Streetwise Professor

August 18, 2015

Vladimir Putin: At Sea in More Ways Than One

Filed under: Energy,Politics,Russia — The Professor @ 7:12 pm

Putin went for a dive in a submersible of the Crimean coast today. He was apparently in search of the Russian economy, and the ruble, but the sub couldn’t quite make it that far down.

As people get older, they tend to repeat the same behavior even after it has become self-parodying: they run out of new ideas and cling to old ones that used to work. This is especially true for people who are at a loss for what to do, because they are presented with insoluble problems.

Vladimir Putin is a perfect illustration of this. Even though his acts of derring do have become the target of world-wide satire, did the submarine thing again. (I thought he would actually go to Kherson, and claim to stumble a cross a relic of Vladimir the Great, but he went with the glass bottom boat again.) Perhaps smarting from previous criticism of his scuba dive in which he claimed to have found a (planted) amphora, today he asserted that the sea bottom was strewn with them.

Putin is at sea in more ways than one. He faces a dire economic situation. His old standby-various energy powerplays-has been undermined by declining demand growth and the development of new supplies. He is in a quagmire in Donbas. He has no idea how to address any of these problems, and indeed, everything he tries seems to turn out badly.

So he goes to the well one more time, and looks even more delusional than usual. It’s the kind of thing that people who are out of ideas do.

It’s also hilarious that the man who bans Dutch cheese and Dutch flowers*, and stymies the investigation of the shutdown of airliner with dozens of Dutch citizens aboard, went on his dive in a Dutch-built vessel.

I guess he didn’t trust a Russian one. Given that it’s August, that’s probably wise.

To round out the comedy, Putin communicated with Medvedev by radio. Poor Dmitry, always the sidekick who never gets to do the fun stuff.

* The Dutch flowers are allegedly infested with California thrips. Dutch flowers and American bugs! Obviously a Nato plot!

 

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August 12, 2015

Hey, It’s August: The Russian Economy Imitates the Kursk

Filed under: China,Economics,Energy,Politics,Russia — The Professor @ 1:37 pm

Despite happy talk from the government in recent months, Russia continues its downward economic spiral. The economy contracted by 4.6 percent in the second quarter. This is pretty appalling, given that oil prices had rebounded some. The Economics Ministry says this is “the lowest point” for Russia, but given the recent rout in oil prices, and the troubling signs coming out of Russia, this seems unduly optimistic. If anything Q3 and Q4 are likely to be worse. These therefore seem to be more realistic predictions:

“While second-quarter growth surprised on the downside, perhaps far more importantly is the fact that the outlook for the Russian economy has deteriorated so far in the third quarter,” Piotr Matys, a London-based foreign-exchange strategist at Rabobank, said by e-mail.

. . . .

“The economic prospects for the coming quarters look pretty grim,” Liza Ermolenko, an analyst at London-based Capital Economics Ltd., said by e-mail. “Industry appears to have been a major cause behind the deterioration in the second quarter, having gone from being a relative bright spot in the first quarter.”

The consensus is now that the current economic situation is more dire than 2008-2009, and that it is likely to persist far longer.

On top of this, China’s sudden devaulation of the Yuan has caused a further decline in commodity prices, with Brent now below $50/bbl. This has contributed to a further decline in the Ruble, which fell about 2 percent in the aftermath of China’s move.  The Russian currency is now around 65 to the dollar.  Russia is particularly vulnerable to an extended Chinese malaise, not to mention a hard Chinese landing.

The Russian Central Bank now faces the same conundrum that it confronted last summer and fall. It can choose between loosening monetary policy to spur the economy but would thereby spur inflation (already running at over 15 percent) and pressure the ruble even further. Or it can choose to defend the Ruble, which would hamstring the real economy, and potentially spur capital flight if the credibility of the RCB’s action is doubted. Which leg does it chew off?

Wherever Putin and his economic advisers look, the scene is bleak indeed. The situation in China is particularly ominous, because Putin had grabbed onto China like a drowning man, hoping it would rescue him from the blows raining down from sanctions and the commodity price implosion. But the Chinese devaluation, combined with a litany of other grim statistics coming out of China, suggests that if China is not drowning itself, it is struggling mightily to keep its head above water.  Russia is particularly vulnerable to an extended Chinese malaise, not to mention a hard Chinese landing. Putin counted on China’s economic support to allow him to continue his Ukrainian adventure and weather the resulting sanctions.  It’s not happening (Chinese direct investment into Russia has fallen by 25 percent), and the prospects of it happening anytime soon are diminishing daily.

Nor are the long run prospects particularly encouraging, not with Bloomberg running articles titled “Russian Workers Vie With Greece in Race for Productivity Abyss,” the upshot of which is that Russia has the lowest productivity in Europe, running at 50 percent of the European average and 30 percent below Greece. (Which makes this boast by the Russian Minister of Industry and Trade that Russia has overtaken the US in labor productivity even more hilarious.)

In brief, the Russian economy is doing an imitation of the Kursk, 15 years ago. The only difference is that Putin has yet to admit the economy has sunk.

 

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August 10, 2015

Destroying Seized Food: Compounding Idiocy With Lunacy

Filed under: Commodities,Economics,Politics,Russia — The Professor @ 5:59 pm

Russia cemented its well-deserved reputation for insanity by bulldozing and burning tons of food seized for violating the country’s cut-off-its-nose-to-spite-its-face import ban. This was daft, even overlooking the foolishness of the ban.

Seizing smuggled foodstuffs raises the cost of violating the ban, thereby achieving a deterrent effect. But what’s the point of destroying what was seized? Selling it would make much more sense. First, selling would actually help strengthen the ban by increasing supply and reducing prices in Russia, thereby reducing the profitability of smuggling. This would have also increased Russian consumption, making Russians better off. Second, the Russian government could realize revenue by selling the confiscated products: God knows it can use every ruble it can get. Or it could just give the stuff away, and get a PR victory as well as reducing the incentive to smuggle.

In other words, no economic downside, and some economic upside (assuming the ban is rational).

Instead, the Russian government engaged in exhibitionist masochism, and destroyed the seized items in a very public and flamboyant way.

Why? Beats me. Maybe they were trying to make the point that Russia needs nothing from the decadent West. Or maybe they are in thrall to the broken window fallacy, and believe that destroying stimulates production.

I really don’t want to understand. Because to understand these lunatics, I would probably have to descend into lunacy myself.

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Gazprom Has Unprotected Sales, And Pays the Price

Filed under: Commodities,Economics,Energy,Politics,Russia — The Professor @ 5:40 pm

I have long mocked Gazprom’s obstreperous, and economically unhinged, defense of an oil price peg of its gas sales. So today is another schadenfreude day, as the FT reports that Gazprom’s vaunted gas deal with China is finding that The East is Red (as in ink) because the price was linked to oil and “offers no protection against low [oil] prices.” (And despite the evident risks of going without protection, Russia is contemplating a ban on foreign condoms! Maybe Gazprom needs to be more “strict and discriminating” in its contracting practices.)

Apparently the company took strategic advice from Obama, who when asked by Fareed Zakaria what would happen if the Iran deal failed, said that “I have a general policy in big issues like this not to anticipate failure“:

Asked whether the contract built in protections to ensure that Gazprom would not make a loss in the event of a prolonged period of low oil prices, Pavel Oderov, a director at the company, said: “We have registered high risk appetite for this contract and we do not envisage such an event.”

By “high risk appetite,” I think he meant: “we were freaking desperate and we put it all on black (as in oil) to gamble for resurrection.”

And of course, Putin can’t let Gazprom eat a loss:

Separately, the Russian government is preparing to support the flagship project. According to a document published by the Kremlin on Monday, president Vladimir Putin ordered the Russian government to draw up by the start of September a “comprehensive action plan to ensure government support for the construction of gas transport infrastructure, including the Power of Siberia pipeline”.

Like the Russian government has money to throw around, especially since Gazprom (and Rosneft) are supposed to be the cash cows that feed the rest of its corrupt cronies, and the budget.

Insisting on the oil peg was always nuts. Note that one reason why many buyers of LNG want to move away from the oil-link is to diversify their price risk: that’s exactly why Russia, already a huge oil long, should have jumped at the chance to move away from a 100 percent reliance on oil price linkages. Yes, oil and gas prices are correlated, but imperfectly so, and moving away from oil-based pricing for gas would have reduced the country’s exposure to oil prices. But apparently Gazprom management and Putin believed that oil would always outperform gas, and insisted on the link. Be careful what you ask for, Vlad!

This is just the latest in a litany of Gazprom failures. Along with today’s bad news about the China contract-the cornerstone of Putin’s vaunted pivot to Asia-the company disclosed that production was down and sales to Europe were down in the first quarter. The company’s ruble profits rose only because the ruble cratered: talk about the cloud engulfing the silver lining. Further, the Turkish Stream project appears dead in the water, foundering upon-you guessed it-the inability to negotiate a price. That, and the cracked economic rationale for the project.

The world is finally awakening to the fact that the alleged energy behemoth is in fact an economically incoherent mess. In the US, it would have been taken over, and ruthlessly rationalized. Or put into rehab. Or broken up. But Putin continues to let it blunder on, like a vodka-sotted giant.

Not so long ago, Putin was considered some sort of virtuoso. He apparently thought so too. But now everything that used to work for him is self-destructing. And he seems quite bewildered at his turn of fortune.

In truth, Putin was not a virtuoso: he confused luck–high oil prices–for some sort of strategic genius. He was a huge spec long on oil, and looked brilliant when the price was high. When it is low, not so much. And idiotically, one of his champions insisted on increasing that exposure instead of diversifying away from it.

Well played. Well played.

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July 22, 2015

Vlad’s Pivot to Oblivion

Filed under: China,Commodities,Economics,Energy,Politics,Russia — The Professor @ 7:09 pm

This story is a Sino-Russian twofer:

The contract between Russia and China for gas supplied via the western route known as Power of Siberia-2 is being delayed indefinitely, Vedomosti cited Russian officials. They say China is reviewing its energy needs due to the economic slowdown.

The demand growth for gas in China is slowing, at the same time access to liquefied natural gas (LNG) is becoming more available in the country, for example from Australia, due to the fall in oil prices, Sberbank CIB analyst Valery Nesterov told Vedomosti on Wednesday.

Repeat after me: Gazprom finalizes about one out of a hundred of the vapor deals it announces. This is especially true where China is involved.

There are three basic problems. First, the pipeline is expensive, primarily because the Russians insist on building it. After all, how else could they tunnel out money? And if they can’t tunnel out money, what the hell is Gazprom good for?

“Gazprom offers CNPC a high price, explaining this by the high cost of the Power of Siberia – 2 construction. China is ready to build the pipeline at a cheaper cost and at public tender, so its companies could participate and for the construction price to be transparent,” the president of the Russia-China analytical center Sergei Sanakoyev said.

Second, the pipeline would go to the western part of China, which is convenient for Gazprom, but it isn’t where China needs the gas.

Third, China doesn’t need as much gas period, because (a) new (LNG) supply is coming on line in Australia, and (b) despite the happy talk of official statistics, every indication is that the Chinese economy is slowing:

The demand growth for gas in China is slowing, at the same time access to liquefied natural gas (LNG) is becoming more available in the country, for example from Australia, due to the fall in oil prices, Sberbank CIB analyst Valery Nesterov told Vedomosti on Wednesday.

So how’s that pivot to Asia working out, Vladimir? Timing is everything in life, and Putin is counting on China precisely when China has its own issues to deal with. If China was continuing to power forward, Putin’s pivot would have turned him into China’s pilot fish. Now even being a pilot fish looks out of reach.

To all those who hyperventilated at the announcements of huge Sino-Russian gas deals: when will you people learn to discount virtually anything Gazprom says down to just above zero? That’s especially true when there was a huge political reason for Putin to hype such a deal. I guess suckers never learn.

The second part of the twofer here is the further evidence it provides of China’s economic troubles. Look at the commodity carnage going around: oil, copper, iron ore, gold, platinum, you name it are in the dumper. China put them there. This is just another pixel in the image.

 

 

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July 12, 2015

Gazprom Struggles. And There Was Much Rejoicing.

Filed under: Commodities,Economics,Energy,Politics,Russia — The Professor @ 7:18 pm

Surprise, surprise, surprise. The vaunted Russia-Turkey gas pipeline deal is not really a deal. The reason-brace yourself against the shock-is that the two sides can’t come to an agreement over price:

Russia’s plan to build a new $15 billion pipeline to Turkey is at risk of delay because of a fight over gas prices, according to people with knowledge of the matter.

State-run OAO Gazprom and its Turkish counterpart Botas had a six-month period to agree on prices for gas supplies between the two countries, which expired on Monday. The Ankara-based company now has the right to take the matter to international arbitration, three of the people said, asking not to be named because the information is private.

The dispute over prices means there’s no immediate prospect of signing a binding pact for the new pipeline, the second between Russia and Turkey. An agreement could now be delayed until at least October, two more people said, also asking not to be identified.

I was about as surprised about this as I was to see the sun rising in the east this morning.

Remember: Gazprom consummates maybe one percent of the “deals” that it announces. And the deals founder on price. Almost every time.

By the way, this totally demolishes the alleged pipeline deal between Russia and Greece, because the Grecian pipeline was intended to carry gas that Russia had shipped to Turkey on to Europe.

Not that the $2-odd billion pipeline deal would have been more than spit in the ocean of Greece’s debt problem: the Greek government would only realize a fraction of the $2+ billion, many years from now. And as things look now, never.

In other Gazprom news, apparently the company is stiffing Turkmenistan:

Turkmenistan, irked by falling natural gas exports to Russia, hit out at Moscow’s gas export monopoly Gazprom on Wednesday, saying the energy giant had not paid for gas purchased from the Central Asian country so far this year.

“Since the beginning of 2015, OAO Gazprom has not paid for its debts to state concern Turkmengas for the shipped volumes of Turkmen natural gas,” Turkmenistan’s Oil and Gas Ministry said in a statement on its official website (www.oilgas.gov.tm).

Could be worse. Gazprom could have blown up the pipeline.

This suggests that Gazprom is having some major cash flow problems.

And who says there is no good news?

 

 

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July 2, 2015

Though I’ve Been Away, I Keep a Weather Eye on Putinsanity

Filed under: Economics,Military,Politics,Russia — The Professor @ 6:50 pm

Apologies for the light posting. Some travel (to Sweden, Denmark and London), work, and a need to decompress for a bit account for the absence.

I have kept a watch on things, though, and some Putinsanity has caught my eye.

For instance, VVP has accused cursed furriners of luring, Pied Piper-like, talented Russian youth away from the glorious Motherland:

A network of [foreign] organizations has ‘rummaged’ through the schools in the Russian Federation for many years under the guise of supporting talented young people. In reality, they simply hoover everything up like a vacuum

Note to Vlad: the reason that “talented young people” want to leave in droves is less that “foreign organizations” attract them, but that the state and society that you have constructed repel them.

Note the rampant insecurity here. I think that Putin knows that Russia has little to offer. But he can’t admit that, so he rages agains the West.

Item two: Surprise, surprise, surprise. The Russia-Turkey gas pipeline project is stalled because of a failure to communicate on price. Don’t say I didn’t tell you so:

Russia’s plan to build a new $15 billion pipeline to Turkey is at risk of delay because of a fight over gas prices, according to people with knowledge of the matter.

State-run OAO Gazprom and its Turkish counterpart Botas had a six-month period to agree on prices for gas supplies between the two countries, which expired on Monday. The Ankara-based company now has the right to take the matter to international arbitration, three of the people said, asking not to be named because the information is private.

The dispute over prices means there’s no immediate prospect of signing a binding pact for the new pipeline, the second between Russia and Turkey. An agreement could now be delayed until at least October, two more people said, also asking not to be identified.

The Russians think that you are stupid enough to believe that this is due to Erdogan’s defeat in the recent parliamentary elections, but that’s just a face saving cover story. Truth be told, the Russians are masters of vapor agreements. By my rough estimate, two of the last 100 announced gas deals have come to completion. And I’m being generous.

Anyone who believes anything Russia/Gazprom say about any pipeline project, deal, contract, etc., please contact me! Have I got a deal for you!

(As an aside, Erdogan and Putin are doppelgängers in a competition for the coveted titled of Most Insane Wannabe Autocrat Obsessed With Restoring Lost Imperial Greatness. May the best nut win!)

Next comedic moment: the Russia-Greece pipeline vapor deal, which is effectively contingent on a (non-existent) Russia-Turkey pipeline vapor deal. (BTW: Why is everybody freaking out about Russia courting Greece? Let Putin have them! Just what he needs. Another economic basket case, to join Abkhazia, Transnistria, South Ossetia, Donetsk, Luhansk. May the Orthodox nations enjoy every happiness! They deserve one another!)

Item three: Russia blasts the new US defense doctrine, which (realistically) identifies Russia as a threat to the sovereignty of its neighbors due to its willingness to use force as “confrontational.”

This is a perfect illustration of Pirrong’s Principle of Putinist Psychological Projection. Whatever the Russians say about the US is a pitch-perfect description of what the Russians are doing. They are the masters of projection.

This leads to my last observation: what will Putin do in Ukraine? He can’t go back: that would be a humiliating climbdown which he is psychologically incapable of, and which could actually threaten his power. Maintaining the status quo is the lowest risk, but offers the least potential for gain, and creates the real potential for a creeping collapse as the economic drain of sanctions and militarization saps the economy. Going forward and attacking Ukraine presents serious risks. Ukraine might be able to deny him a quick victory and impose serious losses. Even if he prevails operationally, the costs of occupation will be steep. These include the direct costs, which will be especially high if Ukrainians resort to historical precedent and wage a grueling guerrilla war (remember the Greens?). They also include the indirect costs of almost certainly escalated sanctions.

He’s in a fine mess, and I don’t know how he will react. Time is running out for a summer offensive, but time is not on his side generally. My fear is that he will follow Eisenhower’s dictum: “If a problem cannot be solved, enlarge it.” The question is: where? The Baltic-Finland, Sweden, Denmark, as well as the Baltic States-is a real possibility. Putinsanity is hard to predict, but nothing is beyond the realm of possibility.

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June 6, 2015

The Russian World Cup Bid Was So Clean They Just Had to Destroy Their Computers

Filed under: Politics,Russia,Sports — The Professor @ 6:17 pm

Russians from Putin on down are freaking out about the possibility that the FIFA corruption scandal will cause the 2018 World Cup to be wrested from them. But never fear. The head of Russia’s organizing committee, Alexei Sorokin, claims that the Russian bid was “clean”:

The head of the organising committee for the Russia 2018 World Cup has insisted that the bid was clean, transparent and “done in accordance with all the practices that are in place in Fifa”.

Well that’s sort of the problem, Alexei. A “clean and transparent bid done in accordance with all the practices that are in place in Fifa” is an oxymoron. The practices in place in Fifa are dirty and opaque.

And of course, it was precisely because its bid was so clean, transparent, etc., that Russia destroyed the computers its committee had utilized:

But it was the lack of evidence provided by the bid team which was of most concern, according to the author of the summary, Fifa’s head judge, Hans-Joachim Eckert.

He wrote: “The Russia 2018 bid committee made only a limited number of documents available for review, which was explained by the fact that the computers used at the time by the Russia bid committee had been leased and returned to their owner after the bidding process.

“The owner has confirmed the computers were destroyed in the meantime. The bid committee also attempted to obtain access to the Gmail accounts used during the bidding process from Google USA. However, the Russia bid committee confirmed Google USA had not responded to the request.”

The head of Russia’s 2018 organising committee, Alexey Sorokin, told Sky Sports News: “We rented the equipment, we had to give it back, then it went back – we don’t even know where it went – to some sports schools, so quite naturally other people used it.

“Whatever we could supply, everything we could supply to the investigation we did. But we have to bear in mind that four years have passed since then, so some of the information we could just forget, naturally.”

Sorokin’s response there is priceless, isn’t it? It reminds me of the punchline to Steve Martin’s How to Make a Million Dollars and Not Pay Taxes bit. 1. Make $1 million. 2. Don’t pay taxes. 3. When the IRS confronts you, say (theatrically) “I forgot.” Presumably the Russians will react to an indictment or a revocation of the WC with “well excuuuuse me!

Perhaps the Russians destroyed the computers because definitive documentation of their clean, transparent and honest dealings would ruin their reputations.

No doubt the Russians are hoping that others who sent or received emails from them were as solicitous in their document non-retention policy as Russia.

What’s more, with all the arrests and indictments, those involved are threatening to talk. Most notably so far, Trinidad’s Jack Warner threatens to unleash “an avalanche of secrets” implicating Blatter.

I am far less interested in learning about the payees of the bribes, than the payers. Eventually someone, or someone’s computers, will blab. And that’s what has Putin (and Russians generally) losing it.

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June 5, 2015

Is the NSA Spying on Foreign Government Hackers? I Sure As Hell Hope So

Filed under: Military,Politics,Russia,Snowden — The Professor @ 7:08 pm

The latest expose from Putin’s little monkey, Edward Snowden, desperate to maintain his relevance, is that the NSA monitors addresses and cybersignatures linked to foreign hackers, and specifically, foreign government-connected hackers:

In mid-2012, Justice Department lawyers wrote two secret memos permitting the spy agency to begin hunting on Internet cables, without a warrant and on American soil, for data linked to computer intrusions originating abroad — including traffic that flows to suspicious Internet addresses or contains malware, the documents show.

The Justice Department allowed the agency to monitor only addresses and “cybersignatures” — patterns associated with computer intrusions — that it could tie to foreign governments. But the documents also note that the NSA sought permission to target hackers even when it could not establish any links to foreign powers.

To which I say: I sure as hell hope so.

It is more than a little ironic that this article appeared almost simultaneously with the revelation that some foreign organization or government hacked into US government computers, and stole the personal information of millions of government employees. It’s hard to imagine a more telling, vivid contrast between the highly abstract and limited treat to American’s personal privacy posed by the measures described in the NYT article, and the very real threat to that privacy posed by the target of those measures.

This all points out the utter asininity of the Snowden fanatics (who, alas, include some members of Congress and at least one presidential candidate), who appear completely unwilling or unable to think of trade-offs and real world choices, but instead focus monomaniacally on the threat to their personal privacy posed by the US government, while ignoring other more serious threats that (unlike the NSA) operate subject to no legal constraint or oversight whatsoever. Yes, the USG can be abusive, at times to the point of being tyrannical. But we need to speak of specific cases.

Tell me. Whom do you believe is a bigger threat to your privacy? The NSA or hackers, foreign hackers in particular?

There is a pronounced whiff of narcissism from those who think that the NSA really gives a damn about them and their precious online secrets. Sorry to break it to you, but it doesn’t, unless perhaps you have had a bad breakup with an NSA employee. It hoovers up vast amounts of information, but is focused on filtering out the noise to get at intelligence-relevant signals. And believe it or not, the hours you spend on Tinder are nothing but noise.

Hackers, on the other hand, find your information quite fascinating, precisely because they can monetize that information. They can turn ethereal bytes into solid gold.

So there is a real trade off, and when you conceive of it as a trade off the choice becomes pretty obvious. At the cost of allowing the NSA to touch a highly limited sliver of your personal data, you can increase the odds of detecting or deterring a truly malign hack. Or, you can protect your address and cybersignature from the prying eyes of the NSA, and dramatically increase the odds of having your most valuable personal information fall victim to hackers. That’s the trade-off. That’s your choice. Deal with that reality. Those who choose to let the hackers run riot rather than have a few limited pieces of information reside on an NSA-controlled server deserve to have Died of a Theory as their financial epitaph.

(Regarding the hack of the US Office of Personnel Management, the administration pointed the finger at China with unseemly haste. Perhaps. But this seems more like a Russian MO than a Chinese. The Russians are interested in information they can monetize, the Chinese less so. Perhaps China is the culprit, but I wouldn’t rush to judgment.)

The NYT/PP article makes it clear that the DOJ only asked the FISA court for authority to collect the data from intruders connected to foreign governments. The NSA wanted a broader mandate,  including the ability to collect from foreign intruders not reliably tied to a government, but DOJ didn’t ask for it.

That’s too bad. Non-Government hackers, mainly operating from Russia, other FSU countries, and China, are arguably a bigger threat to personal privacy than governments. The non-government hackers have mercenary motives, and your data is particularly attractive to them. Most of the major hacks of valuable personal information have been executed by foreign criminal organizations with no demonstrable connections to foreign governments (though in the case of Russia, they likely operate under Russian government protection) So again looking at the trade-off, I’d prefer that the NSA have the broader authority. That would give me more privacy, and more information security.

With regards to Snowden, isn’t it interesting that Snowden’s organ grinder-Putin-would be one of the main beneficiaries of a restriction on the NSA’s authority to track foreign government hackers? Surely just a coincidence, right, because little monkeys never dance to their master’s tunes, do they?

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May 11, 2015

Merkel in Moscow: A Laudable Sentiment, A Misguided Message, and a Lost Opportunity

Filed under: History,Military,Russia — The Professor @ 7:17 pm

Angela Merkel tried to walk a thin line on VE Day. She traveled to Russia, but did not attend the atavistic, militaristic, and jingoistic parade on the 9th. Instead, along with Putin, she laid a wreath at the Tomb of the Unknown Soldier on the 10th. She also met with Putin, and criticized him for Crimea and Donbas.

Merkel said this to explain her visit:

“We cannot close the book on our history,” Ms. Merkel said in her weekly video message May 2. Despite deep differences with Russia over Ukraine, she said, “it is important for me to lay a wreath on May 10 together with the Russian president in remembrance of the millions of dead for which Germany is responsible from World War II.”

Those are laudable sentiments, but she could have done things differently, and better. Indeed, her Russian-centric approach is deeply flawed, and has implications for current events.

Ukraine and Belarus suffered far more, proportionally, than did Russia during WWII. Not that Russia got off lightly. Clearly not. But in terms of loss of life, and in terms of German war crimes, Ukraine and Belarus were ground zero.

Merkel could have and should have gone to Kiev to participate in Ukraine’s far more restrained and somber commemoration. She should have laid a wreath there, in remembrance of the millions of dead in Ukraine for which Germany is responsible. Then she could have gone to Moscow on the 10th.

By going to Moscow only, and not Kiev, she implicitly accepted Russia’s assertion that it is the heir to the Soviet Union; that to Russia is due the honor and the glory for defeating the Nazis; and that Germany owes apologies to Russia, or that at least Russia accepts apologies on behalf of all other ex-Soviet peoples. This implicitly subordinates Ukraine, Belarus and other former-SSRs to Russia. By going to Russia only, she implicitly stated that Russia is the first among nations spawned from the collapse of the USSR, and that the others are inferiors.

This is a particularly dangerous message to be sending now, when Russia is quite explicitly attempting to subordinate these other nations by force, economic pressure, and subversion. Merkel is effectively validating Putin’s belief that Ukraine is not a “real country,” and that Ukraine’s independence is illegitimate and a historical injustice.

By visiting Kiev, Merkel could have sent a very different message. She could have paid homage to those that Germany victimized from 1941-1945, while also saying that the lesson and legacy of the Second World War should be that large aggressive nations should not dominate small and weak ones.  Should could have implicitly upbraided Putin, given support to those he wants to dominate, and made amends for wrongs that Germany inflicted on non-Russians.

Merkel walked a thin line, but she could have walked a much better one.

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