Streetwise Professor

December 11, 2016

Exxon’s Russian Dealings Are No Reason to Fret About Tillerson. If Anything, the Reverse is True

Filed under: Economics,Energy,Politics,Russia — The Professor @ 12:16 pm

Current reports suggest that Trump will select ExxonMobil CEO Rex Tillerson as his Secretary of State. Like many things Trump, this creates substantial uncertainty. For despite the fact that Tillerson has been a public figure for years, he has not been part of the foreign policy community, and hence his view on specific issues (China, the Middle East, and on and on), and his philosophical/ideological/doctrinal orientation are unknown.

As for the fact he has not been part of the FP community–good! It’s not as if it has covered itself in glory in the past couple of decades. Chin pullers moan that Tillerson’s appointment would represent the biggest discontinuity in US foreign policy in years. Again–good! We’re in a rut. Discontinuity has potential.

Others fret that as the mere CEO of one of the largest (if not the largest) corporations in the world, which invests in highly complex technology, operates in virtually every country on the globe, and which must navigate complex political issues in these myriad countries, is just not up to the job of managing the complexities of international diplomacy:

Some former officials said it was an open question whether Tillerson could make the transition from running Exxon, a vast company that explores for oil and gas on six continents, to the even greater complexity of being secretary of state.

“Negotiating a real estate deal or an oil contract with Saudi Arabia is not the same thing,” said Aaron David Miller, a former State Department Middle East specialist now at the Wilson Center think-tank in Washington.

“It’s not a complicated summit where you are trying to reconcile historical woundings, religious identities, sectarian tensions.”

“I’m not arguing that he can’t make this conversion. I just don’t think we know.”

 

Because ex-pols and career diplomats like John Kerry, Hillary Clinton, Warren Christopher, Cyrus Vance, James Baker, etc., are such towering geniuses that they are much better able to manage the complexities of foreign affairs.

Please.

In today’s hysteria over Russia, of course Exxon’s and Tillerson’s relationship with Russia and Putin has been the focus of much angst and criticism. He received the “Order of Friendship” from Putin! XOM was going to invest zillions in Russia but sanctions prevented that! Sanctions cost Exxon billions! He’ll go easy on Russia to help Exxon!

Tillerson ran an oil company. Oil companies look for oil. Russia has oil. Tillerson’s company looked for oil in Russia. Not that complicated.

Further, XOM was not nearly as dependent on Russia as other majors, such as BP or Shell. Consider the billion or so that Exxon had at risk in joint ventures with Rosneft, but which were scuppered by sanctions. Well, a billion is real money, it’s not nearly as big a deal for Exxon because, well, Exxon is so damn big. Even at the depressed values due to low oil prices, $1 billion is .25 percent of XOM’s market cap. The other numbers bandied about–$400-$500 billion in investments in the Arctic over decades–are highly speculative, and dependent on many contingencies. Indeed, the main source of these numbers is hype by Igor Sechin, and should be discounted accordingly.

But even going beyond that, oil exploration and development is a highly fraught and unpredictable endeavor, especially in harsh natural environments like the Arctic, and harsh political environments like Russia. Seemingly promising finds can turn out to be disappointing. Numerous technological hurdles must be overcome. Political difficulties must be surmounted. Take a look at the Shtokman saga to see how these things can bedevil big Arctic projects.

Most importantly, development economics depend on prices, and prices are highly volatile. The initial XOM-Rosneft deals were negotiated in 2011-2013 when oil prices were north of $100/bbl, and were expected to stay there for, well, pretty much forever. A mere year later, oil prices cratered, and now the conventional wisdom is that $100/bbl oil is not on the horizon, even the distant horizon. Even absent sanctions, there would have been a massive re-evaluation of the scale and scope of the Rosneft-XOM cooperation.

Look at Shell. The technological challenges and costs of the Arctic, plus low prices, have led it to pull the plug on its once vaunting ambitions there.

Here’s something else that should provide this perspective. One of Tillerson’s most important moves as CEO was the acquisition of shale operator XTO Energy, for which Exxon paid $31 billion. This dwarfs the commitment to Russia, and shows that Tillerson was investing bigger dollars  in a technology that actually reduced the need for access to Russian resources.

To some, any involvement in Russia inevitably makes one beholden to Putin. Consider this from one of the lead hysterics, Julia Ioffe:

What does that kind of friendship mean? Past experience suggests it is not a relationship of equals. It means that, at the drop of a hat, the Kremlin might discover serious environmental violations at your Sakhalin plant and drive you out of the country, as it did to Royal Dutch Shell, and then give the lucrative access to a better, domestic ally. It might decide to harass you with lawsuits to force you out, as it did to BP. And it might even throw you in jail, as it did to powerful Russian oligarch Vladimir Yevtushenkov in order to take a small oil company, Bashneft, away from you and give it to Sechin. Putin would even arrest his largely popular economics minister, as he did on November 15, to help Sechin retain it.

The lesson of Putin’s 16-year tenure is a lesson that all businesspeople, foreign and domestic, have learned: to do business in Russia, you have to be on good, personal terms with Putin and Sechin. And you have to understand that those two gatekeepers to Russia’s riches are fickle and sadistic, and, as former KGB operatives, know little of real friendship. To do business in Russia—both for Exxon Mobil and for Tillerson’s own massive retirement fund whose fortunes would rise significantly if a Trump White House lifted sanctions—you have to dance to Putin’s tune, and take whatever favors and humiliations he sends your wayPutin may act a friend and pin state medals on your breast, but he is, ultimately, a cynic. And to play ball with him, you have to be a cynic, too. Forget your honor, your rule of law, your independent judiciary, your human rights, your international law, and focus on the gold coins he throws to your feet. And forget looking dignified as you gather them up.

Note that none–NONE–of Ioffe’s examples involve ExxonMobil. Consider Shell’s travails in Sakhalin. ExxonMobil had a project in Sakhalin as well–Sakhalin I. Gazprom tried for years–years–to muscle its way in on that the way it muscled in on Shell’s Sakhalin II. It failed miserably. XOM swatted them away. And note that Gazprom and the Russian government didn’t pull the crap with Exxon that they pulled with Shell, or with BP in Kovytka or with TNK-BP. That’s a very big dog that didn’t bark. You think the Russians were just being nice to Exxon? Hardly. They respond to strength, and knew better than to confront Exxon.

When Rosneft and Exxon were negotiating their deals in the 2011-2013 time frame, Sechin wanted an arrangement similar to that he extracted/extorted from BP: an XOM investment in Rosneft combined with a big Rosneft equity stake in XOM. This went nowhere. Instead, Exxon negotiated a set of joint ventures that limited its exposure and gave it a lot of optionality and off-ramps, thereby limiting its vulnerability to Russian extortion. As further protection, it also exchanged hostages, namely JVs in the GOM. (These were ironically terminated last week, due to bad economics and unfavorable exploration results, thereby demonstrating the tenuous nature of these kinds of ventures.) Sachin was the supplicant, and was rejected.

All of this reveals that ExxonMobil, and Tillerson personally, were quite aware of the nature of the Putin regime, and the dangers in dealing with it. He hardly needs instruction from Julia Ioffe on these things. Indeed, he has more schooling in these matters that pretty much anyone alive, and has far fewer scars to show for it than pretty much anybody else who has tried to deal in Russia (Bob Dudley, for instance). He has fewer scars because he had more power to fight back than even behemoths like BP. Because Exxon is the behemoth among behemoths.

XOM/Tillerson were clearly aware of the lack of property rights in Russia, and the vulnerability to expropriation. They were the industry leaders at structuring contracts to reduce their risk to this. Further, they had the economic heft to stand up to Russia and Putin: Exxon’s market cap is almost equal to the market cap of the entire Russian market. What’s more, Exxon used this economic heft to get good deals out of Russia. If anything, Russia needed Exxon more than Exxon needed Russia–something that BP or even Shell could not say.

In other words, Tillerson is a man who understands Russia well, is intimately aware of its dysfunctions, understands relative power, and is willing to negotiate from a position of strength in order to obtain positive outcomes that limit the risk of exposure to these dysfunctions.

This is a problem why, exactly? That sounds like the perfect skill set. I know those still in shock after losing an election want to blame Russia for all their misfortunes and are (insanely) seeking open confrontation. That’s idiocy. He will have the resources of the most powerful nation in the world at his disposal, and he will know that American power vastly exceeds Russia’s. Tillerson has taken Putin’s measure, knows the players, and knows how to deploy power to reach mutually beneficial outcomes. Sounds good to me.

Also, incentives matter. As CEO, Tillerson was accountable to shareholders, and his compensation largely aligned his incentives accordingly. He was not (directly) accountable to the US government or the American people, and therefore it is expected that he would sometimes make decisions that benefited Exxon but which were not necessarily aligned with American policy or even American interests. (Though no one has provided a compelling example of that.*)

As Secretary of State, however, his incentives will be far different, and his interests will be far less aligned (if aligned at all) with his former employer. However imperfectly, the incentive structure of democratic politics will lead him to make choices that will differ substantially from those he would have made as CEO of Exxon. I would note that there are many, many instances where what people do in office is very different from what they did or said previously. This is because they face very different incentives. To go out on a limb, I would not be surprised if Tillerson becomes a Strange New Respect winner.

I have no idea how Tillerson will perform as Secretary of State. But I am highly confident that his long experience in Russia does not represent a serious concern: in fact, I would venture that it is his greatest attribute.  He dealt with the Russians for years, and didn’t get run over, and indeed, negotiated some pretty favorable deals with them. That speaks volumes.

Further, I would note that Russia is obviously an important policy challenge, but as a declining power that faces some rather daunting geopolitical and economic handicaps, I do not consider it our primary policy threat. The political class’ recent obsession with Russia, to the exclusion of more important countries–China, most notably–reflects the narcissistic rage of a part of the political class that was thwarted in its ambitions, and which is casting about for a scapegoat. These people didn’t give a damn about Russia before last summer, and indeed, to the extent they mentioned it at all it was to scorn those (e.g., Romney) who raised alarms about it. These are not serious people and their hysterics should not be taken seriously. Fixating on Tillerson’s Russian experience and dealings will distract attention from inquiries about his policy thinking on more important issues.

*In the comments Tim Newman mentions ExxonMobil’s dealings with Kurdistan in defiance of US government policy. That’s a good example, though I do find American policy in this regard problematic. Another example that comes to mind is Tilleson’s decision to terminate drilling in Ukrainian waters around the time of the Crimean crisis.

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44 Comments »

  1. Further, XOM was not nearly as dependent on Russia as other majors, such as BP or Total.

    You mean BP and Shell? Total only had Kharyaga as an operating asset in Russian, and they’ve sold that.

    Comment by Tim Newman — December 11, 2016 @ 12:30 pm

  2. Though no one has provided a compelling example of that.

    Exxon’s dealing directly with the de facto government of Kurdistan rather than the US-backed central government in Baghdad.

    Comment by Tim Newman — December 11, 2016 @ 12:35 pm

  3. @Tim. Corrected. Thanks

    The ProfessorComment by The Professor — December 11, 2016 @ 1:00 pm

  4. From the other end of the line.
    Kerry has done nothing except burn aviation gas.
    Tillerson might do something.
    That is worrying.

    Comment by bloke in france — December 11, 2016 @ 2:14 pm

  5. @Tim. Thanks. I added a footnote mentioning that example, and crediting you. It is an example of XOM flouting government policy, but since the policy is problematic I have a hard time getting too fussed about it. Another example that comes to mind is XOM shutting down operations in Ukrainian waters during the Crimean episode. That’s understandable, but a little more troubling.

    The ProfessorComment by The Professor — December 11, 2016 @ 2:45 pm

  6. Can anyone suggest any way in which Hellary was better qualified to be Sec of State than Tillerson?

    Comment by dearieme — December 11, 2016 @ 3:31 pm

  7. The 2013 Bloomberg article is rather fascinating when evaluated in hindsight with the timeline of Putin’s actions in Ukraine.

    https://www.bloomberg.com/news/articles/2013-07-11/exxon-s-735-million-ukraine-pledge-shows-black-sea-zeal-energy

    http://www.dallasnews.com/business/energy/2014/03/05/exxon-mobil-puts-ukraine-gas-prospect-on-hold

    http://www.wsj.com/articles/sanctions-over-ukraine-put-exxon-at-risk-1410477455

    Comment by AndyEss — December 11, 2016 @ 3:43 pm

  8. “I do not consider it our primary policy threat.”

    Well, it depends. I guess, the term “Our” here, excludes the NATO-allies of the Central and Eastern Europe (not even mentioning countries as Sweden and Finland)?

    Comment by Dixi — December 11, 2016 @ 3:50 pm

  9. @bloke. In 2015-2016, I saw Kerry’s plane on the tarmac in Geneva 4 times as I was either arriving or departing. He worries about global warming. If he was serious, he’d fly less.

    Tillerson is another Forrest Gump box of chocolates pick. I have no idea what we’re going to get. All I know is that being-soft-on-Russia-because-he-was-CEO-of-an-oil-company is a dumb reason t oppose him.

    The ProfessorComment by The Professor — December 11, 2016 @ 4:38 pm

  10. Clearly the CEO of Exxon does not have the stellar preparation that you get from being The Wife of the President and A Senator from New York.

    Comment by aaa — December 11, 2016 @ 10:42 pm

  11. I’m not sure why Total’s Novatek investment should be excluded just because it’s non-operated. (BP gets 30% of output from Rosneft, and it’s obviously not operated either.) Total owns 19% in Novatek and 20% in Yamal LNG. The Novatek share alone accounts for more than 10% of Total’s output. “In 2015, Russia became the leading contributor to the Group’s production,” according to their 2015 report.

    BTW, it’s Kovykta, not “Kovytka.” Even native speakers often get it wrong because of the intrusive Slavic suffix, “k.” But then Kovykta is about as Slavic as Chippawa and Chattanooga are Saxon or Norman.

    Comment by Alex K. — December 12, 2016 @ 3:50 am

  12. “However imperfectly, the incentive structure of democratic politics will lead him to make choices that will differ substantially from those he would have made as CEO of Exxon.”

    Sure thing! And that fox trying to get into the chicken coop is just wanting to make friends!

    Comment by Person_XYZ — December 12, 2016 @ 4:47 am

  13. Finally a Secretary of State that realizes sanctions are another failed ploy targeting countries that don’t subscribe to Progressive ideology and toe the Globalization line. A fox in an international chicken coop that he knows contains Many foxes in contrast to predecessors that thought they were the lone fox in the coop by virtue of their mastery of correct human thought.

    Comment by pahoben — December 12, 2016 @ 11:56 am

  14. I don’t think the immutable principle of the inviolability of borders is a part of Progressive ideology and toes the Globalization line.

    Comment by LL — December 12, 2016 @ 12:20 pm

  15. SWP – still trying to reconcile your shift on Russia. A year ago you were hardline, saw them as misinformation artists (see e.g. Zerohedge) … now? not so much. What gives? Trump?

    Comment by job23_12 — December 12, 2016 @ 1:26 pm

  16. @job23_12.

    My views haven’t changed. I am pushing back at the unhinged shrieking about Russia emanating from people who (a) don’t know shit about it, (b) didn’t pay attention to it until last summer when it was ambiguously linked by sketchy circumstantial evidence to the DNC hack (even though they had been silent on evidence of Russian and Chinese hacking for years), (c) had often mocked anybody who suggested that Russia might be more threatening than President The 80s Want Their Foreign Policy Back said, and most disturbingly, (d) in some in instances, are advocating armed confrontation in Syria and elsewhere. As I said in the Tillerson post, much of the current obsession with Russia is the narcissistic rage of a part of the political class that believes that it was denied what was due it, cannot admit that they lost because of their own incompetence and repulsiveness, and are furiously seeking a scapegoat.

    I still see ZH as an misinformation outfit. It’s just I don’t believe that every other media outlet that had the temerity to criticize Hillary is, as the whole fake news-Russophobia hysteria nexus suggests.

    I have no illusions about why the Russians are in Syria, and wrote about this starting the very day that they intervened. Since there is no US interest in Syria that would justify the expenditure of American blood, let alone a superpower confrontation, I have criticized those who are advocating American involvement–especially since that would be on the side of jihadists who are not our allies.

    The point of the Tillerson post is that if I know what bastards the Russians are, then for crissakes Tillerson does because he dealt with them for decades. Moreover, unlike virtually other western energy company that operated in Russia, he didn’t get steamrollered. I’d sure as hell want him negotiating with the Russians instead of John “Show Some Grace” Kerry. How effing pathetic is that?

    I have no illusions about the Russians, but by the same token I haven’t exaggerated them into a bogeyman worse than the USSR. I have pointed out that it is totally counterproductive to do so because it only eggs on Putin and his ilk. I am pushing back on insanely exaggerated assertions that have potentially dangerous consequences. I am also pushing back at idiotic narratives that make the Russians responsible for every ill that befalls the US, precisely because that is a cheap way of denying the agency and responsibility of a failed party and a failed political class in the US. They are only that powerful in their wildest dreams. And maybe not even then. Why feed that?

    I came of age during the last third of the Cold War, when (a) the USSR and US were much closer peer rivals than Russia and the US are today, (b) the Soviet Union still supported robust revolutionary and subversive movements around the world, and (c) engaged in active measures as bad or worse than anything alleged today. And there was not nearly the hysteria then there is now. The Democratic Party today could fit in with the 1950s vintage John Birch Society–with the only difference being that due to (a)-(c) above the Bircher’s paranoia was more grounded in reality. It’s asinine. So even though I am no lover of Putin or the current Russian regime, I think it is imperative to provide some perspective.

    The ProfessorComment by The Professor — December 12, 2016 @ 9:16 pm

  17. @job23_12. In other words, I’ve stayed pretty much in the same place: there has been a stampede to extreme Russophobia from the left in particular that makes me look like a Putin-o-phile by comparison. That just shows how absurd this is.

    Or perhaps the real story is that I was a sleeper agent attracting a readership by writing anti-Putin/Russia posts until FSB Control activated me for the 2016 election and the transition to a Trump regime.

    I am sure that some believe that. I don’t know if there’s enough thorazine to go around.

    The ProfessorComment by The Professor — December 12, 2016 @ 9:33 pm

  18. @LL
    If there is an immutable principle of inviolability of borders then there must be immutable borders. Will you please specify specifically what immutable borders you have in mind? Of course in a Global Utopia there would be no borders and so immutability a moot point in that case when the primitive human tribal drives have been completely eradicated in favor of the higher exalted Progressive world view.

    I haven’t kept up with the situation on the ground in Ukraine but my belief is that the areas where the population is in the majority pro Russian is under Russian control and the areas where the population is opposed is under Ukrainian control. In the case of Ukraine I doubt a more stable option available. The history of the Ukraine demonstrates that borders are mutable.

    Comment by pahoben — December 13, 2016 @ 4:06 am

  19. “I haven’t kept up with the situation on the ground in Ukraine but my belief is…”

    After this profound geopolitical view, no need to argue… Hey folks living in the Eastern and Central European former Soviet satellites with a Russian speaking minority. When a part of Your country have been (re)occupied by Russia, stay calm, that’s the “most stable option available”…

    Comment by Dixi — December 13, 2016 @ 4:51 am

  20. Alex,

    I’m not sure why Total’s Novatek investment should be excluded just because it’s non-operated.

    It’s a fair point, but “dependency” doesn’t just mean where your investments are paying off in the context of an oil company, it also means how much managerial and technical oversight you can have and (by extension) how many of your staff you can keep employed either in the subsidiary or at HQ. Selling a stake in a field is something that barely makes even the internal news in an oil company, selling the operatorship (Kharyaga) or losing it altogether is a Big Deal. One of the reasons the Sakhalin II debacle didn’t hit too hard within Shell was because they retained operatorship. So whereas Total handing over bags of hard currency to Novatek in the hope they will get some back one day does constitute exposure and dependency, it is quite different from Total’s staff getting involved in Russia, securing the licenses, environmental permits, applying the technology, securing funding, etc. The latter is what makes an oil company and oil company, buying a stake in a project can be done by anyone.

    The reason I suggested making the change to the post is because having worked in Shell, I knew the importance of Russia and how heavily invested they were from an operatorship point of view, and how they were (and still are) desperately hoping for another project in the future. In Total? Not so much. We sold operatorship of Kharyaga, and practically closed the affiliate in Moscow, laying off most of the staff. It’s hardly the sign a company is heavily invested in the place, let alone reliant. It is my personal opinion that Total’s presence in Russia, and the stake in Novatek, was down to de Margerie personally and his successor either isn’t much interested (or the Russians aren’t). I’ve never been convinced that stake in Novatek was very secure, anyway.

    Comment by Tim Newman — December 13, 2016 @ 6:20 am

  21. The latter is what makes an oil company and oil company…

    Should read: The latter is what makes an oil company an oil company

    Comment by Tim Newman — December 13, 2016 @ 6:21 am

  22. I haven’t kept up with the situation on the ground in Ukraine but my belief is that the areas where the population is in the majority pro Russian is under Russian control and the areas where the population is opposed is under Ukrainian control.

    That’s not it, unfortunately. Putin was correct in thinking people who lived in Crimea would want to be under Russian rule if he could arrange it, and so he did. He then took this success, and the ease of accompanying it, to assume those in the Russian-speaking and supposedly “pro-Russian” regions of Eastern Ukraine wanted the same thing, and so he attempted a similar takeover. I suspect he was somewhat surprised to find the people of that region did *not* want to be ruled by Russians, and particularly by the knuckle-dragging oafs that are running the pro-Russian militias who are forcing people to take sides, and his campaign has bogged down in a nasty stalemate that will probably drag on for years. The situation in Ukraine was never about who was pro- or anti-Russian, the division was more along the lines of who thought leaning towards the EU was the only viable route out of 25 years of corruption-riddled malaise or whether “more of the same” rule by gangsters in leather jackets reporting to Moscow was the way to go. It was dressed up as an ethnic war by various sides, but it was nothing of the sort – hence the pushback of the Russian incursion into supposedly staunchly pro-Russian regions.

    Comment by Tim Newman — December 13, 2016 @ 6:30 am

  23. @Tim – Putler was NOT correct in “thinking” people in Crimea would want to be under Russian rule if he could arrange it.

    Millions of Tatars would beg to differ with you, and are now being severely persecuted.

    Millions of Ukrainians who lived in Crimea would also beg to differ with you, and they too, have been persecuted in Putler’s holiday “paradise.”

    The proof of the pudding is that Putler took Crimea by force, and unfortunately, with the help of then Senators Obummer Obamatollah and Lugar, Ukraine’s military had been severely dismantled to nothing. Putler’s little green men had to ask directions.

    Ukraine was leasing naval ports to Roosha – Sevastopol – and around that port and that little pocket, there were people who put on sentiments about wanting Putler. That was about it.

    Today, Crimea, which had once been thriving economically, is a wasteland – thank you Putler and his rule. And that is notwithstanding fat tub of lard Seagal, Putler’s butt-buddy, showing up in Crimea for motorcycle parades.

    The local seaquarium can’t even take care of dolphins, and has recently had to sell one.

    Not even Russians want to be under Russian rule – in Russia, one is either an accomplice or a victim.

    But they have not choice, because any expression of dissatisfaction is duly evaporated with an attitude adjustment but Putler thugs, who beat and or kill people who do not show the right attitude.

    And I agree with SWP – Tillerson is a very good choice, given his worldwide experience. To shriek that Tillerson will simply roll over for Putler is simply more hysterical shrieking from Demorats, who are inventing straws to hold on to while they drown in their own crap.

    Comment by elmer — December 13, 2016 @ 8:26 am

  24. @Tim

    You might take a look at the posts of the Kharkiv Human Rights Protection Group, including this one:

    http://khpg.org/en/index.php?id=1479252388

    The there is the typical sovok technique of putting people in psychiatric hospitals – after all, one must be crazy not to want to live in Putler’s wonderland:

    http://khpg.org/en/index.php?id=1480944192

    and reading the constitution is verboten in Putler’s paradise:

    http://khpg.org/en/index.php?id=1481586738

    At least 15 people were detained in Moscow on Dec 12, Russia’s Constitution Day, for a peaceful action reading the Constitution aloud. In St. Petersburg an activist is spending the night in police custody for a single person picket which even under Russia’s current unconstitutional legislation is legal.

    The last of the 15 Russians detained in Moscow on Russian Constitution Day for exercising their constitutional right to freedom of peaceful assembly were released late on Monday evening. The police had drawn up protocols, indicating that they will face administrative charges, and six of the activists initially refused to leave the police station until they were given copies. The documents will almost certainly be used in court to impose steep fines, with the likely claim that they had ‘infringed the procedure for holding public gatherings’ or that they disobeyed a police officer’ virtually never questioned by the courts.

    Comment by elmer — December 13, 2016 @ 11:16 am

  25. @elmer
    There has been no great exodus from Crimea and Crimea is a case study in failed sanctions. Crimea was never a paradise for the average citizen and the average citizen is not in revolt now. Sanctions have created hardships for the population but they do not blame Russia for those hardships but rather the international community that established these sanctions. The sanctions have zero point zero impact on Russian control and so are punitive on an unassuming population that did in fact vote in the majority for Russian control. Why under sanction for voting in the majority for Russian control?. I guess because they did not vote in a way that pleased Progressive elite in the US and EU. Good thing that the international community is not establishing sanctions on Wisconsin, Michigan, Indiana etc for voting for Trump in the majority.

    I expect the quality of life for the average Crimean Joe to improve once the bridge is completed to Krasnodar region. Not sure of the status of the bridge but bet there are some good stories associated with its construction.

    They voted for Russian control and they have Russian control and so why punish them. Crimea is a unique area and I assure you people there do not think in Progressive lockstep.

    Comment by pahoben — December 13, 2016 @ 2:14 pm

  26. Sanctions often seem to galvanize public opinion just the opposite to what the sanctions are intended to produce. Just those primitive tribal allegiances that are hard wired into our now outdated DNA that complicate the enlightened Progressive agenda.

    Comment by pahoben — December 13, 2016 @ 2:37 pm

  27. @pahoben:

    +++If there is an immutable principle of inviolability of borders then there must be immutable borders.+++

    You do realize that the latter clause does not follow from the former and your line is a complete non-sequitur? Borders may change and do change – they cannot be violated. That is the principle written down in the Helsinki Acts and the one that all countries are expected to follow.

    And BTW, the whole discussion about which population groups in Ukraine feel what about where would they like to belong is totally besides the point. There are legitimate borders of souvereign Ukraine as established 25 years ago and they cannot be changed other than by an act of Supreme Rada, the pairlament. Certainly not by actions of another country, like Russia.

    Comment by LL — December 13, 2016 @ 2:52 pm

  28. @LL
    Yes you are right and I stand corrected. My thought was focused on border change only resulting from violation and in that case my logic stands. If borders only change from violation and borders are immutably inviolable in principle then borders are immutable in principle.

    It is commonly accepted that the Helsinki Agreements are difficult to apply in post Cold War Europe and for Kosovo the case made that collective rights can prevail over national borders. Crimea has a unique history and the majority of the population consider themselves Russian and not Ukrainian nationalists.

    The majority of the Crimean population do not consider Russians as an occupying force but as providing protection from Ukrainian nationalists. I am not making any case against Ukrainian nationalism and support their efforts but simply observing that in the case of Crimea a more stable outcome if under Russian control when considering the population there and not considering external Russian actions.

    Comment by pahoben — December 13, 2016 @ 4:38 pm

  29. @pahoben

    Anthony Bourdain did a show from Crimea and from Ukraine before Putler’s little green men invaded Crimea. You take a look at Crimea then, and what it is now – the place is unrecognizable. By the way, that is not the only evidence of the wasteland that Crimea has become.

    Obviously, you have chosen the ignore the reports by the Kharkiv Project – and there are many, many other reports of the trampling on citizens by Putler and his henchmen in Crimea.

    And you are parroting the Kremlinoid propaganda about a “vote” for Russian control – there was no vote, there were people with guns pointed at them who were forced to vote, and indeed, the reported “turnout” in several cases was over 100% !!!!!!

    At any rate, I have no doubt that Tillerson is very familiar with all of that, since Exxon was not the only company exploring options in Crimea.

    And I still think that SWP is correct about Tillerson – his business experience makes him very familiar with situations all over the world, but I doubt very much that his actions as Secretary of State would be detrimental to the US.

    Comment by elmer — December 13, 2016 @ 9:25 pm

  30. […] subject see this from Steve Coll, author of Private Empire: ExxonMobil and American Power; this post from Streetwise Professor; and these two posts from The […]

    Pingback by The Real Challenge Facing Rex Tillerson | White Sun of the Desert — December 14, 2016 @ 2:25 am

  31. @elmer
    Sanctions have resulted in many of Crimea’s economic problems but has not changed Russian policy at all. When sanctions are considered with respect to Rules of Engagement they can be described as-wreak havoc on civilians but no military action. Sanctions are not effective and tend to galvanize public opinion opposite of what is intended. I guess it is the modern day equivalent of ineffectively laying siege to a fortified settlement.

    Otherwise I believe the Crimean population in the majority consider themselves of their own free will Russians and not Ukrainians. Many I am sure trace their family back to Tsarist days.

    Comment by pahoben — December 14, 2016 @ 4:24 am

  32. I believe the US has sanctions in one form or another in place on 30 countries so maybe 15% of all countries. They are not effective but allow the elites to consider themselves self righteously as actively forging a new world order.

    Comment by pahoben — December 14, 2016 @ 5:00 am

  33. @pahoben

    Everything in Crimea was just fine before Putler invaded it.

    Voting at the point of a gun does not constitute consent of the governed.

    Many people did indeed leave Crimea in order to avoid Putler and his “paradise.” Putler has had to spend tons of money via Rooshan government jobs in Crimea to prop up loyalty.

    And despite that, it is still a Putler wasteland, just like everywhere else he has touched.

    Not even lardbutt Seagal’s motorcycle rides can change that.

    Comment by elmer — December 14, 2016 @ 11:22 am

  34. @elmer
    May God have mercy on your immortal Soul if Seagal tracks you down.

    Comment by pahoben — December 15, 2016 @ 3:03 am

  35. @pahoben

    Seagal cannot affect my immortal Soul – and at this point, he can’t see his shoes past his own fat belly.

    Apparently, Putler loves fat no-talent “actors” to pal around with (including Gerard Depardieu), and Seagal is seeking publicity wherever he can find it. Sad. Very, very sad. Both sides have a mutual admiration society, which they think is also admired by people outside of their cheek-to-cheek bromance – but it’s not. Sad. Very sad.

    Comment by elmer — December 15, 2016 @ 9:33 am

  36. @elmer
    The BHO and HRD press releases about Putin’s purported hacking activity read as though they were penned by you except no mention Seagal. Did they edit out reference to his hindquarters?

    Comment by pahoben — December 16, 2016 @ 12:18 pm

  37. @Tim
    Good insightful post and I wish him luck developing transparency in Foggy Bottom. It is a man sized job but then he is used to man sized jobs.

    Comment by pahoben — December 16, 2016 @ 12:39 pm

  38. Watching last Obama news conference this year with subtitles. The global reach of CNN is appalling. For God’s sake much of the world believes this is true unbiased news from the US.

    Comment by pahoben — December 16, 2016 @ 2:15 pm

  39. Since CNN is available in most of Arfica many people even with US Ivey League educations think that soon the KKK will be invited for cross burnings on the White House lawn. It is absolutely appalling.

    Comment by pahoben — December 16, 2016 @ 2:27 pm

  40. Have to check the time stamps but I used appall before Obama.

    Comment by pahoben — December 16, 2016 @ 2:39 pm

  41. All warfare, to at least some degree, is economic competition. In the same vein, all statesmanship, to at least some degree, is economic competition. How replacing Lurch with someone who fully understands economic competition is a bad thing escapes me.

    Tillerson may not understand the minutiae of diplomatic formalities, but as far as promoting the interests of the United States on the global stage, I have no worries whatsoever.

    Comment by Charles — December 16, 2016 @ 5:55 pm

  42. @pahoben

    Peskov just told Obummer to put up or shut up, and denies russhin hacking

    I never thought I would ever find myself saying this, but here it is:

    Obummer, Mr Cash for Clunkers, is lying

    Peskov is, for the first time, and contrary to the Kremlinoid habit of lying, telling the truth

    How did Killery Pandersuit lose the election, let us count the way, whether coming from Obamatollah, or libtards, or midiots (media idiots):

    – talk radio – and especially Rush (you know, Rush = Russhin)

    – Comey

    – deplorables

    – russhins

    I have lost count of the rest of the pretexts

    Comment by elmer — December 16, 2016 @ 5:57 pm

  43. Willing to give all the cabinet appointments their chance at confirmation hearings, and post those, the opportunity to assume the office and set an agenda. I have been impressed so far with Trump’s appointments. Perry to head energy was great-since he was from Texas and theoretically has a lot of experience with energy. Him wanting to eliminate the department in 2012 is a plus. Perhaps he can realize his goal. The only appointment that concerns me is Treasury. I would have been more comfortable with John Allison, former head of BB&T. He was head of Cato and wrote an excellent book on how govt should have responded to the financial crisis of 2008 using private markets rather than stupid regulation like Dodd-Frank. Allison would have been a breath of fresh air and plainspeak to a department that needs a lot of transparency.

    What will be interesting is how aggressive Republicans are in implementing policy that will help the disenfranchised-particularly on things like school vouchers in education. I would also love to see Trump take on govt pensions and turn them into defined contribution packages rather than defined benefit packages. States and cities across the country are drowning in govt pension debt-including your state of Texas.

    Comment by @pointsnfigures — December 20, 2016 @ 9:22 am

  44. […] Professor: Bio, The CIA Leak about the DNC & Podesta Leaks: The Ad Hominem Fallacy Run Amok. Exxon’s Russian Dealings are no Reason to Fret about Tillerson. If Anything, the Reverse is Tr…; via Anatoly Karlin: A Short Guide to the Top 10 Russia Blogs. CC: Poemless: A Slap in the Face of […]

    Pingback by 16 Dec: Streetwise Professor … Stan McChrystal – EoP v WiP NWO Neg — December 26, 2016 @ 3:01 pm

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