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Hard Times For Putin's Petrostate As Oil Prices Decrease


Those days are gone

Those days are gone

The daily newspaper "Kommersant" reported on November 21 that a group of small private oil companies in Russia's Tatarstan Republic say they want a tax holiday -- and are threatening to halt production on December 1 if they don't get one.

The companies, which account for 20 percent of all oil produced in Tatarstan, say current oil prices -- which are at a four-year low -- do not even cover their tax obligations. They are asking to be excused from paying export duties and production taxes until prices go back up.

Tatarstan's little oil rebellion is just the latest example of how the global financial crisis -- and the falling commodities prices that have accompanied it -- is sending tremors through Russia's fragile social contract.

In October, the truck manufacturer Kamaz, moved to a four-day work week due to the crisis. And this week the company told its employees to take a mandatory two-week holiday, for which they will receive two-thirds of their wages.

And in a sign that things could really get dicey soon, the crisis is now taking its toll on Russia's gilded bureaucratic class. The ruling Unified Russia party announced on November 21 that it was cutting 25 percent of its party functionaries.

Easy oil money has long been the glue that held Russia's "managed democracy" in place. What will happen when the cash begins to dry up?

-- Brian Whitmore

About This Blog

Written by RFE/RL editors and correspondents, Transmission serves up news, comment, and the odd silly dictator story. While our primary concern is with foreign policy, Transmission is also a place for the ideas -- some serious, some irreverent -- that bubble up from our bureaus. The name recognizes RFE/RL's role as a surrogate broadcaster to places without free media. You can write us at transmission+rferl.org

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