Gazprom’s private army

The Russian Duma has today voted in favour of allowing Gazprom to form its own private army. Reuters reports:

Toy soldierA law backed by 341 lawmakers in the 450-seat State Duma lower house of parliament gave Gazprom, and oil pipeline monopoly Transneft, special exemption from strict limits on private businesses wielding arms.

The two state-controlled companies will for the first time be allowed to employ their own armed operatives instead of contracting an outside security firm. Their armed units will also have access to more weapons and more freedom to use them than private security companies.

The stated reason: to ensure the protection of gas pipelines and facilities from militants.

My cynical response: so much for the mighty Russian army.

Anyway, opponents of the bill are warning that today’s move risks opening a pandoras box, as they believe that where Gazprom leads, other Russian companies are sure to follow.

The only silver lining, I suppose, is that the bill still has to pass the Federation Council, and be approved by Putin before it becomes law.

You may also like...

9 Responses

  1. That sounds like a dangerous and slippery slope. BTW, the link is broken so I can’t see the details.

    Just so you know your effort is appreciated, I always like the little graphics that you post with the articles. 🙂

  2. Andy says:

    Oops – the link is fixed now.

    Glad you enjoy the pictures. Sometimes I get carried away, and spend more time looking for cool pictures to illustrate a post than I do actually writing the post itself, which is a bad habit…

  3. Something that needs to be carefully outlined with a clear understanding on its limts if created.

    For edification purposes, it’s a good idea to get a full understanding of the pro-private army perspective, as opposed to a sudden knee jerk reaction.

  4. Tim Newman says:

    I’d be interested to know what militants they are referring to. Is Chechnya still considered a source of terrorist activities? If so, it’s not been admitted publically for quite some time.

    Even in the Middle East I never came across a private company protecting the pipelines (it probably occurs in Iraq, in certain sections). It certainly doesn’t happen in most oil and gas producing companies, although parts of Africa and South America certainly do follow this route.

    One thing is for sure, this is an unusual step for an oil and gas company to take in its own country, and far from a common step to take anywhere. Let’s see if any private armies turn up on Sakhalin.

  5. ReluctantMuscovite says:

    Oh shucks… And just two days ago I was ranting about Yukos and IT’S private army of goons.

    On the other hand… Better than having the real army do domestic duty….:(

  6. RM, I was thinking about your previous comments on Yukos as soon as I saw this article. 🙂

    The quote from the article that most amazed me was this:
    Gazprom is already described by some observers as a state within a state: it has 430,000 employees, controls some of Russia’s biggest media outlets, has a firm grip on gas exports and owns the country’s third largest bank.

    According to Wikipedia 430K employees would make Gazprom the 169th most populous nation in the world!

  7. Andy says:

    Meh, that’s nothing on the British NHS, which with more than 1.3 million employees would make it the 151st most populous state in the world.

    How long, I wonder, before the NHS begins to employ its own private army to protect it from overly demanding patients…?

  8. 1.3M employees! That is more than the army of unhappy Wal-Mart cashiers and shelf-stockers in the US. I believe Wal-Mart has around 1M employees. On a side note, to increase efficiency, Wal-Mart has mandatory meetings every other Saturday morning for its salaried employees.

    Actually, rather than simply total employee count, I was thinking more about Gazprom in comparison to other major oil companies. For example, according to this page ExxonMobile has 82K employees with $39B in income. According to this pageGazprom had a net income of $24B for 2006. The difference may be more in the use of contractors than per employee efficiency, but still it gives an idea of why I was surprised by the Gazprom employee count.

    By the way, here is an old article that I found while looking for the income numbers: Why Russians Love Gazprom.

  9. Tim Newman says:

    The difference may be more in the use of contractors than per employee efficiency, but still it gives an idea of why I was surprised by the Gazprom employee count.

    Exxon employs *a lot* of contractors, and it also subcontracts out loads of its activities, thus lowering the number of staff whilst maintaining its revenue.

    The reason why Gazprom employs so many people is the same reason any state-owned giant employs loads of people: most of the positions are no more than an exercise in job creation. Three years in the Middle East taught me well how national oil companies themselves full of locals in nonsense positions serving no purpose whatsoever. Bloated and inefficient are the adjectives I’d use.