Putin holds on to Gazprom

Friday 29 February 2008

Putin may be giving up his role as Russian president, but his influence is set to continue undiminished. His designated successor is his own protégé Dmitry Medvedev, from whom Putin could take over as head of energy giant Gazprom.

Vladimir Putin's designated successor Dmitry Medvedev will, in all likelihood, become Russia's next President. According to the local press, Putin, who is gearing up to become Russia’s next Prime Minister, could in turn take over from Medvedev as head of energy giant Gazprom, the country's leading foreign policy tool.

For the moment, Putin refuses to comment. Alain Guillemoles, journalist and co-author of “Gazprom, the new empire”, thinks that “if it’s not Putin, it will be someone who has a close connection with his circle;" an opinion shared by Nadia Campaner, researcher at the Geopolitical Centre of Energy and Raw Materials. As she puts it, “Gazprom will always be, without any doubt, related to politics,” and to Putin.

For Guillemoles, “Gazprom is the work of Putin in the sense that he transformed the entity into a political instrument. Putin knows everything about Gazprom, from output volume to the diameter of the pipelines. He appointed all of its directors, who are very close to him. The current political culture in Russia is based on links of allegiance to Putin, whether it be Medvedev or Gazprom’s Board of Directors.”

Indeed, after having rid Gazprom of its pro-Yeltsin managers, Putin replaced them with his own men. Then, between 2004 and 2006, the state acquired 50% of the company, its workforce numbering 400,000. Today Gazprom enjoys monopoly rights over exports, and accounts for a staggering 8% of Russia’s GDP.

Gazprom – Putin’s political weapon

This economic colossus is Vladimir Putin’s key to increasing Russia’s influence throughout the world, all the more so with energy prices soaring at the present rate. Russia, the world’s biggest gas producer, controls and supplies a quarter of Europe’s gas. The country is now looking at Asian markets. Whether Moscow is dealing with China or with Europe, political and economic factors interweave.

The arm-wrestling between Moscow and Kiev in recent years highlights this crossover between business and international politics. As Ukraine veers further away from the Kremlin’s influence, edging ever closer to NATO, Russia has threatened to cut off gas supplies on the pretext of an old debt the Ukraine denies owing.

Gazprom has also proved highly useful to Putin's internal ambitions. The company did him a big favour by buying off “impertinent” media companies through the holding Gazprom-Media, which owns many important newspapers, radio and television channels, a publishing house, an advertising agency, a film production company and even two theatres.

For Gauthier Rybinski, political analyst at France 24, "the supercompany’s future is secure. Gazprom will last, diversify and procure all the major contracts.”