Russia's Strategic Intent To Use Energy as a Weapon Has Increased 21 comments
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Ah, Russia. What a baffling, complex and in many ways fascinating country.
Winston Churchill captured the spirit of things with a famous quote. When asked for his opinion on Russian foreign policy, he described it as "a riddle wrapped in a mystery inside an enigma."
In another memorable turn of phrase, Churchill once compared Kremlin politics to a pack of bulldogs fighting under a rug. You could hear the snapping and snarling and see shapes moving around, but no one could tell what was happening until one of the dogs came out.
There is a lot to say about the Russian bear -- strengths, weaknesses and so on -- and it all feels more relevant now than ever. But the thing to understand here and now is this: Russia looks intent on kicking off a new cold war.
Unlike the 20th-century cold war, though, this cold war will revolve around energy instead of nukes... and that could have major long-term implications for oil and gas (particularly liquid natural gas, or LNG).
We'll have to break up the discussion into two parts for the sake of space. First we'll touch on Russian motives and perspectives. Then we'll look at more specific impacts in Part II.
It Takes Two to Tango
The cold war statement should perhaps be qualified a bit. It isn't just Russia that wants a deep freeze; the West seems to want it, too. We're seeing this in the Western media's heavy-handed response to the South Ossetia conflict, and also in the blustering response from Washington.
(Who is to blame for South Ossetia, by the way? That's a nasty game of "he said, she said" that your editor would rather not get too wrapped up in. Suffice it to say that Georgia's president, Mikhail Saakashvili, wasn't exactly blameless in stirring up tensions under cover of the Olympics. On the other side of the coin, Putin seemed more than ready to order the tanks and fighters in... almost as if waiting for an excuse to pounce.)
As soon as the conflict began, Saakashvili started shouting that Georgia's fate was the fate of the free world. The Western media dutifully amplified this drumbeat. Presidential candidate John McCain also jumped in with both feet, loudly declaring "We are all Georgians." (McCain has long taken an extremely hard line on Russia. Among other things, he wants to kick them out of the G8.)
I can't help but wonder what my old friend, Igor, would think of all this...
The View From St. Petersburg
During my three years as a broker with Commodity Resource Corp, I worked with hedging and trading clients all over the world. (We did business on every continent save Antarctica.) One of my top clients was a Russian hedge fund based out of St. Petersburg.
I took orders from three or four of the fund's traders almost every day. Everything came through ICQ, an instant messaging system later absorbed by AOL. (For as long as I live, I'll never forget that distinctive "uh-oh!" sound of a new order coming in.)
One of the hedge fund's traders, Igor T., had a strong grasp of English, a passion for philosophy and a very dry sense of humor. We became fast friends over time and chatted over ICQ when markets were slow.
It was truly eye-opening to see how the world looked from Igor's point of view. As a patriotic Russian who loved his country, Igor saw a lot of arrogant self-righteousness in the Western stance. From his perspective, the great Russian bear was often treated like a mangy circus animal by the West -- asked to jump through hoops and pull off demeaning stunts for others' entertainment.
Sadly, I lost track of Igor years ago. We stayed in contact for a while after I left Commodity Resource, but eventually lost touch.
Anyhow, the point is that I can't disagree with the way Igor felt. He was too convincing over the course of our countless chats. While the U.S. and Europe rejoiced in the inevitable expansion of the EU and the post-USSR spread of democracy to Russian satellite states, there really wasn't too much effort to respect Russia's interests and place in the world.
The implicit assumption seemed to be that that the moral authority of democracy, plus the fact that "winners write the history books," gave the West the right to actively marginalize and undermine Russia while lecturing its leaders and people at the same time.
All that proved a bit hard to swallow for a once-respected and still proud empire whose global influence was ebbing away...
Putin's Revenge
This isn't an apology for Russia by any means. It's just an attempt to balance out some of these chest-pounding op-eds that make it sound like Russia is entirely the bad guy. Developments on the world stage are rarely that black and white.
Just imagine, for example, how Americans would feel in a world where China had both surpassed and eclipsed the United States. Then picture China actively lecturing America over economic and moral failings. Then think how resentment would be further compounded if, adding insult to injury, China elected to hem in the 50 states with active military alliances in U.S. border regions. Can you see how we might be a tad miffed?
As for the iron-fisted Vladimir Putin (or Vlad the Impaler, as some call him), this has to be a sweet moment. As a result of the Georgia conflict, Russia's authority has been sharply reasserted in a way that can't be ignored... and Vlad has planted himself right in the middle of the action with rolled-up sleeves.
The tough talk coming from the White House -- talk that has no chance of being backed up, by the way -- is just more icing on the cake for Putin. Western threats are likely not a point of concern so much as a sign of grudging respect.
They say revenge is a dish best served cold, and that's pretty much what we have here. Putin's willingness to use energy as a weapon was first displayed 30 months or so ago, in his willingness to turn off the natural gas taps to Europe.
With oil and gas in a long-term uptrend, the value of the "energy as a weapon" strategy has only increased. We saw this in one of Russia's choices for a possible bomb target: the Baku-Tbilisi-Ceyhan pipeline, a key conduit of Western oil supply.
The next time I write, we'll get into the nitty-gritty of oil and gas and the serious threat to Europe. Let me know, too, what you think about the Russia-Georgia conflict and the cold war resurgence.
Are things really as morally black and white as the newspapers say? Or does it make sense to dig deeper?
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This article has 21 comments:
One-tenth of America’s electricity comes from fuel made from Russian nuclear warheads. The Megatons to Megawatts program. This can be cancelled by Russia at any time. That means for the US: lights out everywhere.
Further, seeing McCain's startling rise in the polls, it's clear that flag waving is still highly effective. Our public still hasn't learned to do their own DD before responding to chest thumping from a nationalistic hothead.
Of course, there are many that believe we are in Iraq so that women can vote and men have free speech. ROTFL. These same people believe we in in Georgia because they need democracy. Ha Ha.
www.youtube.com/watch?...
You'd wonder if this Columbia University Lawyer is quite sane...
I was shocked by the amount of lies coming out of the US media during this Georgia crisis. No word to mention who started the genocide, why it happened. They all blame it on Russians. Georgia president openly spreading lies on CNN several times, every day. Here folks, simple fact: Russians liberated Georgians from Turkish occupation. Russians and Georgians were living together for 300 years. Three hundred years!!! In peace. And what is happening now, is new-con fascists are feeding the extremism ideology supplying money and weapons to Georgia and secretively conducting acts of genocide.
Go to russiatoday.com and get the idea. CNN is a weapon of mass delusion - a Pentagon arm.
In any case...with all due respect to Mr. Litle, Rusia has been using natural gas as a political weapon for years. What is different is their military boldness with Georgia. Georgia is a message move...sent loud and clear to the Ukraine. Russia has consolidated from the criminal thug period into the Stae as thug period..and European countries who've stood by and expected the US to protect them may be in for a huge surprise.
This why..ONLY SAFE HAVEN OIL AND GAS INVESTMENTS..PWE..LINE... SEVERAL OTHERS..make sense.
Why any corporation would invest with a thieving Russian regime is beyond comprehension.
Looks like you pretend to be quite an expert on Soviet Union. Where did you learn about all these? "nazi", "sound as Venezuela" ? Tell us just one example to support this garbage. Oh wait, I guess you learned from CNN. Now, listen this, my friend, I'd say United States is more comparable of what Nazis were doing. Here is a link to your senator telling the truth. Openly and honestly: www.ronpaullibrary.org...
Quote: "There are as many as 650,000 deaths since the war began. The anger we incite by killing innocents creates more new insurgents than our bullets can keep up with."
Truly Fascist's proportions for the human extermination. Tell me now, any single fact about Soviet Union being "murderous as Nazi Germany"?
How about United States using depleted uranium warheads in most of the local conflicts? In Serbia and Iraq are being most recent. Have you read about these? Did Soviets ever do the same? Tell us then what was the crime. Pathetic liar you are!
And lastly, your typos in almost every sentence, show your education level, which doesn't go much beyond the third grade. What we can learn from you, then?
Looks like you pretend to be quite an expert on Soviet Union. Where did you learn about all these? "nazi", "sound as Venezuela" ? Tell us just one example to support this garbage. Oh wait, I guess you learned from CNN. Now, listen this, my friend, I'd say United States is more comparable of what Nazis were doing. Here is a link to your senator telling the truth. Openly and honestly: www.ronpaullibrary.org...
Quote: "There are as many as 650,000 deaths since the war began. The anger we incite by killing innocents creates more new insurgents than our bullets can keep up with."
Truly Fascist's proportions for the human extermination. Tell me now, any single fact about Soviet Union being "murderous as Nazi Germany"?
How about United States using depleted uranium warheads in most of the local conflicts? In Serbia and Iraq are being most recent. Have you read about these? Did Soviets ever do the same? Tell us then what was the crime. Pathetic liar you are!
And lastly, your typos in almost every sentence, show your education level, which doesn't go much beyond the third grade. What can we learn from you, then?
So, in short:
Russia tried to show that it can demand respect, but instead scared all surrounding countries into closer ties with West.
Investors are fleeing, started before the war and continue.
Credit rating is down, I don't know how government companies are going to refinance.
If oil goes down a lot, Russia is bankrupt. The same way as USSR was by 1988. But this time, it threatens Russia itself, which, BTW, has only about 50% ethnic Russians in its population.