Economically Strapped Dictator Threatens to Play the Nuclear War Card

Urban Nuclear Blast

Urban Nuclear Blast

Is global thermonuclear war unthinkable? Not in Moscow. As Russia’s economy takes a deep dive into a shallow pool, the Kremlin’s war planners are busy laying the groundwork for large scale global violence.

Under mounting Western pressure this year, Russian leaders have been repeatedly and unambiguously reminding the West of the ultimate weapon at Moscow’s disposal—nuclear mutual assured destruction. The Russian military is also rearming and conducting massive exercises, preparing for a possible global war.

… The Russian economy has continued to stagnate and may go into recession in 2015. A contraction in household income is also expected. The finance ministry is considering cuts in budget spending, but it seems defense expenditures will continue to grow. The defense budget in 2015 is planned to reach an all-time post–Cold War high of 4.2 percent of GDP or 3.3 trillion rubles ($81 billion). In 2012, defense spending was 3 percent of GDP; in 2013, it reached 3.2 percent; and in 2014, it was 3.4 percent (Interfax, October 16). Overall federal budget spending to finance Russia’s massive intelligence services and other militarized services is almost as big as the defense budget per se. And as the new cold war–type standoff widens in scope and the Russian economy flounders, the Russian people will be increasingly paying for guns instead of butter. __ Russia Prepares for War

Although the price of oil is staying well below Russia’s fiscal breakeven, Putin is pushing Russia more forcefully onto a quasi-wartime economic footing — boosting military, intelligence, and propaganda budgets in prodigal fashion.

Global oil & gas prices are the key to whether Putin feels forced to speed up his war plans, or whether he feels that he can plan for war at his leisure. If Russia plunges into recession due to a deep and lasting global slump in commodities markets, he may feel he has no choice but to let slip the dogs of war.

Russia’s dependence on energy exports—and, consequently, its economy’s vulnerability to commodity price fluctuation—was highlighted by the 2009 world financial crisis. As oil plunged from $147 to $34 per barrel, the resource-based economy contracted by almost 8 percent—the largest drop among the G20 top industrial nations.

… “The problem of being a petro-state is that the natural resources trend corrupts the institutions,” said Sergei Guriev, rector of the New Economic School in Moscow and a leading expert on Russian political economy. “This is what is called the ‘resource curse.’ This is a trap, where democratic political and economic institutions do not develop because rents coming from natural resources provide incentives to the elite not to develop institutions.”[24]

… Russia’s production may shrink by as much as one-fifth, from the current 10.4 million BPD to 8 million BPD as early as 2020.[34] In the opinion of a top expert, Thane Gustafson, sometime in the coming decade, the Russian state “could well see oil revenues decline, even as its reliance on them grows,” and the “tide of money” that has enabled the Kremlin to meet “everyone’s growing expectations” may vanish.[35]

… With an effectively bankrupt state pension fund and a rapidly aging population, the Kremlin’s ability to prevent a full-blown pension crisis will require a huge influx of gold and hard currency reserves. At a time when soaring household utility prices (tariffs) are a leading source of dissatisfaction with the regime,[73] the diminishing energy revenues will endanger the regime’s ability to subsidize the costs.

… among the most destabilizing consequences of the continuing dependence on oil and gas will be the Kremlin’s declining ability to secure the elites’ loyalty. Fiercely protective of their share of the politically apportioned riches of Russia’s state capitalism, powerful clans will squabble to secure the same share of a diminishing pie, in the process threatening the stability of the regime. “Putin’s unchallenged power” rests on a tripartite foundation: “oil and gas money, the Federal Security Service, and television,” a Russian observer noted last December.[75] Today, one leg of this tripod is beginning to look wobbly. __ Political Economics of Russian Oil & Gas

Actually, all the legs of Putin’s power rest on oil & gas money. None of the others will stand without it.

Russia is spending more on its weapons programs. But as industrial infrastructure inside Russia continues to deteriorate, Russia will be forced to turn to China for weapons manufacture as never before. This will mean turning over complete plans of Russian weapons systems to a larcenous Chinese defence industry that has never hesitated to steal whatever it deems of value.

China will negotiate as many “good deals” with Putin as possible, assuring the Kremlin that China is standing with Russia in its fight against US, NATO, and EU “imperialism.” And then when the moment is right, China is apt to turn on Russia and take what it wants.

Will Russia Fade Quickly ... Or Slowly? Image: New York Times

Will Russia Fade Quickly … Or Slowly?
Image: New York Times

Would Russia still be Russia without Siberia? That is the question that more people will be asking, as Russia shrinks.

Russia is being forced to depend on China for tech and cash it can no longer get from the West because of the growing sanctions. As much as Russian leaders loathe and fear NATO, many also resent being forced to grant China access to Russian markets, raw materials and military technology in payment for help coping with the sanctions. Russian leaders believe they can handle China and Chinese leaders believe their economic power will give them unprecedented control over Russia. Someone has miscalculated here and it is as yet unclear who. While China gains more raw materials and export markets along with improvements to its locally developed weapons, Russia is forced to halt its efforts to diversify its economy away from dependence on raw materials exports. The diversification depended on Western tech and investment. That has been halted for the moment and the Chinese can’t replace it. Many Russians see this as a bad decision and that helps fuel the growing popular opposition to the government. __ Cost of Empire

… the Russian state “could well see oil revenues decline, even as its reliance on them grows,” and the “tide of money” that has enabled the Kremlin to meet “everyone’s growing expectations” may vanish. __ Political Economy of Russian Oil & Gas

Those predictions were made long before the recent slump in the price of oil. In other words, the oil & gas sector was already in decline before the price shock hit. Russia desperately needed outside help in order to modernise its O&G production, but Putin’s temper tantrum in Ukraine put the brakes on that strategy.

Just as Hitler was ignored, appeased, and pampered up to the point that he initiated blitzkrieg, so has Putin been ignored, appeased, and pampered . . . perhaps to the point that he goes nuclear?

Russian propaganda claims that Putin is being forced into a war-like stance by the west. But no one forced Putin to invade Georgia, Crimea, eastern Ukraine — or to threaten Europe with invasion and nuclear war. No one forced Putin to bleed Russia’s resources to support a corrupt political elite, a massive propaganda apparatus, and a weapons industry that is far too outsized for a shrunken Russia — with a GDP less than the state of California GDP. Imagine if California were to threaten nuclear war against Europe?

Even China understands the threat that Putin represents. But China will wait to act against Russia until it believes it has gained as much profit, military strength, and global standing to get away with it. It doesn’t hurt that Putin is making enemies out of virtually every other country in the world except China.

All of this is taking place against the backdrop of an accelerating global dysgenic Idiocracy, and a prolonged global recession and failed economic recovery (thanks Obama, thanks Europe).

Predictions are difficult, especially about the future. The key to making semi-accurate predictions is to understand as many of the dynamic forces acting upon the system as possible. Even then, the system is always subject to the unpredictable “Black Swan” event.

Nevertheless, HFTB. PFTW. Consider how you might participate in a Resilient and Dangerous (R&D) community. It is never too late to have a Dangerous Childhood.

More: As Russia’s military shrinks, it is finding it more difficult to defend its current land area.

The Putin strategy in a nutshell:

Smaller businesses are being crushed, accelerating a long-term trend under Putin in which Russia’s economy has become ever more concentrated in state hands and reliant on natural resources — especially oil and natural gas. __

Everyone talks about the “$450 billion” in reserves that the Kremlin is supposed to have. Better call the bank for confirmation. Since Putin returned to the presidency, Russia has been spending at the limit (and beyond) of oil prices, although you would never know it from reading Kremlin propaganda, eg RT, etc. If accounting is to mean anything, it must mean something on a running, real-time basis.

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6 Responses to Economically Strapped Dictator Threatens to Play the Nuclear War Card

  1. bob sykes says:

    Russia’s expansion into Georgia, Crimea and Ukraine were all responses to aggressive US/EU/NATO intrusions. In Ukraine that took the form of a violent coup d’etat that was engineered by the US and that removed Ukraine’s only democratically elected president and government.

    Russia is clearly threatened by the US/NATO, and given its conventional arms inferiority it will naturally rely on its nuclear deterrent. Russia has had a first use policy (going directly to nuclear attacks at the git-go) since USSR days, so its current policy is nothing new.

    What is new is US/NATO aggression. That has brought Europe to the brink of nuclear war. Lately, US/NATO has sobered up and backed off, but the cornered rat problem is still there. Russia’s economic problems exacerbate the situation.

    Considering Obama’s malignant narcissism and his incompetent blundering in Libya, Egypt, Iraq, Syria, Afghanistan, Liberia, etc etc, we could still see European cities burning under nuclear fires.

    China will not move on Russia until Russia’s nuclear weapons are gone. No one in the current Chinese leadership is willing to sacrifice a few hundred million Chinese and the Chinese economy just to claim sovereignty over Siberia. They are better off with a military/economic alliance with Russia, especially since they could use Russian help against Japan and Taiwan.

    • alfin2101 says:

      Your interpretation of recent events in Eastern Europe coincides with what one might read in any Putin approved state propaganda outlet. But does that make the interpretation accurate? I suspect not. 😉

      Like an old broken down race horse, Russia isn’t what it used to be. And the future can only get worse. No amount of bluster and pretense can bring back the glory days. It only speeds the downfall.

      Opening the door to China just makes it easier for the covetous dragon to get its hands on every natural resource and every strategic asset — including control of the guidance systems for Russia’s missiles (previously designed by Ukraine), electronics for Russia’s conventional weapons systems (planes, ships, tanks, etc.), and sufficient knowledge and control of Russia’s communications systems so as to neutralise Russia’s military whenever it wants. An EMP attack over Moscow and St. Petersburg would apply the finishing touches.

      Russian and Chinese hackers are penetrating confidential databases in Europe and the Anglosphere on a daily basis. But if it comes to Russian hackers vs. Chinese hackers, I suspect the Chinese will have a big advantage — critical backdoors into most Russian systems.

      Russia gets weaker with every move Putin makes. China gets stronger.

  2. Abelard Lindsey says:

    The Chinese are a dynamic, productive people. The Russians much less so. It is natural for the dynamic productive people of the world to dominate those who are not.

    • jabowery says:

      The Russians are a creative people. The grim regimentation of the Chinese has its place in civilization and it may be that is the ultimate expression of civilization. Of course “grim” is only from the perspective of a fully sexual animal watching a parasitically castrated eusocial worker doing its job. From their perspective of being a robotic angel (to use E O Wilson’s term) may be ecstatic.

      • alfin2101 says:

        The best Russians have long since left the country. The process of brain drain, capital flight, womb drain, and depopulation of ethnic Russians continues.

        The only smart Russians who are not considering leaving, are those who are neck deep in the corrupt oligarchy.

  3. jabowery says:

    Would be appeasement to assure Russia’s navy a port with more or less the same historic access to the Mediterranean that the Rus vikings had?

    Yes there is a potential joke there but this situation is no joke and history leaves its imprint on the present — particularly where rights of prescriptive easement are concerned.

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