Energy Policymaking in Russia
From Putin to Medvedev

The most obvious policy trend in Russia during the rule of President Vladimir Putin was a steady strengthening of the role of the state in the management of vital industries. Putin himself indicated on several occasions that state capitalism, accompanied by only a trace of private business, was the best remedy for Russia’s economic shortcomings. During his tenure at the Kremlin, Putin managed to establish a fine-tuned system of centralized control over the Russian political system right to the level of regional governors. This control has encompassed, to a very great extent, the nation’s main source of hard-currency revenue, Russia’s oil and gas industry. Under Putin, energy exports accounted for over 67% of export revenues within the Russian budget. Energy export flows have, moreover, occasionally been used as a political tool internationally.

This article explains how energy policymaking and investments were conducted under Putin’s tenure—outlining the various avenues of influence in Russia’s energy policy—and examines the potential changes within energy policymaking under President Dmitry Medvedev. Putin has played his position well, balancing interest groups against each other to preserve his own dominance. Medvedev faces significant challenges if he intends to wrest any power away from Putin or these interest groups.

Energy Decisionmaking under Putin: The Gazpromization of Russia

Decisionmaking in today’s Russian oil and gas industry is opaque and riddled with controversy. Although Putin has established an almost feudal system of control over the political and administrative system in Russia, he did not fully control the industry alone. Putin’s ability to leverage support from, and balance the conflicting interests of, three main influential groups—the “St. Petersburg lawyers,” the siloviki, and the “Family”—was critical to Putin’s successful seizure of control of Russia’s political apparatus. [1] By acting as a referee between different groups as they struggled for control over commercial interests and revenue flows, Putin often limited conflict—and prevented any one group from prevailing over the others.

The St. Petersburg lawyers are essentially technocrats, generally believed to have relatively liberal views on the state’s role in the economy, foreign policy, and civil liberties. The siloviki, on the other hand, are former KGB and FSB officials. This group tends to be power mongers, hawkish on defense, who view the state as the backbone of society. The Family is a clan of businessmen who were associated with late President Boris Yeltsin.

Although a former KGB official himself, Putin is…

[1] Some analysts recognize over 25 groups of influence in the current Russian establishment.