Spencer Abraham’s August trip to Moscow may have solved one of the chief puzzles of Russian politics as well as underscored Washington’s intent to cultivate Moscow as a possible alternative to OPEC as an energy supplier. Energy Secretary Abraham promised his Russian counterpart, Igor Yusufov, that the United States would help fund Russian geological research in East Siberia and the Arctic Shelf and offered Moscow technical assistance in creating a strategic oil reserve, both of which have a direct bearing on the fortunes of Russia’s current “Oligarch Number One,” Roman Abramovich.
Abramovich, the super-rich (and young—he’s in his mid-30’s) boss of one of Russia’s largest oil companies, Sibneft (“Siberian Oil”), and a partner with fellow oligarch Oleg Deripaska in “Russian Aluminum,” the second-largest producer of aluminum products in the world (after Alcoa), was elected governor of what is arguably Russia’s most remote and benighted region, Chukotka, in December 2000. Abramovich immediately sought to cultivate ties to Alaska, Chukotka’s neighbor across the Bering Strait.
At the time, Russian media reports were filled with puzzled speculation on why the oligarch, already one of the richest and most politically influential men in Russia, would want to become governor of an Arctic wasteland that has lost half its population in recent years as residents have fled its harsh climate and grinding poverty. Time and again, Russian media observers pointed out that, despite its potential mineral wealth, the prohibitive costs of extracting and trans- porting Chukotka’s permafrost-bound oil, gas, gold, and other resources made any economic-development plans a big loser, with or without Alaskan help. So far, Alaska’s main export to Chukotka has been humanitarian aid for its unfortunate residents. (There are only about 70,000 left in the vast territory.) Most analysts concluded that, even with Alaskan aid in rebuilding the region’s collapsing infrastructure, Chukotka would likely remain forbidding and unprofitable.
The reclusive Abramovich has repeatedly claimed that he views Chukotka as something of a hobby, an interesting project for a bored oligarch. Borrowing Lenin’s slogan from the era of the Soviet New Economic Policy as his main campaign promise, Abramovich swore he was in Chukotka “seriously and for a long time.” Abramovich was reportedly shocked by the poverty of the depressed region when he first visited it, and many Russians, especially those who have benefited from the magnate’s largesse (e.g, paying off wage arrears to the region’s workers and sending practically every child in Chukotka on summer vacations to the Black Sea and other resort areas) have come to see “Roma” as a philanthropist, perhaps influenced by his own difficult childhood. (Abramovich was orphaned at a young age.) Some pundits have even claimed that the shy oligarch hoped to use the governor’s post as an opening into “big politics,” perhaps seeing himself as a future prime minister or presidential candidate. His cross-border contacts would be good experience for a novice politician.
The answer to the puzzle of Abramo-vich’s Chukotka “hobby” and his keen interest in Alaska, however, may lie in Russia’s recent efforts to present itself as a potential alternative supplier of oil and gas to the West, especially since the September 11 attacks raised questions about the reliability of Middle Eastern oil supplies. Abraham’s meeting with Yusufov, an Abramovich “clan” ally, may help justify Abramovich’s hopes for Chukotka, particularly in view of Abraham’s promise to help fund geological research in the region, an area said to have a geological structure close to that of Alaska’s North Slope. As many commentators have point-ed out, exploration and exploitation of Chukotka’s oil and gas fields is seriously hampered by Russia’s lack of modern technology. But American technical aid and investment, especially from firms with experience in extracting oil under extreme conditions in Alaska, could make the Chukotka fields quite profitable. Moreover, as Russia’s Profil magazine pointed out, “Roma” is the “only one” standing at the narrow Bering Strait “crossing” to Alaska and the lucrative North American market. Thus, U.S. firms may see Chukotka as a potential Russian Klondike, one that “Oligarch Number One” cannot effectively take advantage of without their help.
If U.S. firms do get seriously involved with “Roma,” they had better watch their wallets and their backs: he is a master of sleight-of-hand Russian “business practices,” making him a legend among the country’s oligarch/gangster elite. More than one business partner has left a joint project with Abramovich with empty pockets—and those are the lucky ones who haven’t wound up wearing a pair of cement overshoes. Then again, after the Enron and WorldCom scandals, maybe Abramovich could learn a thing or two from his American partners.