Russia & USA Privitize Energy Sector

By Boris Kagarlitsky
"Russian populism was the first response to the rise of capitalism in this country"

        When you buy a refrigerator the vendor, if he is a good one, will tell you how long the particular make in question will retain the cold if the power goes off. And you don't have to be a resident of the Far East's Primorye region to come across this phenomenon: Blackouts are spreading throughout the country.

    There is one consolation, however — we aren't the only ones.

    When I first wrote about the problems in California on the pages of Novaya Gazeta, readers responded with letters of disbelief. Surely this kind of thing couldn't be happening in the United States? To this day some of them still don't believe it. Long before the difficulties in California, the same problems had occurred in Brazil. And they are very familiar to the residents of Kazakhstan. Everywhere the same thing happens: First the privatizations, the liberalization and de-regulation of the energy sector and after a while — off go the lights.

    In his capacity as head of Russia's energy systems, Anatoly Chubais explains to his fellow citizens that the blame lies with thieving local officials and isolated errors. He also says the liberalization process hasn't been carried through to the end. If you hack up a company and sell off its most valuable pieces, then everything will magically sort itself out.

    One could say that, on a planet-wide scale, an expensive and not particularly successful experiment has been imposed. After all, the privatization and deregulation models differed for each country, as did the degrees of corruption. When I am told that Russian officials steal, I have no doubt whatsoever that this is true. But when I come to California I hear cries of foul play against the directors of energy companies.

    This is not a case of isolated errors or the peculiarities of one model or another. If one and the same result is repeated in various situations, then this means that the principle, the strategy itself, is bankrupt.

    This cannot be avoided in Brazil, Kazakhstan or even in the U.S. The difference is how society reacts. In Brazil the electricity blackouts cause mass concern. In the U.S. the claims against energy companies are being considered by the courts. And Russia? In the Primorye region the governor, who had no direct connection with energy policy, has been fired and a replacement selected who is in no way better than his predecessor.

    Basic common sense should tell us that running the national energy system like a small private business is no less foolish than incorporating a small shoemakers workshop into the centralized state planning system. But politics has no need for common sense — it has its own interests. And that is why even a clear case of policy failure does not constitute an argument against continuing that policy.

    President Putin tells the nation that the previous years' reforms have failed to improve the lives of the population and that this is bad. But then the authorities discuss a new packet of reforms founded on exactly the same principles as the previous ones. You don't have to be a prophet to predict that if this program is implemented, life will not get any easier or happier.

    Chubais has expressed himself clearly: Those that can't afford electricity must get by without it. And no one asks how prices are set, why wages are still miserly and how, despite the low wages, our product is still not competitive. Alas, we don't hear these questions raised or any answers given at government meetings.

    Boris Kagarlitsky is a Moscow-based sociologist.

 

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