Streetwise Professor

September 27, 2009

They’re Always Asking “More, More, More”

Filed under: Commodities,Economics,Energy,Military,Politics — The Professor @ 9:59 am

The joys of dealing with Putin’s Russia.

First, from Stratfor:

The Israelis also understand the Russia factor. Russia is engaged in an ongoing struggle to win Washington’s recognition of its influence in the former Soviet region. So far, the United States hasn’t given Russia what it wants. Consequently, Russia continues to flaunt the leverage it has with the United States over its ties to Iran. Not only can Russia completely destroy the effectiveness of a U.S.- led sanctions regime, but it can provide Iran with critical weapons systems that could seriously complicate an attack against Iran down the road. The Israelis simply are not seeing the value in delaying much longer.

Israel therefore is leaning heavily on the United States to reach some sort of compromise with Moscow and bring the Russians in line on the Iran issue.

Russian President Dmitri Medvedev made a statement on Wednesday that might indicate that such a compromise has a chance — however slight — of happening. “I told the president of the United States that we think it necessary to help Iran make the right decision,” Medvedev said, with just the right touch of ambiguity. “As for various types of sanctions, Russia’s position is very simple, and I spoke about it recently. Sanctions rarely lead to productive results, but in some cases, the use of sanctions is inevitable. Ultimately, this is a matter of choice, and we are prepared to continue cooperating with the U.S. administration on issues relating to Iran’s peaceful nuclear program, as well as other matters.”

This is a notable shift in tone coming out of Moscow, but does not yet signify that a deal has been made between the Americans and the Russians that would alleviate the crisis over Iran. Our Russian sources are hinting that something bigger may be under way, but they also have made it clear that this is just the beginning of negotiations. One source in particular has indicated that thus far, Washington is at least considering a Russian demand to postpone the U.S. deployment of a Patriot air defense battery in Poland. In return, Moscow would stick to its pledge to delay delivery of the S-300 strategic air defense system to Iran. In essence, this would be a mutual commitment to postpone commitment to their strategic allies.

A few comments.

First, many US commentors and Obama cheerleaders have seized on Medvedev’s words–which Stratfor rightly characterizes as ambiguous–like drowning men grasping at straws.  Note: (a) Medvedev doesn’t matter, Putin does, (b) there is so much wiggle room in this statement it means nothing, and (c) there are more examples of Russian now-you-see-it-now-you-don’t, Lucy-and-the-football dekes than it is possible to count.  There’s a sucker born every minute, and anyone who relies on Medvedev’s words is a sucker indeed.

Second, note Medvedev’s use of the phrase “Iran’s peaceful nuclear program.”  That is, he does not even concede acknowledge that Iran’s program is explicitly intended to develop a nuclear weapon.  Given Russia’s enabling of Iran’s nuclear ambitions, this isn’t surprising.  But note that this formulation gives Russia a perfect escape valve from supporting any sanctions: why would you impose sanctions on a “peaceful” program.  Until Russia officially and unambiguously acknowledges that Iran’s nuclear program is military in nature, there is no reason whatsoever to place any reliance on Russian support against Iran.

Third, note the disgusting, revolting immoral equivalence here.  Iran=Poland.  On the one hand: A totalitarian dictatorship that supports terrorism; a virulently anti-American and anti-Western regime; a Holocaust celebrator (not denier); an aggressive, irredentist nation; a crazed, millenarian theocracy.  On the other: a democracy that has supported the battle against terror and tyranny; pro-Western and pro-American; a nation that has grappled with its anti-Semitic past; a nation that is merely looking to defend itself from the predations of outsiders rather than dominate others; a religious, but politically secular country.

Contra Obama, and pace Mark Steyn: Nations should be–must be–defined by their differences.  The differences between Iran and Poland are so stark that the foregoing list barely even scratches the surface.  To treat Poland as a bargaining chip with the Russians in dealing with Iran is beyond disgusting.

And note: the Russians will just take any concession and ask for more.   Note very well: when it comes to Eastern Europe, the former Soviet space, and Poland in particular, Russia wants the United States to make very public concessions so as to undermine American credibility among these nations, all the better to induce them to reach an accommodation with Russia: an accommodation that will effectively concede Russian suzerainty.

Iran is important.  But to make concessions to Russia in the vain hope of making progress on containing the Iranians would be a strategic mistake of historic dimensions, not to mention a deep stain on American honor.  (How’s that for Jacksonian, Steve?)

Russian grabbiness is not limited to the diplomatic sphere.  It also extends to energy.  (You’re shocked to read this, I’m sure.)  Yes, Putin the Spider (too bad his first name isn’t Boris) is more than willing to lure Western energy firms into his Arctic web, but on his terms:

This looks like a proposal to form a cartel-type arrangement of gas (mainly LNG) exporters through price-formation and market share allocation. Russia would provide the gas resources while international companies would provide the technology and, presumably, share in a commercial bonanza through this arrangement. Moscow probably hopes that some international companies would vie with each other to be picked for the project on this basis.

The conditions for participation would, however, force the international companies to turn over to Gazprom their own competitive assets and lose some of their revenue sources. As spelled out by Shmatko and Economic Development Minister Elvira Nabiullina, international strategic partners in this project would be asked to: transfer Western technologies for the manufacturing of advanced drilling equipment, onshore and offshore, to Russia; allow Gazprom direct access to gas markets in consumer countries, using the distribution networks of partner companies; recognize a right for Russian companies to acquire energy infrastructure on territories of consumer countries; and assist Gazprom with marketing methods and personnel training (Interfax, RBK, September 24).

So, Russia gives access to Yamal in exchange for: money, technology, expertise, access to Western domestic markets (which Putin knows will be protected by Western legal norms), marketing, and training.  And, rest assured, that access to Yamal and the goodies of the cartel arrangement can be taken away at a whim–and likely will be taken away once the gas actually flows.

In other words: asynchronous performance.  The Western companies do everything today: the Russians “promise” to do something later.  Another sucker’s game.

Will there be any suckers to play?  Sad to say, the answer is likely “yes.”  I would hope that anti-trust authorities in nations intending to import Yamal gas, and in nations whose companies would participate in the project, will subject any such agreement to intense scrutiny.

The energy majors–and the Europeans–would be much better advised to do things like ramp up exploration of shale gas in Europe than invest huge sums in Yamal.

One has to have some grudging admiration for Russia’s aggressive negotiating, given its fundamental economic, demographic, political, and social weaknesses.  By the same token, one has to have nothing but disdain for those who seem more than willing to be duped and pushed around by a has-been giant with feet of clay.

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19 Comments »

  1. If the PAC rumor proves true, it is a very interesting answer to all the commentators who opined that the loss of full-scale ABM was no big deal to Poland, since they still had Patriot. What do they have when they have neither?

    Comment by ThomasL — September 27, 2009 @ 10:53 am

  2. Readers should note that Col. Stanislav Lunev, the highest ranking defector from the Main Intelligence Directorate of the Russian General Staff, has issued a firm warning to all Americans. When he defected several years ago Lunev tried to warn the FBI, CIA and DIA “that the Russians already had elaborate war plans against the U.S. I suggested that such a war might begin with a diversion, some sort of terrorst attack. With people’s attention focused elsewhere, special troops could storm Capitol Hill, the Pentagon, the White House — to kill American leaders.”

    http://en.wikipedia.org/wiki/Stanislav_Lunev

    Lunev went on to emphasize something that many Americans don’t fully appreciate. “I have no doubt,” said Lunev, “that Russia has been behind many of these terrorist groups, financing and equipping them.”

    Yes, that’s right. You heard it from a high ranking defector who has knowledge of Moscow’s military plans. As it happens, Russia and China have been supporting rogue states all over the map. And now these states, in league with terrorist organizations, have killed thousands of Americans — striking a real blow against our economy. “These terrorist groups,” stated Lunev, “want nothing less than war against Western Civilization.”

    And that is what, in my opinion, the leaders in Beijing and Moscow also want. The only thing holding them back all these decades has been their relative weakness. And today, after many years of reduced vigilance and severe military cuts on the American side, Russia and China’s weakness may be at an end.

    It is good that Americans are rallying to their country. It is important that we pull together. The struggle ahead may be far more difficult and dangerous than any of us imagine.

    Comment by Oleg — September 27, 2009 @ 11:18 am

  3. On the one hand: A totalitarian dictatorship that supports terrorism; a virulently anti-American and anti-Western regime; a Holocaust celebrator (not denier); an aggressive, irredentist nation; a crazed, millenarian theocracy. On the other: a democracy that has supported the battle against terror and tyranny; pro-Western and pro-American; a nation that has grappled with its anti-Semitic past; a nation that is merely looking to defend itself from the predations of outsiders rather than dominate others; a religious, but politically secular country.

    Meaningless rhetoric overload. Are you sure you’re not a neocon?

    Being pro-Western is equivalent to being totalitarian, because the West is the most perfect totalitarianism in the history of man.

    “Terror” and “tyranny” are code for what the “international community” (i.e. the West and its surrogates) sees as obstacles to their world dominion.

    And exactly how has Poland “grappled with its anti-Semitic past”?

    The energy majors–and the Europeans–would be much better advised to do things like ramp up exploration of shale gas in Europe than invest huge sums in Yamal.

    If it was profitable I’m sure they would have.

    One has to have some grudging admiration for Russia’s aggressive negotiating, given its fundamental economic, demographic, political, and social weaknesses. By the same token, one has to have nothing but disdain for those who seem more than willing to be duped and pushed around by a has-been giant with feet of clay.

    I admire both. They’re not pushed around, they make necessary and rational accommodations.

    Comment by poluchi fashist granatu — September 27, 2009 @ 12:45 pm

  4. poluchi fashist granatu

    Meaningless rhetoric overload. Are you sure you’re not a neo-Stalinist?

    The next two decades we will see the triumph of “Neo-Stalinist democracy as the final form of government” and the spread of the neo-Stalinist consensus, all underwritten by Putin-mafia military dominance and the new resources unlocked by the opening of formerly autarkic economies.

    Comment by Oleg — September 27, 2009 @ 12:57 pm

  5. Thanks for the shoutout Professor. Congratulations to your University’s football team for moving up in the national rankings with another win against an overrated Big 12 team. But since the last dynasty of the Patriots succeeded the dynasties of the 90s Packers, and Cowboys, when has there been a truly dominant team at the professional level? All the veteran backups that made those teams perennial Super Bowl contenders have been replaced by rookies in the salary cap era.

    Take my New York Giants win over the Cowboys last week. Yes we got some nice gifts from Romo, who is the gift that keeps on giving for the rest of the NFC East. And yes, Justin Tuck was flagrantly tripped by Flozell Adams, the weakest link in the hated Cowboys line who’s also good for some nice five yard and holding penalties. But I don’t think the GMen secondary would have dealt very well with the Saints. The NFL is much too much a game of attrition, which is why I prefer to watch college.

    Comment by Steve J. Nelson — September 28, 2009 @ 12:47 am

  6. Oleg – Lunev’s “hidden suitcase nukes” claims have been frequently debunked. There is no way to fit a Bomb in a suitcase, though you might shrink one down to fit in the the trunk of a large car.

    European shale gas fields in Hungary aren’t exactly the Marcellus Shale.

    http://en.wikipedia.org/wiki/Marcellus_Formation#Fossil_fuel

    U.S. consumption is something like 27 TCF per year, the Marcellus alone has 262 TCF plus the Barnett down in Texas and the Haynseville in Louisiana.

    Better luck trying to squeeze methane out of coalbeds in the Donets Basin of Ukraine.

    http://en.wikipedia.org/wiki/Donets_Basin

    Comment by Steve J. Nelson — September 28, 2009 @ 12:52 am

  7. [...] cuisine and Chinese tourists A look at Russia’s violence-wracked North Caucasus (AP via Yahoo! They’re Always Asking “More, More, More” – streetwiseprofessor.com 09/27/2009 The joys of dealing with Putin’s Russia. First, from [...]

    Pingback by Ладушки.Net » Blog Archive » Posts about Putin as of 28/09/2009 — September 28, 2009 @ 3:56 am

  8. Moscow, Russia. Founded 1946. The team was originally sponsored by the KGB. Played in the Russian Superleague 1996- . Played in the European Hockey League in 1996-97, 1997-98 and 1998-99.

    According to RIA Novosti russian president? Medvedev still promotes the idea of Georgians having a moscow friendly president like the specimen they have installed in Chechnya, Kadyrov:

    “I personally will not deal with President Saakashvili because he committed a crime against his own people, and the people of South Ossetia,” but Moscow would be happy to build “good, warm” relations with Tbilisi, “based on hundreds of years of friendship,” but not with Saakashvili. (Source: Eurasianet)

    http://www.eurasianet.org/departments/news/eav092509a.shtml

    What “hundreds of years of friendship” means can be read in the signed handwritten death sentences passed by a number of more or less degenerated former soviet leaders, displayed together with all the broken deals Russia has signed, in the Tbilisi streets on the memorial day for the 2008 russian attack .

    Also the Russian troops killing 20 students with gas in 1989 will surely be remembered by the Georgians as an act of friendhip together with all the warmongery, embargos and support of all kinds of separatism from 1991 and onwards? I really don’t know what planet Medvedev come from, .

    “Like a scene from a medieval battle,” is how one of the Soviet soldiers involved remembers the dawn hours of 9 April 1989.

    The clashes left 20 people dead, mainly young women.

    http://news.bbc.co.uk/2/hi/7986282.stm

    Comment by Oleg — September 28, 2009 @ 7:40 am

  9. “Please sir, I want some more.”

    “MORE!?”

    A supplement to the Professor’s blog post title:

    http://www.youtube.com/watch?v=1BiHTictZTU&feature=PlayList&p=CB29636926103AA6&playnext=1&playnext_from=PL&index=60

    This ideas of always wanting more has been thrown at some others in a way that isn’t so comparatively off.

    Comment by Cutie Pie — September 28, 2009 @ 7:40 am

  10. Should be “idea” over ideas on the last one.

    Steve

    How about the Vikes yesterday?

    Comment by Cutie Pie — September 28, 2009 @ 10:19 am

  11. I think “neo-Stalinist democracy” sounds like an excellent idea.

    Neo-Stalinism to restore faith to the people, inspire them and crack down on corruption. Democracy to give the people a voice and avoid excessive levels of repression.

    Comment by poluchi fashist granatu — September 28, 2009 @ 12:57 pm

  12. “neo-Stalinist democracy” sounds like an excellent idea.

    ‘Lets start crack some skulls’

    http://en.wikipedia.org/wiki/Neo-Stalinism

    Sublime fashist want to crack down on corruption ,why not use a little drop of Polonium .

    Abkhazia – Soon to be swallowed by Putin.

    According to the De facto Vice-President of Abkhazia Raul Khajimba, which is supported by Moscow and seen as the guarantor of Russian expansion in Abkhazia, there is a “deep governmental crisis” in Abkhazia. Khajimba says that President Baghapsh uses force against the opposition in Abkhazia, and accused Baghapsh of behaving in a “non-transparent” way when giving control over the Abkhazian-Georgian administrative border to Russian forces. Baghapsh is also accused by the opposition of “selling” the country to Russia. The majority of Abkhazian strategic and economic facilities are owned by Russian citizens and that the de facto authorities are drafting a law which will allow Russians to purchase Abkhazian land. Baghapsh has already signed a deal giving the Russian ownership to railroads and airfields for ten years ahead, given permission to drill for oil off the shores of Abkhazia, and finally given space for the mighty Russian Black Sea Fleet.

    South Ossetia – dictatorship, corruption and nepotism

    Separatist leader Eduard Kokoity is expected to extend what the opposition calls his tyranny over South Ossetia when the Russian-backed rebel region holds an election on Sunday. The opposition say Kokoity wants to change the constitution so that he can run for a third term in 2011 and an overwhelming success in the parliamentary election would help him do this.South Ossetia awaits Parliamentary elections on May 31. Representatives of the South Ossetian opposition have stated that the current separatist leader Eduard Kokoity is using “dirty tricks” to keep his party in power. Some opposition members have accused him of “stealing Russian money” destined for the rehabilitation of the region after the August 2008 conflict. “A dictatorship is being established in South Ossetia right now and the President Kokoity and his brother are stealing Russian humanitarian aid and budget funds destined for rehabilitation,” said a Moscow-backed ethnic Ossetian, Jambulat Tedeev. The South Ossetian opposition believes the election will be rigged, and will organize protests against Kokoity

    Let’s Go Sublime Fascist

    Comment by Oleg — September 28, 2009 @ 1:30 pm

  13. Wiki can be a mixed bag like some other sources.

    On the Stalinist bit, such traits are evident among a number of non-Russian and non-left types, as well as some others fitting into a different category.

    Comment by Cutie Pie — September 28, 2009 @ 8:13 pm

  14. “Also the Russian troops killing 20 students with gas in 1989 will surely be remembered by the Georgians as an act of friendhip together with all the warmongery, embargos and support of all kinds of separatism from 1991 and onwards? I really don’t know what planet Medvedev come from, .”

    ****

    Soviet not Russian.

    Be intersting to know the ethnicity of those troops involved.

    Comment by Cutie Pie — September 29, 2009 @ 2:05 am

  15. Cutie Pie
    Be intersting to know the ethnicity of those troops involved.

    The perpetrators of war crimes in Georgia was ethnicity Russian (Troops have Russian passports today) and not Georgian

    Igor Nikolayevich Rodionov (Russian: Игорь Николаевич Родионов) (born 1936) is a Russian general and Duma deputy. He is best known as a hardline politician, and for his service heading the Defence Ministry of the Russian Federation.

    In April 1989 he was responsible for the violent massacre during the April 9 protests in Tbilisi and removed from his post. From 1989 to 1996, he served as a People’s Deputy and as the head of the General Staff Academy.

    The local Georgian militsiya (police) units were disarmed just before the operation. On April 9, at 3:45 a.m., Soviet APCs and troops under General Igor Rodionov surrounded the demonstration area.

    Ethnicity he is a Russian rat
    If it looks like a rat and smells like a rat, by golly, it is a rat.

    Igor Rodionov Duma member (Rodina faction) since 1999,

    http://books.google.no/books?id=Q82GoL56Yd8C&pg=PA108&lpg=PA108&dq=Pastiashvili.&source=bl&ots=YPyagYyKDL&sig=CSmoYIRUhZKgCpWVXvMTaMHU5VI&hl=no&ei=StHBSqXgCMTb-Qaj3_TuCw&sa=X&oi=book_result&ct=result&resnum=4#v=onepage&q=Pastiashvili.&f=false

    The Legacy of Soviet Dissent: Dissidents, Democratisation and Radical Nationalism in Russia — Robert Horvath

    Comment by Oleg — September 29, 2009 @ 4:44 am

  16. You only mention one person.

    Were all of them from the RSFSR and if so, were they all ethnic Russians?

    If so, keep in mind other instances involving non-Russian/Soviet and other Communist rats.

    “Radical nationalism,” is a term periodically played down when it otherwise pertains to non-Russian former Soviets.

    Comment by Cutie Pie — September 29, 2009 @ 6:00 am

  17. Cutie Pie – Religion and Race

    The local Georgian militsiya (police) units were disarmed just before the operation and your so called
    Russian- Communist rat joined the Putin-puppet party Rodina.

    Putins NATO puppet Dmitry Rogozin are from the war criminals Neo-Stalinist party Rodina.

    Anatoly Sobchak, member of Congress of People’s Deputies of Soviet Union. After full investigation and inqueries, the commission condemned the military, which had caused the deaths trying to disperse demonstrators. The commission’s report made it more difficult to use military power against demonstrations of civil unrest in the Soviet Union. Sobchak’s report presented a detailed account of the violence which was used against the demonstrators and recommended the full prosecution of military personnel responsible for the April 9 event

    http://books.google.no/books?id=Me4SpO1nSVsC&printsec=frontcover#v=onepage&q=Sobchak&f=false

    Do you think the death of Putins former master Anatoly Sobchak is a coincidence ?

    But i think race is not important , self-determination and freedom is the real issue .

    Cutie Pie , Keep in mind the Germans also appointed Jewish Capos to do the a lot of the dirty work during
    the Holocaust.

    Honestly speaking i love all the Russians i have meet but , Igor Rodionov and the Putin-mafia will not get love letters from me.

    Comment by Oleg — September 29, 2009 @ 8:58 am

  18. Igor Rodionov is living well in the mafia-state not Anatoly Sobchak is it a coincidence ?

    On February 20, 2000 Sobchak suddenly died in the town of Svetlogorsk of Mafia controlled Kaliningrad Oblast

    Dropping dead at the right moment

    http://www.wnd.com/news/article.asp?ARTICLE_ID=19808

    Typical Russian paranoia, you say?

    Sobchak himself gave an interview to Kommersant Daily shortly before his death. In that interview he talked of attempts on his life — attempts to kill him. “But thank God I am healthy,” he told the Kommersant reporter.

    When you think someone is plotting to murder you, there is protection in such statements. You tell everyone that your health is good. You express happy and optimistic sentiments, so that no one will say you were depressed or suicidal. That way, when you collapse and die people will be suspicious.

    Comment by Oleg — September 29, 2009 @ 9:24 am

  19. They’re Always Asking “More, More, More”

    Alexander Golts supports SWPs Analysis

    One Big Lesson the Kremlin Hasn’t Learned

    http://www.themoscowtimes.com/opinion/article/383727.html

    Although many in Washington are hoping for it, Moscow is unlikely to support sanctions against Iran. For now, Tehran does not want to cancel its nuclear program, and Russia wants to go ahead with plans to deliver its S-300 air defense system to Iran. In fact, Prime Minister Vladimir Putin recently stated that such sanctions are counterproductive and that Russia would not support them.

    However, another scenario is also possible. Maybe the Kremlin was just using the “threat” posed by the deployment of elements of a missile defense system in Poland and the Czech Republic as a way to show the Russian public that the West wants to surround Russia. That enabled Russia’s leaders to avoid thinking of an even modestly constructive program for cooperating with the West on strategic arms. Their logic went along the lines of, “Let the United States cancel its missile defense plans first.” And now, Washington has done just that. Under these circumstances, the Kremlin might quickly find some new reason to be upset with the United States. After all, Washington has not rejected all forms of missile defense. Why not, then, raise the alarm about the inevitable concentration of U.S. naval forces “close to our borders”? Russia’s ambassador to NATO, Dmitry Rogozin, has already rushed to declare, “A ship can change its position, and if a missile defense system is onboard, it is perfectly obvious that the ship can be redeployed in a conceivable time frame, to a conceivable region, including to Russia’s shores.” While they are at it, Russian officials might as well demand that the United States completely reject any plans for a missile defense system and that it return to the Anti-Ballistic Missile Treaty of 1972. They could further demand that the United States close its military bases in Bulgaria and Romania. If it has the desire, Russia could throw up any number of obstacles.

    The way it looks now, what should have been a major diplomatic victory for Russia has actually deprived Moscow of an important foreign policy bargaining chip. Now the ball is in Russia’s court.

    Comment by Peter — September 30, 2009 @ 3:45 pm

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