The $27 billion Liquefied Natural Gas (LNG) facility just established in Russia’s Arctic Yamal Peninsula may seem like just another energy project. However, it should not be glossed over. This new LNG facility is an example of how an alternative economic order is emerging in the world.
“Especially on the Eurasian continent, this is a golden era, and in the Eurasian continent we’re seeing a lot of power accumulating, we’re seeing roads, cities, train networks snaking through the post-Soviet wilderness, and creating a fabulous amount of wealth and dynamism.” These words come from Asle Toje, the research director of the Norwegian Nobel Institute. He is describing a process taking place across Russia, China, and Central Asia, which the Yamal facility is one small part of.
Describing the economic benefits of the Yamal project, Russian President Vladimir Putin said: “Here in Sabetta alone it created 32,000 jobs. As Mr Mikhelson said, now the workforce is smaller but there are still tens of thousands of jobs. There is a new port, aviation and railway infrastructure, housing and social facilities. In other words, this is not the predatory, mindless mining of resources but comprehensive development of the territory, accompanied by the implementation of many programmes, including environmental ones. This is exactly the approach that should be used in future LNG projects."
Despite western attempts to crush it, Russia’s natural gas industry has not only remained intact, but it has now entered a new frontier. The Northern Sea Route is now being pioneered. China hails the Yamal project as the opening of the “Ice Silk Road.”
The sanctions imposed on Russia by the United States on August 2nd, had very blatant intentions. They were aimed at pushing Russia out of the oil and natural gas markets, so that Wall Street energy giants could move in. As US Congressman Tim Ryan stated on the floor of the US House of Representatives: “We must continue to focus on how we can get our gas to allies in Europe.” The pipeline project known as Nordstream 2 was specifically targeted in the sanctions bill, infuriating the Germans.
The monopolists of Wall Street and London see Russia and China as competitors. The two countries’ growing ability to produce their own energy and commodities and sell them on the world market cuts into their profits. If the world remains poor, Wall Street and London can keep it as a captive market or “sphere of influence.” But the opposite is occurring and as large parts of the world develop, a western financial elite, whose power has come from keeping the world poor, is losing grip.
Seizing Control of the Economy
In the 1990s, free market capitalism was imposed on Russia after the fall of the Soviet Union. As corporations like British Petroleum and HSBC bank enriched themselves, Russia’s people suffered untold horrors. With economist Jeffrey Sachs at the helm, the rate of unemployment was sometimes well above 20%. Canadian journalist Naomi Klein describes the conditions of the era in her book “The Shock Doctrine.” 80% of the country’s farms went bankrupt between 1991 and 1998. 74 million people lived in poverty, with 37 million in “poverty described as desperate.” Drug addiction and suicide rates skyrocketed.
Things only changed when a new government in Russia stopped allowing Wall Street and London to use the country as a playground. Putin dramatically ended Yeltsin’s neoliberal reforms and enacted a policy of turning Gazprom and Rosneft, the state energy corporations, into National Champions. Revenue from the export of oil and natural gas was used to subsidize and restart the Russian economy.
The ultimate result was a swift stabilization of the country, with wages rising and industrial output returning to pre-1991 levels. Crooked hedge-fund managers and tax dodgers like Bill Browder were forced to flee the country, along with any wealthy Russians who refused to play ball and help restore the country.
In the western world, the constant mantra is “socialism failed.” We are told that policies allowing the greed of the rich and powerful to be unregulated and unrestrained will create prosperity, while state central planning creates stagnation and is “the road to serfdom.”
Russia and China’s history of development is a solid refutation of this free market narrative, touted by proponents of neoliberalism. The Soviet Union became a superpower in the 1930s, while the rest of the planet was having a great depression. Stalin mobilized the population to create a modern steel industry, and bring electricity and running water to the entire country. The USSR’s Five Year Plans created the world’s largest hydro-electrical power plant, the Dnieper Dam, while eliminating illiteracy and maintaining full employment in the Soviet Union.
Russia’s economic crisis and episode of mass poverty took place in the 1990s, the Yeltsin-era, when Chicago School economic theories were imposed on the country. Afterward, Russia restored its economic strength by asserting state-control over energy markets. Russia’s economic resurgence involves a strong, nationalist government that routinely steps in to keep the rich and powerful in line.
China is a similar story. Prior to 1949 it was the “sick man of Asia.” Western capitalism brought China heroin addiction and extreme poverty, while keeping a primitive, feudal system in the countryside well-intact. What began with guerrilla fighters in Mao Zedong’s Eighth Route Army has resulted in China becoming the second largest economy in the world. China produces more steel than any other country, and has the largest telecommunications manufacturer in the world. Each day another Chinese millionaire is created, and the world tourism industry is happily reaping profits from a new market: Chinese families going on vacation across the planet.
Much like Russia, China’s economic successes have come about, not due to “investment” from western corporations, but from an economy that is forced by state intervention to serve the country, not merely profits and special interests. Chinese capitalists are tightly controlled, and the five year development plans from the state essentially dictate how the country moves forward. The 90 million members of China’s very disciplined Communist Party, march in lockstep, controlling the country and ensuring that corporations work for the public good. Xi Jinping is currently overseeing a huge crackdown on corruption, and re-emphasizing the party’s ideological foundations.
Fuel for a Powerhouse of Industry
The “Ice Silk Road” in Yamal is the latest achievement in the ongoing rebirth of Eurasia. It is a joint venture by three economic entities.
The China National Petroleum Corporation is state-owned, and operates as part of the centrally planned economy described as “Socialism with Chinese Characteristics.” Novatek is an independent gas corporation in Russia, owned by a personal friend of the President. Though it is mostly private, over 9% of the shares in Novatek are owned by the state corporation Gazprom, and cooperation with Gazprom and Russian state infrastructure has been essential in Novatek’s operations. The third wheel, the French company known as Total, owns merely 20% of the project. Though this is a low percentage of the stock, when the profits roll in, as global demand for natural gas keeps growing, the payout will be anything but small.
As China has emerged to become an industrial powerhouse, it very much needs to import fuel for its expanding apparatus of production. With a GDP predicted to rise by over 6% this year, China needs more and more oil and natural gas, which its neighbor, Russia, is happy to import.
The two Eurasian superpowers seem to compliment each other in a way. An economy centered around state controlled oil and natural gas resources is cooperating closely with an economy centered around a huge, state controlled manufacturing apparatus. Russia needs to export energy, and China needs to import it. The Eurasian alliance is resulting in the economic transformation of the hemisphere, and a shift away from unipolarity on the global stage.
Across the United States of America, schools are closing, factories have shut their doors, and once prosperous neighborhoods are dotted with foreclosed homes. The younger generation has a much lower standard of living than its parents. Household debt is at record levels, while wages continue to decrease. The highways, railroads and water systems of the United States are in decay.
In the analysis of this writer, the boom in Eurasia, as well as the declining state of western world, is due to a simple reality. In the western countries, it is corporations and capitalists that have all the power, and control the government, using it to protect their profits. Society crumbles as a small elite, without any real loyalties, enriches itself.
In Russia and China, the situation is the opposite. The big corporations and economic entities are tightly controlled and regulated by the government, which has been successfully using them to bring the country up from poverty and create a better life for the people.
Americans should look at the “Golden Era” described by Asle Toje which is taking place across the vast territories of Russia and China, and how it is being carried out. It is essentially proof of something US President Franklin Delano Roosevelt said in 1937: “We must find practical controls over blind economic forces and blindly selfish men.”
Originally published by New Eastern Outlook