Russia risks becoming oil-rich Honduras

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MOSCOW. (Alexander Pogorelsky for RIA Novosti) - The set of circumstances that sent energy prices soaring has determined developments in Russia and neighboring countries.

In one way or another, all of these countries are part of Russia's economic orbit. This wave has created illusions that the boom can last forever. Hence the ideas of dominance, of an energy superpower, of the right to impose its rules of the game not only on its neighbors, but also on Europe, on other great powers.

This is a very dangerous misconception. Owners of commodities have never been able to dictate terms. It is as if Honduras took advantage of the disbalance in banana supplies on the global market to announce itself a banana superpower. However, there are deep historic differences. Russia is a superpower historically, in its aspirations and opportunities. But you cannot claim great significance when your only trump card is oil and gas.

Today, Russia is a huge market, trading goods from all over the CIS. It is also a producer of goods these countries need. Russia is a big immigration magnet. And, finally, it has enormous cultural influence. People in former Soviet republics continue watching Russian films and reading Russian literature. This cultural phenomenon should not be underestimated.

There is a parable about a very bad cow. A bad cow is the one that does not give milk. But a very bad cow is the one that gives enough milk to fill a bucket and then knocks it over with its hoof. Sometimes, in relations with our neighbors, we behave like a very bad cow. The same attitude can be discerned in domestic policies as well. For example, we have accumulated huge gold and foreign currency reserves that are used all over the world to encourage foreign investment. But then the notorious Yukos case damaged the country's image to such an extent that a great number of investors were scared away.

Likewise, we have enormous power leverages, but our awkward efforts in dealing with Ukraine and Georgia have actually set these countries against us. To be fair, this inability to use the "soft power" potential is typical not only of Russia, but even of the United States, which often damages its popularity in the world. Russia sometimes also gives rise to anti-Russian sentiments and increases them.

Why does Poland have an upper hand in former Soviet republics, notably, in Ukraine? Because from the very beginning it treated these republics as sovereign nations, even if emerging and developing ones. Russia, however, preserved a certain air of dominance in relations with these countries for a long time and viewed their leaders as heads of republican party divisions. It is high time to give up both imperial ambitions and laments for the Soviet Union, because it will never come back. It is the same as trying to make a chicken out of an omelet. New independent states will come around one way or another, and we will have to respect them and their people.

In terms of the development difficulties Russia faces, we have to admit that they begin with oil dependence. After all, the Soviet Union broke up not only because it abused "hard power" mechanisms and got involved in the war in Afghanistan that was too big for it, but first of all because its economy became too dependent on oil.

We are all intertwined in the CIS. Russian money travels to neighboring countries via migrant workers and trade. The risk of a decline in oil prices should not be dismissed: they do fall occasionally. This will be a severe blow for Russia, but it may also lead to a collapse in many CIS states. Just imagine that 10% of Tajikistan's population - mostly men of working age - will return home without money or any prospects. That will surely be a sad homecoming.

There is also a serious danger in harbouring the illusion about our natural resources. We are not as rich as we seem to be. Two thirds of Russian resources lie in hard-to-access areas and one third on the shelf. We do not have technology to liquefy gas. We cannot maneuver our resources freely, because we are linked to suppliers. Our pipelines run to Europe. Or, at least, so far they do. If our consumers find an alternative market, we will be hostages to our own logistics. This was clearly shown by the Blue Stream gas pipeline: as soon as it reached Turkey, Russia found that there were no buyers for its gas there.

Of course, we should not give up our oil wealth. It was given to us by God and discovered thanks to scientific research done back in the Lavrenty Beria era. But it is naive to think that if we make use of this wealth, we need not develop alternative areas of the economy, such as processing industry, for example. Why not develop other branches of industry? This is the mistake the Soviet Union made. It decided to build a trans-Eurasia pipeline to compete with huge tankers that traveled 24 hours and proved cheaper in the end. As a result, the country got bogged down in huge projects that required a lot of energy. It also got bogged down in an arms race. This is a very dangerous development. Today we will have to focus on science and research, whether we like it or not, first of all in the energy sector. This will ensure its continued development.

We have to admit honestly that it may be too late for Russia's industrial development. After China and India made such a breakthrough, our chances of equal competition with them on the global market are minimal. We will never have such disciplined manpower; we will not reach in the foreseeable future the organizational level they have achieved.

Instead of vastly expensive projects, we should focus on developing our creative and intellectual potential. This means first of all education, which needs a complete overhaul. We have great prospects in art and software development. Russia's success or failure in building an attractive social model will provide an answer to the question of whether it will remain the centre of gravity for former Soviet republics. If an average Kazakh family dreams of sending their child to study in Moscow or St. Petersburg - instead of London or Paris - then this will be our great achievement.

Alexander Pogorelsky, director of the Institute of East European Studies, member of the RIA Novosti Expert Council.

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