Wednesday, March 08, 2006

Independence or Egotism?

How appropriate that Russia's turn as head of the G-8 group of industrialized nations should coincide with our present emphasis on energy, considering Russia's vast potential to expand oil and gas production and balance declining non-OPEC supplies elsewhere. President Putin marked the occasion with an op-ed in the Wall Street Journal, reprinted in a variety of other sources. In it he characterizes the growing focus on energy independence--and I suspect he is thinking particularly of its US incarnation--as "energy egotism." Ignoring the source for a moment, he has a point.

I liked Mr. Putin's emphasis on the need for global, rather than national energy security. In my view, that's the right level to target, because the energy options available globally greatly exceed those available to almost any individual country, particularly in the industrialized world, and the consequences of increasing energy use have also become global. He rightly points out that access to energy is a key issue not only for the G-8, but for developing countries large and small, and for the billions without reliable or affordable energy.

Globalization, rather than autarky, looks like the better path for energy and the environment, and I believe that's true whether your orientation is nationalist or multi-lateralist. Solutions that focus exclusively on high-cost local energy sources will create an unnecessary brake on economic growth, while many of the best applications of renewable and other advanced energy technology will be found in developing, rather than developed countries.

Unfortunately, Mr. Putin's timely message will be diluted by the inconsistencies between what he has articulated and the policies that his administration has pursued within Russia and in its energy trade with its neighbors. He has re-consolidated a large fraction of the energy industry under state control. He has also not pressed aggressively enough for the liberalization of access by foreign firms, clear and strong property laws, and reformed corporate governance that are part and parcel of the globalizing economy. If Mr. Putin wants to be taken seriously as a statesman and leader in this area, he must show that he follows his own advice where he has direct control, not just oratorical influence.

No comments: