Streetwise Professor

September 19, 2009

Lucy Tees Up the Football

Filed under: Energy,Military,Politics,Russia — The Professor @ 7:54 pm

Russia has invited OPEC to an oil summit in Moscow, and Charlie . . . I mean OPEC has accepted:

Abdalla El-Badri, secretary general of the Organization of Petroleum Exporting Countries, accepted the invitation in a phone conversation this week, Russian Energy Minister  Sergei Shmatko told reporters in the Siberian city of Abakan today.

“We agreed that Russia and OPEC are still interested in developing partnerships in the near future,” Shmatko said.

Deputy Prime Minister  Igor Sechin told OPEC in December that the government was ready to limit output to support prices. Russia has since ramped up exports of crude oil and refined products, overtaking Saudi Arabia and causing Qatari Energy Minister  Abdullah bin Hamad al-Attiyah to say he was “fed up” with non-member producers. OPEC didn’t invite Russia to attend its last meeting in Vienna on Sept. 9, breaking with tradition.

“We will continue to cooperate with OPEC, while keeping our own national interests” in mind, Shmatko said today.

That last sentence is priceless.  Let’s see how Shmatko defines “cooperate”:

Russia, fresh from a record month of oil production, will be able to invest in new fields at current crude prices and makes no apologies to OPEC for refusing to rein in output, Energy Minister Sergei Shmatko said.

“We never had any obligations (to OPEC). When we were communicating, we never promised anything,” Shmatko said late on Thursday. “To say that we do not abide by the rules is not correct.”

Russian oil output hit a record monthly high in August, nearing 10 million barrels per day, as the world’s second-largest crude exporter launched a major new field in the Arctic and grabbed more market share from OPEC.

OPEC Secretary-General Abdullah al-Badri, speaking after an OPEC meeting in Vienna on Thursday, said the lack of any tangible cooperation from non-member Russia in the group’s output cuts “not encouraging.”

Russia took a hit when oil prices plunged last year, stripping the country of a vital source of budget revenues. A bounce in the oil price since has brought early signs of economic recovery.

“One always wants something better. One can always say that, at a higher price, some projects will be more profitable, but today the price of oil does not set any limits for the oil industry’s development,” Shmatko said.

Shmatko also said Russian oil producers would be able to avail themselves of a zero duty on exports from 13 oilfields in East Siberia by the end of September. No time limit has been set for the tax breaks.

This is not at all surprising.  And, as I’ve said before, I’m all for Russia ramping up its output and undercutting OPEC.  I bring this up mainly to make the point that only fools expect any kind of reciprocity from Russia; only buffoons think that Russia will do anything but ruthlessly exploit any opportunity they are given.

The White House would have done well to heed the lesson that Russia gave OPEC before announcing its decision to shut down the Poland-Czech missile defense initiative in the hope that this wold induce cooperative reciprocity from Russia.  Instead, it has ignored it, raising the distinct possibility that fools and buffoons are in charge of American foreign policy.

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  1. The Putinists are criminal traitors who should be overthrown. (At least in this respect).

    Russia should immediately cut its oil production and keep reducing it at 10% per year until it satisfies domestic consumption with just a bit extra exported for hard currency. The rest should be left in the ground for future generations.

    Comment by poluchi fashist granatu — September 19, 2009 @ 9:01 pm

  2. ….raising the distinct possibility that fools and buffoons are in charge of American foreign policy.

    We are nine months in on this administration and Jimmy Carter didn’t look this stupid this soon. Name an ally that Obama hasn’t thrown under the bus to date?

    Igor Sechin is a reptile.

    Comment by penny — September 19, 2009 @ 9:13 pm

  3. My new article on why Russia (and others) should reject the West – it’s a sinking ship.

    Shifting Winds

    Comment by poluchi fashist granatu — September 19, 2009 @ 9:40 pm

  4. “Instead, it has ignored it, raising the distinct possibility that fools and buffoons are in charge of American foreign policy.”


    Michael McFaul and Celeste Wallender?


    “The White House would have done well to heed the lesson that Russia gave OPEC before announcing its decision to shut down the Poland-Czech missile defense initiative in the hope that this wold induce cooperative reciprocity from Russia.”


    Russia should show “reciprocity” on a formal US study which seems to have reasonably concluded that the now scrapped missile defense program wasn’t compartively as cost and quality effective as another option?

    This gets back to the point earlier mentioned (twice) at two other SWP threads about how Russia reciprocated by not putting in nukes in Kaliningrad.

    The idea that O caved in reminds me of those saying that the Western allies could’ve pushed much further east at the end of WW II if they wanted to.

    Comment by Cutie Pie — September 20, 2009 @ 12:55 am

  5. “The idea that O caved in reminds me of those saying that the Western allies could’ve pushed much further east at the end of WW II if they wanted to.”

    Yeah, Winston had the Chiefs of Staff look into that. Even with rearming the Germans, the prospects weren’t bright…

    Comment by rkka — September 20, 2009 @ 6:35 am

  6. Cutie Pie–if you think that McFaul and Wallender are “in charge” of American foreign policy, you are even more naive than I could have possibly imagined.

    Re Kaliningrad-(1) the missiles are mobile, and can be readily moved there if Medvedev (excuse me, Putin) changes his mind again (i.e., there is a decided asymmetry between the fixed nature of the BMD sites and the SRBMs), that is (2) if they really exist–note earlier comments (and one of my long ago posts) to the effect that said missiles have yet to be built yet. Big “concession”–remove virtual missiles. Not to mention the neo-Soviet aspect of the threat.

    As I noted in my original posts, even if you believe that the EE BMD systems were not cost effective, they apparently mattered a lot to the Russians, for whatever reason. (Paranoia? Rage at American military installations in “its” “sphere of influence”? Doesn’t matter.) Hence, they could have been a great bargaining chip. Indeed, possibly the best type of bargaining chip–something that you value little, and the other side values a lot. But what does Obama do? Does he trade it for something worthwhile? No. He unilaterally gives it away. That’s chump diplomacy. (With apologies to chumps.)

    SecDef Gates is either dishonest, or being a fool, when he says this was purely a technical, military decision that has nothing to do with the Russians. The fact is, the entire debate about this subject was in the context of Russia. To the Czechs and Poles–and pretty much everybody E of Berlin–it had everything to do with the Russians. Everybody–not the least the Russians–was using it as a gauge of American policy to Russia.

    That is, politically, it was all about the Russians. Especially to the Russians. Supposedly sophisticated, nuanced practitioners of diplomacy should have been aware of that. Hell, even unsophisticated, pedestrian practitioners of diplomacy should have been aware of that. To pretend otherwise is to suspend reality, and to make policy in a make-believe world in your own mind, rather than in the here-and-now. You have to make policy in the world in which you live, and taking into account the beliefs and perceptions of those you are dealing with. (Elemental game theory.)

    Obama/Gates are trying to pretend they are making policy in a vacuum. That never works out well.

    The ProfessorComment by The Professor — September 20, 2009 @ 8:58 am

  7. Further on the virtual nature of the Iskanders in “Kaliningrad”:

    For the second time this month, Russia has changed its policy regarding its new SS-26 (9M723K1, or “Iskander”) ballistic missiles. First it said it was sending some to Kaliningrad, as a way to threaten the new NATO anti-missile system being built in Poland (to protect Europe from Iranian missiles). Now Russia says it will halt any exports of the Iskander missile until it has produced the hundred or so it plans to send to Kaliningrad. Syria, Kuwait, South Korea, India, Malaysia, Singapore and the United Arab Emirates were all interested in Iskander. The export version, Iskander-E, would have a shorter range (280 kilometers) and fewer countermeasures for the warhead.

    Russia now plans to send five brigades of Iskander (60 launchers, each with one missile, plus reloads, which could amount to over a hundred missiles) to Kaliningrad. Iskander is just entering production, and it would take several years, at least, to produce that many. Actually, it might take five or more years to produce enough missiles for five brigades, because Russian missile production capabilities have sharply deteriorated since the end of the Cold War in 1991. This is one reason why the current Russian government is making so much noise about this imaginary NATO plot to surround and subdue Russia. Losing the Cold War did not go down well in Russia. Rather than forget and move on, many Russians prefer to remember, and use the imagined evil intentions of their Cold War foes to explain away defects in the Russian character.

    The ProfessorComment by The Professor — September 20, 2009 @ 11:41 am

  8. Professor

    Forgot to mention Rose G. Those three have a say on Russian matters.

    On your reference to the Cold War, a number of folks saw this as an opportunity to tweak Russia. This is what didn’t go down well in Russia.

    I recall someone saying that Russia’s role in the Soviet breakup was expected on the basis that it benefitted Russia. Therefore, according to this person, there was no need for the West to reach out to Russia.

    This very same argument can be made with the scrapping of the missile defense program.

    Comment by Cutie Pie — September 20, 2009 @ 2:14 pm

  9. Professor

    You seem to be suggesting that the missile defense shield program was for something other than monitoring Iran.

    Is that so?

    The missile defense program scrapping has been praised by Putin. I’ve to think that the involved decision and response could lead to something mutually beneficial for both countries.

    Meantime, the varied responces to what has transpired have been predictable.

    Comment by Cutie Pie — September 20, 2009 @ 2:26 pm

  10. No such suggestion. All I am saying is if in the mind of Putin et al it is directed against the Russians–hell, use their paranoia to negotiate something you want from them.

    And you are on crack if you think that Putin will do anything in response to this other than what he’s already done: demand more.

    The ProfessorComment by The Professor — September 20, 2009 @ 2:31 pm

  11. It was done because it served America’s best interests without Russia being an issue.

    Russia was the first country to console the US on 9/11. This included offering the US intell on Afghanistan. Was Russia owed anything for that?

    You’re to be on crack if you think that the likes of Gates, MM, CW and RG are “soft” on Russia.

    Comment by Cutie Pie — September 20, 2009 @ 9:32 pm

  12. That’s “you’ve” with that last comment said in the spirit of reciprocity.

    Comment by Cutie Pie — September 20, 2009 @ 10:40 pm

  13. Well, Russian help in Afghanistan is not for free. Russians have enough problems in Chechnya with militants, last thing they need is state in their neighbor with rule of such militants. And transports of cargo to Afghanistan is great bargaining chip, too. If NATO do something Russians do not like, Russians immediately stops with their “help”. Truly, Russians consoled minutes before others, that is the most important thing in geopolitics. It is the same Russia that supports Iran with their “Death to America” rhetoric.

    And yes, you are on crack if you think that Gates, MM, CW and RG are “hard” or “normal” on Russia.

    Comment by Deith — September 21, 2009 @ 1:31 pm

  14. “Not to mention the neo-Soviet aspect of the threat.” Another point where the Prof sounds suspiciously like LR/Penny at least in the sense that they talk off line, not that they are one and the same.

    And yes, as I pointed out over at the Belmont Club site to the saner conservative commenters (not the minority who are certifiable John Birchers predicting an imminent Russian nuclear strike) transport to Afghanistan is not nothing. Unless of course, you again think the perfidious Russians are merely helping us because they want us to repeat their mistakes made in the 1980s and as a Republican suddenly after years of silence under Bush you think staying in Afghanistan is a bad idea under O.

    Comment by Steve J. Nelson — September 21, 2009 @ 3:24 pm

  15. Deith

    Regarding what you last said here about being on crack: at another SWP thread, you recently misinterpreted what a Russian officer said about an issue. A link was asked to support your paraphrasing of what he said. You provided it without noting your error.

    Comment by Cutie Pie — September 21, 2009 @ 3:40 pm

  16. Getting Russian help in undermining OPEC was exactly what G.W. Bush was aiming for in 2001 when he flattered Putin before Cheney and his bunch screwed it all up with their Russophobic policies. Why the Professor continues to hammer away on this point I have no idea. Russian independence from OPEC is GOOD for major oil consumers.

    Comment by Steve J. Nelson — September 22, 2009 @ 4:33 pm

  17. I misinterpreted nothing. Your arguments are just full of everything except logic. So you are also unable to understand that “no plans for leaving” equal “we are staying there”. That is not an “open” option and it is not a paraphrase, it is very simple conclusion anyone with active brain can do from such a statement. You talk about misinterpretation simply because you have no counter-argument against what I said in this topic…

    Comment by Deith — September 23, 2009 @ 7:34 pm

  18. […] is floated, only to watch it fly away from their grasp. Once upon a time, Igor was notorious for encouraging such notions. Not this time […]

    Pingback by Streetwise Professor » I[gor], Robot (Hater) — February 10, 2016 @ 9:40 pm

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