Shaped by the servants of the petrostate, Russian conspiracy theories had to explain how oil prices were determined. Igor Sechin, the chief coordinator of the Russian fossil fuel trade, shared his views on the subject in September 2,014. A barrel was then worth about $90, and Sechin asserted that the price would remain stable for decades. Ninety dollars was "a good price," according to Sechin - a price that he could "work with." A year later, a barrel cost $60; Sechin was still working with it, but predicted that by 2035 it would cost $170. By September 2016, the price had dropped to $47 and Sechin's Rosneft had to ask the government for subsidies. Putin weighed in, stating that $47 was a good price, but it could be better: "oil prices should be fair," he added. It was not clear what he meant by fairness; the average cost of extraction of Russian oil was about $2 a barrel at the time, or $6 including transportation costs.25
In 2008, Alexei Miller, Putin's former secretary who became the head of Gazprom, dismissed the idea that American shale could compete with Russian gas. Shale gas was like "foie gras for the market," he said; its production in the US was "a well-planned PR campaign." In 2013, Miller said that the American shale industry was "a bubble that does not produce any profit."26 But Miller's own corporation was on the brink of bankruptcy. All in all, Gazprom invested $320 billion in new drills and pipes, but most of them remained unused. The scandalous Nord Stream II, connecting Russia to Germany by circumventing Ukraine, cost Gazprom $15 billion. Never used, it mysteriously exploded in September 2022, along with its older sibling, Nord Stream I. But even during the war, Russian gas was flowing through Ukraine, and Gazprom was paying for its transit.
These pipelines could be the biggest machines humans have ever built. Will they eventually be used in the opposite direction, sending goods from Western Europe to Russia? A pneumatic mail system could make use of these pipes if Russian consumers were able to afford the deliveries.
Enter sanctions
The war led to sanctions, which led to the seizing of property, which in turn helped us all to discover many things that the Kremlin and its oiligarchs would rather have kept hidden. And yet much of it was already known. Mikhail Khodorkovsky had warned about the massive corruption in Russia right before his arrest in 2003. Alexei Navalny, before his arrest in 2021, guided us through the posh palaces of the Russian "elite." And the banks preferred by this elite - Credit Suisse, Deutsche Bank and a few others - also knew everything.
Transparency International found that in the years from 2008 to 2020, current and former Russian officials acquired 28,000 properties in eighty-five countries.27 Dmitry Medvedev, one-time president of Russia and former head of Gazprom, owned one of the biggest villas in Tuscany. Vladimir Soloviev, a leading propagandist of Russia's state- owned TV, owned four properties on Lake Como. Petr Aven, a former minister and the co-owner of Alfa Bank, owned a flat in London, an estate in Surrey, a chalet in the Swiss Alps, a villa in Sardinia and twenty-eight properties in Latvia.28 In May 2022, Forbes published awesome pictures, with price tags, of 124 properties held by twenty-two sanctioned Russian oligarchs - about five mansions per person.29 Estimates of the value of Russian assets in Switzerland ranged from a conservative $25 billion calculated by the Swiss National Bank to the more realistic $209 billion put forward by the Swiss Bankers Association.30
Yachts were even more conspicuous than villas. Sailing the high seas or parked in coastal marinas, they flaunted the abundant luxury of the Russian oiligarchs. Igor Sechin owned two yachts. In 2,022, France seized them both; the bigger one, 135 meters long, was estimated to be worth $600 million. But Sechin's vessel was of course smaller and cheaper than the yacht suspected to be owned by Putin: seized in Italy, this Scheherazade was 140 meters long and estimated at $700 million. Both were built in Northern Germany, at the Liirssen yard which also built ocean-going corvettes for the German navy - two times shorter and three times cheaper than the Russian yachts. No coincidence that this yard announced it was downsizing in September 2021.31 The Russian cruiser Moskva, sunk by a Ukrainian missile, was longer than Scheherazade but of roughly equal weight. Moskva had a crew of 510 men, most of whom died on April 14,2022; Scheherazade required ninety- four at full crew. Berthed at pier, the monstrous vessel was manned by fifty-eight crew members, who were flown between Moscow and Milan to service it in shifts.32 Several other Russian yachts were seized on both sides of the Atlantic. The richest of the oligarchs, Roman Abramovich, who made his money on Russian oil and spent it on British football, owned five yachts, with a collective value of more than a billion dollars.
Anyone who had made that much money in a couple of decades must have been very busy indeed. Why did they want a yacht or two - or five? For entertainment? Many of these yacht owners supported Putin's war. Why did they keep their properties abroad? Even if we accept that a private entrepreneur like Abramovich could legitimately make enough to pay for his yachts, how was it possible for a civil servant like Sechin to do the same?
There is a story about Easter Island in the Pacific, where a local tribe kept erecting enormous stone statues, called "moai," until they had cut down all the palm trees needed to roll the statues to their places. When the first Western ships landed
All petrostates were highly unequal. On top of that, Russia maintained a flat income tax and refused to introduce an inheritance tax. Both policies distinguished Russia from other developed countries. Almost no other modern country, not even the United States under Republican administrations, went as far as Russia in adopting these libertarian policies.3
The most common measure of inequality is the Gini coefficient. As calculated by the government in 2018, Russia's Gini was 0.411 - a high number that made the Russian Federation comparable in income inequality to the United States. But the official statistics underrepresented top earners and underestimated inequality.4 Using taxation data, French economist Thomas Piketty calculated the Russian Gini at 0.545, placing Russia among the world's most unequal nations.5 His data did not include untaxed incomes - offshore accounts, grey trade schemes and kickbacks. Channeling money from the poor to the powerful, corruption increased the inequality of incomes. "In the global game of tax evasion, Russia became a world leader," wrote Piketty.6 Using its own sources, Credit Suisse estimated Russia's Gini in 2.020 as being higher than those of the US and the UK, and among big countries second only to Brazil. However, in inequality of wealth (rather than income), Russia tops the world. According to Credit Suisse, in Russia in 2021, 58 percent of national wealth belonged to the top 1 percent, well above Brazil (49%), the US (35%) and the UI< (21%).7 Two-thirds of Russian millionaires resided in Moscow, which was an incredibly high concentration of wealth for one city - the figure for London was about one-third.8 Regional inequalities within the Russian Federation were far higher than anywhere else in the world. The richest US state paid 4.5 times more taxes per capita than the poorest, and the richest German land 2.5 times more. In Russia, the taxes per capita paid by the oil-extracting Khanty-Mansi region exceeded those of the overpopulated Ingushetia, in the Caucasus, by a factor of 300.9 In a big country, this concentration of wealth was shocking.