Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on March 21, 2014
Imposing ‘High Costs’ on Russia Would be Costly for All Involved
One day after a disputed and widely deemed unlawful referendum in Crimea, the Crimean Parliament declared Crimea’s independence from Ukraine, formally asking Russia to annex it, the New York Times reports. This comes after 96.6% of voters in Crimea support joining Russia. With this, the crisis in the Ukraine hit its peak to date and the West now needs to follow up its rhetoric with credible actions that impose “high costs” on Russia.
President Putin’s swift and decisive move – in sharp contrast to the West – into the Crimean peninsula, which took advantage of early Ukraine crisis turmoil, now affords Russia a significant strategic advantage. Putin can react to punitive measures the US and its European allies impose from a position of relative strength.
Most importantly, the Ukraine crisis also marks a break from “pragmatic” Russian foreign policy on the Eurasian continent as perceived by the West. In 2010, Janusz Bugajski of CSIS provided insightful analysis by elaborating on the problem with the word “pragmatic” in this context: “[It] has been loosely applied in describing Russia’s foreign policy by implying partnership, moderation, and cooperation, as well as by counterposing it to an ideologized and expansive imperial policy characteristic of the Cold War.” He stresses that – different from Western understanding of “pragmatic” – it is pragmatic imperialism that can describe Putinist Russia’s foreign policy, with its key objective restoring Russia as a neo-imperial state, or at least a regional superpower. Bugajski details Russia’s re-imperialization as follows:
“To achieve these long-range objectives, the Kremlin is intent on expanding the ‘Eurasian space’ in which Russia is the dominant political [and cultural] player, and thus the (…) Euro-Atlantic zone of security would become increasingly fractured and neutralized. In this strategic struggle, ‘Eurasianism’ for Moscow involves two interconnected approaches: transforming Europe into an appendage of the Russian sphere of influence and debilitating Euro-Atlanticism by undercutting Europe’s connections with the United States.”
President Putin appears to be working toward both strategic objectives as the following energy sector developments highlight.
Regarding the first strategic objective – Europe’s transformation into a Russian energy appendage – which is already under way, Russia utilizes state-controlled natural gas monopoly Gazprom in an attempt to solidify its long-term European gas market dominance.
Given Germany’s central role in Russia’s European energy strategy, Breaking Energy recently published a 3-part series on Gazprom’s German operations.
Germany is an indispensable US ally, particularly with regard to imposing tough sanctions on Russia, but trade sanctions could result in “high costs” for all sides in a globalized world with deep economic interdependency. However, US-German actions vis-a-vis Russia are distinct from the asset freezes and travel bans on 21 Russian and Ukrainian officials imposed by the EU and U.S. President Obama per executive order.
This so-called “first round” of sanctions – focused only on individuals – is fairly modest and has been telegraphed for sometime. Targeting individual Putin allies and advisers, while attention grabbing, is a far cry from imposing “high costs” and Putin appears to have circumvented some of these measures. According to Bloomberg citing Fed data, the Federal Reserve recorded a record decrease of $104 billion to $2.86 trillion in US government securities held in its custody in the week ending March 12. This fuels speculation that Russia may have shifted its holdings out of the U.S. in anticipation of Western sanctions. It is also possible the officials on the sanctions list have done the same.
Western governments understand that an escalation beyond this “first round” of sanctions will likely have negative repercussions for all participants in terms of lost trade, potential expropriations, general market uncertainty, and Europe’s case, a medium-term decrease in energy security. As such, the decision to move forward with more punitive sanctions will come down to individual governments’ pain threshold for bearing the costs.
17 Comments on "Imposing ‘High Costs’ on Russia Would be Costly for All Involved"
J-Gav on Fri, 21st Mar 2014 11:12 pm
Let’s not neglect the facts – Russia’s holding better cards than the West in this Ukraine face-off. All the new cold war rhetoric, sanctions and absurd posturing by our prognathic Sec of State doesn’t change that. Does that make me a Putin sympathiser? Hardly. Pretty much everybody in power today is a kleptocratic thug, masquerading as something sexier and friendlier. Crimea has returned to where it belonged, for better or for worse. We’ll see where the rest of this bag of shit leads.
DC on Fri, 21st Mar 2014 11:28 pm
Deemed ‘unlawful’ by who exactly? The criminal uS\western oligarchy and its presstitute media? The uS is last country in the world to lecture anyone on ‘legality’. Another shyt article from your corporate spin-meisters.
Davy, Hermann, MO on Fri, 21st Mar 2014 11:48 pm
Another well put Gav
rockman on Sat, 22nd Mar 2014 12:13 am
I was listening to a “Ukrainian” that lived in Crimea and was opposed to the switch over to Russia. Asked if he would move away he said definitely not. But as he talked it was clear that he didn’t thing of himself as Russian or Ukrainian…he was Crimean all the way. He said he was a Crimean now living under Russia rule instead of Ukrainian rule. He didn’t seem to care for one more than the other.
Granted this is just one guy but I sensed the BBC reporter had found it a common attitude amongst the non-Russians in Crimea.
Makati1 on Sat, 22nd Mar 2014 12:24 am
Germany is all bluster and BS, and Herr Merkel is blowin’ in the wind. Russia has the EU by the b—s and they know it. So does Putin. Sanctions will push the EU into depression, or maybe I should say, deeper into the one they are already in.
Russia can sell their US holdings and make up for any loss in trade that China does not take up. The EU has no holdings, only worthless paper, junk securities and debt. Ditto for the US.
The US can not come to the rescue as the have no energy to export. At least not until a few cold winters have passed, if ever. Interesting…
rockman on Sat, 22nd Mar 2014 12:53 am
M – Concerning Germany saw an interesting stat this afternoon: there are 6,000 German companies that market their products in Russia.
Boat on Sat, 22nd Mar 2014 1:25 am
European Union GDP…16 trillion
US GDP……………16 trillion
Russia GDP…………2 Trillion
Anybody besides me see who has the advantage?
Google military spending by country and you will see similar results.
Northwest Resident on Sat, 22nd Mar 2014 2:35 am
I realize nobody shares my POV on this subject, which is just fine by me. But from my POV, this whole Ukraine ordeal has never been anything but a big theatrical act, with all the politicians and all the media playing their roles like actors on a stage. The simple goal was to return Crimea to Russia, to right a wrong that was done long ago, and to reduce social and economic tensions that have been brewing for far too long due to that wrong done — when Crimea was “gifted” to Ukraine. So, why didn’t Crimea and Russia just hold a joint news conference with amenable Western leaders sitting in chairs around the podium smiling in agreement, as Putin announced to the world that Crimea was finally returning to Russia? Because there are lots and lots of raw deals in our history that set borders where borders should not have been set, that divided ethnic populations from each other and that to this day are causing all kinds of friction and ill will and bloodshed. You have to make a BIG DEAL out of dissolving those historical borders and righting past wrongs, otherwise all the little nations around the world might get the wrong idea and think that hey, they’re doing it in Ukraine and Crimea, let’s do it too. Too many little “nations” owe their borders and even their status as a “nation” to the Western powers carving up land masses into nation-states that seemed like a good idea at the time. The last thing the major powers in the world want right now is to have to deal with all these little carved up nations trying to move their borders. So, to facilitate the move of Crimea back to Ukraine, they bring a little death (to pro-Nazi demonstrators, no great loss) and threat of war and even threat of nuclear war into the picture, they make a HUGE DEAL out of nothing really, so that all the little nations looking at what is happening get the message — moving borders around is serious, risky and deadly business, and probably not worth the effort. In the end, Russia gets what it wants, Crimea gets what it wants, Ukraine is probably going to get some of what it wants and could probably give a rip about Crimea going back to Russia anyway. The media get to create a frenzy, the politicians all get to play leading roles on the world stage, the bloggers and conspiracy theorists get their adrenaline rushes — happy ending for everybody, BAU plows along unhampered, everybody gets a good laugh at the “sanctions” being imposed, the sun sets in the West, blah blah blah. End of story.
Keith on Sat, 22nd Mar 2014 2:57 am
Bring fracking to Europe and isolate the BRICS, that’s what this is about.
FriedrichKling on Sat, 22nd Mar 2014 3:41 am
NorthWest Res-
More people share your view than you might imagine- count me as one.
rockman on Sat, 22nd Mar 2014 3:56 am
Boat – “Anybody besides me see who has the advantage?” Question: how much of that EU GDP comes from selling products to Russia? As I just pointed out 6000 German companies get at least some portion of the GDP by selling to Russia. I’m sure the Chinese would be very pleased to replace some of those German companies. Granted this would take many years to have a significant impact.
Likewise how much of that EU GDP depends upon Russian oil/NG? the same might be asked about Canadian oil exports and the US GDP: today about 1/6 of the oil we burns to create our GDP comes from Canada. But what happens when some (maybe a lot) of that energy doesn’t
rockman on Sat, 22nd Mar 2014 4:06 am
“Bring fracking to Europe…”. Just a remainder: at the moment there is no commercial development of NG from shale frac’ng in the EU. Might be some day but that would take many years and 100’s of $billions in capex. Certainly long after currently flare up with Russia is settled one way or the other. And that’s only if the potential is really there and companies invest the many 10’s of $billions in shale gas extraction infrastructure that currently does not exist in the EU. Last time I saw the stat Texas had more onshore drill rigs turning to the right then the rest of the world combined… shale gas ain’t going to drill itself. LOL.
GregT on Sat, 22nd Mar 2014 6:01 am
NorthWest Res-
More people share your view than you might imagine- count me as one.
Me too NWR. My take, nothing more than a distraction while the bankers continue on with their age old plan. A few thousand killed here, a couple of million there, they really could care less. Human beings to them, are nothing more than livestock.
Arthur on Sat, 22nd Mar 2014 7:22 pm
Boat says:
European Union GDP…16 trillion
US GDP……………16 trillion
Russia GDP…………2 Trillion
Anybody besides me see who has the advantage?
Without fossil fuel, the impressive western GDPs would shrink to insignificant proportion. And more important, Russia has potential alternative customers, most important China, where Europe will have a hard time finding alternative suppliers. Russia simply has the better cards.
Russia did nothing outrageous in the Crimea, instead it reacted in a moderate way to what was nothing less than a frontal western attack against legitimate centuries old Russian interests in the region and I can’t say I feel threatened at all by the Russians.
And no J-Gav, there is not a single hint that Putin is a ‘kleptocrat’ or motivated by private material gain. His motivation is to restore Russian grandeur, and as long as he restrains himself to traditional Russian sphere of influence, meaning territories that declare themselves as majority Russian (like territories in the south-east of the Ukraine) I will support him (whatever that may mean.lol)
My real worry is that the behavior of the aggressive US + despicable weak EU ‘leaders’ will result in driving a wedge between Europe and Russia and drive the Russians in the arms of the Chinese, in the eyes of the Russians an ally of second choice.
Have to admit that I am disappointed by the attitude of Merkel, although she handled the euro-crisis very well.
Where is the European de Gaulle when you need him?
Arthur on Sat, 22nd Mar 2014 9:07 pm
Even the Economist now uses the somewhat esoteric concept of “New World Order”, popular with right-wingers a la Alex Jones, and opines correctly that the NWO is under dire threat… from Wlad:
http://tinyurl.com/orymyd4
Arthur on Sat, 22nd Mar 2014 10:02 pm
Very interesting article by Israel Shamir about the Ukraine:
http://www.globalresearch.ca/crimea-putins-triumph-now-the-confrontation-moves-east-to-new-russia/5374710
Interesting observations:
Alexander Yakimenko, the head of Ukrainian Secret Services (SBU) who had escaped to Russia like his president. Yakimenko accused Andriy Parubiy, the present security czar, of making a deal with the Americans. On American instructions, he delivered weapons and brought snipers who killed some 70 persons within few hours. They killed the riot police and the protesters as well.
The US Neocon-led conspiracy in Kiev was aimed against the European attempt to reach a compromise with President Yanukovych, said the SBU chief. They almost agreed on all points, but Ms Nuland wanted to derail the agreement, and so she did – with the help of a few snipers
Who fights whom over there? It is a great error to consider the conflict a tribal one, between Russians and Ukrainians…
Putin is a proponent and advocate of non-nationalist Russian world…
Russians are amazingly non-tribal…
Putin defends all Russian-speakers, all ethnic minorities, such as Gagauz or Abkhaz, not only ethnic Russians. He defends the Russian World, all those russophones who want and need his protection. This Russian World definitely includes many, perhaps majority of people in the Ukraine, ethnic Russians, Jews, small ethnic groups and ethnic Ukrainians, in Novorossia and in Kiev…
there will be no ethnic strife in the Ukraine’s East, despite US efforts to the contrary. The decision time is coming up fast: some experts presume that by end of May the Ukrainian crisis will be behind us.
Makati1 on Sun, 23rd Mar 2014 3:17 am
The West is fast losing the ability to consume/import. The East knows this. The power is now in the East and spreading south, no matter what the West may believe.