Originally posted to the NDN blog.
The reappearance of a belligerent Russia on the world stage, buoyed by high oil prices and newfound wealth, would appear to signal a new era in global politics. For anyone still clinging to the idea of the unipolar moment, the spectacle of Nicholas Sarkozy brokering a deal between Russia and Georgia, shows that the moment of a single superpower is probably over, and something like a return to the era of the Great Powers, at best, or the Cold War, at worst may be in store -- absent real U.S. leadership to the contrary.
Nor is it an accident that high oil prices have ushered in the return of authoritarianism to the global stage. Securing and maintaining oil wealth has never been pretty or conducive to democracy. The huge payoff from controlling the wealth has always encouraged factions to vie for its control and, once they obtain it, quash opposition. So it was throughout Central Asia during the years of the Great Game and remains today, not only in Russia, but also in Saudi Arabia, Iran and even Venezuela. From Putin to Ahmadinejad to Chavez, oil-emboldened strongmen are again asserting their power.
However, as glamorous as unbounded oil wealth inevitably seems, it equally comes at a tremendous cost, which in a modern economy, can entirely cancel out its benefits. That is because through the phenomenon of Dutch Disease -- the phenomenon noted in Holland after the discovery of North Sea oil, it has an incontrovertible tendency to undermine the rest of a nation's economy. The high profits obtainable through oil, gas, or indeed any valuable commodity, tend to make other industries non-competitive by driving up costs. This is the dark cloud that threatens Russia's future.
Indeed, as Philip Stepens notes in today's Financial Times, Russia faces a raft of deep-seated economic problems that belie her new found swagger. Russia is losing population at an alarming rate due to low birth rates. Infrastructure is crumbling. And the corruption problems that have plagued her for decades have only grown worse as she has become more dependent on oil and gas revenues. Indeed, Russia's decision yesterday to suspend Robert Dudley, the British head of its TNK-BP oil venture, for trumped up reasons, testifies to the absence of the rule of law, likely continued capital flight, and corruption that still characterizes commercial dealings in the country.
Oil wealth always tends to contain the seeds of its own destruction. Were it not so, countries like Iran, Venezuela, and Mexico would dominate the global economy. Thus, Russia is riding high for now. However, with her economy increasingly dependent on oil and gas, a drop in prices would have strong and swift effects. Russia, herself, would benefit in the long term from diversification away from oil but this is a goal that has always eluded those who worship at the altar of oil.
From a U.S. strategic point of view, shifting energy consumption away from oil and gas toward renewable energy that is not tied to any one geographic locations can, thus have important strategic as well as economic benefits.
U.S.-Russia climate and energy efficiency cooperation: A neglected challenge
Comments View as Flat
Jon Rynn Posted 11:00 am
15 Aug 2008
Russia's not so strong
The collapse of its manufacturing economy was one of the main reasons that the Soviet Union itself collapsed -- the consequences of a military-industrial complex run amok -- and I'm not sure, but I suspect that the manufacturing base hasn't been put together again. Therefore, unlike China and to a lesser extent India, Russia only gets standing as a "Great Power" because of the leftover effects of its nuclear weapons. Otherwise, it's just another fossil-fuel economy.
What it's doing now is typical Russian behavior for, oh,maybe the last 500 years? Always probing and pushing to see if there are any weaknesses. They don't have enough wealth to keep this up for very long.
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Jon Rynn Posted 11:26 am
15 Aug 2008
For another view
that defends Russia, check out Mike Whitney's article in Counterpunch.
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Colin Wright Posted 3:58 pm
15 Aug 2008
Wagging the Dog?
Thanks for the interpretation and link, Jon!
Let's see. Whitney sees it through an anti-U.S.-imperialist lens. Klare sees it through an energy lens ("all about oil!"). Vanden Heuvel sees it through a rosy lens ("This could establish the basis for a more cooperative US-Russia relationship that would also be in the interests of the Georgian people"!). And now Rynn gives us the Manufacturing lens!
(Also here is a worthwhile Georgian academic's view.) Of course, now that we know McCain's advisor was being paid by the Georgian government shows that it's all about Wagging the Dog, the hilarious movie!
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amazingdrx Posted 4:27 pm
15 Aug 2008
Don't under estimate the Bear
Their debts are paid, they have a surplus. They are feeding off of our oil addiction.
Their corruption is infinite. No human values exist in their power structure. It is a neoconservative paradise. With nuclear weapons.
It is like the exxonmob with their own country, unopposed by any legal structure, even the flimsy remnants of a constitution like we have is nonexistent there.
There is only one way to stop this hell on earth from spreading. Oil prices must fall. Only demand reduction can acomplish that. In short.
The security of the US and the free world depends upon reduucing the demand for oil. It's a cold war again, but it can't be won with bluster and an arms race this time.
Bankruptcy stopped the Bear in the former cold war, only bankruptcy will stop them this time. If OPEC and the exxonmob and the Saudis need to be bankrupted too, well that's a shame. It's the fortunes of war.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Wolverine Posted 5:28 pm
15 Aug 2008
Population & Economics
If population decline is considered an economic problem, then we need to say screw economics.
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amazingdrx Posted 5:40 pm
15 Aug 2008
Amen...and amen
Wolverine. Another great point. Got to remember that and incorporate it in the whole symbiotic strategy for this renewable/conservation energy and agriculture re-evolution.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Tasermons Partner Posted 3:55 am
16 Aug 2008
Mixed bag...
...their new reign in the oil world will likely reek havoc on some of their local ecosystems...
...on the other hand, it's also helped to drive up oil prices on the world stage.
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WWAGD?! Posted 4:06 am
16 Aug 2008
Wealth Breeds Independence
Actually, it's the other way around...when you get a whole lot of people making a whole lot of money, they are less likely to coalesce around a single dictator. Right now, Moscow is trying to hold it together. I don't think those troops in Georgia even know whose orders they are taking...even if they are taking any orders! They seem like the equivalent of a Hell's Angels troupe that rolled into town doing whatever they please.
The U.S.S.R. was powerful because its people had no wealth of their own and became dependent wards of the state...this is Al Gore's vision of a Green Dictatorship...everyone enslaved to Light Rail systems.
The new Hydrogen economy allows independence of generation and a loosely coupled grid. It lets us build homes far away from the dying inner urb and spread into the hinterland yet enjoying the benefits of electricity and water.
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Tasermons Partner Posted 5:30 am
16 Aug 2008
Not quite...
when you get a whole lot of people making a whole lot of money, they are less likely to coalesce around a single dictator.
While this is true, it should be pointed out that Russia has a nationalized oil industry.
In other words, not so much many rich people as just a few very rich people.
And because the oil resources belong to the government, the government controls it. And the very rich people are likely to support a government that will keep the oil in their very few hands and thus continue to make 'em very rich.
...Not that it's that much different than private oil companies, they just cut out some middle men.
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atreyger Posted 7:40 am
16 Aug 2008
amazing and jabailo
You two are a bunch of quacks, completely unfamiliar with the story, and spouting purely preconceived notions without educating yourselves about the issue and the general state of global politics.
Please refrain from posting about issues until you decide to leave the country and see for yourselves what is going on in other parts of the world.
Thank you.
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amazingdrx Posted 3:08 pm
16 Aug 2008
Quack, quack
"You two are a bunch of quacks.....Please refrain from posting about issues until you decide to leave the country and see for yourselves what is going on in other parts of the world."
That hurts, being "bunched" in with Bailo.
So "pooty poot" is really a pretty nice feller? That whole Pollonium thing was just a hoax? Chernobyl and the aftermath, just a tabloid story.
Russian troops are very respectful of civilian populations and POWs. I stand corrected, your world traveling wisdom has made me see the light.
That's very different then, nevermind.
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Pangolin Posted 4:22 pm
16 Aug 2008
What does Russia do with the money?
I haven't heard anything about the amazing russian train system or the russian houses that are completely independent from coal, gas or nuclear power. Does anybody know anything about the status of russian electronics, biotech or agriculture? Anybody?
When the oil and gas runs out do they have anything to work with other than depleted farm land and inaccessible siberian lumber? The incredibly high standard of living can't be why russian women marry strangers from the US and Western Europe. Has anybody ever heard of a Canadian mail order bride?
Meanwhile every government west of the Russian border should have already had the cabinet meeting where they plan out how to free themselves from the albatross of Russian oil and gas. Germany's huge feed-in tariff for solar looks like pure genius right about now.
It's what you do with the money that counts.
Put the Carbon Back
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amazingdrx Posted 4:48 pm
16 Aug 2008
Criminals
That run all these oil kleptocracies stash the cash in Swiss banks usually. But I think Dubai is the destination now.
Are the swiss getting nervous? In order to protect their banking secrey status are they playing it safe and turning down some of the loot this time? The nazi loot almost got them in trouble. Swiss bankers play it safe, it's why they are trusted.
The money is laundered somehow anyway, then invested in bargain basement priced US real estate. The weak dollar and recession caused by inflation driven by oil prices helps, that makes it a fire sale for the oily crooks.
One thing is for sure, the last place oil loot will be invested is Russia. With it's lack of any property rights. Total criminal kleptocracy does not atract investnment, domestic or foreign.
Russians with any money quickly get their loved ones out of Russia, it's a kidnap zone. Why would they invest any loot there?
Reagan's only good idea was a joke:
"My fellow Americans, I'm pleased to tell you today that I've signed legislation that will outlaw Russia forever. We begin bombing in five minutes."
http://www.history.com/this-day-in-history.do?action=Arti ...
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Jon Rynn Posted 1:26 am
17 Aug 2008
Why Russia's in better shape than we are
One of my favorite all-time web articles is "Closing the 'Collapse Gap': the USSR was better prepared for collapse than the US", featured at energybulletin.net, by Dmitri Orlov. In it he explains that since most Russians, 1) live in apartment buildings that are government-owned, 2) don't have cars but use the very good public transit system, and 3) have little vegetable gardens, there was actually little panic when the ruble collapsed in the 1990s -- a collapse that took place because their military-industrial complex had sucked their manufacturing economy dry (sound familiar?). By contrast, if petroleum disappeared from the US...well, he does a good job exploring the possibilities.
It's a fascinating read.
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amazingdrx Posted 2:10 am
17 Aug 2008
Rubble?
I found out that the wealthy connected russian families in the power structure use dollars Jon, probably Euros now. They cared not a bit what happened to the Ruble.
It was merely worthless scrip for the penshioned and unemployed, viewed as worthless extra unused cannon fodder and cheap labor by the upper class. It is corporate feudalism at its most brutal.
This is the same path the neocons wish to take US down. The dollar turned to rubble.
A film about the region around Lake Victoria is a great illustration of how this downward spiral works, ironically russian aircraft and pilots are involved in this criminal eneterprise. Check it out, it will show you where the McBush clan wants us all to end up. And how they see mother earth.
http://amazngdrx.blogharbor.com/blog/_archives/2008/2/7/3 ...
http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin
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Jon Rynn Posted 4:22 am
17 Aug 2008
Yeah Amazin'
I've read about Lake Victoria. Imperialism at its finest, of both the economic and environmental kind (environmental imperialism? hmmm...) Anyway, the point about Russia is that their currency was sort of floating on air for a few years after the Soviet Union collapsed, until the international economy figured out (it took them that long?) that the Russians couldn't exchange anything for the stuff that they were importing because their manufacturing economy had collapsed, and thus the ruble plummetted. Much of the population there stuffs rolls of hundred dollar bills in their mattresses and gets worried when the US treasury changes the bill.
Unfortunately, I can't answer Pangolin's question about the state of their non-fossil fuel economy, but it's a good question.
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2wheeler Posted 6:58 am
18 Aug 2008
But not Norway?
AFAIK, Norway defies the thesis that petro riches corrupt absolutely. I think it's likely a contributing factor, but not the only one.
The relative roles played by the multinational oil companies also should be examined in this context.
What one does with the petro riches is more of a long term factor in whether destruction or sustainability is seeded. If a nation were to invest in sustainable energy sources with the short-term profits of the fossil fuelishness, they may just escape the reaper's call when the oil wells run dry.
Gore's "inconvenient" hopeful effort was based on the well founded assumption that most oil-rich folk (T Boone Pickens recent conversion notwithstanding) prefer the status quo and would rather buy metals, furs and diamonds (or real estate) than invest in sustainable energy on a crash course.
Moving toward sustainability with hopefulness, one revolution at a time.
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