After the Gap’s attack on the Seam

After Russia invaded Georgia, some criticized me for focusing too much on ways to minimize Rusisa’s power. These critics came in two broad camps. One thought that Russia was the superior force in Europe, that the West was basically helpless, and that the wise way forward was to accept a reconstitution of Russia’s near abroad and otherwise get on with life. Another camp argued that Russia, even is weak, was the natural partner for the U.S. in this situation, that Russia and the United States would rise and fall together, and that opposing Russia’s invasion amouned to a civil war within the West.

Now, a season later, it’s clear that Russia was oil-mad, that Russia is in a state of deep decline, and that dropping oil prices are the quickest way to get Russia to sober up and minimize their meddling in the Core.

Here are some links from the blogosphere which do a good job of describing Russia’s weakened state, and how low oil prices will help:

Catholicgauze:

The days of credit given to those who cannot handle it sure shook the world. Economies in recession led to markets slowing down. The big under reported story of this downturn is the falls effect on oil prices. As of late October oil prices were trading below $65 a barrel. For the last several years dictatorial countries like Russia, Venezuela, and Iran managed to expand their operations with gas profits. Will these powers slim down their operations or will they fall like the Soviet Union under pressure from their growing monetary demands.

From Tom:

The one place I really worry about is China. I don’t think their current leadership is up for much (remember, it’s 4th Generation homebodies) other than pulling in their heads and hiding in their shell. Maybe a bit more from India, and hopefully more from Brazil. Another upside is that the air is deflating in Moscow’s big head, so enough of that nonsense.

And courtesy Mark and Lex:

How likely is it that Russia will face serious economic problems? Although high oil prices are ensuring a steady flow of money into the state treasury, there have been signs of economic vulnerability. The cost of living is rising sharply, with inflation reaching 12.6 percent in January 2008. Owing partly to lax lending standards, consumer and corporate credit is increasing rapidly—by 50 percent a year. A surge in external borrowing by Russian banks to fund credit expansion has aroused concerns about a crisis of liquidity in the banking system if access to foreign borrowing is curtailed. Moreover, according to Anatoly Chubais, Russia’s current account surplus is declining to the point where it could disappear in just a couple of years. There has been a marked slowdown in the growth of Russia’s oil output, resulting from the failure to invest in oil extracting capacity. Income from oil and gas may not be sufficient to cover future imports.

After Russia invaded Georgia, there was a not of hyperventilation in the blogosphere. Now it is possible to see it in context, as a Gap state invading a Seam neighbor. Imagine Venezuela shelling a province or Colombia, or Iran annexing part of Azerbaijan, and the basic story wouldbe the same.

5 thoughts on “After the Gap’s attack on the Seam”

  1. Their misadventure offers the next president a great opportunity to reconstitute alliances and interests in Central Asia and with China.

  2. Eddie, you are 100%.

    A lot of the reaction to this was ‘this does/will/could/etc blow up globalization.”

    What we have is Venezuela attacking Aruba. A dangerous situation, but very manageable.

    You are also right about China. [1,2]

    Putin has been Russia’s worst enemy for a while now. [3]

    [1] http://www.tdaxp.com/archive/2008/10/12/that-other-pipeline.html
    [2] http://www.tdaxp.com/archive/2008/08/23/russia-against-the-shanghai-cooperation-organization-and-against-open-government.html
    [3] http://www.tdaxp.com/archive/2006/11/23/give-thanks-for-putin.html

  3. Speaking of Venezuela, I wonder how much longer Chavez can keep up the charade if oil prices stay close to where they are now? That will be a nice little disaster for a President to be handed in about six-twelve months.

  4. That will be a nice little disaster for a President to be handed in about six-twelve months.

    Opportunity, not disaster.

    If Chavez falls and the opposition reconstitutes the democratic capitalist system, that is one less distraction/diversion competing for the the new president’s attention.

  5. The trickiest state implosion might be North Korea. Not only because of refugees and nukes, but also the prickliness of (South) Korean nationalism.

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