Why Russia and China Miscalculated their Dual Power Plays
In the US, a president’s powers are limited, and he is sure to be replaced every 4 or 8 years. This prevents one person from becoming a “dictator for life,” such as many of the corrupt leaders in the third world.
China and Russia believed that by making Obama blink, they could grab as much regional and global influence from the US as they wanted.
Doubtless both Russia and China believed they saw an American president ready to blink. They were almost right; unfortunately, that short-term calculation misread America as a geopolitical entity. The president’s personality doesn’t matter in the long run. They are eventually and predictably replaced. The errors of one are resolved by the next. That’s one reason the US is so formidable: to have a disastrous president only strengthens the ability of the next to act.
The system isn’t dependent on a single person but the office they hold. China’s Politburo can function in a similar fashion, replacing bad leaders with new ones, but its closed process means loyalty is more important than efficiency. That’s always a dangerous tradeoff.
Russia, on the other hand, is much worse off. Its current geopolitical strategy is the result of a single personality. For him to have a heart attack could well be fatal not just to Putin but to the entire scheme to reverse Russia’s many losses. While Russia can and will replace its president, Putin is threading a very fine needle geopolitically, acting on narrow issues that aren’t vital to the survival of the Russian state.
… The Chinese will find the weakened Russian state a liability; since Russia is so commodity heavy and its economy isn’t very diverse, they’ll have to foot the bill to modernize Russia. (Ironically, this is precisely what the Soviets did for Mao’s China and they too eventually got sick of keeping his lights on.) Russia won’t like Chinese encroachment upon Siberia’s plentiful resources, nor Beijing’s inroads into Central Asia.
In fact, China is already encroaching upon Siberia’s resources. Such encroachment is likely to accelerate as Russia weakens. More: Russia denies Chinese claims, publicly. Behind the scenes is another matter, as economic necessity forces Putin’s hand.
Putin’s Aspirations Lead Russia to Disaster
Russia is now living with inflation and deflation due to Western economic sanctions and the fall in oil and gas prices. Some Russian observers predict the fall of oil prices to $40 or even $20 per barrel. It is worth noting that for every $1 drop per barrel of oil, Russia loses $2.5 billion.
We must not forget that a fifth of the external debt of $700 billion and the debt accumulated by Russian companies, which amounts to $500 billion, must be repaid this year; nor that capital ranging from $100 and $200 billion was taken out of Russia in 2014. An increase in oil and gas supply after recent large discoveries will reform the market and impose a new balance in which Russia’s share will drop; gas and oil represent about 74 per cent of Russian exports and its revenues make up 50 per cent of the state’s resources, both of which are the main source of hard currency. Western business investments are likely to be withdrawn; indeed, 87 companies have already liquidated or reduced their presence in Russia. This has caused a fall in the value of the rouble; the exchange rate against the dollar has fallen by 20 per cent. It is worth noting that at the beginning of 2014, $1 was equal to around 33 roubles; it is now 66 roubles. This has led to a 30 per cent increase in the price of basic foodstuffs and the decline of growth to below zero per cent.
Despite the fact that Russia’s revenues from oil and its by-products, and natural gas, reached about $3.2 trillion between 2000 and 2013, it did not result in the modernisation of the Russian economy, its diversification or ending its dependence on the export of raw materials and the import of advanced technology. It was growth without development.
__ Russia In Trouble
Even Russia’s hard currency reserves are slipping away. These are the reserves that are supposed to be used in only in panic situations.
Putin took big risks moving into Ukraine and Syria. The accidental shooting down of a Malaysian airliner by Russian missilemen in Ukraine was one huge blowback against Putin’s international reputation. If the Airbus disaster in Sinai was due to an Isil bomb, it will be another blow against Putin’s reputation. Many more shoes are yet to drop on the head of the would-be tsar.
Russia’s Debts are Mounting Rapidly
Russian companies won’t have much of a problem paying off a measly $3 billion it owes foreign lenders this year. But next year that number nearly quadruples to $11 billion. In 2017, it’s $27 billion. And in 2018, it goes even higher, to $34 billion currently. Assuming oil prices remain in the high 40s and the ruble remains in the 60s, what type of credit risk is unfolding in corporate Russia?
… According to the Bank of Russia, the country has a total gross foreign debt of $512 billion this year, with dwindling reserves ($371.2 billion as of Sept. 30). Barclays estimates that one-fifth of that debt is in rubles, the rest is in foreign currencies.
Although Russian polls show Putin ranking quite high in public opinion, the mood of the Russian public is darkening quickly.
Russians are … becoming less optimistic about the future, as the percentage of people who think the country’s hard times have passed falls, and the number of people who think the worst is still ahead rises.
… Sociologist Anton Oleinik writes that the relationship between the authorities and society in countries like Russia can be represented by an hourglass, where the upper sphere (the ruling elite) and the lower half (ordinary citizens) are linked by nothing but a narrow bridge. The two spheres exist largely independently, and the everyday life of their inhabitants eliminates the need for each other.
… In this sense, popular thinking about the proverbial war between “the refrigerator” and “the TV set” (between people’s living conditions and the influence of propaganda) is inaccurate. The television and the refrigerator exist in different worlds. The Motherland on TV elicits pride, of course, rising from its knees and laying down the law, and every now and again it even demands sacrifices from the people, sending soldiers off somewhere to die. But it knows little about what’s happening in people’s refrigerators. And thank God for that, people seem to think.
This is a fascinating interpretation of the schizoid-like approval ratings for Putin in a failing Russia. If 40% of Russians work “off the books” with little interaction with the official economy or government, they may believe they have little to lose by backing the “TV hero,” Mr. Putin.
On the other hand, as more Russians are forced to go “off the grid” to survive, the separatist urge is likely to gain power. And how hard is it, with today’s technology, to start a new radio or television station using the internet or similar technologies? Media monopolies such as Putin wants, are a thing of the dark ages.
In the old days of the USSR, outsiders often took big risks to smuggle prohibited books and films into the prison-nation. Now, of course, the flow of drugs into Russia, and young women out of Russia, are unimpeded.
But where trafficked people and drugs flow across borders freely, so can state-busting technologies.
Russia’s demographic situation over the next 35 to 85 years is far more dismal than most people understand. Russia’s population is expected to drop from around 140 million now to between 70 million and 110 million in 2050. By the year 2100, Russia’s population is likely to be between 40 million and 70 million, assuming no catastrophic depopulating events occur to cause a larger dieoff. Russia’s labour force is shrinking, and appears to have passed a point of no return.
By around 2050, more than half of Russia’s population will be Muslim. By 2100, perhaps 75% or more of the resident population inside Russia will be Muslim.
Perhaps Putin should have continued the “warheads to electricity” program, rather than ramping up Russia’s nuclear arsenal. With Muslims in control of Russia’s vast nuclear arsenal, a global nuclear war becomes almost inevitable. The world will pay a high price for tolerating Putin.
A quick look at Kaliningrad will illustrate the general decay that is prevalent across the nation of Russia:
Nothing exemplifies the blight of Kaliningrad more than the House of Soviets. Built in 1960 to be the administrative center of the state, this strange, futurist behemoth has still never been occupied due to structural problems. It dominates the drab city center, a looming icon of Kaliningrad.
… Kaliningrad’s current state of decay is all the more depressing given its rich past. Konigsberg was a gorgeous city, which, had it remained intact, would have rivaled nearby UNESCO heritage cities like Gdansk, Riga, and Tallinn. Today, Kaliningrad is little more than a spreading mass of gray apartment blocks.
… Kaliningrad is full of empty, decrepit spaces where drunks and feral dogs make their home. Out on Leininsky Propsect, the main street in town, old women beg or try to sell the saplings of pussy willow trees for a few rubles.
… The next day, my friend Margarita drove me to the ruins of the ancient Balga Castle near the Baltic coast. Balga Castle was the site of one of the fiercest battles on the Eastern front during World War II. The Red Army’s atrocities were some of the worst of the war—rape and murder were actively encouraged. Today, the place is a brick ruin, equal parts memorial and rustic campground. Campers lounge around in their SUVs drinking, barbecuing shashlik (Russian shish-kebab), and listening to dance music. There are a few memorials to German and Russian soldiers at Balga, but the overriding feeling is a remembrance of the place’s ancient Germanic heritage. The poet Joseph Brodsky once said of Kaliningrad, “The trees whisper in German.” Balga Castle reminded me of this.
… Such a pity. What can I say, this is Russia.
In Russia, clinics are being shuttered to pay for weapons. Oil & gas profits are shunted to the private overseas accounts of Putin insiders and mafia clan lords (to keep the peace). Beautiful teenaged girls are tricked, trafficked, and spirited overseas for brutal lives as rough trade whores. And Russia’s most talented and ambitious young men begin plotting how to relocate in Europe, the Anglosphere, or East Asia, years before graduating from higher education.
Those who defend Putin and his corrupt regime are helping to make ethnic Russians extinct in the long run. The best of intentions pave the superhighway to hell. Everything you think you know, just ain’t so. Most people live and die without an inkling of understanding.