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Sunday, October 12, 2008

Putin's Next Move?

While our economy sits on the edge of collapse, one thing that may have been lost in the confusion is the price of oil. The price of a barrel of oil has fallen from a high of $140 per barrel to right around $80 per barrel currently. This price drop is due almost entirely to a worldwide drop in demand for oil as the world economies teeter on the edge. As such, while most of our pocket books get tighter, one place where we will all see relief is at the gas tank.

While much of the world is likely happy to see oil dropping, one person that is not is Vladimir Putin. In the summer, I surmised the theory that Garry Kasparov, former chess champion and current political opponent of Putin, has about what motivates Putin geo politically. Kasparov believes that Putin's every geopolitical move is done in order to prop up oil prices. The Russian economy is a house of cards based entirely on inflated oil prices. Russia has seen an enormous growth in wealth over the last seven years and that is due entirely to the enormous growth in oil prices. The Russian economy is not diversified, and wealth is not distributed throughout most of the society. What the Russian economy has is a blossoming oil industry, propped up by the inflated price of oil. Russia supplies about one quarter of Europe's energy needs.

The Russian economy could withstand a drop in oil prices for a while, but it cannot withstand a fundamental shift in oil prices. Because the world's economies are sputtering that is exactly what is happening. The price of oil is plummeting because worldwide demand is plummeting. This is a dynamic that Russia, and Putin, cannot stand for too long.

Putin has numerous options, and we have already seen him attempt to take some of them. Just a week and a half ago, Russia announced an arms deal with Venezuela.

Venezuelan President Hugo Chavez and Russian President Dmitry Medvedev watched the signing of deals between state energy companies in the southern city of Orenburg. Chavez also was expected to watch a major Russian military exercise during his second visit to Russia in just over two months.

The Kremlin said Thursday that Russia is granting Venezuela a US$1 billion
credit for the purchase of Russian weaponry. The arms purchases have
sparked concern in the U.S. and among some neighbors of Venezuela, such as
Colombia, which has accused Venezuelan officials of supporting leftist
insurgents.


Often, we have seen Putin insert himself into geopolitical spheres where there is oil and get into bed with geopolitical loose cannons that sit on significant oil reserves. I believe he does this because instability often causes the price of oil to increase at least in the short term. An armed Venezuela has the potential of doing significant damage to the oil market. If Hugo Chavez feels he is militarily powerful enough, there is no telling what he might do with the significant amount of oil that he sits on. Over the last several years, Putin has gotten into bed with the Iranians, and blocked any action against them in the Security Council. This, I believe, he also does because instability by the likes of Iran causes short and long term rises in oil.

Of course, we are in a different time then we were only a couple of years ago. The sort of geopolitical stunts that Putin could pull to force oil up ten and twenty percent are gone. Making arms deals and rattling sabres would have worked while the world's economies were somewhat solid. In this downturn though, Putin will have to do something dramatic. Back in August, he invaded Georgia, and with it, a two week drop in oil stopped and turned around for a week.

If Putin is to stop the slide in oil, he will have to do something as dramatic. John McCain often says watch the Ukraine. This is actually the most logical step for Putin. Like Georgia, Ukraine is not yet in NATO. Furthermore, like Georgia, the Ukraine has a significant ethnic Russian population. Their "protection" could be the trojan horse that Putin could use for invasion much like Georgia. Most importantly, a significant oil pipeiline known as the Oddessa/Brodsky pipeline runs right through the Ukraine.

I believe that Putin read the Europeans as weak and he believes that they wouldn't have the stomach for any serious military confrontation as long as they were convinced that whatever incursions occurred temporarily. His show of force in Georgia appears to wrapping up, and if the Europeans thought that any incursion into the Ukraine would only last for months, I believe that whatever "strong diplomatic language" they used, it would stop at language. A significant incursion into the Ukraine, close enough to the pipeline, could be all the oil market needs to jump at least temporarily.

If Putin is really bold, he could move into any one of the three former Baltic States, Estonia, Latvia, and Lithuania. Incursions into these three hold a dicier proposition, but one that Putin could even see as an opportunity. That's because they are all NATO members. NATO charter states clearly that an attack on one is an attack on all. Yet, Putin might believe that won't be enough motive for the Europeans to confront him militarily. If NATO folds even though one of its members is attacked, NATO literally would fold and the alliance would forever be useless. Each of those three nations also sit on significant oil.

The diciest proposition is Poland. That's because not only are they a part of NATO, but their military would likely give the Russians its biggest challenge. Putin may not want an invasion that he isn't one hundred percent certain he can win.

One thing is clear though. Putin has little time the way that oil is going. A move may soon be necessary because his economy simply can't survive oil prices anywhere below $50 a barrel.

30 comments:

Anonymous said...

Convoluted nonsense and ignorance laced with out right false hoods and
wishful thinking.

mike volpe said...

Well, as long as you back anything that you say with something besides rhetoric. Oh yeah, you don't.

Anonymous said...

First: RUSSIA did not attack Georgia; even Sec. of State Condi admits that
Russia responded to Georgian aggression. You start with one great falsehood then continue with assertions and presumptions based on false premises. Study, read and analyse a bit more before commiting your thoughts to paper.

mike volpe said...

I answered this nonsense in another post.

http://theeprovocateur.blogspot.com/2008/08/georgia-vs-russia-answering-moral.html

There was no Georgian aggression. Russia invaded another nation period. I don't believe that Condi said this but if she did she is out of her mind.

The so called aggression was of a territory in their own nation. Russia invaded Georgia. Georgia invaded a province in Georgia.

Anonymous said...

dEAR dear Mike! you obviously suffer from cranial eclipse or cerebral vacuity (both fatal) and deny what is apparent
to every political entity in the world. After such a provocative false statement your credentials are equal to that of Kasparov's on Russia's political status. Just use "google" to verify Condi's statment.

mike volpe said...

Personal attacks are the last bastion of a weak argument. The crux of my point has nothing to do with Condi. Like I said, if she said this she is out of her mind.

The only thing that has come from you is attacking me. You have backed up nothing, and the only point you have made is that Russia didn't really attack Georgia. Of course they did. They are still in Georgia today.

Anonymous said...

dear dear Mike, you seem to know as much about Georgia as you know about Alabama. I'm not interested in educating a person who does not wish to use "google" to verify Condi's statement; just astounded that your level of ignorance allows you to entertain the notion that you are a political commentator.

mike volpe said...

Weak. You roll out all the boiler plate weak debate tactics when someone has no point to make.

Let's try this again. I don't care if Condi said this. You may see her statement as some sort of mythical proof that you are right, but I don't. I said that I didn't believe she said it but if she did, she is out of her mind. As Sec of State, she has to be a lot more diplomatic than most. That might be why she said it if she did. frankly, it doesn't matter either way.

The bottom line is that South Ossetia is in Georgia. Russia invaded Georgia and have been occupying a territory of Georgia since. That's what happened. Now, if you challenge that, then we can get somewhere. If you insist on calling me names and constantly referring to some statement Condi made we will go round and round.

Anonymous said...

Mike- where are you? Did the kitchen get too hot.

mike volpe said...

I have no idea what you are talking about. I responded to your comment. You have said absolutely nothing of substance from the beginning. You have insulted me. You have given nothing in the way of evidence. You have fixated on Condi Rice's statement which I have long ago said was in my opinion irrelevant.

You came to my site and so far the debate is boring.

Anonymous said...

South Ossetia was Joe Stalin's gift to his Georgian brothers as was Nik Kruschev's gift of the Crimea to his Ukrainians' during the rein of the USSR. Historically
both belonged to Russia. So lets give California back to the Mexicans!?

Anonymous said...

Mike, seems as if your getting a bit up tight. No one is attacking or insulting you - just your outright lack of geopolitical awarness-at least Kasparov could play chess!

mike volpe said...

by that token if Mexico invaded Texas, they would be in their right. Saddam was also then well within his right to invade Kuwait.

This is a silly argument. What was once is not what is now. There are internationally recognized borders and South Ossetia is a part of Georgia. Maybe, Russia feels they should be a part of Russia, but all sorts of tyrants believe land that isn't theirs should be theirs.

mike volpe said...

not uptight, annoyed. All you have done is insult me, and then make a wild claim with no back up and you continue to come back making silly comments and then accuse me of being afraid of debating you.

If my perspective is weak then 1) take it up with Reuters since they published it anyway and 2) simply prove it don't insult me.

So far, all you have been able to do effectively is insult me. So far, you have made no substantial point. You have not shown in the slightest how it is that I am wrong. yet, you continue coming here to hurl insults.

Anonymous said...

Mike, where do you get your information? I just stated a verifiable fact and you skim over it with some generality- don't you realize that Kuwait once was a part of Iraq.

mike volpe said...

Yes, and I stated, that this didn't actually give Saddam anymore right to invade than did Putin have a right to invade Georgia because South Ossetia was once part of Russia.

Is this really the substance of your debate? Condi Rice might have said he didn't invade Georgia. He had the right to invade Georgia because this province was once a part of Russia. Have you really wasted this much time to arrive at nothing?

Anonymous said...

Mike, you seem less of a PROVOCATEUR with every post! Sensitivity is you forte- not provocation.

Anonymous said...

But we had the right to attack Iraq because it was never ours historically - my my what convolution.

mike volpe said...

What we did or didn't do is entirely irrelevant, since we are talking about what Putin had the right to do.

The Gulf War of 1991 ended with a cease fire that made many stipulations of Saddam Hussein. Furthermore, it was made very clear that further violations of said stipulations would be a resumption of war. Saddam proceeded to violate these stipulations over and over. As such, we should have taken him to war years ago, but only got around to it when we had a President that saw what a dangerous thing it is to allow tyrants to violate international law with impugnity.

That again though is entirely different argument and one that I address in another post I referenced. What I am trying to figure out is exactly what your point and why you have posted multiple times in response and have yet to make anything near a substantive point.

Anonymous said...

Mike, your last statement sums up your mind set: its OK to murder a few million people in Iraq over some imposed
violations, but when the Russians prevent the whole sale murder of Orthodox Christians in an independent
Ossetia they are vilified by Neocons. It took the Russians five days to clean house while we have spent a half decade butchering the "terrorists." We could have bought every "terrorist" a party store by now a taken possession of the oil without spilling a drop of blood on either side- but no! We have mentalities such as yours to continue the bloody convolutions.

mike volpe said...

No, your last statement is another example of you debating skills. First, millions of Iraqis haven't died. Second, I don't think that Iraqis were sad to see Saddam get removed. Third, both of those are beside the point.

There was a war. There was cease fire. Saddam violated the cease fire. If he did it with impugnity, that means all international law has no merit and despots can do as they please.

Second, there was no wholesale slaughter of Ossetians, furthermore, that is the exact same excuse that Hitler used when he invade Austria and Czechoslovakia.

More than that, they are two separate issues. You came on here to tell me that my assumptions about Putin's next move are faulty, and yet, now you are arguing about Iraq. The two are separate. What I am waiting for is for you to explain why I am wrong about Putin.

I have written plenty about Iraq and you can argue about that issue any number of other posts.

Keep the discussion here to Putin.

Anonymous said...

Mike, you are delusional. Millions have died in Iraq-visit "informationclearinghouse.com" for stats. Putin had as much right (more) to entire Ossetia as the US had the right to attack Grenada on the pretense of protecting US medical students. The name of your game is hypocrisy, or maybe you just are blinded by years of living in a democracy, not a republic. Not an insult-just an observation.

mike volpe said...

No, you're delusional. In order for millions to die, it would require an average of more than a thousand deaths daily. Since the last two years we have averaged more like a handful, you are the one that is delusional.

The name of your game is excusing bad behavior by pointing to something else you find even worse. What in the world does Grenada have to do with this discussion? I don't know the details and I don't care. Putin doesn't have the right to invade South Ossetia because we once invaded Grenada. By that logic, anyone can do just about anything since worse was done at one point.

That is also beside the point since your argument has been that he didn't invade South Ossetia. Now, what is your argument?

Remember, you originally said I was totally wrong, and then when I asked you to prove it, you said that I was starting with the false premise that Putin invaded Georgia. You claimed he didn't.

So, frankly, at this point, you have a totally convoluted argument and you have taken up a lot of comments. The only thing anyone will see reading this back and forth is that looney arguments will be taken apart on my site.

Anonymous said...

Mike, try real hard to focus.

Putin entered a sovereign Ossetia to protect Russian Orthodox citizens after Russian peace keepers were back-stabbed by their Georgian counter parts.

According to the international red cross more than five million Iraqi's have died since the original US invasion of her borders.

Seems your range of history gets hazy beyond two years or so.

What else needs clarification?

mike volpe said...

First of all, the only thing that is confusing is the shifting arguments you insist on making.

Second, I don't know how many Russian citizens there were in South Ossetia. There are many ethnic Russians in South Ossetia but I don't know how many of them are Russian citizens. Of course, that is ultimately beside the point since countries can't invade other countries to protect their citizenry. If that is allowed then any developed nation can invade any other under the guise that they are protecting their citizens since most countries have ex pats in nearly every country. By your logic, any country could invade any other as long as they believe their citizens are in danger. Of coruse, this is the same excuse given by Hitler when he invade Austria.

As for the red cross, I don't know that they said this however Iraq would have to average about 3500 deaths daily to hit that number, and if you believe that you are out of your mind.

Anonymous said...

Mike, seems like you don't know much of anything according to your self admission and yet you wish to share your views on this site. Everything I have presented can be verified with a flick of a few fingers.
The US has been in Iraq since the first gulf war of Aug. 2nd of 1990- thats 18 years; plenty of time! Ossetia decalared its independence in1991.

All the stats are available; the only glitch is in your mind.

mike volpe said...

The South once declared its independence from the North in our country and that still didn't make the South its own country. Nor would it have allowed Mexico to invade the South, or the North for that matter, under the guise that Mexican citizens were in danger in our Civil War.

As for us being in Iraq, you will have to find a link to show that but furthermore, it is irrelevant.

Iraq is irrelevant in this debate and it is being used by you as a distraction because you can't seem to find an argument that works.

Anonymous said...

Mike, you may grasp for straws for as long as you wish, but your avoidance of documentation is evident.
Please allow your readers to enjoy the commentary and arrive at their own conclusions. Further interaction with you is futile since facts seem to have no bearing on your suppositions. You suffer from the lack of rudimentary research to verify your contentions - somewhat like an ostrich, exposing the rear end while burying the head. Unfortunately you typify the vast majority of Americans who, because of ignorance find themselves standing on the edge of a precipice.

mike volpe said...

I don't speak gibberish so it's hard to answer that last comment.

If you can communicate in English again then I might be able to respond.

Anonymous said...

Your last response is quite sufficient. Thank you.