February 13th, 2012
10:10 PM ET

Zakaria: How oil is propping up Putin

By Fareed Zakaria, CNN

If you're trying to understand the recent protests against the Putin regime in Russia, one of the best guides is an outspoken columnist who's been writing trenchant essays in the nation's leading newspapers over the past month.

"Political competition is the heartbeat of democracy," this author writes, noting the absence of such competition in contemporary Russia. He describes the frustrations of the Russian middle class, demanding political rights.  "Today, the quality of our state does not match civil society's readiness to participate in it." On corruption, perhaps the issue that most riles the public, the author is scathing. "The problem comes from the lack of transparency and accountability of government," he says.

Now, what makes this all deeply strange is that the author of these essays is Vladimir Putin - the architect, builder, and chief enforcer of the system that he is critiquing. Putin seems to understand Russia's problems better than your average dictator. He doesn't seem to understand that he is the source of those problems in many people's eyes. In Putin's worldview, he is the savior of modern Russia, the man who stopped its descent into chaos and poverty in the 1990s. His opponents see him as a warmed-over KGB apparatchik, presiding over a new, improved Soviet state.

Neither view is entirely accurate. The real hero of Russia's rescue was oil. The dramatic rise in the average Russian's income has been a consequence not of Putin's policies but of oil prices. The price of oil when Putin came to office was $27 a barrel. From that point, it began an almost unbroken rise and is now at $116 a barrel. And oil is the lifeblood of Russia's economy. It provides two-thirds of its exports, half of the federal government's revenues.

The Russian state has used these revenues to dole out patronage across the country. It is widely believed in the West that Putin stays in power through repression. Actually, he does so in larger measure through bribery.

In the short run, Putin will be able to win the March election and consolidate power through a mixture of repression and patronage. His problems are more long-term. His government has ramped up its revenues to the point that it now needs oil to approach $125 a barrel simply to balance the budget.

Russia's demographics are terrible. It has a population that's aging and shrinking, which means pension and healthcare costs will rise as people retire; labor productivity in Russia is abysmal; the Caucasus region is almost turning into a separate country; and Russia's ethnic diversity is straining its sense of nationalism. But, like Saudi Arabia, like Iran, like Venezuela - all somewhat dysfunctional regimes - the Russian regime will survive these challenges until and unless oil prices come down.

For more on this, you can read my column in TIME magazine. For more of my thoughts throughout the week, I invite you to follow me on Twitter and Facebook.

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Topics: Fareed's Take • From Fareed • Oil • Russia

soundoff (43 Responses)
  1. Serge Prévost

    Oil is indeed propping up Putin which in a way is good to spread out the wealth, though it does (the oil) bring power to a few it is a cost to most notwithstanding mother nature escpecially in sensitive areas. Going back to Putin his renewed power due to energy ressources is a concern as this man strive on power and has weird ideas, supporting Assad is one of those. ..it is mind boggling that someone saine would support Assad.

    February 13, 2012 at 10:59 pm | Reply
    • ObjectiveView

      To be precise, it is LNG, not oil that make Russia economically vibrant, Russia is the biggest LNG exporter to the world, and to its neighbor, CIS. Of course LNG price is affected by oil price,

      February 13, 2012 at 11:35 pm | Reply
      • j. von hettlingen

        Russia is the largest exporter of LNG. It is the world's largest oil producer as well. Energy and minerals make up 80% of Russia's exports.

        February 14, 2012 at 4:39 am |
  2. Putin

    I totally disagree with this article. Putin indeed is the savior of modern Russia. If it was not for him Russia would have totally disintegrated much to the pleasure of the West who would like it to be like a 3rd world nation depending on the west/US for Aid.
    As for oil, yes its true oil has saved Russia but its all depends on the leadership and what they do with the oil money. One look at Nigeria and you get the point.
    Putin might not be perfect but he is what Russia needed at a time when it was in totally chaos. His steady hands gave Russia stability. Once that is achieved people naturally forget and move on to other demands like political freedom etc….
    I sometimes feel it’s the wealthy elite who are trumping all the trouble against Putin and not the Average Russian. I guess we just have to wait and see what happens come election time.

    February 13, 2012 at 11:14 pm | Reply
    • ObjectiveView

      He is more capable than Obama in his handling of political opponents.

      February 13, 2012 at 11:36 pm | Reply
      • ALLAMERICAN

        wait until you become saudi arabia

        February 14, 2012 at 12:32 am |
    • SF

      I believe it is important to note something here – The western mindset of democracy differs largely compared to other specific nations, including Russia. For instance, while the west may see a dictatorial aspect in Russian political environment, and yes, perhaps there is to some degree, this is something that must be done to curtail instability and continue and accelerate macro economic growth in these specific countries as per the plans of those governments. This, unfortunately, is not the right ingredients of democracy as seen by the West in general, however, this has to be the case. Nevertheless, this type of democracy also brings with it corruption and other violations which are not in line with a "democratic" nation. The underlying fact is that Russia, just like many other countries in Asia, (especially), relies on these attributes to ensure their plans both for the nation and personal well being has a 'continuation' without being obstructed by those opposing such progressive plans for whatever reasons it may be.

      February 14, 2012 at 4:21 am | Reply
    • j. von hettlingen

      Natural resources are Russia's salvation and Putin was lucky to rise in power at the right moment.

      February 14, 2012 at 4:49 am | Reply
      • j. von hettlingen

        He has to reinvent himself if he wants to go into history as Russia's modern hero.

        February 14, 2012 at 4:52 am |
  3. kovy17

    The dollar's status as a world reserve currency is propping up Obama and all other US presidents before him. While the dollar maintains this position, it will be very difficult to overthrow the US oligarchy that's been in power since the 1950's. As soon as the dollar losses ground on it's positions, it may be possible to start a revolution in the US and bring in a government that Russia, China, and Iran approve of. lol, Americans, how does that sound to you? offensive? I hope so (it should be). This is analogous to Zakaria's argument. It is a very dangerous and an unconstructive type of policy. It will not bring you friends. Putin is a popular figure in Russia because he stabilized the country after the chaos of the 1990's. Many of the so called opposition leaders are totally financed by NGO's in bed with the US gov (i.e. National Endowment for Democracy). I've been on this earth for a while. Believe me, the US doesn't care if there is or isn't democracy in a particular part of the world; instead, and like most other nations, it's driven by its own economic interests, and only that. If the US truly cared about democracy, it would have long since intervened in every single African country south of the Maghreb. PS, Zakiria is part of a disinformation campaign bent on discrediting Putin in the eyes of the West. Don't fall for it!

    February 13, 2012 at 11:49 pm | Reply
    • uncle Bob

      How does it sound? It sounds stupid. I know, you've bee told the whole life that US will fall if not today then tomorrow. It's not going to happen soon. Sounds disappointing, I know.
      As for democracy and Africa. Americans have experience in pushing democracy on unprepared people. Like Somalia, Iraq, and Afghanistan right now. It doesn't work well. It wouldn't work in Russia ether for the same reason. It takes generations to come to it. Russia is not even moving in this direction unfortunately. And yes, oil is a backbone of Russian economy. That's statistic. Like in Iran, Venezuela...

      February 14, 2012 at 3:22 am | Reply
    • Paul

      Syrian baby killers!

      February 15, 2012 at 9:49 am | Reply
  4. what planet you guys from

    OUTER LIMITS LOL

    February 13, 2012 at 11:51 pm | Reply
  5. Joey J

    These protests are being sponsored by the same people who profited under Yeltzin. However Putin still needs time to repatriate ownership of Russia's natural resources. Which also includes clearing up at least a few more offshore shenanigans that also need to get rectified.

    February 14, 2012 at 12:07 am | Reply
    • Alexey

      You are mistaken. Putin is corruption and dependency court. We in Russia needs new leaders. Protests progressive part of society, who understand that Putin is stagnation.

      February 14, 2012 at 12:55 am | Reply
      • Andrey

        Some office plankton protests in Russia, housewives and some Jews. Spend too much their time in social networks, too little time in real life and managing their own affairs and carriers. Mindless liberal puppets – I hope they grow out of this. Or just get kicked into face – I am ready to settle for this.

        February 14, 2012 at 3:07 pm |
  6. A DM Opinion

    Reblogged this on A DM Opinion and commented:
    "Russia needs oil to sell at $125 a barrel just to balance it's budgets"

    So there is the real reason that Russia wants turmoil in the Middle East. When there are conflicts in the region, oil prices always go up. Russia just wants to fan the flames

    February 14, 2012 at 12:15 am | Reply
    • Kuddln

      A DM Opinion YOU definitely hit-the-nail-on-the-head. Who else is contributing to the rise of oil exports? The more $$$'s collected, Russia becomes more corrupt. Oh well, Satan does come in different forms, doesn't he?

      February 14, 2012 at 12:28 am | Reply
  7. johnnysnot

    If the Rossi E-cat is legit it would destroy many oil producing companies in just a few years.

    I'm surprised they haven't put an old KGB style hit on Rossi, just in case...

    February 14, 2012 at 12:46 am | Reply
  8. Jeff in San Diego

    Then let's end speculation on oil futures and restore the rules governing commodities markets. This will lower the cost of oil by, some say, 60 percent. As long as the government is stacked with Goldman Sach's executives this will be a pipe dream because Goldman runs the commodities exchange.

    February 14, 2012 at 12:51 am | Reply
  9. freedomofspeech

    Good somebody is raising to match zakaria. Zakaria seems to be worried that he might lose his oil lobby seat in cnn sponsored by saudi .We might get a buddy sponsored by putin instead of a saudi buddy.

    February 14, 2012 at 1:03 am | Reply
  10. Paganguy

    What is propping up US democracy? What is propping up US military power? The ability to borrow money. We borrow money and pay the generals, the ex-generals and the arms makers big money.
    Putin has more brain than all our money spenders combined. He may bribe some low level officials with good pay. Our politicians are bribed with corporate money from lobbyist.

    February 14, 2012 at 1:13 am | Reply
  11. Pk

    This guy just says whatever CNN wants him to say. The numbers about Russian export he's quoting are just wrong. If that would be true, Russia's GDP would have been equal to the GDP of say, Saudi Arabia, but it's much bigger. It is just hard for US to realize that Russia is keeping up with them again, and it is Moscow and not Beijing which will be the most valued Washington's head pain...

    February 14, 2012 at 1:15 am | Reply
  12. Aaron

    Russia and the US have the same problem. The foxes are guarding the hen house. The leaders make laws renaming bribery as legal contributions, then get filthy rich off of their treachery.

    February 14, 2012 at 1:22 am | Reply
    • .

      Obama and Valerie"The Alcohol Syndrome Baby Poster Child" Jarrett are running the White House.

      The Democrats don't care about YOU. They care about the public sector unions. No one else.

      What did you expect?

      February 14, 2012 at 6:37 am | Reply
  13. biegizagraniczne

    Reblogged this on Biegi Zagraniczne and commented:
    More running than driving. Easy to say though...

    February 14, 2012 at 2:41 am | Reply
  14. guss

    I give mr.zakaria a lot of respect,!! He is one smart arab,,!! Saudies dnt only have their influence in the world media,,they actually run it,,!! Just ask fox news who owens them,,its not only mr. Murdoc,,!! Its also ben waleed a saudi man,,!!

    February 14, 2012 at 3:32 am | Reply
    • Aj

      You need reality check on Fareed's nationality. Don't you?

      February 14, 2012 at 7:52 am | Reply
    • John F. Phillips

      guss, Mr. Zakaria is INDIAN, not an Arab.

      February 17, 2012 at 4:02 pm | Reply
  15. Jack

    golly... all that intellect to say the obvious... this guy is just another talking head corrupted by $$$$

    February 14, 2012 at 5:57 am | Reply
  16. .

    Russia is drilling for their oil. America is pi$$ing money into Obama campaign donors who run shell companies that promise "green energy" like Solyndra. And the American people are paying $3.50 for a gallon of gas.

    We can't afford another four years.

    February 14, 2012 at 6:36 am | Reply
  17. Edgardo Pascual Jacinto

    In my guess cautious future situation opinion comments to Putin of Russia if Putin won the March 4 election,I don't know if Putin has can balance can stand his principles happy idea to implement for the benefit of Putin peoples of Russia alone, etc...Furthermore, especially if Putin protect his happy idea radical peoples, then that's the big problems Putin holds,he say! I guess,respectively...ed...

    February 14, 2012 at 6:43 am | Reply
  18. PATRICK A.

    If he is right no wonder our economy is in shambles we have no oil and have to go steal it with made up lies in order to go to war

    February 14, 2012 at 7:28 am | Reply
  19. George Patton

    Leave it to the right-wing thugs in Washington to label Vladimir Putin a dictator. In fact, Russia is fast becoming more of a democratic society than ours!!! Look at just how much the MIC(military-industrial-complex) in Washington has gotten control of our government lately!!! Have any of you noticed that we're now constantly at war????

    February 14, 2012 at 11:33 am | Reply
  20. James

    Russia is also top arms exporter. MiG is world's best selling Fighter Jet

    February 14, 2012 at 12:04 pm | Reply
  21. Andrey

    I do not see high oil prices last years propping up any other world leaders. So why do they help Putin?
    It is not like in Chinese saying: that the tyde lifts all boats. It is more like in Russian: God helps those who help themseves.

    February 14, 2012 at 3:13 pm | Reply
  22. Samuil

    CNN как всегда публикует отвязных русофобов и лжецов. Бюджет на 12 год расчитан исходя из стоимости нефти 100$, но предусмотрено и возможное снижение до 60$. Запомни и больше не озвучивай свой бред.

    February 15, 2012 at 2:45 am | Reply
  23. Alla

    "Russia's demographics are terrible. It has a population that's aging and shrinking, which means pension and healthcare costs will rise as people retire;"

    Author must be never try to research object before write about it or just lie. This of course true about US white population who pays most taxes but in 2010 and 2011 Russia have small growth of population of over 143,000 people.

    And about price of oil, how much Us is printing money? This causes global inflation and on products Russia imports too.

    February 15, 2012 at 2:59 am | Reply
  24. iran=syria=hizboallah=shiia=terrorsists=evil

    المخابرات العراقية تحذر من استخدام المدارس الايرانية في العراق لتجنيد شبان عراقيين ونقلهم خارج البلاد لتنفيذ عمليات لصالح المخابرات الايرانية
    دبي-الشرقية 25 فبراير: حذرت المخابرات العراقية من استخدام المدارس الايرانية في العراق لتجنيد الشبان العراقيين ثم نقلِهم الى خارج البلاد للقيام باعمال لصالح المخابرات الايرانية وقال ضابط في المخابرات العراقية رفض الكشف عن اسمه اِن لدى دائرته معلوماتٍ عن وجود اكثر من ثلاثين مركزا تعليميا ايرانيا بصفة مَدرسة او مركزِ تدريب في مختلف مدن العراق يعمل تحت غطاء شرعي ولكنه في الحقيقة يركز على الشبان العراقيين لكسب ولائهم عقائديا وسياسيا واجراءِ عملية غسيل دماغ منظمة لهم حيث يُنقل شبانٌ مختارون منهم الى ايران في فترات العطلة لاكمال اِعدادهم ثم تجنيدِهم . وقال الضابط اِن الهدف هو الحصول على ولاء مطلق واعمى لهؤلاء الشبان بعد غسيل الدماغ المنظم والتجنيدِ الاستخباري المحسوب واشار الى ان المخابرات العراقية رفضت محاولاتِ نقل بعض هؤلاء الشبان الى دول عربية قريبة من العراق لاستخدامهم في مهمات استخبارية شبهِ عسكرية .واشار الضابط الى ان تقاريرَ بهذا المستوى رُفعت الى الجهات العليا منذ عدة اشهر وان القرار متروكٌ لهذه الجهات لتُقرر الاجراءات التي تراها مناسبة ًللصالح العام في العراق .

    February 25, 2012 at 12:47 pm | Reply

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