Petrostate: Putin, Power, and the New Russia (Hardcover)

by Marshall I. Goldman (Author)
Key Phrases: production sharing agreement, ooo cubic meters, crude oil output, United States, Soviet Union, Putin Takes Over (more...)

Editorial Reviews

Review

"One of America's most seasoned Kremlin-watchers, Goldman's snappily written Petrostate argues boldly that Russia has become an energy superpower with a strong political agenda." The Economist
"This may be Goldman's best book, and that's saying a lot. Focusing on Putin's Russia with a scholar's commitment to deep and meaningful research and a reporter's eye for detail and color, Goldman has explained why and how Russia has again emerged as a global power. The answer is oil. At inflated prices, it leads directly to inflated national aspirations and further down the road to dangers of a totally unpredictable nature. Read and learn." --Marvin Kalb, former Moscow bureau chief for CBS News
"Few developments are likely to reshape the contours of international politics over the next decade more than Russia's ascent to energy superpower. And no one can tell the story of that ascent and the challenges it presents with better knowledge or flair for detail than Marshall Goldman." --Mark R. Beissinger, Professor of Politics, Princeton University
"In Petrostate, he treats petroleum as the key to Russian power, devoting the first half of his brief and very readable book to a fast-paced history of oil in Russia's economic growth from the mid-nineteenth century to the end of the twentieth."--The Nation
"A superb, readable description of Vladimir Putin's role in the emergence of Russia as a successful and potentially threatening petrostate. As a bonus Goldman also provides a concise survey of Russian political and economic history, with emphasis upon the growth of its oil and gas industries from the earliest days to the present." --James R. Millar, Professor of Economics and International Affairs, George Washington University
"'What is good for Gazprom is good for the world!' This emphatic claim by a prominent Russian energy official lies at the core of Marshall Goldman's timely and sobering new study of Moscow's petroleum industry. Putin is at the center of Goldman's readable study of the resurgence of Russian power based on petro-dollars. But the author combines sound history with economic analysis to come to the important conclusion that the new assertiveness of the Kremlin is here to stay."--Norman M. Naimark, Robert and Florence McDonnell Professor in East European Studies, Stanford University


Product Description
In the aftermath of the financial collapse of August 1998, it looked as if Russia's day as a superpower had come and gone. That it should recover and reassert itself after less than a decade is nothing short of an economic and political miracle.
Based on extensive research, including several interviews with Vladimir Putin, this revealing book chronicles Russia's dramatic reemergence on the world stage, illuminating the key reason for its rebirth: the use of its ever-expanding energy wealth to reassert its traditional great power ambitions. In his deft, informative narrative, Marshall Goldman traces how this has come to be, and how Russia is using its oil-based power as a lever in world politics. The book provides an informative overview of oil in Russia, traces Vladimir Putin's determined effort to reign in the upstart oil oligarchs who had risen to power in the post-Soviet era, and describes Putin's efforts to renationalize and refashion Russia's industries into state companies and his vaunted "national champions" corporations like Gazprom, largely owned by the state, who do the bidding of the state. Goldman shows how Russia paid off its international debt and has gone on to accumulate the world's third largest holdings of foreign currency reserves--all by becoming the world's largest producer of petroleum and the world's second largest exporter. Today, Vladimir Putin and his cohort have stabilized the Russian economy and recentralized power in Moscow, and fossil fuels (oil and natural gas) have made it all possible.
The story of oil and gas in Russia is a tale of discovery, intrigue, corruption, wealth, misguidance, greed, patronage, nepotism, and power. Marshall Goldman tells this story with panache, as only one of the world's leading authorities on Russia could.

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Product Details

• Hardcover: 256 pages
• Publisher: Oxford University Press, USA (May 27, 2008)
• Language: English
• ISBN-10: 0195340736
• ISBN-13: 978-0195340730
• Product Dimensions: 9.2 x 6.4 x 1 inches
• Shipping Weight: 15.2 ounces (View shipping rates and policies)
• Average Customer Review: 4.1 out of 5 stars See all reviews (8 customer reviews)
• Amazon.com Sales Rank: #51,080 in Books (See Bestsellers in Books)

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Customer Reviews

Most Helpful Customer Reviews

32 of 35 people found the following review helpful:

2.0 out of 5 stars Rife with factual errors, June 19, 2008

By	interstone (Oxford, UK) - See all my reviews

As a student of Russian energy markets, I can confidently say that this book is rife with factual errors. Simple things like calling Iran one of the top gas exporters in the world (Iran doesn't export gas at all, it imports it, though Iran does have some of the largest gas reserves in the world); claiming that liquefied natural gas (LNG) often needs long-term contracts of "two years" to sell (usually needs contracts of 10-20 years); contending that OPEC regulated the oil market through production quotas from its founding in 1960 (the production quota system wasn't formally instituted until 1986-1987); etc. The conclusions that Goldman draws from his analysis are largely correct because he knows Russia well, but a lot of the (incorrect) detail he includes demonstrates an interested observer's - not an expert's - understanding of energy markets. If you are an interested observer, go ahead and buy this book. If you are a researcher, you should certainly corroborate the facts in this book.

Overall, the book is filled with detail, most of it correct but some not. I certainly learned something from reading it, things that had slipped under the radar, but I am not convinced that one should trust Marshall Goldman's grasp of energy markets.

5 of 6 people found the following review helpful:

3.0 out of 5 stars Petrostate Review, July 1, 2008

By	Chad Creevy (Holland, MI) - See all my reviews (REAL NAME)

Goldman's book, Petrostate was somewhat interesting and shed some light on the complexity of business and energy in Russia. His research and references were undeniable but at times (not to his fault) difficult to follow because of the many "smoke and mirrors" corporate structures of many Russian companies and individuals based there. The government is layered with backscratching which he points out brilliantly throughout.

Overall, the book gave me a better understanding of business in Russia and the size and scope of their global position in energy. Good read.

6 of 8 people found the following review helpful:

5.0 out of 5 stars Excellent Background!, July 24, 2008

By	Loyd E. Eskildson "Pragmatist" (Phoenix, AZ.) - See all my reviews (TOP 100 REVIEWER)    (REAL NAME)

"Petrostate" provides good insights into Russia's comeback after its late 1990s nadir, as well as an understanding of its economic-political strategies.

Russia regained its place as the world's largest oil producer in 2007; energy generates about 30% of Russia's GDP and 60% of its exports. Russia is a major energy provider to Europe and the U.S. The U.S. buys $10 billion of Russian petroleum, LUKoil bought nearly 3,000 U.S. filling stations from Getty Oil and Mobil. Gazprom also provides LNG to the U.S., via a swap arrangement with Algeria. It also provides natural gas to 405 of Germany's homes and many of its factories, as well as much of the rest of Europe. Russia's Gazprom pipelines also play a major role in delivering gas from the "stans."

There is a fair amount of evidence that CIA chief Casey (Reagan administration) worked with Saudi Arabia (mad at Russia for invading Afghanistan) to break Russia's economy via increased S.A. production - however, the data do not provide a clean fit supporting this theory. Low energy prices in 1998 led to Russia defaulting on its debt, as well as many bank failures within the country. Prices quickly recovered in 1999, and along with a 40% increase in production between 2000-2004 transformed Russia into a major holder of foreign currencies. Russia has avoided the "Dutch Disease" because it didn't have much manufacturing, other than defense industries, to start with.

Mass privatization did not begin until mid-1992 under Yeltsin. Oligarch-controlled banks loaned the state money in exchange for stock certificates; most of the state's economic problems were due to companies and individuals failing to pay taxes - only about 3 in 70 did, and even those usually paid much less than owed. It was agreed that if the banks were not repaid, the stock would be sold. This occurred in mostly rigged auctions that, eg. excluded foreigners, and usually at far less than the stock was worth. Thus, auctioning Yukos brought $309 million, vs a market value soon afterwards of $15 billion. Similar actions occurred in the mining industry. Other assets were given away in return for eg. TV stations providing support for Yeltsin.

Capital requirements to establish private commercial banks were only $75,000 in 1989, after inflation; required $750,000 in 1987. "Oligarchs" could achieve this via sales of consumer goods immediately after the ban on their sales was lifted; other sources included trading commodities, taking advantage of government positions to sell hard-to-get commodities (eg. lumber). Legal chicanery and thuggery allowed further aggregations - government insiders during the late 1990s used their positions to exchange rapidly inflating rubles for IMF and Goldman Sachs loans denominated in dollars. (LTCM went bankrupt during this period. Another "trick" was suddenly changing stockholder meeting locations without notifying stockholders not part of management.)

Many banks failed, however, during the commodities downturn, and millions lost their savings - including Gorbachev. Putin stepped in and replaced Russia's graduated tax (maximum 30%) with a 13% flat tax, set goals of increasing GDP 7%/year (double in ten years), and increased military spending 27% in 2005 and another 22% in 2006.

Putin's 1997 dissertation proposed creating effective companies in natural resources and using them to advance Russia's national interests after commandeering them. He also wanted to open manufacturing to foreign investment (help modernize), but retain operating control - again to focus on national interests. ("National interest" was equated with low prices within Russia, and suspending deliveries to foreign countries that don't support Russian policy.)

Putin seized the assets of media moguls that criticized him, then replaced oil leaders involved in "asset-stripping," and maneuvering to sell large portions of their companies to American firms, reach long-term agreements to sell oil to China, and failing to pay taxes. (Oil leaders were also deemed guilty of black market activities, an economic crime in Russia. Further, there was strong evidence some were involved in several murders of both public leaders and private competitors.)

Russia's re-nationalizing industry (typically 50% + 1) has given it leverage greater than with nuclear weapons (they were only useful as threats). Reagan tried to block construction of a new gas pipeline from Russia into Europe, and backed it up by banning use of G.E. pumps and other pumps using American parts. Britain, however, ignored Reagan and supplied the equipment. (Cheney has subsequently made similar efforts elsewhere against Russia, and failed as well.)

Russia has the world's largest reserves of natural gas. Ukraine was receiving gas at about 1/3 the world market price, was warned that if wanted closer relationships with the West it should pay Western prices, and then was cut off when it refused to do so and instead diverted Germany's supplies. Similar haggling has occurred involving Georgia and Hungary - the latter regarding its possible agreement to host a competing gas line.

Russia now is claiming ownership of the North Pole sea bottom as an extension of Russia - experts believe it is rich in energy resources.