Putin’s aggressive rush to war in Eastern Europe appears to be a misguided attempt to jack up global oil prices. The Russian government is deeply dependent upon oil & gas revenues, and while the price of oil remains below the $130 to $150 bbl range, the government is forced to draw from its reserves to pay for routine expenditures. This is due to many reasons, including Putin’s ambitious and lavish spending habits and the slow and increasingly debilitating effects of sanctions against Russia by the outside world. So it is that Putin seems to go to war as casually as Obama goes to the country club, just to boost oil prices.
Russia appears to be intervening more aggressively in the war in eastern Ukraine in what American and Ukrainian officials call a dangerous escalation that will almost certainly force more robust retaliation from the United States and Europe.
Russia has increased its direct involvement in fighting between the Ukrainian military and separatist insurgents, moving more of its own troops to the border and preparing to arm the rebels with ever more potent weapons, including high-powered Tornado rocket launchers, American and Ukrainian officials said on Friday.
Investigators examining wreckage of Malaysia Airlines Flight 17. Ukraine ceded control of the inquiry to the Netherlands, which has been monitoring the bank accounts of the crash victims.
… Russia had positioned heavy weapons, including tanks and other combat vehicles, at several points along the border where there has been intense fighting. On Thursday, Russia unleashed artillery attacks on eastern Ukraine from Russian territory … NYT
Russia’s stock market and currency dropped Monday as investors girded for the worst.
“The room for maneuver is now minimal,” says Alexei Makarkin, analyst at the Center for Political Technologies, a Moscow political consultant.
“From the pragmatic point of view, it would probably be best to pull back” and allow the Ukrainian military to defeat the separatists, he said. “But now that’s very difficult. The public wouldn’t understand.” __WSJ
Putin is unable to change his militant tactics due to the energy calculus under which his government operates. Worse, Putin’s dreams of empire force him to ramp up both spending and threat behaviours.
Of course Putin is not the only kooky guy in Russia. Being kooky seems to be a Russian tradition in many ways.
I recently moved to Moscow, and it’s hard to miss the extent to which Russian society exists in an alternate universe. Even well-educated, sophisticated people who have traveled widely in Europe and North America will frequently voice opinions that, in an American context, would place them alongside people wearing tinfoil hats. Russia is not living in the reality-based community. _WaPo
Russia stole Yukos and owes $50 billion
Sanctions against Russia have barely begun, although Putin can still joke about Russia’s invulnerability to any action by the outside world.
Russia continues to suffer from brain drain, capital flight, womb drain, population loss in Siberia, sky-high death rates alongside low birth rates for ethnic Russians, dismal rates of HIV, TB, alcoholism, tobacco abuse, suicide, violent crime, corruption, and a lack of economic opportunity and high risk for doing business. Russia may even cease to exist as a state, by 2100.
As economic conditions inside Russia continue to tighten, all of Russia’s many problems — including the loss of its best and brightest — only get worse.
A small peek into the problems of Russian military production:
Russian engines have long been noted for their low reliability, and short service lives. There are currently two Russian engines being built for fighter aircraft. The $4 million AL-31 (for the Su-27/30, and the Chinese J-11, J-10) and the $3 million RD-33/93 for the MiG-29 and the Chinese JF-17 (a F-16 type aircraft developed in cooperation with Pakistan) are big export items and a major source of income for the Russian firms that build them. The AL-41 is supposed to be good for 4,000 flight hours (compared to 3,000 hours for the AL-31). Accidents like the one in 2009 are expected during aircraft development, although in the last decade, Western aircraft developers have avoided such losses by doing a lot more testing via computer simulation. The AL-31/41 has been the cause of several Su-30 mishaps recently and the Russians are still seeking answers. It’s is obviously not easy. The Al-31 itself is five meters (16.3 feet) long and weighs 1.6 tons. They are complex bits of engineering with thousands of precision parts. There is a lot that can go wrong. India understands this but the abnormally high number of engine failures in 2012 and 2013 and Russian inability to fix problems that have been present since before 2008 is very worrisome. It should be to Russia as well because India currently operates about 40 percent of Su-30s in service. That’s twice as many as China (which operates more than Russia). __ StrategyPage
Russia sells a lot of arms because its products are cheaper for the nominal firepower. If the reputation of Russian arms continues to fall — because quality control in military production is falling to the low levels of all other Russian industrial production — prospective customers may look to France or other arms producers instead.
If sanctions make it difficult for Russia to upgrade its petroleum production, it will need every bit of hard currency export income it can get from sources other than energy exports.