Wednesday 14 October 2015

Putin goes for agricultural investment

Is this the first sign of Mr P.'s rather desperate gamble coming off the rails?

Russia is to re-focus investment away from Oil and Gas. Which on an economic strategy level is pure common sense. Having 90% of your economy of the same level of tax levels from one industry does mean you are a little exposed when said sector has a major international crash.

More interesting though is Rosneft CEO, Putin's best buddy Mr Igor Sechin, merrily saying that this is crazy plan and a fall off in investments will mean a long-term decline for the industry. This is not normally allowed in Russia, or to be more accurate, normally contemplated as a strategy by those wishing to remain free of tax investigations.

Perhaps Mr S. is so close that he gets free rain to criticise. Alternatively, perhaps the power of Mr P. is in slight decline. Certainly his Syria gamble which will fail (only because all interventions there will fail, given the complexity of the situation and the issue that all outcomes there are bad), has the feel of desperation. No doubt he is looking to trade his Syria intervention cards for a Ukraine acceptance card with the West.

This may work or not, the West collectively not really being that bright at realpolitik at the moment they may miss the hints....

Anyway, not many Russians I have met recently who live in Russia are best pleased with the 50% depreciation in currency and collapse of imports.


hovis said...

Russia may have come to it's senses that ther will be no oil price rise, but the first sentences of th AEP piece are pure fantasy - the underlying trend is due to global deflation, which will continue. In that context perhaps the agriculture bet isnt such a bad move.

MyBloodyObviousName said...


But, as we never seem to learn, squeezing an autocratic leader economically results in war. Theres nothing in Putins actions or reactions that a clear headed analysis wouldnt have predicted.

We want gas from the Gulf, Russia says no. Thats it. End of.

On radio 4 yeaterday morning there was an interesting chat with a Russian character - I didnt catch his name or position. He opined that the west misunderstood Russias analysis of the situation.
We (the west) characterise this as a standoff between dictatorship and democracy. The Russians see it as choosing between a Dictator with a beard or a dictator with a moustache. In this light, they'll fight to keep their man in power.

Scoffing at Russia is a very foolish gambit; they only need to rebalance their economy if oil prices stay low. Being that they could turn the middle east into dust it would be utterly fucking stupid to imagine they will allow us to remove their man and drive gas prices down further.
Better set the world ablaze and be the only provider of gas.

As you have skillfully avoided realising, the Russians are trapped between economic collapse and war. The weapons they have moved into theatre should show that they are very serious about this.
The presence of the Chinese is of particular concern; I have mentioned before that they have never projected power (well, not openly anyway); heres their chance to test all that gadgetry.

If we dont get a seasoned diplomatic hand on this quickly, I think we could see this military crisis spill over into Europe.

dearieme said...

"he gets free rain": then he should move into agriculture himself.

Nick Drew said...

MBON - " they have never projected power (well, not openly anyway)" - well 'never' is too strong of course but I have often commented here that the Chinese have been exceptionally tentative in their overseas power-projection to date (and not very successful when they've tried, which gets to be a self-reinforcing timidity, typical orientals, obsessed with 'face')

"heres their chance to test all that gadgetry"
I suppose one day they will get around to that, but highly unlikely in the middle east, where the west's monitoring capacity is quite extraordinary: if there's one place you don't want to (a) give away all your secrets in a nano-second and (b) actually prove how crap you are*, it's where US + UK + Israel have 100% blanket coverage of everything that moves / transmits / goes off bang

(*PS, judging by the film clips they proudly show, Russia's targetting systems aren't very cutting-edge - though good enough for what they are trying at the moment)

CityUnslicker said...

dearime - a howla, even by my low standards.

CityUnslicker said...

MBON - Don't see how the Russians are in any way forced into war. If they are that is their choice not ours. You end by suggesting we should help them by capitulating. That never ends well either.

As usual, there are no good endings. But Russia does not have the money or economy of extended power projection so unless they go batshit (which they won't, Bay of Pigs etc) Putin will over-step in the end.

MyAfternoonName said...

(b) actually prove how crap you are
1 - The chinese popped up in the middle of a US carrier group a few years back
2 - The shot down their own old satellites from ground base about 2 years ago
3 - The have non-nuclear anti-Carrier weapons.

Russia's targetting systems aren't very cutting-edge
The understanding here is that their hardware was compromised - the actual chips and boards they used had backdoors hardwired. Thats how the Israelis managed to spkie syrias nuclear program which was defended by Russian AA.
Television reception in Israel was pretty grainy for a while after that.....

Theres an awful lot of chest-puffing gung-ho-ery rather than real analysis going on here but I'd agree with CU on one point; there are no good endings to this.
We capitulate, agree to buy our gas from Russia and leave the gulf suppliers to the Chinese....... or Russia makes us do it.

dearieme said...

"a howla": but an excellent accidental joke.

Electro-Kevin said...

I thought so too, Dearieme.

Anonymous said...

"the actual chips and boards they used had backdoors hardwired"

And we're perfectly happy to get our nuclear reactors from China?

I know there'll be a lot of disinformation about, but it makes a kind of sense.

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