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Premature Contractualization

With regard to the news I posted earlier about Algeria’s crumbling deal with Gazprom, I wanted make note of some additional thoughts. In many respects, it really doesn’t matter that much to the Kremlin whether or not they are able to establish a concrete joint venture with Sonatrach – simply just raising the possibility of the alliance was sufficient to produce the desired outcome in Italy, so the MoU has arguably already served its purpose. Like a bait-and-switch technique of a used car salesman, Gazprom successfully muscled both PM Romano Prodi and Eni CEO Paolo Scaroni into commitments and agreements. I imagine that Gazprom was as surprised as anyone else by how quickly they collapsed before the Algerian gambit. Foreign governments need to understand that this strategy of announcing pending deals, massive contracts or MoUs, and then then later dissolving or abandoning them as the political or economic winds shift, puts Russia in a category all its own. We will hence forth describe this process as “premature contractualization,” and apply it when we talk about Russia’s energy acquisition activity in all directions. Before taking news from Gazprom directly, we should bear this lesson in mind.