Hard to believe, but this is the fourth year I am writing this end-of-the-year column. I hardly remember 2004 anymore, save for what came to be know as the Russian banking crisis, and the events of 2005-2007 are slightly mixed up in my head - when was YUKOS officially dissolved or Gazprom took over Shell's Sakhalin II project?
It seems like that was a long time ago, but both of these events actually happened this year. I remember that in previous years I wrote this column looking for a single all-defining moment of truth, but this year I will act differently. Here is a list of this year's most important economic events. In my humble opinion.
The most important event of 2007 was inflation, which spiraled out of the government's control as early as April. As a result, we are looking at the annual inflation of at least 12 percent, the highest since 2004. In addition to diminishing the real incomes of real people such high inflation puts an upward pressure on the inflation forecasts for 2008-2010, although the government is trying not to cave in. And I remember that back in 2004 Alexei Kudrin (or was it German Gref?) said that by 2008-2009 inflation could be down to as little as 3 percent. Well, looks like it's not going to happen in this 2008.
No more YUKOS. The fate of this once-giant oil company was pretty much sealed back in 2004, but it wasn't fully bankrupted and dissolved until this year. And even now it refuses to die completely as there are plenty of YUKOS gas stations around Russia still waiting to be rebranded. One can argue about production methods used by YUKOS to develop its fields or the political ambitions of its founder Mikhail Khodorkovsky or the selective justice meted out by the Russian legal system - all of that in vain now, because there is no company called YUKOS anymore and it's unlikely there will be another one in the foreseeable future.
Gazprom was all over the news this year (well, nothing new on this front). With the help of Rosprirodnadzor environmental watchdog the gas monopoly "persuaded" Royal Dutch/Shell to give up control in its lucrative Sakhalin II oil and gas venture, while simultaneously wooing the new Turkmen President to preserve Gazprom's monopoly right on the export of the Central Asian gas. Gazprom was also able to persuade the Russian-British oil venture TNK-BP to give up control in its giant Kovykta gas field in East Siberia. It went along with construction plans for its Nord Stream pipeline despite numerous outcries about potential environmental dangers and created quite a stir when it backed down on its plans to develop the giant Shtokman gas condensate field in the Barents Sea all on its own. Now that Gazprom's Board Chairman Dmitry Medvedev is practically slated to become Russia's new president, there is little doubt in everyone's mind that the gas monopoly will continue to prosper. But all of this flourishing hides a starker picture - Gazprom fails to invest enough in exploration and production and it has an acute shortage of gas industry professionals at the top management levels.
This was also the year of "people's IPOs." Sberbank and VTB floated their stock, making it available to private Russian investors. The IPOs showed that Russians have money, lots of it, that they are finally looking to invest somewhere other than their own mattress. But none of the companies demonstrated any real market value growth after the IPO, leading many analysts to call them a flop.
And now a quick recap of what hasn't been done. There are thousands of kilometers of roads still waiting to be built, thousands of localities waiting to be gasified, probably millions of children who still haven't seen a computer. There is a pension reform, which is far from being successful. There are scientists still waiting for their profession to become valued again and there are lots of vocational schools waiting to be filled with students who will become blue-collar workers. There is corruption, which is getting progressively worse. In fact, every time I look at the Russian economy, I see that it's growing in spite of everything, not because of something. Considering how well it's doing I can only wish it to continue doing the same, but deep down inside I hope that one of these years the Russian economy will actually have strong reasons for growth.
By Marina Pustilnik
