Foundation and Empire, part II

What surprises me most about the Russian situation is how parts of the right seem to side with Putin and how this seems to correlate with climate skepticism. It seems like they do this because he has lots of natural gas and there's nothing a skeptic loves more than gas, but is there a deeper reason to be found?

Yeah, I noticed the same, Raff - institutional climate denialism is restricted to the US, UK, Australia, Canada, Poland and Russia (Czech, too maybe?).
It all revolves around fossil fuel lobbying, and it ties into right-wing politics.
And people, loving their black/white false dichotomies as they do, having decided to be pro-fossil fuel, have to be pro-Putin, too.

Raff...so glad to see that your total ignorance of geo-politics as displayed on various blogs does not prevent you from presenting a complete volte-face here and saying everyone else was wrong. LMFAO.

How about this one?
http://img.washingtonpost.com/rf/image_606w/2010-2019/WashingtonPost/20…

I wonder if Putin would like to sell Siberia?

[Thanks, that's good; I've added that one -W]

The big problem for Russia is its government is a big kleptocracy, with Putin as the king of thieves. To the degree that it is about yielding domestic power rather than the wellbeing of the country as a whole, the incentives for the ruling class don't align with an improving economy.

Wingers are attracted to a Putin like ruler. They like tough no nonsense autocratic sorts, better to run roughshod over the liberals (I guess).

"But this isn’t going to last. Its just the Saudis making a doomed attempt to knock out the frackers."

Sorry, but no.

The Saudis know that, if they cut one million barrels per day of production from the market to prop up oil prices, the U.S. will have that lost production replaced within one year's time. Therefore, there's no point in Saudi Arabia propping up the oil price when they'd only lose market share and revenues as a result.

There's nothing more to it than that.

Sanctions do have something to do with it. The basic situation is as you describe of course, natural resource economy, the price of that resource is falling, they're f***ed.

Shrug.

But sanctions do give us the trigger for this fall. Rosneft has loans it wants to roll over (ie, instead of repaying a loan they want to borrow the money again, entirely normal sorta thing for a company of that size to do). But sanctions mean that no western bank (no one with a business in the US in fact, and everyone has a business in the US so therefore no western bank at all) is allowed to lend to Rosneft for longer than 90 days.

So Rosneft can't roll over those loans. And then on Friday a little deal was done. Complicated but the effect was that the loan was rolled over by the central bank printing $10 billion's worth of rubles that the banks could then lend to Rosneft.

This is known as monetising the debt. And $10 billion in an economy of that size isn't much of a problem. However, the gossip is (and this is gossip but good gossip) that the markets looked at this and thought, well, what's going to happen with the other couple of hundred billion $'s worth of debts that must be rolled over? That would have an effect: and thus the crash.

As I say, the basic problem isn't the sanctions. But why this week probably is.

[Indeed. This is your The Ruble Falls Another 23% Even After The Interest Rate Jump To 17% I think. Quantitative easing by their central bank, effectively.

Incidentally, is the last sentence on page 1 of Russia Raises Interest Rates To 17% To Defend Ruble; Might Work, Might Not a prediction ;-? -W]

Omega,

The big problem for Russia is its government is a big kleptocracy, with Putin as the king of thieves. To the degree that it is about yielding domestic power rather than the wellbeing of the country as a whole, the incentives for the ruling class don’t align with an improving economy.

Yes. The worrying thing is about the parallels to the current situation in western democracies.

We now in the UK have a position where
- large portions of the media are controlled by billionaires with a political ideology
- the economy is increasingly skewed towards rewarding a small proportion of the populace
- that small proportion of people bankroll political parties and individuals (though largely post-factum at individual level - see Blair)

It seems increasingly to me that kleptocracy is very much the direction we're heading, just less extreme.

The US is much worse.

Neither, obviously, is anywhere near as bad as Russia; in particular there has not been such a blatant spillover into the justice system or beyond that to extra-judicial killings in the West.

Machiavelli would, though, suggest that Putin is ultimately doomed to failure unless he keeps his populace on side. And I think Putin may well be a student of Machiavelli, so it will be most interesting to see what he does next.

My money is on a belligerent outward reaction whilst quietly coming to some arrangement which includes financial restrictions lifting somewhat and belligerence in Ukraine diminishing somewhat. Which will later be reneged on.

as, of course, do the bozo Russkie electorate who keep re-electing him, bribed with their own money, the idiots.

Are you sure that the electorate keep re-electing him? Vote rigging is a plausible explanation to me.

[I don't think they can escape censure that way. Possibly there's a bit of low-level rigging, but from what I can glean from the press, its not needed: his popularity rating is still 70%. really, the Russian electorate are getting what they voted for: a little temporary safety at the cost of long-term pain / disaster -W]

there has not been such a blatant spillover into the justice system or beyond that to extra-judicial killings in the West

I can't say about other countries, but in the US this point is debatable. There have been several prominent examples recently (the one in Missouri is probably best known, but other cases in Ohio and New York, and those are just the ones that have made national news in the US) of police officers not being indicted for killing unarmed civilians. I still do not know of anybody from Wall Street who has served jail time for crashing the economy in 2008. And then there's the torture report.

I agree with other posters who have noticed a tendency for right-wing politicians to express support for Putin, largely because Putin projects such a tough guy image. Riding shirtless on a horse, even. Earlier this year Putin was perceived as putting one over on Obama, and politics has become very tribal in the US. On this point at least, Obama has followed Teddy Roosevelt's maxim of, "Speak softly and carry a big stick." The US political right seems to prefer Yosemite Sam's version: "OH YEAH? Well I speak LOUDLY and I carry a BIGGER stick and [hitting Bugs Bunny on the head] I use it, too."

I would like to trademark the term "carbon republic" to replace the term "banana republic", if someone has not already done it.

Yes, OPEC appears to be trying to squeeze the frackers and oil-sanders who are leveraged to the hilt. It just might work. Talk about the Grinch stealing Xmas.

Harry, this is a very good point. Here in Alberta we've been so focused on the potential profits from the Tarry Oil Sands that we've failed to take even basic steps to shield our economy from the same boom & bust cycle we've experienced several times in the past. We have extensive infrastructure in economic education -- just ask Mr. Harper, scion of the "Calgary School" of Neoconservative Economics -- and a well-heeled network of politicians and business leaders, some of whom have been waiting years and years to get their hands on those Oily Tar Sands profits. We have famously low taxes, as well as very low (the lowest?) petroleum royalties. We even used to have a provincial savings plan, the Heritage Trust Fund, to provide for us if we ever encountered an economic "rainy day".

In spite of all that and the delightfully conservative example of Norway, we're committed to extracting short-term profits without regard for world oil supplies, OPEC, or common sense. The willingness of our politicians to sell Canadian resources and infrastructure at sale prices to government-owned companies in China and Malaysia is an amazing example of how far they're willing to go to demonstrate their belief in "free" markets and, of course, take-home profits for the well-connected. Who could possibly have anticipated that the barely-economic and massively over-hyped Oil Sands would be affected by market manipulation by the Saudis or [insert villain-of-the-week here]? Carbon republic, indeed.

The United States overthrew Ukraine's elected government by funding violence by groups including actual Nazis, and is getting ready to strip the country of all moveable resources with the help of the IMF and the new American finance minister. But that's the people of Ukraine's problem. As for Russia, had the mostly Russian people of Crimea gone along for the ride, Russia would have lost its only warm-water port. They still may end up with NATO troops, in contravention of past assurances, parked right on their border, possibly with nuclear missiles in tow.

I ask you, leaving Putin as a person out of it, what Russian government could have accepted that outcome without putting up some kind of struggle, especially when the people living in that strategically and economically critical port mostly preferred to rejoin Russia rather than be ruled by Ukrainian ethnic supremacists who hate them? Would even our boy Yeltsin have thought this situation was just fine and dandy? Terming anyone who suspects otherwise "pro-Putin" or a "winger" is just a way of creating a false binary with which to dehumanize opposition - and it's particularly bizarre because the American right is more pro-empire than the left, so should be less likely to respect Russia's right to try to throw a spanner in our works.

Putin and the Kremlin, of course, could not care less about the interests of the western Ukrainians - but let's stop trying to pretend that Obama or the neocons do either. We took the place over not to better their lives, but to transfer as many of their privatizable assets into the hands of Western plutocrats as possible. We also hoped to cut Russian naval activities off at the knees, while making it hard for them to sell their remaining fossil fuels except at our will and our terms. That was too ambitious a goal, for a failing empire whose support from and power over the rest of the world is crumbling. It's not going to happen. Time to admit as much and move on.

Hank, #4,

Putin may be wanting to sell Siberia one day but the buyer will never be sure if Putin allows him to keep it, as we've seen with previous ventures of Western oil companies in Russia.

Its jane at #14 who interests me. I keep seeing pro-Russian stuff - far more than I should. To the extent that an actual paper newspaper popped up in Australia selling the idea that the West shot down MH17 (and that the Rothschilds still run the world).

Now I'm happy to believe that the West were behind the revolution in Kiev. But I can't believe the rubbish about the West shooting down MH17. It was simply a mistake by Russian separatists in eastern Ukraine. Why does Russia have to pretend otherwise?

But I can confirm that Putin is incredibly popular in Russia. We have a former Russian at work, and she speaks glowingly of him, and there is nothing nutty about her.

Jane @ #14 makes undocumented assertions in her first paragraph. I find those, which I have seen elsewhere, not credible. I suspect a Kremlin supported misinformer.

As I read the situation, the Saudis do not want to give up market share and are out to stop the most expensive producers. Their (in)action is no more aimed at the Russians then their fellow OPECers, Venezuela.

Always interesting to read the whole 'market share' argument.

It basically means that although OPEC could set the price - or at least a price floor - they don't because of a lack of discipline. It's not some grand game of geopolitics, it's just cheating.

In any case, world oil supply has barely moved anywhere in a decade; on a per capita basis it's gone down. The reason for the price drop is as much down to the financialisation of the oil market as any big supply/demand changes. The drop in price has a pretty good chance of blowing up fracking in the US - we'll see..

[I don't understand The reason for the price drop is as much down to the financialisation of the oil market. I think you mean you don't like financial markets, or somesuch, but I can't interpret your words in any way that make sense. What did you mean by it? -W]

In 1999, oil dropped to $10 for no readily apparent reason. Out economic gurus had barely finished their articles pronouncing that technology had produced a sea of oil and it was going to $5, before it promptly tripled in price.

VTG @ 9: while the concentration of wealth and power in the UK and US is greater than many would like, you have to go a long way to get from there to a kleptocracy. the US and UK are still pretty good about the rule of law (Russians go there to litigate their own disputes) so you don't see the kinds of scams you see in Russia, where kleptocrats use the tax and legal system to steal business assets from disfavored individuals/entities.

Think about it: when was the last time you saw the Putin regime lose in a Russian court? Courts in the West overturn government actions all the time and act as a check on government overreach.

[I agree that asserting a false equivalence between the Putin's Russia and the West isn't helpful -W]

Heh! I wish the Kremlin would hurry up and send my check. They're late this month! Good thing I insisted in being paid in dollars instead of rubles, huh? David, you really ought to read at least one thing about the Ukraine crisis that is not written by a neocon. The following are extremely well-documented and uncontroversial facts:

[All of this is just like the "facts" that the GW denialists provide. And just like to them, my answer is, you really need references rather than assertions, and really if you feel the need to write long screeds its better to put them onto your own blog and link to them -W]

1. American government official Victoria Nuland was recorded talking about who should and should not be part of the future Ukrainian government after its elected government had been removed (and indicating, via the infamous phrase "F*** the EU," that America alone would decide the composition of the new regime).

2. The armed militias whom we funded to "demonstrate" against the government to be removed included people who have been photographed wearing actual Nazi insignia and quoted in the media as wanting ethnic Russians to be barred from government jobs, if not worse.

3. The catastrophic effects of the Washington Consensus on the economies of target nations could be argued about, but the new Ukrainian finance minister is undeniably an American plutocrat who was given a Ukrainian passport simultaneously with her new job title.

4. Crimea has been a Russian possession for centuries, transferred to Ukraine in the twentieth century when Ukraine was part of the Soviet Union. It is occupied mostly by ethnic Russians who speak Russian. They reasonably assumed that, if left in Ukraine after the breakup of the USSR, they would be able to maintain relationships with Russia, since we had assured Russia that we would not expand NATO to Russia's borders or try to force Russia's neighbors to end friendly relationships with them. And finally, Crimea holds Russia's only warm-water port facilities.

For both economic and military reasons, loss of access to that port would be strategically very harmful to Russia even if Ukraine were not further used, as it may be, as a staging ground for NATO armies or weapons of mass destruction. Maybe we don't give a damn whether Russian interests are harmed, but the Russians do. Pragmatically, the evidence of all human history should have told us that they would attempt to protect their own interests whether that was convenient for us or not. Morally, their meddling in Ukraine is in their own backyard, while our meddling is on another continent, thousands of miles from our imperial homeland. If the latter is perfectly acceptable, it's hard to scream about the former - unless the underlying principle is just "America should get to do whatever it wants, while others should wait to hear America tell them what they may do." The rest of the world has had about enough of that attitude.

jane @ 21: No doubt Crimea had been a Russian possession. But that doesn't mean it was Russian, just that Russia, thorugh force of arms, had taken control of it. And the population of ethnic Russians there were present, to a fair degree, as a result of the deliberate actions of the Soviets regime to substitute politically reliable Russians for politically unreliable Tatars. (I don't think the phrase "ethnic cleansing" had yet been coined, but it applies.)

Beyond "might makes right", there isn't much in the way of principle in Russia's actions there, whether in the 20th centruy or the 21st.

That's very true. On the other hand, I would be surprised if the percentages of non-Russian inhabitants killed or exiled when Crimea was being Russianized came close to the percentages of Native Americans who would soon be killed or exiled by Anglophones during their expansion into these United States. Let's face it, "might makes right" is the usual belief system of all imperial powers throughout history, with lip service at best for fairness or the rule of law. A survey reports this week that over half of Americans still think the Bush-era torture program was just fine, for example.

Despite increasing state violence and public paranoia as its decline accelerates, the American "homeland" is still a much better place for an average American to live than Russia is for an average Russian. Russia is probably more oppressive of minorities within its borders. However, we do substantially more harm to people outside our borders than post-Soviet Russia. We invade and occupy more countries, we bomb more places, we crush more peoples into poverty with endless sanctions. The unipolar world, in fact, was not a world based on principle. It was one where everyone except America and its pets got the fuzzy side of the lollipop, and the hammer was brought down on anyone who objected.

The Kremlin knows that very well, and indeed received a taste of it after the collapse of the Soviet Union. They will thus never accept a Saudi-monarchy-like role of fossil-fuel-supplying serf to the US so long as they see any chance to remain a world power in their own right - and who, aside from neocons, finds that surprising or unnatural?

[Russia isn't a world power. Its a backwater. They are fossil-fuel suppliers; hence their dependency on the price of oil -W]

Jane @ #21 --- Your point 4 is wrong. As
https://en.wikipedia.org/wiki/Modern_history_of_Ukraine
the modern Ukraine came into being ca. 1919.

It's back to rubbels for your payment. :)

Regarding the effects of current oil oil price, BBC(?) has an article today about what the 2015 North Sea oil drilling plans are; mostly layoffs.

In a small defense of Russian engineers: (1) they do very well in building nuclear power plants, for example FInland's next will be Russian rather than French; (2) they are as good as the best in building space rockets, especially the heavy lifters.

[Its a large country, and I'm being broad-brush. They've had some pretty good mathematicians too. But in political terms, its poor -W]

Regarding financialisation - It's just the case that more people are trading oil and especially oil derivatives; and with the large amounts of loose money going around the system nowadays, this means that trends are exaggerated and can detach from supply/demand reality(for a while, anyway).

In 2008-9, the price of oil went from $60 to $140 to $40 to $80. In an industry with lead times measured in years. This isn't supply and demand happily equlibriating, it's a herd of poorly informed investors magnifying swings..

My person opinion on this isn't really relevant, it's just an observation; it pertains to the current price drop as in it could easily be an artifact of a small oversupply.

[I don't think I believe that. In particular, I don't believe the more-trading-leads-to-more volatility argument. In fact, the reverse. I've learnt that from Timmy -W]

I think that Timmy has infected you with the Neoliberal Brain Worm..

The data is in front of you. You have an alternative hypothesis - go for it. Timmy won't give you one, he'll run (or answer a different question). Indeed, why would you think that going from a market dominated by a small number of well-informed people, to a large number of less well informed people, would work better?

Again - all I'm really saying is the a small supply/demand imbalance has an effect on prices (controversial, I know),

[No, that bit is entirely uncontroversial -W]

and this effect is magnified by other players who have no particular domain expertise piling in - hedge funds, day traders, whoever.

[But you've presented no reason to believe that at all -W]

And the actual real world numbers support me. I'm not saying that we should overturn capitalism or whatnot.

Russia's no longer a "world power" in the same way that the Soviet Union was for a few decades, or that America has been from World War II up to now, or that China is (again) becoming. However, that doesn't mean that it automatically falls into the category of impoverished weakling whose government can be overthrown whenever America feels like it. There is an intermediate category of regional powers that enjoy relative prosperity and autonomy, and they're rationally working hard to stay in it. Their nuclear arsenal helps considerably with that, just as ours will help keep the U.S. or its successor states from being "pacified" by Chinese troops if/after our economic and political stability decline badly enough.

I suspect the folks in the Kremlin are savvy enough to recognize that population and other factors guarantee they will play second fiddle to China in a post-American future. If so, they will use their fossil fuel reserves strategically to build alliances with China and with smaller nations in their own neighborhood that aren't strongly in the American orbit. There is already evidence of this, e.g., it was recently reported that Russia had planned to build a natural gas pipeline into eastern Europe, but after America pressured one of the countries involved to block the project indefinitely, Russia immediately announced that it would be cancelled and a pipeline through Turkey would be built instead. Triply smart: they don't let America dictate whether their resources get sold [ignore the fact that from the environment's perspective, those resources would be better not sold]; they let it be observed that governments in their region that follow America's orders lose money for which America does not compensate them; and they build economic ties with a smaller regional power, itself a former empire, that is starting to question whether endless fawning over the West is worth their effort given that its citizenry's Muslim faith seems a permanent bar to their admission to that international country club. (The fact that Putin et al. persecute Muslim minorities at home is no bar to schmoozing the Turks. This is realpolitik, remember, so no principles are involved.)

It thus appears to me that the current Russian rulership has a much more realistic and rational understanding of geopolitics than the American government has, or has had for some time now. They can't hope to rule the world in the coming two centuries, but if they are smart enough not to try, and to settle instead for goals that are attainable, they can salvage quite a lot for themselves. We are still stuck in the "Of course we can rule the world!" stage, and that's going to hurt us.

> the buyer will never be sure if
> Putin allows him to keep [Siberia]

Yeah, didn't Palin warn us that Putin can seize Alaska from there?

Jane @23 says: "On the other hand, I would be surprised if the percentages of non-Russian inhabitants killed or exiled when Crimea was being Russianized came close to the percentages of Native Americans who would soon be killed or exiled by Anglophones during their expansion into these United States."

Hmmm. So you agree that the Crimea was NOT Russian and only got they way through force of arms, and your defense of that is what, exactly? A Tu Quoque? So your standard for 20th and 21st century conduct is that so long as it isn't as bad as how the US treated native Americans it's OK?

You are doing some marvelous gymnastics here, but you'll have to be more limber than that to put a white hat on Putin. The short story is that when it looked like the Ukrainian government was going to start acting like a real sovereign government Putin wigged out and decided to crush it. There's no way to dress that up.

It's getting harder to dismiss conspiracist thinking like Jane's out of hand these days, but we still need to remember not to ascribe to malice, that which is adequately explained by incompetence. While shadowy but powerful interests are in fact responsible for much villainy in the world, independent local agendas may have disproportionate influence as well. Then there's the butterfly effect ("for want of a nail..."). The state of the world at any instant is a vector sum.

Can anyone say "what really happened" ini Cuba in the 1950s? Does anyone know what's really happening in the Ukraine today? We may be able to trace certain threads, but what's the overarching narrative? It is the problem of historiography, as much with events in the present as in the past (which was the present a moment ago): What Does it All Mean?

Meanwhile, global average temperature ascends.