Stuff of dreams

High oil prices have given Russia renewed power, frightening the west but bringing hope to ordinary

Vasya and Dasha are Russian newly-weds who have just bought a small stake in their country - or, to be more accurate, they have made a bid and have their fingers crossed it will be accepted. And it's not quite Russia itself that is for sale, but something very close. The state oil company, Rosneft, is being partly privatised. Small inves tors were invited to take a slice if they had a minimum of 15,000 roubles (£300) to spend.

"We had 170,000 roubles [£3,400] that we thought we'd like to invest for our future," said Vasya, "so we went down to the bank and they did the paperwork for us. It was easy. There wasn't a big queue. We just had to open an account. Now we're waiting to see if we've been accepted. There's no guarantee we'll actually get the shares because they could be oversubscribed.

"We think the shares will do well. Oil is a natural resource, so it should be good, shouldn't it? There's always a risk, of course. We did this for our financial security, not out of national pride."

Maybe not, but there is no disputing that the country's huge oil and gas wealth is giving a new confidence to Russians; so does the knowledge that today's is a sellers' market for such things. It may be hard for people in the west to grasp the humiliation that Russians suffered when the Soviet Union collapsed in 1991. For decades, they had been told that they lived in the best country in the world, and then they woke up to find the whole structure had fallen apart. Russia was in debt to the west. Its social safety nets vanished and millions found their life savings were almost worthless.

That pensioners and newly-weds such as Vas ya and Dasha are now ready to risk their money in Rosneft, rather than keeping dollars under the bed, shows that Russians are regaining faith in their system.

A current advertisement for Gazprom, the state-owned gas giant, shows a little boy sitting in a frozen urban wasteland, kicking his legs in boredom and dreaming of being an ice-hockey star. There is a flash, and magically he finds himself in a stadium, kitted out with hockey stick and helmet. Then the boy-Cinderella is back in his frozen wasteland. But he has got the message: gas makes dreams come true.

In practical ways, at least for some people, life is changing for the better. President Vladimir Putin, with an eye on the elections in two years, is spending part of Russia's oil and gas revenues for the benefit of the people. One of his possible successors, Dmitry Medvedev, the first deputy prime minister, has been put in charge of four national projects to improve health, education, agriculture and housing. Almost nightly, Med vedev is to be seen on television, patting cows on farms that have received grants, or children in schools that have been given new computers. Critics say the sudden burst of social spending will stoke inflation, but the lucky ones who have had a visit from Medvedev are not complaining.

Seen from the west, of course, it can all look very different. First, there is the smell of corruption and political abuse. Back in the 1990s so-called oligarchs such as Mikhail Khodorkovsky were able to buy up natural resources for a tiny fraction of their worth, but Khodorkovsky is now in jail and his Yukos company has been broken up and largely renationalised, a brutal and frankly unfair process that shocked many in the business world outside Russia.

A former Yukos executive, Bruce Misamore, recently denounced the sale of Rosneft, complaining that the company had been plundered by Putin's government. Misamore said the sell-off was the "moral equivalent of Nazi Germany floating a company whose assets were seized from Jewish owners".

Second, and even more alarming to the west, is the new global power that oil and gas have conferred on the Kremlin. When Russia briefly stopped oil supplies to Ukraine last winter during a price dispute, many of the country's other clients felt a shiver of fear. A Russia with oil might prove no less dangerous than the Soviet Union with its nukes, the argument runs.

Putin stresses that he is not looking for conflict, but he has shown great determination in reasserting government power over the energy industry and clearly intends to make use of that power on the international stage. It's only natural. What does the west want? An unstable, basket-case Russia, or a prosperous country that uses the clout that goes with prosperity? Vasya and Dasha know which they prefer.

Tags:Oil