From Underground: Western Companies Were Shown the Door

NEW – May 27, 2022

The government is preparing a ban on foreign companies obtaining new licenses for the development of deposits in Russia. The share of permissible participation of foreign capital in domestic companies has not yet been determined. Such a decision is long overdue. The subsoil should belong to the Russian state, and our firms should develop it. An oil-producing country must have the technology to extract black gold and other raw materials. Otherwise, we will not be able to benefit even from the obvious natural advantages of Russia and will find ourselves in a dead end.

Information has leaked to the media that a new initiative has appeared in the Cabinet of Ministers restricting the rights of foreign entrepreneurs in our country. The government will propose to prohibit foreign legal entities from developing Russian mineral resources and obtaining new licenses for this business. The relevant draft law will be prepared by mid-June. Its adoption will make it possible to not rest on those mining projects that are being implemented today with the participation of foreign capital. At the same time, it is still unclear what to do with domestic firms where there is a share of non-residents. This issue will be worked out further. In its current form, the law states: foreigners have the right to use the subsoil and its development, with the exception of the continental shelf and adjacent territories.

Kudrin is trying to save the interests of the West

The very fact that clearly unfriendly states continue to engage in economic activity in Russia in strategically important industries is puzzling. And not only with us. The other day, a meeting of the State Duma was held, at which the chairman of the lower house of parliament Vyacheslav Volodin raised this issue. He asked the head of the Accounts Chamber Aleksey Kudrin with a question: why do British, Japanese and Dutch companies continue to participate in the development of Russian mineral resources? In particular, they are still implementing the “Sakhalin 2” oil and gas project (Shell owns 27.5% + 1 share, Japanese Mitsui and Mitsubishi – 12.5% and 10%, respectively).

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According to the Duma Speaker, it would be logical to give the share of the countries that imposed sanctions against us to large state-owned companies. Moreover, the silence of Tokyo and London on this issue is a good evidence of the painfulness of Moscow’s potential counterattack in this direction. In addition, Volodin pointed to the extremely liberal law regulating the conclusion of production sharing agreements (PSAs), adopted in 1994 during the era of wild capitalism and the criminal revolution. According to the norms established at that time, foreigners received huge preferences, which significantly increased profitability at the expense of our country.

In response, Aleksey Leonidovich issued an apologetic speech in defence of foreign business. They say that sanctions are imposed by state bodies, and not by entrepreneurs, why should they suffer because of this? Deputy Irina Yarovaya retorted to him, pointing out that the position of the Accounting Chamber should be “more offensive” from the point of view of protecting national interests. Volodin reasonably noted: no one in power opposes business, even a foreign one. It is about protecting the interests of our country’s citizens and equalising rights. Why, the question is, should Russia leave such brazen actions unanswered?

In general, analyzing the debates in the State Duma, one can notice that Aleksey Kudrin looks extremely unconvincing and takes some kind of passive strategy. It’s no wonder. The whole world of systemic liberals collapsed overnight on February 24, 2022, when Russian President Vladimir Putin announced the launch of a special military operation to denazify and demilitarise Ukraine. Such as Aleksey Kudrin, for many years, have been building a model of the Russian economy, tailored to the interests of American and European financiers and large entrepreneurs. This is what was called “convergence with the West” in the late 1980s. In fact, Russia, a great power, was destined for the fate of a semi-colony of Washington and Brussels. No, we don’t want to say that Kudrin is a spy or a saboteur. There are ideological people for whom the interests of globalism are higher than the interests of their country. There were such in China of the Qing dynasty, and in India during the British rule, and in the Ottoman Empire, which in the 19th century found itself in humiliating dependence on Western states.

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When he was Finance Minister (2000-2011), Mr. Kudrin did everything to make it easier for the United States and the European Union to enter domestic markets. He considers his main achievement to be the lifting of restrictions on the cross-border movement of capital, that is, the fact that the lion’s share of funds that could have been left inside the country began to be pumped out of Russia. According to the conservative estimate of the Bloomberg news agency, the capital outflow for 1994-2018 amounted to $750 billion, but in reality this figure may exceed $1 trillion. Considering the period 2018-2022, the situation looks even sadder. All these funds could work for the national economy of Russia, go to infrastructure projects, to diversify exports to China and the countries of the Asia-Pacific region, to create high-tech industries. But “famous last words”…

So what?

The ban on foreigners from developing our deposits will be a landmark event in Russia’s acquisition of economic sovereignty. Skeptics say that this step will cut us off from advanced oil and gas production technologies. However, these people forget about a few things. Firstly, back in 2014, the West imposed restrictions in this area, and they were constantly tightened. Secondly, our state is simply ashamed not to have its own technologies, given the status of one of the world leaders in energy supplies. In the early 1990s, the Russian Soviet Federative Socialist Republic produced about 569 million tons of oil annually – about the same as today.

Despite the lost time, we still have a powerful Soviet scientific school and a huge accumulated experience in extracting resources from the depths. All that is missing can be found in other countries that are more friendly to Russia than the US and the EU. Even with an overpayment, mining technologies can be bought from China, India, Saudi Arabia and other monarchies of the Persian Gulf. And industrial espionage has not been canceled, now we can talk about it openly.

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Konstantin Dvinsky

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