Russia in the 21st Century [Superthread]

[Edward Campbell]

Here, reproduced under the Fair Dealing provisions of the Copyright Act from The Economist is a useful infographic for those considering Europe's thirst for Russia's gas:

 

[a_majoor]

Russia continues to make bold moves to capitalise on the inaction of the American led *West*. I suspect some of this activity is driven more by a need to make Russia stronger in relation to her continental neighbours, particularly the Islamic crescent and China rather than just poking a stick in Obama's eye. Having the economic ability to pull strings on Tehran makes Iran a useful puppet to keep the ME destabilized and offer a threat to others when it suits Russia's needs:

http://www.the-american-interest.com/blog/2014/04/07/russia-to-bust-the-iran-sanctions-regime/

Russia to Bust the Iran Sanctions Regime?

Western leaders appear to have found themselves something resembling a strategy for dealing with Vladimir Putin: hit him with sanctions while providing him with face-saving way of de-escalating the situation in Ukraine. Unfortunately for the West, Putin seems to have other plans:


As nuclear negotiations continue this week in Vienna, Moscow appears poised to openly flaunt the U.S.-led Iran sanctions regime. The move could undermine the Obama administration’s assurances that neither the Crimea crisis nor the recent de-escalation of sanctions would undercut U.S. leverage in its nuclear negotiations with Iran. [...]

The proposed deal, worth possibly $20 billion, would include Russian purchases of up to 500,000 bpd of Iranian oil—boosting Iranian exports by as much as 50% from levels permitted to Iran under the Geneva interim nuclear agreement—in exchange for Russian equipment and goods. The deal would ease further pressure on Iran’s battered energy sector and at least partially restore Iran’s access to oil customers with Russian help. There is further reason for concern that such a scheme could provide a channel for the transfer of sanctioned nuclear equipment or military hardware to Iran, not to mention other illicit financial transactions.

Combined with the announcement by Transnistrian separatists that they will not be attending the next round of talks with Moldova and the latest unrest in Donetsk, Kharkiv, and Lugansk (all of which provide more excuses for Putin to send his forces into Ukraine), a negotiated solution with Russia looks increasingly like a pipe dream. On the contrary, Putin is aiming to cause problems for the United States across the board.

Maybe it’s time to come up with a real Russia policy.

 

[pbi]

Here is an interesting piece by George Friedman of STRATFOR, in Geopolitical Weekly, addressing US defence policy since the Maidan Revolt in Kyiv:

http://www.stratfor.com/weekly/us-defense-policy-wake-ukrainian-affair?utm_source=freelist-f&utm_medium=email&utm_campaign=20140408&utm_term=Gweekly&utm_content=readmore

 

[a_majoor]

Here is an interesting piece by George Friedman of STRATFOR, in Geopolitical Weekly, addressing US defence policy since the Maidan Revolt in Kyiv:

http://www.stratfor.com/weekly/us-defense-policy-wake-ukrainian-affair?utm_source=freelist-f&utm_medium=email&utm_campaign=20140408&utm_term=Gweekly&utm_content=readmore

Halford Mackinder lives!

This article could also be posted in the Grand Strategy for a Divided America thread as well.

 

[Kirkhill]

"Give me a place to stand on  and a lever long enough and I will move the world".  Archimedes.

The closer you get to the fulcrum the shorter the lever gets and the harder it is to exert influence.    Try standing in the middle of a teeter-totter and stop the teeter-tottering.

Russia exists at the fulcrum of the teeter-totter.  It is easier for things to be done to it than it is for it to do things. 

Put it another way - without lots of cash to buy influence it is terminally f*cked.

 

[pbi]

"Give me a place to stand on  and a lever long enough and I will move the world".  Archimedes.

The closer you get to the fulcrum the shorter the lever gets and the harder it is to exert influence.    Try standing in the middle of a teeter-totter and stop the teeter-tottering.

Russia exists at the fulcrum of the teeter-totter.  It is easier for things to be done to it than it is for it to do things. 

Put it another way - without lots of cash to buy influence it is terminally ******.

I'm not sure. You might ask the Poles, Balts, Rumanians and other small countries in Putin's "'hood": even a cash--strapped Russia might still be frightening for them: maybe even more so if it's impending financial ruin, combined with the usual collection of unpleasant Russian national traits such as rabid nationalism, bully tendencies and xenophobia (underlain by a secret jealousy and frustration that they can never quite "get" modern Western society as well as some others do...), provoke it do do some dangerous thing in desperation or as a show of force.

I've slagged them quite a bit on these pages, but in seriousness it may be a dangerous mistake to underestimate them.

 

[Kirkhill]

I don't underestimate them.  Nor, I am sure do their neighbours.  The Poles in particular are taking this situation seriously.  They have been steadily building their own military and reaching out to the rest of Russia's neighbours - offering an agricultural programme here, an industrial programme there.

They are creating their own net of bilateral agreements in the area - all the way from the Baltic to the Black Sea.  I don't think they will wait for NATO to come and save them this time.  They have seen that movie recently.

With respect to Russia's activity - I believe that that proves the point.  Russia, like the man on the teeter totter, has to be constantly active, constantly expending energy, just to maintain its balance.  It doesn't feel it has the luxury of just sitting back and letting the world go by.  If it isn't acting it is being acted upon.... Hence my previous crude expression of its condition.

The problem with that is that Russia is as likely to over-react as react appropriately ... or at least the people leading her.

 

[Edward Campbell]

I just saw this:

Caption: "Allow me to give you a glimpse inside my mind & personality,"
says Vladimir Putin

I have frequently read reports that many, many Russians yearn for a new Stalin. They think that Stalin represented the zenith of Russian achievement: defeating the hated Germans, building the bombs, setting Russia (the USSR, of course) on the path to the stars and so on. They willfully ignore how those things happened but they remember, or think they do, anyway, that they did happen and Russia was great.

 

[vonGarvin]

I just saw this:

Caption: "Allow me to give you a glimpse inside my mind & personality,"
says Vladimir Putin

I have frequently read reports that many, many Russians yearn for a new Stalin. They think that Stalin represented the zenith of Russian achievement: defeating the hated Germans, building the bombs, setting Russia (the USSR, of course) on the path to the stars and so on. They willfully ignore how those things happened but they remember, or think they do, anyway, that they did happen and Russia was great.

I think he's one step further back: the Russian Empire of old.  Stalin was (officially) atheist and all that, while Putin (et al) appear to be embracing the Russian Orthodox Church.  No matter what it is, Russians seem to be yearning for a Czar.  And Putin seems to know this quite well.  His image betrays that:

 

[a_majoor]

I don't underestimate them.  Nor, I am sure do their neighbours.  The Poles in particular are taking this situation seriously.  They have been steadily building their own military and reaching out to the rest of Russia's neighbours - offering an agricultural programme here, an industrial programme there.

They are creating their own net of bilateral agreements in the area - all the way from the Baltic to the Black Sea.  I don't think they will wait for NATO to come and save them this time.  They have seen that movie recently.

With respect to Russia's activity - I believe that that proves the point.  Russia, like the man on the teeter totter, has to be constantly active, constantly expending energy, just to maintain its balance.  It doesn't feel it has the luxury of just sitting back and letting the world go by.  If it isn't acting it is being acted upon.... Hence my previous crude expression of its condition.

The problem with that is that Russia is as likely to over-react as react appropriately ... or at least the people leading her.

The Poles are a logical choice to lead a "Central European Zone", having the largest and most "organized" state, as well as being wary of both the Russians to the East and the Germans to the West. Culturally, the linkage with Central European nations from the Baltic to the Black Sea also makes more sense than (say) reaching to the Nordic nations, the German Zone, the "Latin Zone", Britain or the Balkans.

I suspect that in the long term, the EUZone will become much more polarized between these various factions, even if the EU itself continues to exist as a sort of shadow of its former self (the various regional blocks will probably work to sharply limit the powers of the EU Parliament and bureaucracy, for example). While Obama may joke about the '80's calling for their foreign policy back, in the real world 19th century "balance of power" is reasserting itself.

 

[pbi]

I have frequently read reports that many, many Russians yearn for a new Stalin. They think that Stalin represented the zenith of Russian achievement: defeating the hated Germans, building the bombs, setting Russia (the USSR, of course) on the path to the stars and so on. They willfully ignore how those things happened but they remember, or think they do, anyway, that they did happen and Russia was great.

I think he's one step further back: the Russian Empire of old.  Stalin was (officially) atheist and all that, while Putin (et al) appear to be embracing the Russian Orthodox Church.  No matter what it is, Russians seem to be yearning for a Czar.  And Putin seems to know this quite well.  His image betrays that

I think you are both right. My gut feeling is that "democracy" is meaningless rubbish and confusion to most Russians. They yearn, secretly or openly, for the "Father King" figure. That, I think , is when they are at their happiest. Combine this with what I think is a deep-running streak of brutality and willful ignorance in their society, and you don't get anything nice.

The Poles are a logical choice to lead a "Central European Zone", having the largest and most "organized" state, as well as being wary of both the Russians to the East and the Germans to the West. Culturally, the linkage with Central European nations from the Baltic to the Black Sea also makes more sense than (say) reaching to the Nordic nations, the German Zone, the "Latin Zone", Britain or the Balkans.

This would be an interesting return to Polish pre-WWII foreign policy that sought to establish a "Third Europe" of  Eastern states led (of course...) by Warsaw. They saw this a necessary balance against Germany in the West and the USSR in the East, without having to rely too much on external guarantors like France or Britain.

In 2008 I attended a Corps exercise in western Poland. The enemy was very clearly Russia. The Poles envisioned losing the eastern part of their country, then falling back on successive river lines until NATO could help them, but clearly carrying the brunt of the fight on their own.

 

[George Wallace]

I think he's one step further back: the Russian Empire of old.  Stalin was (officially) atheist and all that, while Putin (et al) appear to be embracing the Russian Orthodox Church.  No matter what it is, Russians seem to be yearning for a Czar.  And Putin seems to know this quite well.  His image betrays that:

Putin is definitely a Type A personality.  With his numerous bare-chested photo ops and his affiliation with the Nochniye Volki (the Night Wolves) biker group and the Russian chapters of Hells Angels.  I think you may be heading down the right avenue.  Stalin, not doubt, considered himself as the 'Czar', if not by name.  Putin and Bikers photos would tend to indicate that he wants to show affiliations with all classes of Russians, especially the classes other than the 'upper more mobile', yet still hold the reign of power over all.  He definitely knows how to control how his image is portrayed.

 

[Kirkhill]

In 1917 the Russian war effort collapsed amid bread riots.  In 1918 Germans gave up when they were reduced to eating turnips.


New York Times Article

Russia Economy Worsens Even Before Sanctions Hit
By DAVID M. HERSZENHORNAPRIL 16, 2014

MOSCOW — Margarita R. Zobnina, a professor of marketing here, has been watching the Russian economy’s gathering woes with mounting alarm: friends who have moved abroad with no plans to return; others who put off new business ventures because of rising uncertainty. Meanwhile, Ms. Zobnina and her husband, Alexander, also a professor, have rented a safe deposit box to hold foreign cash as a hedge against the declining ruble.

Most shocking, she says, is that her local grocery is now selling anchovies packed in sunflower oil rather than olive oil, an obvious response to the soaring cost of imports. “That really freaks me out,” she said.

While the annexation of Crimea has rocketed President Vladimir V. Putin’s approval rating to more than 80 percent, it has also contributed to a sobering downturn in Russia’s economy that appears to be worsening even before Western sanctions take full effect. With inflation rising, growth stagnating, the ruble and stock market plunging, and billions in capital fleeing the country for safety, the economy is teetering on the edge of recession, as the country’s minister of economic development acknowledged on Wednesday.

Mr. Putin, who just lavished $50 billion on the Sochi Olympics, also must absorb the costs of integrating Crimea, which economists and other experts say has its own sickly economy and expensive infrastructure needs. The economic costs have been masked by recent patriotic fervor but could soon haunt the Kremlin, as prices rise, wages stall and consumer confidence erodes.

Even before the Crimean episode, and the resulting imposition of sanctions by the West, Russia’s $2 trillion economy was suffering from stagflation, that toxic mix of stagnant growth and high inflation typically accompanied by a spike in unemployment. In Russia, joblessness remains low, but only because years of population decline have produced a shrunken, inadequate labor force.

In recent weeks, international and Russian banks have slashed their growth projections for 2014, with the World Bank saying the economy could shrink by 1.8 percent if the West imposes more sanctions over Ukraine. By some accounts, more than $70 billion in capital has fled the country so far this year and the main stock market index fell by 10 percent in March — and a dizzying 3 percent just on Tuesday over fears of greater Russian involvement in Ukraine.

“This is our fee of sorts for conducting an independent foreign policy,” Aleksei L. Kudrin, a former Russian finance minister, said at a recent investor conference in Moscow. He added that the sanctions and the fallout from Mr. Putin’s foreign policy moves would drain hundreds of billions of dollars from the national economy and strangle growth for the remainder of the year.

But Mr. Kudrin, who quit his post in a dispute over the Kremlin’s economic policies, said the population had yet to confront the full bill, which he predicted would grow as a result of the steep costs of absorbing Crimea, a geographically isolated peninsula. “Society has not yet seen the final result, and that will be when this puts the brakes on real incomes,” he said. “For now, society accepts this fee.”

From a textbook perspective, the deep-rooted ills in Russia’s economy have been clear for years: The decade-long skyrocketing in energy prices that buoyed Mr. Putin’s popularity has flatlined, exposing the country’s dangerous over-reliance on revenues from oil and natural gas. Efforts to diversify into manufacturing, high technology and other sectors have failed, and officials have been unable, or unwilling, to stop the rampant, corrosive corruption that scares off foreign investors.

Consumer demand, which had been a primary driver of the Russian economy in recent years, stalled hard in 2013. Surveys by the Levada Center, Russia’s only independent polling institute, show that consumer sentiment has been on a slow, steady decline since 2010, while fears of inflation — especially rising prices for basic necessities, which have persisted since the 1990s — have grown along with new anxiety about a potential drop in wages or rising unemployment.

“If you want to open your eyes, you would admit that it is a slow, downward trend of social optimism and consumer optimism,” said Marina Krasilnikova, who leads income and consumer research for the Levada Center.

“The situation with Ukraine and Crimea has resulted in patriotic and imperialistic optimism,” Ms. Krasilnikova said. But, she added, “this optimism will not last long.”

Some analysts said that Russia’s annexation of Crimea had proved that Mr. Putin puts politics ahead of reasonable economic decisions, and that there was little reason for economic optimism, particularly given his inward, xenophobic turn, including his vow to create Russia’s own cashless pay systems and even its own credit rating agency so it would not have to rely on the global financial system.

Miljenko Horvat, a private equity investor who ran Citibank’s office in Russia in the 1990s, said that Russia had simply failed to make itself economically relevant beyond its energy supplies.

Mr. Horvat, who now lives in Vancouver, British Columbia, said that he often challenged his Russian friends by making the following point: “I wake up in the morning and drink coffee from a machine made by a Swiss company, Nescafé. I wear something that was designed in France or Italy but probably made in Turkey. I get into a German car, look at a Korean phone, use a computer that was designed in California but made in Japan or Korea. Russia just doesn’t touch me in my daily life. It just doesn’t matter. It’s just not relevant. So where is the economic engine going to come from?”

Mr. Horvat said that he had lived in Russia through defaults in 1991, 1993 and 1998 and that he expected another one. “I am not long in Russia,” he said, invoking the financial term for betting on a rising stock, “neither in my portfolio, nor in life.”

Given the recent turmoil, a catastrophe has been averted so far largely because the price of oil has remained stubbornly high, at nearly $110 per barrel of Brent crude on Wednesday, even as production steadily rises in the United States. For now, that has kept the federal budget in decent shape with still no deficit projected for the year.

But even without a shock, it is not clear how Russia will manage to climb out of the current quagmire. Stagflation is among the most confounding economic problems that policy makers can face, and officials here seem flummoxed, with the Central Bank, Finance Ministry and Economics Ministry urging contradictory steps.

Last month, the bank raised its key interest rate to 7 percent from 5.5 percent to combat inflation and support the ruble, a step that could slow growth. Meanwhile, the Economics Ministry, worried about growth, favors borrowing and government spending as a stimulus and to reduce capital flight, a possibly inflationary strategy that is opposed by the Finance Ministry, which wants to keep debt low and reserve funds available to weather any unexpected drop in oil prices.


“All of them have their clear priorities, and they stick to their priorities,” said Alexei Deviatov, the chief economist for Uralsib Capital, an investment bank here, “and there is very little coordination between these authorities.”

While Russian and global investors and businesses have been moving billions of dollars out of Russia to places perceived as less risky, it is not just money that is fleeing. Ms. Zobnina, who teaches at the Higher School of Economics in Moscow, said that one of her classmates had left for the United States after college 10 years ago, and that another friend followed three years ago to pursue a Ph.D., with no plans to return. Still another friend, a journalist, moved to London last summer with her husband and three children.

Ms. Zobnina, 32, said that she and her husband, 30, were thinking about finding posts in Europe or the United States, and for now were keeping their savings in dollars and euros. In an interview, she conceded that putting cash in a safe deposit box hardly amounted to sophisticated financial planning, particularly for two economics professors.

“It’s absolutely not rational to prefer safe box than deposit because you lose interest,” she said. “But in this unpredictable situation, when the ruble is falling and banks are unstable — and who knows when we’ll be cut off from the global financial system or which bank will be next to be closed — it’s better to have this small bird in hand.”

 

[Edward Campbell]

The Economist gets it about right on this week's cover:

 

[Retired AF Guy]

Now a little humour break.

 

[pbi]

You know what's funny, and a bit weird?

Go on the CBC.ca news site, and look up the latest article about the Ukraine/Russia situation. Look at the blog comments that, based on their similar content and fractured English, are almost certainly originating in Russia, possibly in an organized effort.

 

[vonGarvin]

Go on the CBC.ca news site, and look up the latest article about the Ukraine/Russia situation. Look at the blog comments that, based on their similar content and fractured English, are almost certainly originating in Russia, possibly in an organized effort.

Could very well be.

Edit to add:


Here's a quote:

After CIA director visit Kyiv, few days after Ukraine announce anti-terrorist operations which failed dismally and now the US vice president visited Kyiv and again after he left they announce another anti-terrorist operation. That gives suggestion that US want another war to keep the economy going and they forgot that Ukraine military is in disarray and demoralized unless US/ NATO sends their own man in the front line of this anti-Ukraine operation.

The grammar is off enough on this to suggest it's of Slavic origin: lack of definite articles especially in some spots.

 

[pbi]

That's the very quote I was looking at this AM.

There seem to be several "repeat offenders" (or one person using several screen names). They generally harp on the same themes, with the same bad English. One I saw yesterday was a bit ominous (although probably a crackpot): he was rambling on about creating a "free Germany". The last time Russia was involved in Germany it wasn't very free, IIRC.

Occasionally they launch their rant-bombs in threads where the connection to the subject heading is either very thin, or non-existent. They might be keying on certain indicator words in the articles and posting accordingly, whether their post is actually relevant or not.

Or maybe they're just dumb.

 

[Edward Campbell]

Two reports, this morning, that illustrate the complexity of Russia's natural resource wealth and the ties it creates:

    1. The Financial Times reports that "Gazprom said it was taking action to mitigate the impact of possible further western sanctions as it reported a 7 per cent drop in net profit last year ...
        the Russian state gas giant, the world's largest producer of natural gas, highlighted its plans to expand sales in Asia and said it was adopting incentives to encourage local sourcing among its suppliers and contractors, as
        it flagged the "material adverse effect" that any sanctions on the group would have ... Gazprom said that European plans to increase diversity of energy suppliers and move gas markets away from long-term contracts "may
        disrupt the balance of demand and supply in the European gas market and have unpredictable implications, including threaten energy security of importing countries" ... nonetheless, it highlighted its plans to increase supplies to Asia.
        The company hopes to sign a long-term supply contract with China next month when Russian president Vladimir Putin visits the country."

    2. The Wall Street Journal reports that  "Former German chancellor Gerhard Schroeder celebrated his 70th birthday with Russian President Vladimir Putin in St. Petersburg Monday evening, as the U.S. and European Union stepped up sanctions against
          Moscow over its handling of the Ukraine crisis ... the meeting took place during a birthday reception organized by Mr. Schroeder’s employer Nord Stream AG, a pipeline operator controlled by Russian gas giant OAO Gazprom ...
          The meeting between Mr. Schroeder and Mr. Putin highlights divisions in Germany over Chancellor Merkel’s tough line against the Kremlin. Mr. Schroeder and former chancellor Helmut Schmidt, both Social Democrats, have repeatedly
          criticized the West’s handling of the crisis and its treatment of Mr. Putin over past weeks ... [and] Mr. Schroeder’s birthday reception was also attended by Erwin Sellering, the governor of the German state of Mecklenburg-West Pomerania,
          which is organizing a “Russia Day” to be held in the state in September."

 

[CougarKing]

If Russia aims to flex its muscles militarily in this century, they have to wean themselves from the dependence on Ukrainian spare parts for some types of their military equipment as mentioned in the Ukraine-Crimea crisis thread below:

Russian military needs Ukrainian spare parts; Kiev's arms embargo may cripple the Kremlin

Or perhaps Chinese arms companies like NORINCO may see an opportunity to sell Russia reverse-engineered versions of those spare parts?  ;D