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Putin’s Little Earner

Whilst the murkier aspects of state ownership and Russia’s giant energy and infrastructure companies are frequently assumed and insinuated, it’s rare to see any direct connections made explicitly in the mainstream press.  Anders Aslund has a striking piece up at Bloomberg from earlier this week about the links between the slowly declining Gazprom and ‘its real chairman‘, Vladimir Putin.

Aslund speaks about the company’s ‘spectacular mismanagement‘ and arcane policies, blaming Putin for Gazprom’s losing out on the European energy market, its falling sales and market share, and stagnant production:

At the heart of Gazprom’s mismanagement lies extreme inertia; reluctance to absorb new information; corruption and outlandish arrogance. Its managers are used to exercising Soviet-style monopoly over consumers, not having realized that the market has taken over. The company has traditionally varied prices by countries for opaque reasons. For example, Lithuania pays 15 percent more for Gazprom gas than neighboring Latvia.

But what’s really interesting is the article’s revelation that Gazprom’s market value has absolutely plummeted since May of 2008, when its market capitalisation was a whopping $369 billion.  That figure is down to just $83 billion now, and shows no signs of recovery.  These figures are telling.  Why would shareholders be losing interest?  Most probably because they aren’t getting paid.  And yet Gazprom, says Aslund, claimed the largest net income of any company in the world in 2011.  So where is all the money going, one wonders…