KGB Petroleum

Today, the contemporary version of the KGB, the Federal Security Bureau, runs Russia’s energy businesses in much the same top-down way that the KGB once ran the Soviet Union, with business always subordinate to the regime’s political needs. The result has been not only widespread corruption and under-investment, but also an inability to modernize and diversify the economy.

MOSCOW – There is one key thing to keep in mind when talking about Russia: despite what you see on the surface, it never really changes. Buildings, fashions, and even regimes (at least in name) may change, but the country’s core, its secret-police-state legacy, is never far from the surface.

Today, the contemporary version of the KGB, the Federal Security Bureau (FSB), runs Russia’s energy businesses in much the same top-down way that the KGB once ran the Soviet Union, with business always subordinate to the regime’s political needs. Since current Prime Minister Vladimir Putin became Russia’s president in 2000, the country’s vast energy wealth has become increasingly concentrated in state hands. And the actual hands at the controls of the world’s premier natural-gas economy are those of the FSB.

Indeed, today the KGB/FSB is Russia’s primary business school. Think of the graduates as holding a master’s degree in brutal (and brutally inefficient) administration. Former spies now sit atop the commanding heights of Russia’s energy-centric economy, but their role is not all that different from what it was in Soviet days. Back then, the USSR promoted its interests through satellite states and military power. Today, Russia flexes its might through its energy companies.

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