The certain good news from Russia for the oil and gas industry is that the Communist Party no longer controls legislation in the Duma, or lower house of parliament. The rest remains a muddle.
It's worth cheering that 60% of the Russian electorate voted in December's parliamentary election. But that welcome exercise of democracy is yesterday's news. It makes meaning of outcome no less a puzzle.
Oil companies should be wary. They increasingly get called to account when governments with which they do business misbehave. Moscow is as prone to misbehavior as ever, as President Boris Yeltsin demonstrated recently with his truculent reminder to the US that Russia possesses nuclear weapons.
The Communist rebuff
Weakening of the Communist grip on the Duma removes one obstacle to economic change and to construction of the legal framework on which reform has waited for so long. But the rebuff to the Communists, who still garnered more votes than any other single party, wasn't only about reform.
To a large extent, the vote amounted to an expression of support for Russia's reinvigorated military assault against Chechnya, directed by Prime Minister Vladimir Putin. Because it indiscriminately targeted civilians, the assault created proper outrage outside of Russia. In that context, success of the upstart Unity alliance, which with Putin's endorsement won nearly as many votes as the Communists did, can be seen as a lapse into old-style Muscovite bullying of vassal republics. More-tenured democracies can't easily reconcile the brutishness with notions of progress.
The view from Russia throws different light on the aggression against Chechnya-or at least on its popularity among Russians. Chechnya is seen as a cradle of anti-Russian banditry supported by Russian mobsters who profit from instability. From this perspective, the attack of Chechnya represents overdue response to the corruption and violence that have escalated since collapse of the Soviet Union. It was against such lawlessness and not in retaliation for Moscow's Chechen campaign that the Clinton administration last month insisted it acted when it blocked International Monetary Fund loan guarantees worth $500 million to Tyumen Oil Co.
To complicate things further, these interpretations don't exclude one another. It would not be incongruous for a Russian voter to have wanted both an end to corruption as well as restoration of Moscow's former imperial glory. Such a voter might also support economic reform-or not. So there's no way to tell exactly what the vote means.
Two important outcomes are clear, however. One of them is that politicians inclined to support economic reform gained influence in the Duma at the expense of politicians who oppose it. This will mean little if, indeed, voters were principally motivated by a resurgent nationalism symbolized by the ravaging of Chechnya-the possibility that should most worry the international petroleum industry.
Putin's momentum
The election's other important outcome is the political momentum it gives Putin, who will try to succeed Yeltsin in presidential elections later this year. Putin, a former spy, has been affiliated in the past with Russian economic reformers but as prime minister has been noted mainly for pressing the war against Chechnya. As president, Putin would not have to contend with a Communist opposition as strong as the one that bedeviled Yeltsin. And he might be able to parlay his popularity into a measure of national direction.
The problem of the moment is that the parliamentary elections don't tell whether that direction points toward open markets and the rule of law, democratically drawn, or toward retreat from competition and oppression in the name of order. Putin no doubt will take much counsel from the political alliances that form in the Duma between now and the presidential elections. Oil companies should do the same.
