Streetwise Professor

October 1, 2022

Another Anti-Anglo Saxon Jeremiad From a Demented (and Desperate) Dwarf

Filed under: Energy,History,Military,Politics,Russia,Ukraine — cpirrong @ 11:15 am

In an earlier post I said that Putin’s mobilization address was his most unhinged speech ever. That record did not last long: his Friday speech announcing the annexation of four Ukrainian regions was beyond unhinged.

The speech was Castroesque in length. The bulk of it was a jeremiad against the west, and “Anglo-Saxons” in particular. (Apparently he is unaware of American diversity!) He justified his invasion of Ukraine, and the annexations, as a war of survival against a west that is hell bent on subjugating Russia. The speech was a litany of the west’s sins, colonialism and slavery most prominent among them. He conveniently elided over Russia’s imperialism, symbolized today by the disproportionate representation of ethnic groups from Russian republics in those fighting–and dying–in Ukraine, and touted the USSR’s “anti-colonial” record in Africa and elsewhere.

The speech was chock-full of projection, most importantly regarding waging war on civilian populations. There were also the now familiar accusations of Ukrainian Naziism, the betrayal of 1991, and the non-existence of Ukrainian nationhood.

In brief, Putin portrayed the war in Ukraine as an existential conflict waged to defend Russia against Anglo-Saxons attempting to colonize Russia, and to defend the world against such western rapacity. (The reference to the Opium Wars was obviously an attempt to appeal to China, whose ardor for this Ukrainian adventure is obviously waning fast.)

The atmospherics were also bizarre. The images of a dwarfish Putin clasping hands with the hulking mouth breathers leading the sham annexed regions, chanting “Ross-i-ya!” with a demented grin on his face are quite striking–and disturbing. Especially when contrasted to the reality on the ground, where Russian forces continue to reel and rout–the bugout from Izyum being the latest example. “Reservists” are being shoved to the front without even a simulacrum of training, where they will no doubt be slaughtered without changing the battlefield dynamic one iota. Putin is giving no retreat orders and is bossing about formations that have been destroyed or dissolved. Gee, whom does that remind one of?

Tens of thousands of Russian men are fleeing to avoid the press gangs, a visible demonstration of widespread panic. (Kazakhstan–the Russian Canada!) Personal contacts indicate that the panic is widespread even among those who have not fled, but who fear the knock on the door.

The realities of the battlefield and the home front reveal that this is truly an existential conflict–for Putin. He objectively can’t win, but he can’t lose and survive. This creates a tremendous bias towards escalation, with nuclear weapons being his only real escalation option.

There is a considerable debate over whether when push comes to shove Putin will push the button. This is an unanswerable question. Suffice it to say that his Downfall-esque rants in public (one can only imagine what he’s like in private) mean that there is a material probability that he will.

Which poses a grave dilemma to the Anglo-Saxons. (In this respect, Putin is on to something: the continentals are hopelessly ineffectual and along for the ride.) Months ago I wrote that Putin was in zugzwang, i.e., a situation where any move made the situation worse, but one is compelled to move. Well, currently the US is arguably in zugzwang as well. The consequences of letting Putin off the hook or pushing him to the wall are both deeply unsatisfactory.

What is in the US’s opportunity set? The situation on the battlefield does suggest that giving Ukraine a blank weapons check could result in pushing Russia out of most of, and perhaps all, of the occupied portions of the country–including Crimea. But choosing that option is a bet on Putin’s sanity and willingness to go nuclear, and how far up the escalation ladder Putin is willing to go. Conversely, pulling the Ukrainian’s leash will likely result in a continued grinding war with its global and human and economic toll. Brokering a compromise is almost certainly out of the question, given the intransigence of the parties and the completely irreconcilable nature of their demands (though Putin did graciously say that he was willing to accept Ukraine’s capitulation).

The administration is clearly leaning towards–but not completely towards–engineering Russian defeat on the battlefield. Most of the American populace is disengaged. The populist right in the US is engaged but stupidly pro-Russian, because (a) Putin criticized the west’s trans obsession, and (b) the enemy of their enemy (the administration) is their friend. With respect to (a) this is beyond bizarre because these passing references were embedded in a speech that damned the entirety of American history in a way that would make Howard Zinn beam: is the PR buying into that now? (It is also stupid because it validates left narratives about them being Russian puppets.)

The populist right also immediately concluded that the US is responsible for the destruction of the Nord Stream I and II pipelines under the Baltic. The fact is we have no facts, other than that the pipelines suffered catastrophic ruptures, possibly the result of deliberate sabotage. Everything else you read is speculation about motive, which only prove whom the speculators hate most. Those who know ain’t talking, and those talking don’t know.

Although I immediately concluded sabotage, there is reason to doubt this too. This is plausible to me, based on my knowledge of natural gas pipelines and Russian incompetence. (Anybody remember the shitshow of the Russian oil pipelines in spring 2019?)

But again–nobody knows nothing beyond the fact that the pipelines are fucked, so speculation is pointless. And depressingly, given the natures of everyone involved, I can’t say there’s anyone I would trust to reveal the facts.

The populist right is annoying, but largely powerless. Even if the Republicans prevail in the upcoming election, the PR will represent a clamorous but ultimately irrelevant force. Meaning that the US will continue to stumble along, mainly in the direction of pushing an increasingly desperate Putin.

Yes, I can see the upside of that. But I also see considerable downside risk, and indeed the risks are asymmetric. Even as things stand now, beyond nuclear weapons Russia’s military capability has proven even more illusory than a Potemkin village of legend. His conventional threat to Nato is demonstrably non-existent. So the upside to the US and Nato of drubbing Putin further is very limited. But the downside of drubbing him could be serious indeed.

So mutual zugzwang is a not unrealistic description of the current situation.

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September 24, 2022

Vova Shovels Fleas

Filed under: History,Military,Politics,Russia,Ukraine — cpirrong @ 10:57 am

In an unhinged speech earlier this week, Vladimir Putin (a) threatened (again) to use nukes, and (b) announced the mobilization of 300,000 reservists–although there are reports that the order actually calls for the mobilization of 1 million. This raises the issues of what this means about the state of the war, and the effect that the mobilization will have on it.

The speech speaks volumes about the state of the war. Putin realizes that he is losing, badly, and is desperate to reverse the reverses. He is in essence following Eisenhower’s advice:  “Whenever I run into a problem I can’t solve, I always make it bigger.  I can never solve it by trying to make it smaller, but if I make it big enough, I can begin to see the outlines of a solution.” Or, as it is often expressed: when a problem appears insoluble, enlarge it.

Putin has two margins on which he can enlarge: nukes and bodies. He’s threatening the former and implementing the latter.

When I say Putin’s speech was unhinged, I do not exaggerate. Look at the videos. He was incandescently angry. His rhetoric recycled the common themes–Nazis, Banderaists–and added twists on his West-directed paranoia by way of rationalizing (although not admitting) the defeats: Ukrainian forces are not just armed by the West, but Nato generals are in command and western troops are in the ranks. The speech was filled with projection about violations of sovereign territory and atrocities. Perhaps it was all for effect–Mad Vlad–to make the nuclear threats more credible. But it seems all too genuine to me.

As for the effect of the mobilization, a quote from Lincoln comes to mind: “Sending armies to McClellan is like shoveling fleas across a barnyard: not half of them get there.” My surmise is that far less than half the fleas that Putin is madly trying to shovel into Ukraine will get there.

If the front line Russian military has proved shambolic on the Ukrainian steppes, the Russian reserve system is beyond shambolic. It was allowed to decay after the collapse of the USSR (which depended on mass mobilization), and the military “reforms” of the last decade only accelerated its decay: the goal of the “reforms” (which were realized more in the promise than the delivery) was to move away from conscription-based forces towards a professional military.

It is therefore best to view what is happening not as a mobilization of an existing reserve force (e.g., the mobilizations seen in August 1914) but as an improvised, hurried mass conscription. Although the initial announcements stated that the mobilization would be targeted at those with combat experience and with specialized military skills, there are reports–all too believable–that the authorities are casting their net far beyond these categories, and that the unfortunates caught up in it are being assigned to units willy-nilly with no regard to their past duties. Tellingly, the dragnet is most intense in the republics: ethnic minorities have already borne the brunt of the war, and Putin wants to shelter metropolitan Russia as much as possible for fear of sparking unrest in the cities.

The existing Russian conscription system is a disaster, rife with evasion and corruption. And that was just to escape the miseries of peacetime service. Both will be far worse when the prospect is being shoveled to Donbas.

No this is not a mobilization. It is press ganging and the yield will be far less than Putin wants.

And what will be the effectiveness those poor fleas who do make it across the barnyard? More bodies will not fix the deep dysfunctions that have been revealed on the battlefield. The high command will still prove to be incompetent. Already poor leadership at the regimental, battalion, company, and platoon level will become even worse as poorly trained and dispirited officers will be put in charge of scared and resentful losers of the conscription lottery. Further, there will be an adverse selection problem: the cleverer and more fit will find ways to escape the net, leaving a disproportionately dimwitted, sociopathic, and addicted rump to fight. More bodies will not fix the paralyzing over-centralization of the Russian command. More bodies will not fix Russia’s disastrous logistics: indeed, trying to supply more bodies will actually exacerbate the logistical problems. More bodies will not fix Russia’s underperforming air forces. More bodies are not the same as more precision guided munitions. Historically Russia has used more bodies successfully when supported by massive artillery, but now ammunition shortages (is another “Shell Crisis” a la 1915 coming?) loom and Ukrainian counterbattery fire has proved devastating thanks to HIMARS and M177s. More bodies will not address Russia’s repeated intelligence failures at the operational or tactical levels. Russian armor has proved extremely vulnerable, but the more bodies will deploy in older and even less well-maintained AFVs.

In sum, more bodies cannot and will not fix the real reasons for Russian battlefield disasters. They will just be more victims for these reasons.

There is also the issue of how the new bodies will be deployed: as replacements or in entire units. The time involved in standing up new units is considerable, even if rushed. Putin is in a hurry, so I conjecture that the unfortunates swept up by the press ganskis will receive lick-and-a-promise “training” of a few weeks (after all, they are veterans, right?, so they just need a refresher course!) and be shoveled to the front and shoved into shattered units. If you look at say the American army in WWII, you’ll find that the life expectancy of replacements is often measured in hours or a few days. (Experienced infantrymen often avoided learning the names of replacements, because it was pointless.) That will happen here as well.

Historically, Russia relied on a huge demographic advantage vis a vis its foes in a quantity-over-quality approach. But even when Russia did have a demographic advantage, the results were often disastrous: cf. the Russo-Japanese War, and Tannenberg and other WWI battles. Now a demographically devastated Russia is falling back on old formulae. To call it tragic is an understatement.

In sum, more cannon fodder without more cannon (and logistics, and leadership, and on and on) to support them will result in a bloody disaster. But it will allow Putin to defer deciding whether to resort to his only other option: nukes.

It is also important to consider how Putin’s adversaries–not just Ukraine, but the US and the rest of Nato–will respond. The prospect of facing greater numbers (even of a low quality) incentivizes Ukraine to accelerate its offensives and press its advantages, even though that will entail larger losses. If successful, that would in turn accelerate when Putin has to decide whether to back down or resort to his only remaining way of expanding the problem. Ukraine will redouble its already frenzied efforts to lobby western governments for more weapons.

The US and Nato need to turn their attention from what is happening on the battlefield to focus intensely on forestalling Putin concluding that it’s nukes or nothing. Sadly, that means hoping that Putin’s more bodies measure will extend the stalemate, thereby buying time for some diplomatic resolution.

Alas, the US and its allies appear set on Ukrainian victory on the battlefield and on the humiliation of Putin, rather than on securing an unsatisfying and messy diplomatic compromise. That is gambling with millions of lives–and perhaps many more.

Which means that where things go may hinge crucially on the Russian popular reaction to Putin’s desperate measure. It is optimistic in the extreme to believe that the mobilization will spur a 1905 or February 1917 or August 1991 moment in Russia. And it is equally optimistic to believe that if such a moment indeed occurs, that it will not result in Putin’s replacement with someone even worse.

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September 11, 2022

The Judo Expert Takes a Stunning and Unexpected Blow to the Right Temple

Filed under: Military,Russia,Ukraine — cpirrong @ 2:04 pm

Although one has to be skeptical about all real time reports from battle zones–especially in Ukraine, given the intense information warfare waged by all sides–all indications are that the Ukrainian military has achieved dramatic success, not in a counteroffensive in Kherson, but in Karkiv/Kharkov. The Russians have acknowledged that they have “redeployed” troops from Kharkiv Oblast to Donbas to continue their offensive there. This is risible, and reminds me of McClellan claiming that his retreat from the front of Richmond in June 1862 was a “change of base.” Ukrainian reports that they have routed Russian defenders appear far more credible.

Like all battlefield victories and defeats, what is transpiring now is an amalgam of competence and incompetence. (Or, as my mother always used to say on our Civil War battlefield tours–nobody ever won a battle: somebody lost it.). On the Ukrainian side, it appears that they achieved considerable surprise, based on months of shaping the information space. They tipped a right uppercut (into Kherson) then delivered a thundering left hook crashing into the Russian right temple (in Kharkiv).

In other words, the judo expert was fooled, caught off balance, and is now reeling.

The attention for months was on a highly touted forthcoming Kherson offensive. Attacks in Crimea further served to direct attention to the south. Russia apparently directed reinforcements to the south and denuded (or at least did not strengthen) its forces around Kharkiv. Ukraine thus was able to achieve solid gains in the east, and now threatens to create what in WWII was called a “cauldron battle” by pivoting south to cut off large number of Russian troops. (Which is why Russian troops are apparently “bugging out,” to borrow Korean War lingo.)

The flip side to Ukrainian operational surprise facilitated by distraction is a Russian intelligence failure. Russian aerial reconnaissance, signals intelligence/electronic warfare, and human intelligence obviously fell woefully short. They did not see through the ruse, and were unable to suss out the real distribution of Ukrainian forces or Ukrainian defenses.

I wonder if Ukraine may be following the example of Montgomery at El Alamein, who alternated advances on two widely separated axes, ramping up one when Rommel shuttled reinforcements to counter the other. If so, expect increased effort on the Kherson axis in the coming days and weeks, especially if Russia rushes troops to the east in an attempt to stymie Ukrainian progress there.

Despite the large disparity in populations, Ukrainian forces outnumber the Russian now. The Russians are reportedly assembling outfits of old men and young boys, an expedient the Germans did not resort to until 1944 (Volksgrenadiers). The Russians are also reportedly scouring the prisons for potential cannon fodder.

Further, the Ukrainians are operating on interior lines, the Russians on exterior ones, and what’s more, Ukraine has shown the ability to strike in Russian rear areas with indirect fires more effectively than Russia has been able to strike the Ukrainian rear, and this despite the on paper superiority of Russian air forces.

So the balance has shifted. Ukraine has made gains in days that took the Russians months to achieve in Donbas.

That said, I expect that this will mainly move the line of stalemate to the east and south, rather than result in a decisive ejection of the Russians from Ukrainian territory, and a termination of the war by Putin.

Indeed, some crazed nationalist elements in Russia are celebrating the defeat. Now, they say, the gloves will come off!

The problem, of course, is not that Russia has been stymied because its blows have been softened by strategic and tactical gloves: it is that Russia has not landed any real blows to speak of since about 1 March. Those celebrating reverses in the east say now Russia has no choice but to strike at the infrastructure that Ukraine uses to deliver western weapons (mainly American). But how they do not explain.

They seem to be operating under the same assumptions (or more accurately delusions) that most western observers (me included) held on 24 February, namely, that Russian air and missile forces would overwhelm Ukrainian defenses and allow Russia to romp unhindered against Ukrainian lines of communication. But actual events put paid to this assumption months ago.

What’s more, in an ineffectual and futile campaign of missile and air strikes, Russia has expended the vast bulk of its precision weapons. Not that they have proved at all effective heretofore, but they still would be more effective than whatever else remains in the Russian quiver.

In other words, Russian failures to interdict Ukraine’s lines of supply reflect incapacity, not a failure to utilize capacities. And the capabilities now are less than they were six months ago. Taking off the gloves helps little when you have no fists.

Thus, non-victory is staring Putin in the face, and there is little he can do about it. Little conventionally, that is. Which is disturbing. Putin cannot be so out of touch as the mouth breathers in Moscow. His only escalation options are unconventional–and hence extreme. The only other choice is to hang on and let the war drag on. Although I would not exclude the possibility of an extreme escalation, I think he will make the latter choice, and hang on by his fingertips while condemning thousands of Russians and Ukrainians to death and maiming.

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August 21, 2022

No, Dugin Is Not Putin’s Brain: They Are Products of a Shared History

Filed under: History,Politics,Russia — cpirrong @ 12:40 pm

Yesterday Daria Dugin, the daughter of Russian philosopher and ideologist Alexander Dugin, was killed on a Moscow highway by the detonation of a car bomb. The bomb was apparently intended for her father, who decided at the last minute not to ride with her from an event.

The murder triggered an avalanche of ghoulish, creepy, and frankly disgusting celebration. The only regret that many expressed was that Dugin père was not vaporized. Better luck next time!

The commentary was littered with descriptions of Dugin including “Putin’s brain,” or “Putin’s Rasputin,” and “fascist.” The implication being that Dugin is and has long been Putin’s Svengali, and that Putin has been in Dugin’s thrall. Putin wouldn’t have considered seizing Crimea without Dugin’s suggesting it, dontcha know.

This is illogical, idiocy, and entirely at odds with actual historical facts.

In terms of logic, D saying X and P doing X does not imply that D’s words caused P’s actions.

More generally, to the extent that there are parallels between Dugin’s writings and public statements and Putin’s words and actions, this does not mean that Putin was an acolyte sitting at the master’s feet, an Alexander to Dugin’s Aristotle.

Instead, there is a common root. Dugin’s emphasis on Russian exceptionalism–especially Russians’ supposedly transcendental spiritual mission in existential opposition to a degraded materialist West–and Putin’s expression of similar ideas draws from a very common theme in Russian thought. Think Dostoevsky, for example, or Solzhenitsyn, or the veneration of the supposed “Russian soul.” The examples could be multiplied.

Putin has long sought ideological and philosophical justifications for his politics. Once upon a time–in the mid-2000s, basically–Dugin was the flavor of the month. He was just a fashion that Putin donned for a bit, before moving on. Dugin didn’t shape Putin’s thinking. Instead, Dugin’s thinking was useful to Putin at one time. But the dynamic of Putin’s actions and the logic underlying them are largely independent of Dugin’s writing, and to the extent that they are correlated, it is because they draw inspiration from a common historical source, or from geopolitical forces that Dugin wrote about but did not create. If anything, Putin used Dugin for a while, but Dugin has never used Putin.

Much of Dugin’s writing is rooted in the geopolitical, geographical theories of Mackinder, combined with a distinctly Russian, anti-Western, anti-Enlightenment civilizational perspective. One can explain a lot of what Putin has done, and does, as an expression of the geopolitical and civilizational forces that Dugin wrote about, that doesn’t mean that Putin wouldn’t have done the same thing if Dugin had never existed. In fact, it means the opposite.

In other words, both Dugin’s words and Putin’s actions are the products of common forces and a common history, not the creators thereof.

As for fascism, yes there are points of contact, regarding culture, idealism v. materialism, Romanticism, etc., but the very Russianness of Dugin’s thought makes comparisons to Mussolini let alone Hitler superficial at best, and highly misleading at worst. The historical palette of most American and European commentators is highly limited.

I think of Dugin as the Russian avatar of Huntington’s Clash of Civilizations–and Dugin would probably consider that flattering. The hatred directed at him, and his returning that with interest, reflects that clash.

In other words, like most intellectuals, Dugin isn’t all that important except as an expression and illustration of what produced him. If he had chosen to ride with his daughter yesterday, the future would not have differed a whit, just as he reflected but did not create the past.

If he doesn’t matter, why was he targeted? Well, I am arguing that he shouldn’t matter. That’s different from saying that some people think that he does. The ghoulish gloating and “Putin’s brain” idiocy demonstrates that many do.

Some have weirdly suggested that Putin wants him gone. Er, why? And Putin has found that he can silence opponents by jailing them or tormenting them with judicial processes. No need to create a martyr.

The most likely culprits are Ukrainian. Not necessarily (or even likely) the government. More likely Azov types.

Killing Dugin would perhaps be emotionally satisfying to Ukrainian nationalists, but it would not advance Ukrainian interests in the slightest. Indeed, it would quite likely have the opposite effect, because it would only make the conflict even more existential from the Russian perspective.

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August 19, 2022

Putin’s Army Taking It In the Rear

Filed under: Military,Russia — cpirrong @ 5:50 pm

If you would have asked me in February, or even early-March, whose rear areas would be more vulnerable, Ukraine’s or Russia’s, I would have said Ukraine’s without a doubt. Russian airpower would be able to roam at will over the length and breadth of Ukraine, attacking its headquarters, supply areas, and lines of communication. It would also be able to obtain targeting information for its standoff weapons to attack such military resources.

Wrong! Russia’s air campaign has been the dampest of squibs. It’s pathetic, actually. And its standoff weapons (cruise missiles, Iskanders, etc.) have mainly hit civilian areas–apartment buildings, shopping centers, and the like.

In contrast, in recent weeks and days Ukraine has hit numerous Russian rear area targets by a variety of means.

The arrival of HIMARs has allowed the Ukrainians to take out numerous headquarters, including army-level headquarters. (Though to be fair, Russian armies are really just big divisions or at most a corps, compared to WWII antecedents.) HIMARs have also wreaked havoc on Russian ammunition depots vital to their artillery-centric tactics–which is precisely why their assaults in Donbas have ground to a shuddering halt. HIMARs have also inflicted substantial damage on bridges essential to the Russians for supporting their units on the north/west bank of the Dnipro around Kherson.

But the Ukrainians have also mounted several attacks in Russia proper, through means not fully known. In particular, military targets in Belograd oblast have been hit: these include an oil refinery and yet more ammunition dumps.

Some of these attacks appear to have been carried out by helicopters and rockets. But others are more likely the result of sabotage. And recent explosions in Crimea are almost certainly the result of sabotage operations. The most notable occurred at an airbase at Saki which per satellite photographic evidence destroyed nine or ten front line Russian aircraft. But in the last few days there have been explosions at ammunition dumps in Crimea and even in Sevastopol.

One thing I did get kind of right was predicting that the Russians would be vulnerable to partisan and guerrilla activity in their rear areas. But I was only kinda right because I envisioned this would occur after they had rolled across most or all of Ukraine. The fact that even what should be secure Russian and largely Russified areas are at risk is pretty staggering.

At the tactical level, this means that the Russians will have to divert already scarce manpower from the front to secure their rear, thereby reducing their offensive capacity. Guerrilla/commando/partisan warfare is an economy of force tactic, and it will almost certainly perform that function here.

At the strategic level, the impact will be largely psychological. And I don’t say that to diminish its importance. War is often won by breaking an enemy’s morale and psychologically unbalancing him into making mistakes.

The strikes on Crimea are especially salient in this regard given the psychological value of that region to Putin, and to Russians generally. Putin’s bloodless conquest of Crimea is his crowning achievement, and his prowess is severely tarnished if he can’t even defend it from saboteurs and “terrorists” (something else Putin has claimed to vanquish).

Given the neuralgia Putin has about Crimea, it is not beyond the realm of possibility that these attacks, and continued attacks there, will unbalance him sufficiently to induce him to do something rash–and stupid.

The military damage inflicted by some of the Crimea attacks appears to be small (Saki being an exception). But frequently small events can have outsized consequences if they strike at the leadership’s pride.

Consider the 1942 Doolittle Raid, which had virtually no direct military consequences. But striking the Japanese homeland and at least theoretically threatening the life of the Emperor so shocked and humiliated the military and naval leadership who had promised that such a thing was impossible that they launched the Midway operation (because they viewed Midway as the keyhole through which the Americans had gained access to Japanese airspace). The catastrophic failure of that operation was the beginning of the end for Japan.

Partisan/guerrilla/commando operations in Russian rear areas, and especially in Crimea, are deeply humiliating to Putin and the Russian high command. If they continue, and especially if they escalate, honor (one of the main motivators of war, according to Thucidides) will compel Putin to exact revenge. Given that he has proven incapable of doing so against Ukraine conventionally, the forms that revenge could take are sobering.

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July 23, 2022

Putin’s Hamster Wheel Spins Bloodily On

Filed under: Commodities,Energy,Military,Politics,Russia — cpirrong @ 1:46 pm

The war in Ukraine grinds on, and recent developments–non-developments really–mean that it will grind on for a long time to come. Specifically, Russian Foreign Minister stated that Russian territorial goals were not limited to the Donbas but included (at least) the Kharkiv and Zaporizhzhia regions. For his part, Ukrainian president Zelensky declared that Ukraine would attempt to negotiate a cease fire only after his country had recaptured all of the areas previously seized by the Russians (presumably including Crimea as well). I say “non-developments” because they represent mere restatements of previous positions.

These stated goals are clearly irreconcilable. Therefore, the beat will go on. And on. And on.

Russia continues to grind, but at an even slower pace than in May and June–and that pace was glacial. Ukraine is making some gains around Kherson, and is intimating that it will mount an offensive there. Even if successful, that will put the attempting-to-take-a-city-shoe–with all the attendant casualties–on the other foot. And even if successful, it will not be decisive, especially given Putin’s obvious bloody mindedness. Zelensky’s ambition of decisive victory is delusional.

Even the one glimmer of hope in the situation shone weakly for only a few hours. The day after a deal brokered by Turkey was reached between Russia and Ukraine to resume grain shipments from Ukraine, the Russians launched a small salvo of Kaliber cruise missiles at the port of Odesa/Odessa. As this video shows, firing Kalibers in ones and twos at a port poses relatively little threat to port infrastructure:

But they don’t have to in order to make the agreement a meaningless scrap of paper. Cruise missiles, even in penny packets, would pose a threat to ships loading at the port. The brazenness of the Russian action before the ink was dry on the grain export deal makes it plain that calling in Odesa/Odessa is nothing but a game of Russian roulette–literally. Few if any carriers (or their insurers) will be game to play, especially given the other dangers (e.g., mines).

So what Putin giveth with one hand to great fanfare he taketh away with little more than a shrug. A typically cynical play.

The biggest losers from all this (other than the combatants themselves, of course) are the Europeans. They are looking at a cold, dark winter. And they are looking at serious economic damage for as long as this lasts. German industry (chemicals especially) will suffer greatly from protracted high energy prices, natural gas in particular.

German resolve, such as it was, is already cracking. It is fading its promises to provide weapons to Ukraine, and its foreign minister said the quiet part out loud: “If we don’t get the gas turbine, then we won’t get any more gas, and then we won’t be able to provide any support for Ukraine at all, because then we’ll be busy with popular uprisings.” Translation: Ukraine, we don’t have your backs–but we might stab you there! (“At your feet or at your throat” also comes to mind.)

She backtracked, but her words are a vivid example of Michael Kinsley’s definition of a gaffe: “A gaffe is when a politician tells the truth – some obvious truth he isn’t supposed to say.” Or in this instance, “she.”

Putin is executing a major psyop, varying the volumes of gas shipped to Europe. “Nice little energy-dependent economy you got here. Shame if anything happened to it.”

The likely outcome is that the western Europeans will temporize. They won’t back off on sanctions altogether, but their support for Ukraine and their opposition to Russia will be hedged and tepid at best. They will choose the muddle course, because they don’t have the guts either to confront Putin or to capitulate to him. This will also help extend the stalemate.

Years ago I used to refer to “Putin’s hamster wheel.” The fiasco in Ukraine is just a particularly bloody version of that. And betting on form, it will continue to spin for the indefinite future.

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July 13, 2022

Hey, Janet, Here’s a Deal! Buy a Russian Toaster for $5 Mil, and Igor Will Throw in 100K Barrels of Oil for an Additional $5 Mil

Filed under: Commodities,Economics,Energy,Politics,Russia — cpirrong @ 6:06 pm

The Biden Better Than Yous’ most recent brain flash is to impose a price cap on Russian oil. We’re told (by an anonymous senior Treasury official–maybe the ex-economist Janet Yellen herself?) that if we don’t the price of oil could reach $140/bbl.

Oh thank you for thinking of how to save us!!!

Not so fast. That is based on a particular counterfactual: namely, a complete cutoff of Russian oil exports. That counterfactual is totally unrealistic.

Let’s compare to a more realistic alternative–current reality. Russia currently has to sell its barrels at a discount. But even the discounted price is well above the price cap being bruited about. So, if the plan works–which it won’t, for reasons I’ll get into momentarily–Russia would receive a lower price for its oil. Russia’s supply curve slopes up. Yes, it’s pretty steep, but it will export less if the proposed price cap were indeed binding. And if it exports less, world prices will rise. And since the demand curve is pretty steep too, the price rise will be appreciable.

In other words, compared to the current situation, this plan will raise prices if it works.

This is not complicated.

One could rationalize this as a way of reducing Russian oil revenues while having a relatively modest impact on prices. If Russian output was completely price inelastic, the cap would not reduce its output, and world prices would not rise, but Russia would receive less money to blow up Ukraine with.

Brilliant!

Again . . . if the plan works.

This rosy scenario would mean that the plan is oil price neutral. But it would create a huge windfall for any entity that secures barrels at the capped price. That “windfall” is an economic rent, and there will be massive rent seeking to attempt to secure it. And rent seeking will undermine the operation of the plan.

It’s not as if this is a theoretical possibility. Remember why Marc Rich fled the US? Well, one reason was that he sought rents created by Jimmy Carter’s idiotic oil pricing scheme which created different categories of oil with different price caps. “Old” oil was subject to a price cap. “New” oil wasn’t. So enterprising rent seekers like M. Rich found ways to buy old oil and magically transform it into new oil, thereby making bank.

Substitute “Russian” for “Old” and you have Janet Yellen’s current plan. It creates tremendous incentives to evade, and will require tremendous resources to enforce. Uncle Sam no likey, and indicted Rich. But remember Marc died a free man in Switzerland.

Moreover, there are myriad ways to circumvent price controls.

If you are old enough, you’ll remember banks giving away toasters and other small appliances to depositors. Why? Because interest rates on deposits were capped at below market levels. But there was no rule against giving away toasters! So, in essence, interest was paid in toasters.

Think of the possibilities now! Buy a limited edition autographed portrait of Igor Sechin (the old Igor, with a mullet) for $5 million, and Rosneft will throw in 100,000 bbl of oil for $5 million more–a 50 percent discount off the current price, and compliant with the cap! It’s a bargain!

Or maybe buy a Russian toaster for $5 million, and get the 100kbbl for another $5 mil.

Warning: Do NOT accept sausages from Igor.

The bundling possibilities are endless. Side deals run through a labyrinth of shell companies are another way around this.

And don’t forget, one of the main ways that Russian oligarchs got rich in the 1990s was buying commodities at official Russian prices (well below world prices), illegally exporting them and selling at world prices, and then stashing the money overseas.

Meaning that they just have to dust off their old playbooks–they are pros at this. Only this time they will be circumventing foreign price caps instead of domestic ones. And they will have numerous eager accomplices in China, India, South America, and Africa.

And the Russians aren’t the only pros. Do you have any idea about all the invoicing scams in China to circumvent capital controls?

What’s the US going to do in response? Sanction everybody?

In sum, this is a plan that looks great on a whiteboard in economics class, but will not survive contact with the enemy. The enemy being reality.

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June 25, 2022

Russian Tactical Failures in Ukraine: Where’s the Meat?

Filed under: History,Military,Russia — cpirrong @ 11:02 am

In the very early days of the Russian invasion of Ukraine, after watching many videos of columns of Russian armor or individual tanks getting blown to smithereens, I remarked on Twitter several times that what astounded me is that the tanks were operating without infantry support, which left them vulnerable to being ambushed by a couple of guys with an ATGM fired within spitting distance. FFS, it has been known since the dawn of tanks in WWI, and especially since their widespread employment in WWII, that tanks without infantry are extremely vulnerable to one- or two-man antitank weapons. The bazooka is one example, but the panzerfaust (and subsequently its imitator the RPG-7) is the best illustration.

I had written down the Russian failures to a meatware problem: namely, badly trained or badly led troops, operating under bad doctrine. Well, it appears that it is a meatware problem, but a different one: a lack of meat. To modify the old Wendy’s commercial: where’s the meat?

For it seems that the vaunted Russian Battalion Tactical Groups–BTGs–have been deployed to Ukraine seriously undermanned. Fifty percent undermanned, in fact, a problem only exacerbated by the massive attrition that undermanned units inevitably suffered.

Many of the infantry fighting vehicles like the BMP-2 in its several variants have apparently operated without infantry: only the driver, commander, and gunner man the vehicles. So the reason that Russian armor has no infantry support is that it has no infantry period.

This is nothing short of criminal. Alas, the real criminals here (from Putin on down) will not pay the price. The poor Ivans incinerated when Javelins or Stugnas and other ATGMs demolish their vehicles have–and will.

Recently there have been fewer such images, because the Russians have changed tactics, due no doubt to the carnage of February and March. Now most Russian losses (at least the ones depicted on video) are from indirect fires.

For the war in Ukraine has become one of indirect fires. As predicted here when the original coup de main was smashed, the Russians have reverted to reliance on their God of War–artillery. In particular, after giving the Grozny treatment to Mariupol and winning a pyrrhic victory there, they have done the same at Severodonetsk.

The Ukrainians have wisely decided to withdraw. Perhaps a bit too late, but better late than never. By holding out the Ukrainians did cost the Russians time and materiel and casualties. But the Ukrainians suffered severe casualties as well. Judging when to make a tactical withdrawal is hard.

Severodonetsk is (or perhaps was) at the nose of a salient. The classic means of assaulting a salient is to strike on the shoulders and pinch it off, trapping the defenders. But the Russians have signally failed in their attempts to do so. So they bashed in the nose of the salient with brute firepower. It is a victory, of sorts, but one that will not have decisive because the Russians have proved that they do not have the ability to exploit such breaches through armored maneuver.

Severodonetsk was just a WWI battle, or a battle akin to the ones in the static phase of the Korean War July 1951-July 1953. A few kilometers are taken, at heavy cost (especially to the attackers) with no decisive strategic effect.

And the prospect is for more such battles, until one side or the other–or both–collapses due to an exhaustion of personnel or emotional/moral collapse.

Morale on both sides involved in the slugging contests is reportedly cracking. This is understandable. Especially on the Ukrainian side, given they are outgunned. There is nothing more terrifying or demoralizing to soldiers than artillery bombardment. The soldier feels utterly helpless, with no way of fighting back, and wondering whether the next whoosh of a shell is the last sound they will ever hear. What we now call PTSD was referred to as “shell shock” in WWI for a reason.

So, again as predicted early on, the war has degenerated into a war of attrition. The deciding factor will be which army, and perhaps which government, collapses first. Existing Russian forces have been hollowed out. Russia has additional manpower to draw on, but that would require Putin to mobilize, something he has been reluctant to do. And even if he does, re-manning depleted BTGs with unmotivated raw recruits will just permit extending the slow grind west, will not result in a decisive advance, and will push the Russian death toll ever closer to 6 figures.

Ukraine has made some marginal gains on the periphery in the north (around Kharkiv) and in the south (around Kherson). But nothing decisive.

Further, the events in Donbas have apparently been a rude awakening and cured the “victory disease” that inflicted Zelensky, the rest of the Ukrainian leadership, and many supporters in the West after the initial Russian thrusts were turned back.

But given that neither side seems willing to stop the fighting except on terms that the other finds completely unacceptable, the bloody, pointless war will drag on for the foreseeable future.

Astoundingly, even though it should have been apparent no later than mid-March that based on events on the ground and betting on form regarding Russian behavior that this is exactly where we would be, US military “intelligence” has supposedly been surprised at how the Russians have responded to their initial setback: “But U.S. intelligence apparently missed another possibility: that Russia would revert to its traditional “way of war” based on mass and attrition.”

How is that possible? I mean really. This should not have been complicated.

After Iraq, Afghanistan, and now Ukraine, U.S. military intelligence–especially the parts responsible for evaluating enemy capabilities and intentions–needs to be ripped down to the foundation and built from scratch. Ukraine is another example of “those who forget the past are condemned to repeat it.” And it doesn’t even require looking at relatively ancient history, like, you know, WWII. It only requires looking back back 20-25 years, to Grozny.

These serial failures of US intelligence scare me far more than anything happening along the Don. An addle-brained president, with moronic advisors, acting on bad information. What could possibly go wrong?

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May 19, 2022

Z Is For Zugzwang

Filed under: Military,Politics,Russia,Ukraine — cpirrong @ 4:05 pm

Ten days ago Vladimir Putin gave his much anticipated “Victory Day” speech, and said . . . well, not much at all.

There was much anticipation and speculation in advance. He would declare war and full mobilization. He would declare victory, or announce some criteria for victory that even his shambolic military could achieve.

Instead, he basically affirmed the status quo. Russia would keep grinding away. It would not escalate. Nor would it de-escalate.

In other words, Putin tacitly admitted what I had asserted weeks ago: Putin/Russia are in Zugzwang: any move makes things worse, so Putin has basically chosen to do nothing, or at least to change nothing.

There has been much conjecture what the Z on Russian equipment means. Now you know. It means “Zugzwang.”

Things have gotten even worse for Russia since 9 May. Ukraine has mounted a modest counteroffensive (a real counteroffensive, not a local counterattack) north of Kharkiv, and pushed the Russian army back across its border in places. The Russian offensive in Donetsk and Luhansk is essentially stalled. Indeed, the Russians suffered a humiliating reverse in an attempt to mount a river crossing: an entire battalion tactical group and its equipment were destroyed, as was the bridging equipment.

Overall, Russian losses continue to mount, with nothing to show for it. The only simulacrum of an achievement is the surrender of the besieged and battered defenders of the Azovstal plant after weeks of relentless Russian assault and bombardment. But on net Ukraine gained far more from that battle by delaying and attriting Russian forces than Russia has by its ultimate capture of the facility.

And now the Russians appear to view their “triumph” as an excuse to commit a massive war crime by trying the captives as war criminals and threatening to execute the surrendered Ukrainians.

But of course they have to do that to justify their war propaganda that they are fighting Nazis. You know, act like Nazis to pretend they are fighting Nazis. But the Russian military and state are already so far down the war crimes road they won’t stop now, especially if this one provides something that they can use to sell this fiasco to the Russian public.

Now the battle resembles World War I far more than World War II. It is an artillery war being fought on a relatively static front. Even if Russia gains some local objectives, “the big push” and “breakthrough” are clearly beyond their capabilities.

Ukraine is clearly encouraged that it can win, with victory defined as pushing out Russians from all of Ukrainian territory. I think this is too optimistic, and even if it is realistic, the cost to Ukraine, let alone the world, is not worth it.

I understand the risk of leaving Putin/Russia with a rump of Ukrainian territory from which they can spin up a future justification for resuming hostilities once they’ve licked their wounds and convinced themselves that they have really fixed their military this time. But the pretext will exist, and in fact be even stronger, if Ukraine retakes the Donbas. For no doubt the Russians will claim that Ukraine is Nazifiing the recaptured Donbas if it retakes control, and this will be a future casus belli. Retaking it would alter the tactical situation somewhat in Ukraine’s favor for the next time, but not enough to change materially the probability of another Russian attempt. The war exists because Ukraine exists. Redrawing the lines of effective control in Ukraine won’t remove the Russian rationale for war. It is not worth it.

So the war will grind on, because Zugzwang Putin can’t admit he’s lost, and Ukraine believes it can win. Nothing good will come of that.

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May 13, 2022

Congresspeople, Being Idiots, As Always: Gasoline Price Edition

Filed under: Commodities,CoronaCrisis,Economics,Energy,Russia — cpirrong @ 6:28 pm

Mark Twain never grows old:

“Reader, suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.”

This came to mind when reading about the proposal of Rep. Katie Porter to impose some sort of price control on gasoline:

Since the beginning of recorded history–and that is not hyperbole–the stock government response to high prices is price controls. The Pharaohs. Hammurabi. Diocletian. And many other examples. And it continues through the ages to more recent history, e.g., rent control in NY starting in WWII, Nixon in 1973.

And the result is always the same: economic disaster. It is price controls result in real shortages: people standing in lines, empty shelves, etc.

Always. If price doesn’t clear the market, waste (e.g., time spent standing in line) will.

But politicians never learn.

Nancy Pelosi (who is old enough to remember gas lines–hell, she’s probably old enough to remember the Code of Diocletian, if not that of Hammurabi) is of course fully on board. Which is an illustration that the adage “those who don’t remember the past are condemned to repeat it” is wrong: many who can remember the past repeat its errors nonetheless.

Elizabeth Warren hasn’t weighed in on this yet, but you know she will, because she’s the main spokes-shrieker for The Gouger Theory of Prices.

The Gouger Theory is stupid on its face. Did oil companies wake up one morning and realize: “Whoa! We coulda jacked up prices and gouged the suckers! What were we thinking?” Did they have some sort of epileptic fit in 2020, when prices crashed? What were they thinking?

No. This isn’t gouging. This is-as it almost always is-fundamentals.

Oil prices are high. But in this week’s edition of “Find the Bottleneck,” that’s only one of the drivers (no pun intended) behind high gasoline and diesel prices. The bottleneck is in refining.

How do we know? Let’s look at the diesel crack:

It’s gone from around $22/bbl to as high as $70/bbl. (And the $22 is high compared to what it was a year ago). (Gasoline crack somewhat similar though not as bad–though it is likely to get so when the peak demand season kicks in.)

A high refining margin means that refinery capacity is constrained. And yes, it is constrained: it’s not as if refiners are exercising market power (i.e., gouging) by withholding output. Here is the capacity utilization in the US over time:

It’s running at pre-Pandemic levels.

And here’s another thing: post-Pandemic capacity is well below pre-Pandemic capacity:

That drop from pre-Pandemic levels is around 5 percent. That’s a lot.

So refineries are running flat out, and refinery capacity is down. What do you get?: big refining margins and high prices at the pump. Yes, it’s good to be a refiner now (though not so much two years ago). But it’s not good because you get to exercise market power. It’s because even under competition it’s highly profitable because of supply-demand fundamentals.

A variety of factors have contributed to this. The loss of a good chunk of Russian oil output is keeping the price of oil up, but the loss of Russian diesel supplies to Europe is probably a bigger factor. The US is to a large extent filling the gap, to the extent it can, by exporting.

But no matter how you break it down, it is clear that this is fundamentals driven. It is not gouging. And capping prices on the delusional belief that it is gouging will wreak economic havoc.

Which has never stopped the Democrats before, I know. (And Republicans too, e.g., Nixon).

One thing here does deserve emphasis. The decline in capacity is directly attributable to the Pandemic. Correction: it is directly attributable to the horrible policy choices that politicians and bureaucrats forced on us in the name of the Pandemic. The lockdowns in particular.

Like many, many things going on in commodity world right now, the current spike in product prices overall, and relative to crude, is yet another baleful consequence of completely mental decisions to shut down economies and crater the economics of producing and processing commodities.

In other news of economic-related political hysteria, there is also a lot of finger pointing going on about baby formula. I don’t have the information at hand to analyze in the same way as I can refined petroleum prices, but I can say what it isn’t. It isn’t “oligopoly.”

But again, those educated in politics (did I really use “educated” and “politics” in the same sentence?) and not economics immediately seize on this as an explanation.

Er, the baby formula business was an oligopoly a year ago. And a year before that. And a year before that. So . . . why all of a sudden did they supposedly decide to create a shortage? And pray tell–how do you make money if you aren’t selling stuff?

So whenever Congresspeople, or people who buzz around them like insects (yeah, I’m looking at you, journalists) come up with some economic brainstorm, remember Twain. They’re idiots. Dangerous idiots.

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