1. Guaranteed windfall profit now is better than speculative profit later; a bird in the hand is worth two in the bush.
2. Russia has long planned on a 'pivot to Asia' in the event Europe does ween itself off of natural gas. Not that that has panned out very well so far; the Power of Siberia pipeline has reportedly been quite unprofitable, allegedly because of the nepotism on the project regarding the contractors. Which brings me on to the next point...
3. It is a mistake to assume that leaders of countries are competent or their interests are inherently linked to 'national interests' or 'geopolitical strategy' (principal-agent problem).
3a. Even if Russia is out of money in 50 or 100 years because of some green energy revolution, nobody running the show today will be alive enough to care about it.
3b. Natural resources are easier and more profitable to exploit than human resources. If you want to build a technology-intensive industry, you need to keep the talent happy (or otherwise prevent them from leaving as the Soviets did) and keep up on innovation against competitors. E.g., Roscosmos has been coasting for decades off of the reliability of Soyuz, but have they designed anything good lately? SpaceX, Rocket Lab, and several other startups present a real risk to their business.
If you have something in the ground you can dig up, you don't have to keep anybody happy, you might have competition, but changes in the market won't come as any surprise. You don't even have to have local expertise in resource extraction - just hire Exxon to do it for you, like they did in Sakhalin. Whereas if you want to extract money from people, you're going to have to tax them, and if you do that too much, they'll get upset or leave.
If you're running a country and want to personally enrich yourself, the best way to do so is to prioritise resource extraction and exploitation.
I think our analyses of the Russian state are based on such fundamentally different premises that we will never come to any meaningful agreement, and further discussion is pointless.
mannerheim|3 years ago
2. Russia has long planned on a 'pivot to Asia' in the event Europe does ween itself off of natural gas. Not that that has panned out very well so far; the Power of Siberia pipeline has reportedly been quite unprofitable, allegedly because of the nepotism on the project regarding the contractors. Which brings me on to the next point...
3. It is a mistake to assume that leaders of countries are competent or their interests are inherently linked to 'national interests' or 'geopolitical strategy' (principal-agent problem).
3a. Even if Russia is out of money in 50 or 100 years because of some green energy revolution, nobody running the show today will be alive enough to care about it.
3b. Natural resources are easier and more profitable to exploit than human resources. If you want to build a technology-intensive industry, you need to keep the talent happy (or otherwise prevent them from leaving as the Soviets did) and keep up on innovation against competitors. E.g., Roscosmos has been coasting for decades off of the reliability of Soyuz, but have they designed anything good lately? SpaceX, Rocket Lab, and several other startups present a real risk to their business.
If you have something in the ground you can dig up, you don't have to keep anybody happy, you might have competition, but changes in the market won't come as any surprise. You don't even have to have local expertise in resource extraction - just hire Exxon to do it for you, like they did in Sakhalin. Whereas if you want to extract money from people, you're going to have to tax them, and if you do that too much, they'll get upset or leave.
If you're running a country and want to personally enrich yourself, the best way to do so is to prioritise resource extraction and exploitation.
janef0421|3 years ago