Streetwise Professor

October 23, 2014

Watch This If You Want to Understand Why We Are Where We Are in Iraq

Filed under: History,Military,Politics — The Professor @ 8:08 pm

As you might guess, I’m usually not a big Frontline fan, given its rather monotonous lefty line on most issues. But I have to take my hat off to Frontline’s Losing Iraq. It presents a very balanced retrospective on events beginning with the fall of Saddam’s statue in Baghdad in 2003. Given the divisiveness of the topic, this is quite an accomplishment.

It is, unsurprisingly, a depressing picture. The bulk of the program focuses on the Bush years, but the most damning parts address the Obama administration’s willful mishandling of a bad but improving situation.

There are few heroes here. Generals Keene and Petraeus come off quite well. Perhaps because they tell their own stories. Rumsfeld and Bremmer come off terribly, which is only accurate. The picture on Bush is very mixed. His misjudgments and mistakes are discussed in full, and there were many: the de-Baathification and disbanding of the Iraqi army stand out. Yes, these were mainly Rumsfeld moves, but Bush signed off. But he is given credit for his courageous decision to double down-or as Petraeus put it, go all in-on the Surge. This redeemed a seemingly hopeless situation, and created the possibility for a good outcome in Iraq. Good by Middle Eastern standards, anyways. Overall, Bush comes off flawed, but human and earnest, and dedicated to doing the best for the country, by his lights. One odd thing is that Colin Powell is completely absent: I don’t even recall his name being mentioned.

One fascinating part relates to Bush and Maliki. Maliki was the accidental leader of Iraq, dredged from obscurity by an administration desperate for an Iraqi face to lead a government so that America could cede control of the country to the locals. Maliki demonstrated some of the tendencies that would later contribute to the current catastrophe, but through a combination of carrots and sticks, and perhaps most importantly, Bush’s personal attention, he was nudged in a more constructive direction and did not indulge his worst sectarian impulses. He wasn’t great, but by the standards of the Middle East, he could have been a lot worse.

Everything changed once Obama assumed office. The most telling scene in the film is from Obama’s speech at Camp Lejeune a mere 4 weeks after assuming  office. Obama acknowledged that Iraq had become a passably peaceful place. But instead of understanding that this peace had been hard-won,  was incredibly fragile, and required continued American military and political engagement to sustain, Obama asserted that the conditions were now right for the US to withdraw. He treated the peace as an inheritance, an endowment, rather than a tender thing that required continued nurturing.

One could spend much time contemplating why he arrived at this conclusion. It was a convenient excuse for him to do what he wanted-to get shed of Iraq, like yesterday. Moreover, to conclude otherwise would have required him to acknowledge that Bush had been right about the Surge, but as we know, Obama reflexively believed-believes-that everything Bush did was wrong, and perhaps evil.

The documentary points out that everyone in the national security establishment opposed Obama’s decision. Everyone believed that it was imperative for the US to retain military force in the country. But Obama decided otherwise and overruled them all.

The chagrin of the military is vividly captured in the face of Robert Gates when Obama completed his remarks and walked over to shake Gates’s hand. Those on stage during a presidential speech, especially one delivered in triumphal tones, are usually smiling and happy. But Gates’s face was stern and tense. You know he hated  being there. You know he believed that Obama was making a tragic mistake. You also know that Obama made a point of seeking him out first to assert his authority, and to make plain to the world that the defense department and the military were going to salute and execute, even though they believed to a man that the policy was a disaster in the making.

The most damning part of Losing Iraq is the recapitulation of the failed attempt to negotiate a Status of Forces agreement with Maliki. Well, failed attempt is not the right phrase, for the documentary makes it clear that Obama had no intention of getting an agreement. He made a demand-that the Iraqi parliament vote to immunize American troops against prosecution-that he knew-knew-could not be met. He made an offer that Iraq had to refuse, which is exactly what Obama wanted, because he wanted out of Iraq, come what may. Iraq of course did refuse, and we are witnessing what has come.

The film quickly covers the aftermath of the American withdrawal. Left completely on his own, Maliki indulged his sectarian devils. He gutted  the Iraqi military by placing reliable Shia cronies in all major command posts: the objective was not creating an effective military force, but creating one that would not pose a coup threat. Most crucially, he cut off the Sunni tribes in Anbar, thereby undoing what Petraeus had achieved at such cost. Into that chaos, ISIS plunged, to its profit.

This is why we are where we are. Yes, the invasion of Iraq was a blunder of historic proportions. But after doing the typical American thing of doing the right thing after trying everything else, the situation was stabilized and showed some promise. But Obama threw it all way out of arrogance, pique, and ideological blindness.

Losing Iraq is painful watching, but it is necessary watching if you want to know why we are where we are, and why that is not a good place to be.

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The Cultural Context of the War on ISIS: Playing Whac-a-Flag in Kobane

Filed under: History,Military,Politics — The Professor @ 6:49 pm

There is no better illustration of the wildly different cultural perspectives of the combatants in Kobane than what occurred today on a barren hill two miles from the city. The hill of Tel Shair, 2 miles from the town, has changed hands several times in the past weeks. In the morning, ISIS seized the hill from the Kurds. As soon as I read about it, I said to myself: The hill is barren and offers no cover, and is far from any civilians. ISIS might as well hold up huge “BOMB US” signs with arrows pointing to the top of the hill. There is no possible way that they could hold it. Once clear of Kurds, it was destined to be a bomb magnet.

And indeed, that was the case. A few hours after the seizure was reported, I saw a Vine video depicting events on the hill. An couple of ISIS fighters had just planted a flag on the summit, and were walking down the hill: the fact that they left the flag and were hotfooting down the hill  tells you they knew what was coming. And sure enough, when they were about halfway down the hill, two bombs explode. I swear, one hit the f*cking flag: a high explosive hole-in-one. The shot is so accurate that I suspect it was laser guided. Apropos what Norman Schwarzkopf said when describing a video of a precision strike during Gulf War I, the two guys survived, and hence were the luckiest men in Syria at that minute. (Here’s another, somewhat longer, video.)

And ISIS could not hold the hill. Predictably so. Within a few hours, the WSJ reported that the Kurds/FSA had retaken it.

To my eyes-western eyes-this illustrates the absurdity of the battle in Kobane. From an objectively-or perhaps materialistic is the better word-military perspective, it was idiotic for ISIS to expend one fighter to take the hill. They could never hold it in the face of an American bombing, and would just suffer more casualties if they tried. So what was the point?

But as one unidentified American official said in a WSJ article yesterday (or the day before), this is a war of flags. For ISIS, planting its flag is a victory, even if the banner gets blown to smithereens within minutes. It is the Arab equivalent of a Sioux counting coup on an adversary. The Arabs are an honor/shame culture, and the planting of the flag, as militarily pointless as it is to western eyes, confers honor on ISIS, and shames the Kurds and the Islamic Front from whom they seized the hill. I am sure that ISIS will be circulating videos of the planting, if they haven’t already. Stories of the deed will spread around the world, at the speed of Internet. To ISIS eyes, and the eyes of their acolytes, each of these flag raisings is as pregnant with meaning as Suribachi was to Americans of earlier generations.

John Keegan, in his History of Warfare, emphasizes that war is a cultural endeavor, that every war has its cultural context, and different cultures wage war differently and account for victory in different ways. Intercultural conflicts are often particularly chaotic, because each side miscalculates the effects of its actions on its enemy, and actions cause unexpected reactions.

Defeating ISIS requires us to understand their cultural frames. Such an understanding will help us predict what they will try to do, and to design counters. Such an understanding is necessary for us to know how the adversary defines defeat, which in turn is necessary for us to determine how to defeat it, for no victory is truly complete unless the enemy believes, in his own mind, that he is vanquished.

ISIS believes that it’s banners make it terrible. Or, perhaps, that its banners strike terror in its adversaries, because they know what happens under those flying flags.

Kobane has become a matter of honor to ISIS. The absurdity (to western eyes) of the events on Tel Shair demonstrate that. As I noted yesterday, we can use ISIS’s honor against it by making it pay a high price whenever it attempts to achieve honor by engaging in an open fight. But as I also noted, this approach has its limits.  Attrition limits ISIS’s capabilities, but does not defeat it psychologically.

The US needs to see things through ISIS’s eyes to determine how to defeat it. Perhaps the best way of doing so is to exploit the flip side of honor: shame. I can’t say that I know how to do that as I sit here, but that seems to be a more profitable “indirect approach” than playing whac-a-flag.

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October 22, 2014

A Lack of Strategy Makes Kobane Strategic For the US

Filed under: History,Military,Politics — The Professor @ 9:20 pm

There’s been some chin pulling about whether Kobane is strategic for the US. Methinks that some of this is encouraged by nudges from people in the administration, who really don’t want to be involved there.

Truth be told, it is strategic, but it isn’t. Paradoxically, it is strategic because of the lack of a US strategy.

That’s not quite right, exactly. Obama has a strategy to achieve an objective defined by what he wants to avoid, rather than what he wants to achieve. But he has to do something, so he has effectively fallen back onto the last refuge of the strategically bankrupt, or those lacking the capability (or unwilling to use the capability) to take the initiative and succeed: attrition. When a campaign is focused on body counts, it is likely to be strategically barren.

 

Famous battles of attrition throughout history (think Verdun) have been hideously costly to both sides. US airpower allows it, under certain circumstances, to attrit its enemy at virtually no risk of casualties. The problem is that those circumstances are largely under the control of the enemy. An enemy that disperses and burrows into urban terrain is relatively immune, although by doing so it can hold what it has but can’t take more.

What is remarkable about Kobane is that IS has eschewed those tactics, and has concentrated large numbers of men and equipment, thereby presenting a target to American airpower. Given the American attrition strategy, these concentrations have become a strategic objective by default. It’s in that sense that a lack of strategy beyond attrition makes Kobane strategic, but then only because for some unfathomable reason ISIS decided to expose itself there.

As this Max Boot article argues, using Khe Sanh as an example, this can inflict large losses and keep even an isolated position from falling. But it cannot inflict a real defeat on ISIS (although the morale and propaganda effects of a failure to take Kobane would inflict some damage on it).

There are concerns that going after Kobane is limiting American ability to influence the battle in other, more important locations, like Mosul and Anbar. But this must be a consequence of self-imposed limitations on the resources committed to the theater. To put things in comparison, the shambolic Syrian air force is mounting far more sorties in Syria than US forces are in Iraq and Syria combined. For Syria, this is an existential conflict and it is pulling out all the stops. For the US, this is a conflict entered grudgingly with many strings attached. Gulliver is tying himself down.

ISIS is apparently mounting attacks elsewhere. These provide additional opportunities for American airpower. Outside of Mosul in particular, the US can cooperate with a reasonably competent ground force. But none of this is likely to prove decisive. ISIS has the luxury of fighting and running away with little fear of aggressive pursuit or the loss of territory (much of it desert waste anyways) from troops following in the wake of their retreat. It continues to have the initiative.

So the likely outcome is stalemate. US airpower, working with available local ground forces, can contain ISIS, and inflict some serious casualties. But that’s about it.

Austin Bay’s verdict is about right:

The battle for the Syrian Kurd town of Khobane has emerged as an opportunity to deal the Islamic State a military and political defeat. Maximizing the opportunity, however, requires what has been most grievously missing from the struggle against the terrorists and their so-called caliphate: persuasive, coherent and steadfast American leadership.

Not happening. Not going to happen.

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October 21, 2014

The Crown Family Affair

Filed under: Military,Politics — The Professor @ 10:29 pm

Yesterday the WaPo reported that the US was planning to sell to Iraq 46,000 HEAT rounds for 120mm M1A1 Abrams tank guns. I was scratching my head at reading this. Although HEAT rounds can be used against buildings, and hence could be of some use in an attack against ISIS in places like Fallujah, it hardly seems that this is a priority for the Iraqi Army. The priority for the Iraqi Army is to get it to stand and fight rather than flee. An attack against a place like Fallujah is a long, long way away. What’s the point of giving Iraq more tank rounds, when its tankers bail out at the first opportunity?

Since this didn’t make sense militarily the only explanation I had is that  this is really  about giving General Dynamics more than half-a-billion dollars under the cover of the (relatively) popular campaign against ISIS. Then @libertylynx pointed out that General Dynamics’ largest shareholder (and once-upon-a-time controlling shareholder) is the Crown family. The Crowns have about 10 percent of GD, and about 50 percent of their $7.5 billion fortune is invested up in the company.

So what? you might say. Who are the Crowns, anyways? Well, they are a Chicago family that has  been a longtime supporter of Obama: they gave $128K for his 2006 senate campaign. According to the WaPo, they are part of the inner circle of Chicago Friends of Barack, and as the paper notes, Chicago ties are the ones that bind. And when Michelle goes skiing at Aspen, she crashes at the Crowns’. (“She likes it there!”)  In 2008, Crown elder Lester (briber of politicians-hey, he is from Chicago, you know-whose security clearance the Pentagon wanted to yank) did Barack a boon service by writing a letter aimed at Jewish voters assuring them of Obama’s “stellar record on Israel” and promising that as president Obama would be a great friend of the Jewish state. (How’s that working out, by the way?)

So the Crowns have been there for Obama, early and often (as the Chicago phrase goes), with money and a kind word to the right constituencies. It’s nothing of a stretch to conclude that the $600 million of love showered on General Dynamics is the least Barry can do in return. So spare me any shrieking about the Kochs or Dick Cheney and Halliburton. Obama is well-versed in Chicago ways, and this has Chicago written all over it, in more ways than one. There is no plausible military case to be made for putting $600 million in HEAT rounds at the top of military aid for Iraq, so there must be something else. Occam’s Razor suggests that this military aid is just (domestic) politics carried out by other means.

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October 19, 2014

Russian Truculence and a History of Russian Naval Mishaps Colliding in Swedish Waters?

Filed under: History,Military,Politics,Russia — The Professor @ 2:35 pm

Russia has been hyper-aggressive of late in probing the defenses of neighboring countries, including the US and Canada, mainly by aircraft. Sweden has been a frequent target as well.

Now Sweden may be the subject of another probe, this one from under the sea in the Stockholm Archipelago. Anomalous underwater activity was detected, as have been communications (some encrypted) from a point in the region to the Russian naval base at Kaliningrad. The comms purportedly include a distress call. A Russian tanker (under the Liberian flag with an English name, the Concord) has been circling suspiciously in the Baltic: some suspect it is the mother ship of a mini-sub. A Russian research ship, the Professor Lugachev, has suddenly set sail from Saint Petersburg.

Given history, and current events, the Occam’s Razor solution to this mystery is that a Russian sub, maybe a mini-sub, has run into trouble while probing Swedish waters.

The Russians, of course, deny everything:

A defence ministry spokesman in Moscow told reporters that the Russian navy’s submarines and surface ships were “performing tasks… according to plan”.

“There has been no irregular situation, let alone emergency situation, involving Russian navy vessels,” he said.

Again given history, the best thing to do is to assume the opposite is true. Consider the case of the Kursk:

In the days after the incident, the Navy and the government issued a blizzard of non-information, mis-information and dis-information.  At first, the Navy denied that anything was amiss, acknowledging a mere “technical difficulty.”  The government denied the problem for some time; it took two entire days to even admit that the ship “was in serious trouble,” and then lied about when the incident had occurred.  Indeed, the day after the sinking, the Navy commander told the press that the exercise had been flawless.  Yes: flawless.

They never used the word “sink.”  They claimed the entire crew was alive.  They claimed they were in communication with the crew, and that the ship was supplied with air and power from the surface.  The Navy excused its evident lack of preparation for a rescue by bewailing the weather conditions and strong currents, even though the weather was fine and the currents benign.  All complete and outrageous fabrications.

Enraged by the duplicity, at one Navy press conference, the mother of a Kursk officer, Nedezhda Tylik, launched into a screaming denunciation of official dishonesty.  In an event captured on film, a nurse was seen to move up behind Tylik, and inject her with a hypodermic needle.  Tylik collapsed and was taken from the room.  (A still photo is available here; I have not found the video online for free despite a diligent effort; there is a documentary that has the film that can be purchased here.)  She first claimed she had been sedated against her will, and the Navy said that it had indeed given her a sedative; in an Orwellian way, it acknowledged the “solicitous administration of needed tranquilizers.”

Then, remarkably, in the aftermath of a domestic and international outcry, the Navy denied that it had sedated her, and Tylik also recanted, claiming that she had only been given her heart medication at her husband’s request.  Yeah, sure.  Who you gonna believe?  Them or your lying eyes? (Tylik maintains this version in the documentary.  But why did neither she nor her husband make that statement initially?)

And how can we forget Russia’s dodgy naval safety record? I’ve often mocked how its carrier Kuznetsov, such as it is, never leaves home without a salvage tug bobbing along in its wake. The Russian naval curse even inflicts those dumb enough to buy its cast offs and then spend billions trying to fix them up. The Indians found this out to their cost when they bought the Admiral Gorshkov. Now the Chinese are having problems with the Liaoning, ex-VaryagNo biggie. Just that steam is flooding out of its boiler compartment. But it’s not a boiler explosion, apparently! So there’s that.

Given the combination of recent Russian truculence and the long record of Russian naval mishaps, the most likely explanation is that a Russian naval intelligence operation has come to ruin. Let’s hope that the crew survives-though given the track record one doubts that Putin and the Russian high command give a crap about that. Indeed, they would probably prefer that the crew die undiscovered than survive to be captured. Let’s also hope that the facts come out, and prove very embarrassing to VVP.

But one thing for sure: pay zero attention to what the Russians say about this. Well, that’s not right, exactly. Take what they say, and assume the exact opposite and you might be within visual range of the truth.

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Further My Last

Filed under: History,Military,Politics — The Professor @ 12:26 pm

Following up on yesterday’s Victory Disease post, here are a couple of articles that reinforce my basic conclusion. The Bronk piece in CNN is particularly complementary in its discussion of ISIS’s error in switching tactics, and the Telegraph article provides very current information and detail about how just accurate and devastating US airpower can be.  And lest you think I am a victim of confirmation bias, I did look for contrary information, and couldn’t find anything from independent sources.

The Bronk article reinforces something I was thinking the other day. T. E. Lawrence and other British officers assigned to the Arab rebels during WWI despaired of making them conventional soldiers. Lawrence, per his telling in the grips of dysentery-induced delirium, conceived that their genius was as irregulars who utilized mobility to carry out a war of hit and run attacks on a relatively immobile Turkish army of dodgy morale. Keegan’s History of Warfare states that this form of warfare was the Arab way going back to the times of Mohammed. For the Arabs, there was no dishonor in retreat. Hit weaker forces at a vulnerable point, don’t engage in standup fights, and run when a superior force appears. Keegan draws on V. D. Hanson’s work to argue that the standup, face-to-face fight is a peculiarly Western way of war deriving from the Greeks.

ISIS is most formidable when it fights in the traditional Arab way. (Chechens were also historically guerrillas and raiders.) It does its opponents a favor when it fights the Western way. But it appears that Victory Disease has deluded its leaders into believing that they can ape a conventional Western army and win. That delusion could be a great favor.

 

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October 18, 2014

Victory Disease in the Desert?

Filed under: History,Military,Politics — The Professor @ 7:35 pm

Definitive news out of Kobane is difficult to come by. Kurdish sources claim that ISIS has been pushed out of the city. Others report an increase in ISIS mortar fire. However, the city’s fall no longer seems imminent, and it does appear that the momentum has been reversed. This despite Turkey’s starving the Kurds of reinforcements and supplies.

What turned the tide? A modest increase in American air strikes, to around 15-20 per day. In terms of capability, and previous US campaigns, this is nothing. But even a few handfuls of American strikes can be devastating to troops, vehicles, and equipment in open desert.

Kobane is an operational blunder by ISIS. It has no real strategic importance. At most, capturing the city allows ISIS to consolidate and extend its control over northern Syria and clean up its rear. But the Kurds there posed no real threat to ISIS, so why divert a major effort there? Apparently hatred of atheist Kurds (whom they are fighting in Iraq as well) has  convinced the group to divert a major effort to this sideshow.

It may also be a case of what the Japanese in WWII called “Victory Disease.” After Japan achieved all of its strategic objectives by early 1942, it should have followed its original plan and create a defensive perimeter. Instead, intoxicated by easy success, Japan pushed beyond its original planned perimeter. The result was disaster: the short, crushing loss at Midway, and the long, grinding defeat in the Solomons.

ISIS’s boasting certainly betrays strong symptoms of VD. Moreover, the predicate for it is there: a series of rapid, unexpected and stunning victories that left its enemies reeling, confused, and demoralized. Ironically, even Obama’s diffident and indecisive response might have had the beneficial effect of encouraging ISIS belief in their invincibility, and the terror they inspired. Even America was afraid to confront them!

ISIS also believes in a sort of imminent eschatology. Its haste to declare a caliphate is a manifestation of that. They are in a hurry. Such minds are especially prone to Victory Disease, because they believe that they are destined to conquer, and conquer now, and look at every victory as a confirmation of that destiny.

The capture of American heavy equipment (including tanks and howitzers) from the hapless Iraqi army, and some Russian armor from the Syrians, has also fed ISIS’s belief that it is a real army that can fight conventionally, and that it can beat conventional armies. The farcical boasting about 3 captured MiG-21s (which are as dangerous to their pilots as the enemy, even when not stalked by F-22s or F-18s) is another example. (What do you call an ISIS MiG-21? A smoking hole in the ground.)

But the most telling indicator of Victory Disease is ISIS’s throwing a good portion of its forces (including perhaps some of the hardcore Chechens) against a strategic luxury, and getting drawn into an urban battle as the attacker (rather than the defender) and therefore having to remain stationary while it gets pounded from the air.

ISIS’s future success also depends on the perception of its inevitability and invincibility. This is something that has to be conserved. A few defeats, especially bruising ones in major efforts that appeared on the verge of another victory, can shatter that perception.

Thus, I hope they continue to come out and play in Kobane. I also hope they try to go against type and fight conventionally elsewhere. That’s playing to the US strengths, and ISIS’s weakness. And I hope that we dial it up a little bit. It appears that a modest increase in effort has had a major impact. So crank it up a little more.

 

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October 13, 2014

Russia in a Nutshell: Three Stories That Convey Important Truths About an Aggressive, Mendacious, and Economically Weak Empire

Filed under: Commodities,Economics,Energy,Military,Politics,Russia — The Professor @ 2:43 pm

A quick rundown on some Russia stories. Three stories that encapsulate important truths about an unhappy country that seems intent on forcing others to share in its unhappiness.

First, there was a lot of attention paid to Putin’s announcement that 17,000 soldiers would be withdrawn from Rostov, on the Ukrainian border, to return to their bases. The reactions are a combination of poor memory, ignorance, and wishful thinking. Poor memory because something similar happened in the spring, which didn’t preclude an invasion in the summer. Ignorance, because if you are aware of Russia’s conscription cycle, you are aware that the fall 2013 conscript class is due to be mustered out, and units must return to their bases to discharge last year’s class and induct and train this year’s. That’s what happened in the spring. This ignorance is inexcusable now, as it was written about in the spring, notably by Pavel Felgenhauer: I wrote about it here as well. Wishful thinking, because everyone is grasping at the hope that Putin will back down from the Ukraine battle. As if.

There is no news here. This is an artifact of Russia’s conscription system. Period. Watch for new training exercises in a few months, and the deployment of units to the Ukrainian border again, once the new conscripts are integrated into their units.

Second, Russia will sign several intergovernmental agreements with China when Premier Li visits next month. One of them is an agreement to export gas from Russia to China.

I know what you’re thinking: “Wait, didn’t they sign that deal to huge fanfare back in May?” Apparently not:

Russia has prepared intergovernmental agreements to sign during Chinese Premier Li Keqiang’s visit to Moscow next week including one on a $400 billion natural gas deal agreed in May, Russia’s deputy foreign minister said.

Russian gas exporter Gazprom and China National Petroleum Corp (CNPC) have agreed that Russia will supply China with 38 billion cubic metres of gas starting from 2019.

Yet on Friday Gazprom said an intergovernmental agreement between Russia and China required for the plan to come into force had not yet been signed.

Russian Deputy Foreign Minister Igor Morgulov told Chinese state news agency Xinhua that governmental agreements including one on gas were ready for signing during Li’s coming visit.

“They include an intergovernmental agreement on natural gas supplies via an “‘eastern’ route,” he said. [Emphasis added.]

Proving yet again that announcements from the Russians about any deal should be treated with extreme skepticism. They are the masters of vaporcontracts.

The Russians are touting various deals with the Chinese as proof of their invulnerability to western sanctions and pressure. The feebleminded believe this. In fact, Russian desperation is palpable: the fact that they hyped the gas non-deal is a perfect example of this. If you don’t think that the Chinese are aware that they have the whip hand here, and are flogging the Russians for all it is worth, please contact me. I’ve securitized some bridges, and I’m sure they’d be perfect for your portfolios!

Third, the Russians are in full paranoid mode over the decline in oil prices. Brent is down to $88/bbl, which puts Urals at about $86. Speaking of 86, they are having flashbacks to 1986, when the Saudis flooded the world with oil. This began the fatal crash of the Soviet economy (described well in Gaidar’s book, Empire).

The vice-president of Russia’s state-owned oil behemoth Rosneft has accused Saudi Arabia of manipulating the oil price for political reasons. Mikhail Leontyev was quoted in Russian media as saying:

Prices can be manipulative. First of all, Saudi Arabia has begun making big discounts on oil. This is political manipulation, and Saudi Arabia is being manipulated, which could end badly.

Er, this is way different from 1986. At most, the Saudis have increased output only slightly (about 100kbbl/day): in ’86, they more than doubled output. The Saudis are just acknowledging market reality. Demand is weak,  supplies from the US are growing, and Libya is coming back into the market. Put those  things together, and prices are inevitably going to fall. The Saudis can see the writing on the wall, and their market share is sufficiently small that unilateral reductions in their output are not economically rational. Funny, now that I mention it: Saudi market share is about the same as Russian market share. The Russians produce up to capacity, because that is profit maximizing. Yet they expect the Saudis to cut back output? Of course they do! The Saudis should sacrifice their own interests to bail out the Russians! Of course they should!

Leontyev seems to be vying with the Gazprom guy Komlev to see who can make the most idiotic statements about world energy markets. Something that commentor Ivan passed on suggests that as idiotic as Komlev was, Leontyev has him hands down. The Rosneft spokesman also blamed low oil prices on ISIS selling oil at a “triple discount.” Hilarious! World oil prices are determined in the world market. ISIS has to sell at a huge discount because it is politically radioactive, and because it cannot access world markets directly. Those to whom it sells pocket the discount to adjust for the risk of dealing with a political leper (a radioactive leper!-I’m not mixing metaphors), and sell at the world price. The world price is determined by world output, not the price of the first sale. If anything, ISIS is propping up prices by reducing output in Syria (not a big deal) and threatening output in Iraq (a bigger deal).

Together, these three stories convey important truths  about Russia. And truth is ugly indeed. An aggressive, economically tottering empire dependent on commodity rents, and constitutionally unable to tell the truth or deal with reality.

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October 12, 2014

Achtung! Jabos

Filed under: History,Military,Politics — The Professor @ 9:11 pm

Here is a fascinating document from WWII. It’s a semi-official history of the IX Tactical Air Command, written to promote the unit’s achievements and build morale. It’s not independent and objective, but it does provide valuable information. I note especially the description of the vital importance of personnel on the ground to spot targets and coordinate the actions of the fighter bombers and the armor and infantry on the ground p. 7:

Some things don’t change: the need for air-ground cooperation has been proven again and again, in Europe, in Viet Nam, in the two Gulf Wars, and in Afghanistan. But apparently a community organizer knows better.

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He Doth Protest Too Much, Methinks

Filed under: Military,Politics,Russia — The Professor @ 1:56 pm

In recent weeks there have been a spate of stories about how JP Morgan and perhaps 13 other financial institutions were the target of a massive cyber probing attack. The early reporting fingered Russians. Now there is pushback:

There is no indication that Vladimir Putin, the Russian government or any foreign nation state was involved in the JPMorgan cyberattack this summer, a source familiar with the incident tells CNBC.

There have been media reports speculating that the Russians may have carried out the attack in retaliation for U.S. sanctions on Russia, but that appears not to be the case, the source said. “Anyone who says this is the Russians, that’s ridiculous,” the source said. “There’s no indication of any foreign nation state. Any reporting on that is not coming from someone who knows what’s going on.”

Um, except that wasn’t the reporting, at all. Here’s an example:

JPMorgan Chase & Co.’s own investigators have found clues that a global network of computers available for hire by sophisticated criminals was used to reroute data stolen from the bank to a major Russian city, according to people familiar with the probe.

. . . .

The use of a Russian-based data center is another piece of a puzzle being constructed by investigators as they chase answers to urgent questions such as the attack’s motive, the hackers’ identity, and the possibility other banks may have been attacked or probed by the same group.

The link to Russia cybercriminals is pretty concrete here. Yes, some people pointed out the obvious: that there are links between Russian cybercriminals and the Russian state, specifically its intelligence agencies. Especially given the ongoing confrontation between the US and Russia, involving sanctions, aggressive Russian actions in the air and at sea, etc., and Russia’s history of using private hackers in attacks on states it is at odds with, it is reasonable to suspect that the probes of US financial firms has some connection to the Russian security services.

Given these facts, and this history, the very aggressive denial, and the invocation of Putin by name, is very odd. He doth protest too much, methinks.

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