Craig Pirrong has a stinging piece [stinging? moi?] over at Seeking Alpha on all the upcoming nastiness he expects out of the economic crisis in Russia, beginning with the Sayano-Shushenskaya dam explosion to Gazprom’s disappointing first quarter results. It’s good article (especially the sharp rebuke against bullish analysts predicting a Gazprom rally)
But there’s a but (isn’t there always?):
but I think the eagerness to hold a parade over the collapse of the gas giant will only guarantee its next wave of revanchist corporate foreign policy strategy. Gazprom has a lot of ways to still make money, and the full bore weight of the Kremlin helping it out.
I agree completely, James. In fact, that was the thrust of my objections to Biden’s dismissing of Russia due to its economic and demographic weaknesses: namely, that these problems, and the desperation that goes with them, will make Russia more aggressive, not less.
When it comes to gas and Gazprom, that means that anyone touching Russian gas, or in a position to damage Gazprom’s interests better jock it up and get ready for battle. It means that companies like ExxonMobil that have gas in Russia, and rights to sell it into potentially lucrative markets will face intense pressure. It means than even independent Russian companies can expect some smashmouth. It means that a country like Turkmenistan that sells gas to Gazprom and prices that seemed like a good idea at the time, but no longer, should get ready for economic and even political aggression. It means that Ukraine–and Europe–should look out come January.
Get ready to rumble, folks.