet tycoons have taken hold of the Russian state to determining the design and implementation of policies to privatize the oil industry is an erroneous one. State control in the transition period was inconsistent and sparse over state resources but one must only look back through the past regimes’ treatment of the energy sector to know its importance to the Russian state. Oil was the second largest assets to tsarist Russia after grain and, like today, oil was the largest economic assets to Soviet Russia. The privatization of the oil industry did not happen in a blink of an eye but was done in stages through Presidential decrees and economic reform policies.
In 1992 there 300 fully state owned oil entities and “within a decade, six privately owned oil companies emerged to dominate the Russian oil industry,” (Sim, 1). Li-Chen Sim concentrates on the years 1992-2003 as the key reformer years of the oil industry because they went against “inherited and contemporary trends” in the oil industry. She lays out three reasons for why the practices were in opposition; oil was a strategic and valuable commodity that underpinned much of soviet development, the pace at which the oil industry was de-monopolized, corporatized, and privatized was in stark contrast to other energy subsectors, and there is no compelling rational to do away with state ownership because there is no correlation to ownership type and a world-class oil company. For the third reason, state-ownership in the norm in most oil rich countries that are developing and nationalization of key economic assets is the norm for transitional periods of states.
These practices have been noticed by many but Li-Chen Sim takes in step further by forsaking the accepted paradigm in analysis of Russian development as state assets being ruthlessly plundered by tiny elite of business oligarchs who captured the state and its functions. She separates the businessmen into their own force and concentrates on the influence of Soviet-era general managers of oil companies. Since the decision to privatize oil was made at the end of 1992 Li-Chen Sim says that it was done prior to the emergence of big business so the ‘red directors’ certainly played a central role during this period.
As seen above the focus of this book is, “on oil companies and the impact of their leaders on policies related to oil privatization in Russia,” (Sim, 5). Li-Chen Sim uses an analytical framework of rational choice institutionalism. This analysis is on the interaction between human agency and institutional parameters with the individual as the basic unit of analysis. The following three assumptions lead her analysis of YUKOS, Slavneft’, and Rosneft’. First, political actors make decisions and determine policy that may re-craft and destroy institutions. Second, the political actor is self-interested and third, the self-interested actor is rational in that he attempts to maximize the possibility that his highest-ranked preference is achieved.
Li-Chen Sim’s analysis addresses issues critical to Russia’s political and economic development. Russia must decide who controls the flow of privatization throughout Russia and if any form of de-nationalization is healthy to the nation. Her analysis of the oil industry is a window into the political and economic processes and organization of a still transitioning Russia that may be important to other sectors of the economy.
No comments:
Post a Comment