Sakhalin Ii-Negotiation Process

Topics: Negotiation, Bargaining, Harvard Business School Pages: 4 (1037 words) Published: August 13, 2010
1.Sakhalin: Assessment of Negotiation Process
Your assessment of negotiation processes covered in the three 'journey to Sakhalin’ cases.

The three Sakhalin cases meander through a path hardly uncharted in the geopolitics of resource extraction industrial history of the world. A weak, ill equipped state hungry of extraction investment courts a multinational giant on ‘asked for’ terms only to turn around and rewrite the rules of the game when it has incentives and capacity to do so. What follows may be anywhere between outright expropriation to subtle legal engineering, both aimed to extract power rents. The engineered re-domination often comes with inventive euphemisms for what is essentially full or diluted expropriation or nationalisation or collectivisation or redistribution. From a negotiating perspective- between a natural resource rich, capital poor, technology poor, managerial skills poor developing state as host and a foreign corporation- Sakhalin is a quintessential example of obsolescence bargaining relationship. Such relationships are a function of parties’ goals, resources and constraints. The goals can be conflicting from inception but the hope of the game being positive sum keeps both parties engaged. The initial constellation of goals, resources and constraints favours the corporation but bargain obsolesces over time as and if, the state accumulates clout. The post Soviet break up Russia of 1993 with its economic chaos and a more stable, confident, re-ambitious Russia of 2006 clearly reflect the obsolescence/re-emergence pattern of bargaining power. In addition, the natural gas being a non-general application, non-storable, pipeline transportable, not spot tradable commodity – in contrast to modern floating vessels over wells for deep sea oil extraction, demobilisable in reasonable time- facilitated gradual increase in host nation’s game theoretic bargaining power in negotiations as invested funds lay on its soil eliminating confrontation as...
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