“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."
Thursday, December 17, 2009
China sticks it to Gasputin
Up until last spring, Gazprom had pursued a policy of importing all available gas from Central Asia at almost any price based on the wishful assessments of trends in European and U.S. demand and in the valuation of its main product. The collapse of oil prices in late 2008 took Gazprom completely by surprise. Then it was hit by two more surprises: a sharp drop in demand on the European market in the first quarter of 2009 and an even deeper contraction of the U.S. market, which has become saturated with domestic shale gas.
After Gazprom agreed in July 2008 to import gas from Central Asia based on high European prices, every cubic meter of gas that it imported from the region was a net loss on the company’s books. As the international economic crisis gained steam and global demand for energy resources dropped dramatically, Gazprom could no longer afford to buy gas at these high prices.
China has come to the rescue of Turkmenistan.
Most news reports and comments on Monday’s festive opening of the gas pipeline from Turkmenistan to China portrayed the event as a strategic setback for Russia. There has been no official reaction, but the Kremlin has demonstrated total indifference to the break on its monopoly on importing gas from Central Asia.
China, Turkmenistan, Kazakhstan and Uzbekistan were quickly able to reach an agreement on the construction of the 1,833-kilometer pipeline that is expected to carry 40 billion cubic meters of gas a year by 2010. This is in stark contrast to the pipeline project along the eastern shore of the Caspian Sea that then-President Vladimir Putin initiated in May 2007 — an initiative that has gone nowhere.