2014 March 20 Thursday
Putin Effectively Tells West To Go For Energy Independence?

A German news site asks:

Why would a country which gets half of its revenue from the export of energy make an aggressive power play that tells every last one if its customers that it can't be trusted and that they had better wean themselves off Russian oil and gas sooner rather than later?

Imagine the EU reacted to Russia's seizure of Ukraine by getting really serious about reducing its dependence in Russian natural gas and oil. France could do its part to wean Europe off of Russian natural gas by tripling its fleet of nuclear reactors in order to supply its neighbors with enough energy to replace Russian energy. Germany could do its part by resuming spending too much on solar power far from the equator. Perhaps Scandinavian countries build wind towers in their sparsely populated northern zones. Imagine.

But meanwhile back in reality: Aging and economically cratering Europe is focused in upon itself, absorbed in the financial problems of stagnating economies and looming sovereign debt defaults and bank defaults. The EU is not a national government of a bunch of peoples, cultures, and languages with quite different outlooks and motivations. So I think Vladimir Putin shouldn't worry about that.

Russia's problem is that once its fossil fuels production peaks it does not have enough of a real economy to replace it. The Russian government needs to make a real legal system where businesses are not vulnerable to arbitrary law enforcement and where they can invest safely build up lots of capital. That would make Russian less vulnerable to China or economic pressure from the Western countries. But it seems as unlikely that Russia will stop acting like Russia as it is that the EU member states will stop being their natural selves.

Does anyone think that the Russian seizure of Crimea is an important turning point? If so, for what?

Share |      By Randall Parker at 2014 March 20 08:55 PM 


Comments
bob sykes said at March 21, 2014 4:12 AM:

The reunification of Crimea and Russia not important unless the US/EU manage to provoke a large-scale European war, which they seem intent on doing.

All of Europe, including Russia, has declining native populations, abandoned rural villages, sclerotic and delusional socialist politics, stagnant if not declining economies and small, incompetent militaries. Large parts of Europe are in a full-blown economic depression, with unemployment above 25%. Even France is losing its young, educated population, and even Germany's economy is weakening.

Moreover, Europe is importing millions of low-IQ, semiliterate, unskilled Third World people who live off European welfare and who are virulently anti-European. The probability of large-scale racial violence in countries like France, Italy, Spain and Germany is uncomfortably large.

If current demographic trends continue, then by 2100 AD Europe's population, including Russia, will be smaller than that of the US, say 350 million vs. 400 million. Furthermore, the European populations will consist of elderly, unproductive, dependent native Europeans and younger, unproductive hostile Muslim immigrants. One can expect wide-spread economic decline, authoritarian if not totalitarian governments and wide-spread domestic violence.

A true dark age is pending.

No i don't said at March 21, 2014 12:58 PM:

The U.S. and Europe ain't ging to do nothing about the reunification of Crimea to Russia, except some tough talk at most. That's done and any more talk about it is redundant. I think we can move on to other topics.

Mike Street Station said at March 22, 2014 6:37 AM:

Why Crimea matters: The US and Russia signed the Budapest Accords in 1994 under which the Ukraine gave up it’s nuclear weapons in exchange for a guarantee of it’s borders. Well, they gave up the nukes but as a result are getting carved up like a Turkey dinner by Russia. Lesson learned: Never ever EVER give up nukes! And if you don’t have them, get them as soon as possible.

James Bowery said at March 22, 2014 7:21 AM:

Mike Street Station's insight, if correct (and I think it probably is) does accelerate the already inevitable state of affairs in which nuclear proliferation is leading to discontinuity in geopolitics with the first use of nuclear weapons in anger since WW II in the context of a highly urbanized and rapidly urbanizing and nuclear-armed world. In such a situation false flag tactical nuclear strikes will be the primary problem facing civilization because that will lead, inevitably, to an EMP attack.

The Dude said at March 22, 2014 8:44 AM:

The IMF is cramming austerity down the throats of the Ukrainian people. They have ordered Ukraine to cut salaries and pensions by 40% if they want IMF dollars. I expect all hell to break loose when the EU and IMF start working the people over. But with globe trotting billionaires in charge of the government and several provinces I expect things will get much worse before they get better.

Putin should drop the Petrodollar and start selling gas to Europe in exchange for Euros. That would drive a giant wedge between Europe and the USA. The collapse of the Petrodollar would be great for Europe. He seems to be moving in this direction given the announcement of his new trade deal with China. He might even encourage the Venezuelans, Irwnians, Iraqis, and Libyans to follow suit.

When things go to hell in the Ukraine under banker/billionaire/IMF rule Putin could start providing food and fuel subsidies for the residents of a Eastern Ukraine. Putin has so many options available he would have to be an idiot to screw them up, and he isn't. Obama's neocon/neoliberal handlers are all squabbling so they cannot give him clear orders. He is just going to keep waffling.

Gerard Mason said at March 22, 2014 9:50 AM:

Yeah, Serbia should get nukes and take Kosovo back from the bandits.

In other news, does anybody else think it's a bad idea that the European country most likely to become an Islamic state in the next fifty years or so is also the one (France) that's building the most nuclear reactors?

Wolf-Dog said at March 22, 2014 10:36 AM:

GM: Russia also has the same demographics as France, as far as religion is concerned. This factor is one reason it's not in the interest of the US to let Russia disintegrate.

Randall Parker said at March 22, 2014 12:38 PM:

bob sykes,

The future sure looks like it will be full of excitement. Will we get to watch a civil war in a European country? Can we use blimps to keep the internet up in a warn torn country even as the cities become blazing battle zones? Will we get to watch live footage as battle lines shift in Bucharest, Budapest, or Bavaria?

I'm thinking a summer civil war would be best with sun to power recharging portable videocams and lots of sunlight for day time battle live feeds.

The Dude,

The revolution in Ukraine represents a shift in who holds power from one group of corrupt looters aligned with Russia to a different (and previous) group of corrupt looters aligned with the EU.

Without virtue a nation is lost.

aandrews said at March 22, 2014 5:52 PM:

I read this little news item earlier today and it spooked the living hell outta me.

"Forget Russia Dumping U.S. Treasuries … Here’s the REAL Economic Threat" ( http://www.zerohedge.com/print/486385 )

Watch the embedded video. (Full version here.)

"...Russia has a much scarier financial attack which Russia can use against the U.S...specifically... if Russia accepts payment for oil and gas in any currency other than the dollar – whether it’s gold, the Euro, the Ruble, the Rupee, or anything else – then the U.S. petrodollar system will collapse...."


Randall Parker said at March 22, 2014 6:45 PM:

aandrews,

People who label themselves a "gold expert" are immediately suspect in my book.

As for Russia accepting payment in another currency: But the price paid would just be in dollars converted to that other currency. The financial markets price oil in dollars. Traders short and long barrels of oil in dollars.

Wolf-Dog said at March 22, 2014 8:32 PM:

RP: "As for Russia accepting payment in another currency: But the price paid would just be in dollars converted to that other currency. The financial markets price oil in dollars. Traders short and long barrels of oil in dollars."
---------------------------------------------------------------------------------------------------------

The financial markets will use a lot less dollars for oil and gas transactions if oil and gas producing countries start accepting other currencies instead of dollars, because the conversion from dollars to other currencies will then be done only once to get rid of the dollars that they have.

However, whose currency other than the dollar would be acceptable for the oil producers? The acceptability of a currency depends on what the buying country has to offer. Does China and EU allow oil producers arbitrarily buy land and property as much as the US? Right now the EU and its financial system is in deep trouble, and it is not so clear that alternative currencies are as viable as the dollar.

CamelCaseRob said at March 24, 2014 5:33 AM:

If the West tried to become energy self-sufficient, they'd have to answer to their Greens. I doubt that would happen as the environmentalists are an important part of the Left coalition.

aandrews said at March 24, 2014 6:28 AM:

Randall, Wolf-Dog:

Evidently neither of you watched/listened to the linked video. (I considered writing a synopsis, but why bother, I thought.)

Mr. Sinclair is described as an expert in the YouTube caption. In the video he's introduced as "one of the top gold people in the world," who, as he states himself, "came out of the '60s," worked for Paul Volcher in the '80s, and has 54 years of experience in the metals market. I think you could safely call the guy an expert on the precious metals market (cf. 00:03:23, "confessions of a manipulator", a gag Marc Rich probably ran many a time).

The "nuclear economic weapon" Putin has at his disposal works thusly as described. Sanctions would evidently involve removal of Russia from the SWIFT system. The SWIFT system inhibits ("almost prohibitively difficult") bank wire transfers and the BRIC nation are in the process of developing their on SWIFT system. Using SWIFT as a sanction forces the creation of a competitor that all BRIC nations will start using. Sinclair describes it as shooting yourself in the foot.

In the meantime, if Russia is removed from the SWIFT system, Russia (Putin) can counter by accepting any currency, in addition to gold and silver, for its oil and gas. Europe depends on Russia for its natural gas supply and, anyway, it would be cheaper on them to settle in their own currency and not have to do the foreign exchange. That they don't (that anybody doesn't!) up to the present represents the "strength of the petrodollar".

He describes the recent technical moves of the dollar on the USDX as the dollar sensing the threat, despite Exchange Stabilization Fund efforts, of retaliation for sanctions in the form of Russia accepting any currency for contract settlements of gas to Europe. And he reiterates that Europe will go along it. It's easier for them to settle in Euros and makes energy cheaper. The momentum of the dollar is tied to the strength of the petrodollar and any negative change could break the trend for the dollar, which he stresses by saying When a bull market ends, a bear market starts.

Europe would love the new arrangement and Saudi Arabia, who's evidently unhappy with the US (who knew!), might wish to participate. The US would be suddenly hit with "significant inflation". "Currency induced cost-push inflation is the type of inflation which can create hyperinflation in the worst of business conditions. If the cost of what you import skyrockets, what happens to the price of what you're selling locally? Skyrockets." And all Putin has to do is simply start accepting payments in any currency.

"The petrodollar is the singular most important factor that exists in economics today, bar none. And Russia has it by the...and, in a moments notice, retaliate in a way that could bring in a market crash in the DOW the likes of which you've never seen in your life."

It all sounds eminently reasonable and plausible to me. But then, I'm no expert.

aandrews said at March 24, 2014 7:41 AM:

On an ancillary note (since there's an f-ing depresssion on the way), from Science magazine, no less.

http://sciencecareers.sciencemag.org/career_magazine/previous_issues/articles/2014_03_21/caredit.a1400074

"Retraining existing workers produces "less value" for employers than hiring guest workers from abroad, a high-tech industry representative said during a 19 March media conference call.

[...]

"Corley and Slaughter's answers typify the attitude described in Peter Cappelli's important 2012 book Why Good People Can't Get Jobs: The Skills Gap and What Companies Can Do About It. As we reported when it was published, Cappelli faults companies' rigid hiring practices and failure to provide adequate training for creating the false perception of a skills shortage. Training of employees used to be widespread in industry, Cappelli told Science Careers then, but many companies have stopped doing it altogether.

[...]

"It is up to those lawmakers and policymakers—and to anyone who cares about America's scientific, technical, and economic future—to consider whether such policies are consistent with the broader interests of society. It is no longer a question of whether we should allow skilled foreign workers to displace skilled Americans. The basic question now is whether we can abide a system in which our top companies view knowledge workers as disposable, no matter where they're from."

I can't wait for the zombie apocalypse. (Recall the first rule: Cardio!)

Rich said at March 24, 2014 6:06 PM:

"In such a situation false flag tactical nuclear strikes will be the primary problem facing civilization because that will lead, inevitably, to an EMP attack."

http://guardianlv.com/2014/03/argentina-to-host-russian-military-bases-while-america-sleeps/

The formation of indefinite Russian bases and a strong Russian existence in the Western Hemisphere will be a challenge to US policies and will diminish Washington’s influence. With South America in Russia’s good graces, the country will have a base to coordinate and store offensive weapons, putting another challenge in place for US homeland defenses.

America has never had sufficient missile defenses along its southern borders and cannot adequately defend against any missile strike coming from the south. Additionally, Russia has been sending missile bearing nuclear submarines to the South Hemisphere for 3 years.

Experts, including former Strategic Defense Initiative Director Henry Cooper, have been saying that America needs to utilize the existing Aegis defense framework in the southern parts of the US.

An Electro-Magnetic Pulse, EMP, attack could destroy the fragile US electrical grid along with other infrastructure upon which America has come to rely. An attack could conceivably last months and would have the possibility of killing up to 90 percent of the American population through starvation and lack of medical attention.

Albion7 said at March 24, 2014 11:12 PM:

Bob Sykes said: "Europe is importing millions of low-IQ, semiliterate, unskilled Third World people who live off European welfare and who are virulently anti-European. The probability of large-scale racial violence in countries like France, Italy, Spain and Germany is uncomfortably large."

Randall Parker said: "The future sure looks like it will be full of excitement. Will we get to watch a civil war in a European country?"


The good news is there's one European guy that European Muslims are quite fond of.

The bad news is the one European guy they like is Hitler.


European Muslims are moderating their behavior while they're in the minority.

As they get closer to being the majority and having dominance at the polls, expect their existing hostility toward Kuffar to increase.


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