Streetwise Professor

October 15, 2006

A Foolish Consistency

Filed under: Politics,Russia — The Professor @ 3:03 am

Today the UN Security Council passed tepid sanctions against North Korea in response to its (alleged?) nuclear test. Not surprisingly, Russia and China led the opposition to tougher sanctions. This follows repeated Russian calls for caution in responding to NoKo actions, and is of a piece with Russia’s persistent opposition to sanctioning Iran for its nuclear program, and its former intransigence on taking action against Saddam’s Iraq.

I am sure that Moscow’s constant calls for cautious, level-headed diplomacy to deal with international tensions are of immense comfort to the denizens of the Republic of Georgia. Russia’s solicitude for the sovereignty of North Korea, Iran, and Iraq must be very reassuring. Russia’s reluctance to impose sanctions on aggressive, lunatic, and totalitarian states must imply that it would never resort to such measures when small, poor, and passably democratic nations are involved.

Oh wait, I forgot. Russia is mightily exercised at Georgia’s temerity in asserting its independence–de facto and de jure–from Moscow. It is livid at Georgia’s Rose Revolution, its desire to join NATO, its opposition to the presence of Russian troops within its borders, its desire to maintain control of Abkhazia and South Ossetia, and its outrage at Russian espionage. And perhaps most importantly, Russia is determined to stop the construction of oil and gas pipelines across Georgian territory, pipelines that would undercut Russian control over energy exports from the Caspian region and Turkmenistan. So Russia has unilaterally (no UN monkey business for Vlad) slapped punitive sanctions on the tiny Caucasian republic, using Georgia’s detention of 4 Russians on espionage charges as the pretext. It has implemented a virtual blockade of Georgia, and is beginning to round up Georgians living in Russia. The Russian economic measures go far beyond what Moscow would even contemplate imposing on Iran.

The rhetorical contrast is particularly rich. When lecturing the world on NoKo, Iran, Iraq (and Sudan, for that matter), Putin and Foreign Minister Sergey Lavrov speak in measured, diplomatic tones. Butter wouldn’t melt in their mouths. Threats are counterproductive, don’t you know. Precipitous, punitive economic actions–not to mention military force–are beyond the pale. When the subject is the “near abroad,” however, the language is blunt, brutal, threatening, and anything but diplomatic. The specter of military force is palpable.

All in all a demonstration, as if another was needed, of Churchill’s dictum that national interest is the key to understanding Russia’s often riddling, mysterious, and enigmatic behavior. Russia deems Georgia to be in its sphere of influence, to deal with as it chooses. It further deems rogue states as useful pieces to play in its efforts to stymie the United States. In brief, the contrast between its actions in the UN with respect to NoKo, Iran, etc., and its behavior in Georgia reveals clearly that Russia deems its interests to lie in absolute order and control in its perceived sphere, and disorder and chaos outside that sphere. (Chaos in energy producing regions is of special value to Russia, as it leads to higher prices of the country’s most important resource.)

As I have noted before, Russia and Putin are feeling their oats in large part because oil prices are high, and this has boosted the Russian economy. In essence, Russia is a huge long speculation on energy prices, and big speculators are often quite assertive, bold, and arrogant when the market has moved their direction. Has Putin heard of Brian Hunter of Amaranth fame (or infamy)? Or Jeffrey Skilling? They too once rode commodity prices to fame and fortune–and then crashed ignominiously when prices moved against them.

It’s never wise to confuse luck with skill, or to assume that a winning streak is destined to continue. What goes up can go down–and almost certainly will. Oil prices have already fallen about 30 percent from their peak. They are still high by historical standards, but for the first time in a long time bearish factors are exerting themselves. Putin–and Russia–have ridden a very lucky streak–two intense hurricane seasons, political turmoil in major oil producing regions, robust growth in China and the US–but recent events have not been so favorable. Growth is the US is slowing (still respectable, but slowing). China is actively attempting to tamp down on investment-led growth, and to channel resources into services (which are less energy intensive). Huge inventories built largely on anticipation of another bad hurricane season are weighing heavily on the market since the feared storms failed to appear. Vlad and Russia are still majorly long–and very vulnerable to a further price decline that is a very real possibility.

Moreover, here and there are signs of political ferment bubbling beneath the surface calm of Putin’s Russia. Putin’s term ends soon, and the succession is by no means clear. The power he has accumulated at the center is a very rich prize, and many will take extreme measures to seize it. High profile assassinations–a staple of the Yeltsin years, but less evident in Putin’s term–are back in the news. It is by no means a certain outcome, but it is very possible that a power struggle in Russia may occur at the same time that energy price declines undercut the continuation of Russia’s modest economic rebound. And Russian power struggles are not a pretty sight. Again, not to say that it’s a certainty–but it is likely enough.

Remember, Vlad–pride goeth before the fall.

I do not write this with relish. To the contrary. As I have written before, both on this blog and elsewhere, Russia has suffered more tragedy than any nation deserves. I deeply sympathize with the travails its people have suffered. I ardently hope that it can make the transition to a free, liberal (in the classical sense), civic society, but am not sanguine. After all, classical tragedy is traceable to a tragic flaw, and Russia’s tragic flaws (autocracy and imperial ambition) have never been held at bay for long. They are reasserting themselves today, and the outcome is far too predictable.

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