Policy Memos

The Political Economy of Oil in Russia: 'Really Existing Capitalism?'

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The past year has seen oil prices return to near-record levels and the Russian economy return to growth. It has also seen major Russian oil companies discuss partnerships and file lawsuits, while the state has dismissed two leading oil executives, rescinded tax breaks, and spoken of a new round of privatization. Because of oil’s dominant role in the Russian economy, and because some of the stories make for good copy, there may be a tendency to see these developments as more evidence of Russia’s peculiarities, either as a resource-dependent state or as a post-communist one. If we cut through the drama, however, we may see that the political economy of oil in Russia looks a lot like capitalism as it is actually practiced in many countries: a handful of major companies competing for customers and political influence, alongside a state deeply enmeshed in the sector while trying to appear above it. It is different from the struggle for property in the country over the last two decades in that outright fraud and violence are less prominent tools in the conflict. Nonetheless, the sector is still ripe for upheaval, especially as political and economic actors try to position themselves in the run-up to next year’s elections.

This memo first briefly considers the role of oil in Russia’s economic development, showing it is still the dominant product. It then reviews several of the major players in the sector, particularly the state, the leading oil producers, and the pipeline monopoly. Next, it highlights some major events in Russian oil over the past year, noting that no single player seemed to emerge victorious from each of these incidents. It concludes with a discussion of what this means for how we understand the political economy of oil in Russia today. [...]

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About the author

Chair, Associate Professor, Department of Political Science
Kent State University