Why Putin Scores Big With the Rosneft Deal

The surprise deal in which Qatar's sovereign wealth and the commodities trader Glencore are acquiring 19.5 percent of Russia's state-controlled oil company, Rosneft, has broad implications for Middle Eastern geopolitics, Russia's opaque domestic politics and the oil market. Russian President Vladimir Putin and his old associate, Rosneft chief executive officer Igor Sechin, have both won big on the deal, even though the shares were sold at a discount to Rosneft's market price.

The Rosneft privatization was scheduled for this year for two reasons: one financial and one political. Russia needed to close a budget gap created by low oil prices, and Putin has an aversion to big government debt increases, especially when debt markets aren't particularly welcoming. But, perhaps as importantly for Putin, the deal was meant to demonstrate the inefficiency of Western sanctions against Russia.