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    Russian gas and power at home [NGW Magazine]


Just as in its dealings abroad, the Kremlin uses gas to bring people into line at home and the exceptions reveal a delicate balancing act.

[NGW Magazine Volume 4, Issue 6]

by: Dmitry Shlapentokh

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NGW News Alert, Top Stories, Europe, Premium, NGW Magazine Articles, Volume 4, Issue 6, Russia

Russian gas and power at home [NGW Magazine]

According to the Russian analyst Vladimir Surkov, among the many reasons for the longevity of Vladimir Putin’s regime is his ability to communicate with the average Russian directly, bypassing bureaucracy.

Another is the regime’s creation of the repressive machinery of state. But a detailed analysis of low-profile developments suggests that Putin’s state is not as stable as Surkov claims. Regional gas debts are one example of this.

Putin, in this part of the picture, emerges not so much as an all-powerful autocrat, but a feudal king who approaches different regions of the country in the same way as he approaches foreign countries.

Russian regions owe a huge amount of money for gas, with the Moscow region among the biggest debtors. There are several reasons for this, including confusion about who to pay. But a bigger reason is the higher prices and authorities said Russia’s residents would see two price rises this year.

Income has been declining for the last five years as Russia’s bottom fifth by salary earn under rubles 11,000 ($170)/month.

Measures include empowering bailiffs with the power to get debt with the threat of eviction. And some government experts have advised bringing back the pre-revolutionary custom of peasant communes where each individual is liable for the debts of others, and others have advised linking the salaries of officials in local authorities to their ability to make people pay for the gas and power they use.

While the authorities have been actively engaged in the attempt to get money from customers, Gazprom adopted its own methods, disconnecting the delinquent customer, even during winter, with a court order. In some cases, utilities have jumped the gun, cutting gas, electricity and water themselves without the delay of a court order. There were cases of sick people dying because of the cold, and an entire family dying from cold in Tatarstan in 2016.

One might also add that it is not easy to turn gas deliveries back on, once they have been turned off. Gazprom also used this threat to cut gas delivery to an entire city, Omsk, because of the city’s payment delinquency.

While conflict between individual residents and regions on one hand, and Gazprom and authorities on the other hand, have been quite tense, the government, both central and local, and the consumers have attempted to find a compromise and some solution. For example, in Perm, the deputies asked the local prosecutor to write off the debt for utilities used by locals.

The gas company in Vologda province promised to forgive fines to those residents of the region who eventually do pay up; and some authorities proposed a law which would prohibit cutting gas and electricity to the poor and households with three or more children.

All these plans implied writing off debt either completely or partly but some pundits stated that the amounts were so large that a wholesale amnesty was impossible.

The central authorities agreed with those observers who assumed that consumers should pay, come what may. A Kremlin spokesman said that the Russian government has no clear solution to the problem of non-payment. He added that both the interests of the residents and the gas companies had to be taken into consideration.

But non-payment could also could be a sign of defiance, an indication that Russia is a peculiar patchwork of semi-independent bodies, betraying its feudal past. Some organisations do not pay because they think they are above the law. There are also institutions that see themselves as “quasi states” with the right not to pay. This includes various state-owned entities, such as military installations.

The authorities believe that they could more easily get debt from powerless individuals, who ended up shouldering some of the debts owed by other, bigger organisations. The fact that the latter rewrite the rules for themselves creates a clear sense of peculiar feudalistic arrangements, where the king must consider the interests of the lords and appease them. This tactic is much in evidence in Moscow’s dealings with the republics of the northern Caucasus, especially Chechnya.

Chechnya: first among equals

The republics of the northern Caucasus are no different from other parts of the Russian Federation, in that they too have accumulated a huge debt to Gazprom. Chief among them is Chechnya, while Dagestan, Kabardino-Balkaria, Krasnodar and Ingushetia all owe collectively billions of dollars. The figures are disputed: according to one observer, Dagestan is the biggest debtor.

Some local leaders have tried to ensure payment for gas: the Chechen authorities have rejected the claim that locals are deliberately not paying, if they believe that the fees are legitimate.

Still, it is clear that local leader Ramzan Kadyrov has arranged relief from gas payment. His policy in relationship to gas arrears has been controversial. On one hand, he seems to have tried to play the part of the Kremlin’s loyal lieutenant, who follows orders and, implicitly, meets the demands of Gazprom. In 2018, Kadyrov fired some local officials because they were unable to collect payments for gas and electricity.

On the other hand, when the gas company interrupted electricity delivery to three-children households, Kadyrov sacked those responsible for the decision. As time progressed, Kadyrov and, it seems, other leaders of the republics of the northern Caucasus increasingly demonstrated defiance to Moscow and, implicitly, Gazprom. They portrayed themselves as defenders of their people who should enjoy certain privileges, one of which was free gas and electricity.

Russia’s prime minister Dmitry Medvedev complained last summer that a considerable number of consumers in the north Caucasus do not pay for gas. The point here is that residents are quite different from those elsewhere in the state. Non-north Caucasian residents are pretty much aware of what might follow: the authorities cut deliveries and charge the entire sum.

But gas keeps flowing to the north Caucasus, even if a court decides that certain individuals must pay for gas. Even state-controlled Gazprom could not force Moscow to demand payment, as local courts have written off debts to Moscow. They said the debtors could not pay Gazprom and threatened civil unrest if the bills were enforced – a potent threat in a republic with Chechnya’s relatively recent bloody history.

At the same time the authorities have applied the law in other parts of Russia because there was no such risk. Still, observers noted other reasons for Chechnya’s special treatment. The court decision to relieve Chechens from paying debt solidified Kadyrov’s power. A political scientist, Alexei Malashenko, said that not only has Kadyrov shown that he can stand up for Chechens, but also that he takes advantage of the gas problems to settle personal scores, picking on those who do not fall into line with threats of court action if they do not pay up.

But a bad example can be infectious: other republics in the northern Caucasus have followed Chechnya, not without success. Such as the city of Lermontov in the Stavropol region near the Caucasus. Residents decided not to pay for gas and when the local gas company decided to cut off deliveries, the authorities compelled it to deliver gas free of charge.

Moscow and implicitly Gazprom were alarmed at the prospect of the principle spreading and the government warned other regions not to copy it, tempting though it might be. If push comes to shove, they said, gas companies will enforce payment or cut off the gas.

This advice was ignored by some regions and individuals who watched other cases of “exemptions” applied to military organisations or powerful individuals in the Russian heartland that continued to receive gas, water and electricity. They were led to believe that they could demand the same concessions from Moscow as Chechnya had.

Response to concessions to Chechnya

The residents of Smolensk region, Chuvashia, Bashkiria and St Petersburg also wanted to write down their gas debt, but lacking any credible threat, they failed. Their rebellion was confined to angry discussions on the internet and articles in newspapers.

One wrote to Komsomolskaia Pravda to say Chechens always took gas without paying, unlike residents of “destitute Vologda,” who always paid as much as they could. Another implied online that Gazprom and other bigwigs in Moscow could hardly write off the huge Chechen debt and consequently, it was Russians from the country’s heartland who will cover the so-called “Chechen poor” who live in “palaces.” Another online contributor also advocated protest and non-payment.

Those discussions showed clear awareness of the Kremlin’s logic and explanation for its concessions to Chechnya and, by implication, to other regions of the north Caucasus. Kremlin spokesmen could well note that the wars in the 1990s and early 2000s made it a special case, and the region is still unstable, not only because of Muslim threats but also because of the continuous ethnic tensions between various peoples within the region.

Attempting to collect debt from the locals could well lead to new bloody wars which could cost Russia not just the lives of its soldiers, but considerable resources that could well exceed the cost of providing Chechnya with what has turned out to be free gas.

Young Russians do not understand why Chechnya should be treated differently from other republics, even if they do accept the notion that Chechnya and/or other republics of North Caucasus might engage in violence and demand independence. They do not see any reason for the rest of Russia to be concerned with these matters. Moreover, many of them undoubtedly believed that Moscow should “expel” these republic parasites from Russia, even if they want to stay inside the country.

Satirist Viktor Shenderevich has conveyed these feelings clearly enough, noting sarcastically the Soviet general killed in Chechnya in 1996 that “Dzhokar Dudaev only wanted what was good for us all along. Too late, we realise that Russia would perhaps be better off starting a war to liberate itself from Chechnya.”

While Kremlin ideologists undoubtedly are aware of these feelings, they tend to avoid going into depth into the true reason for appeasing Chechens and other republics of the northern Caucasus at any cost. One could wonder why Moscow is pursuing this policy: there is after all scant economic justification. While the north Caucasus has some natural resources, they are not so extensive as to warrant major subsidies.

The geopolitical threat also might not be as serious as some Moscow analysts believe. Russia already has a fairly tense relationship with nearby Georgia. Alienating a few more states would not make the situation that much worse for Russia.

The reason for Moscow’s reluctance to let Chechnya go as an independent or semi-independent state is of a different nature: it would send a signal to others – not just ethnic enclaves but to purely Russian regions – that Moscow’s power could be challenged and they could achieve considerable autonomy vis-à-vis Moscow, creating a new version of the “Holy Roman Empire of the German Nation,” the mediaeval political construction in which the emperor was no more than a figurehead.

The semi-disintegration of the federation would please the local elite, for property arrangements and political power is intimately connected with post-Soviet Russia. The local barons could also enjoy the support of the locals, who are outraged by the privileges of Chechnya and, implicitly, Moscow itself, where living standards are historically much higher than in their capitals. This would be a disaster for Moscow’s elite and explains Putin’s peculiar gas policies: he does not adopt a “one size fits all” approach to the Russian regions, any more than he does with foreign countries.

Like the late mediaeval/early modern king, Putin has provided concessions to powerful barons or regions that he could not master and dealt harshly with those that were unlikely to engage in violence. This balancing between different “barons” or “principalities” is based on Putin’s personality, and from this perspective, the analyst Vladimir Surkov is correct to say that Putin is the major element of state. But this construction is fragile, and it is not clear how it will survive Putin, whose populist approach and understanding of what plays well to the ordinary citizen has been a hallmark of his regime.