Russia’s “Oil-for-Knowledge” Scheme

Whenever you fill up your European compact car’s gas tank, or that of your American SUV, you pay as much as a Russian schoolteacher earns in a month. And every time you pay, you subsidize a regime that relies on energy, not information, as its main product. You finance the pre-modern and the inefficient, and perhaps worse: every time you pay, you may be collaborating with political evil.

Russia began 2006, the year of its chairmanship of the G-8, by launching a gas war with Ukraine. Having a virtual monopoly on supply, Russia decided that it could dictate prices. But Ukraine has a virtual monopoly on delivery, so Russia blinked in this standoff as soon as gas supplies to Western Europe dropped.

Modern economies rely not on monopolies, but on competition. Contemporary Russians consume competitive products: Nestle cereals, Mercedes cars, Hollywood movies. The problem is that they do not make them.

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