Wednesday 27 April 2022

Russian operations in Ukraine, phase 2

Sorry for the protracted spacing between posts: both CU and meself are heavily preoccupied, the stories may some day be told.

Anyhow, I thought it might be time for a short update on the Russian ops in Ukraine.  You might recall that we noted several weeks ago how the initial Russian invasion failed entirely to utilise the highly coherent and well considered Red Army operational doctrine that must surely have been what their [military] leadership was weaned on, and was of course purpose-made for ops across these very battlefields.  

Now, it seems, they've dusted off those manuals; because we are told they are advancing on a couple of the fronts along parallel, mutually-supporting axes.  Well, that's certainly part of what the book says: so far, so good. 


They are doing this without the prescribed massive opening barrage by land and air, AND they are inching forward ... slowly.

For various reasons, This Won't Work.  As with blitzkrieg, speed is of the essence.  If, as seems to be the case, UKR forces are militarily well educated, well led, and adequately provisioned (we know they have phenomenal will to resist, and excellent operational intelligence) then even if outnumbered they will be able to do serious business. 

Of course, sheer weight of numbers could eventually tell.  But it's not clear Putin can muster that without some kind of quite extraordinary call-up - which would need a period of training - and major resupply (from China, one assumes).  It's not clear to me he'll have anything significant to display on Victory Day.

Which, I suppose, makes it all the more likely he'll pull some other kind of stunt for that occasion.  There seems to be trouble brewing in Moldova ...


Friday 22 April 2022

Russian culture of contempt for Ukraine

A while back before the fighting started, I related some first hand experiences that convinced me there was enough resentment amongst Ukrainians of the arrogant, nay racist, Russian attitude towards them that their resistance would be of the 1939 Finnish variety, as opposed to the French 1940 vintage.  In this context I mentioned an incident at a business dinner in Moscow where a Ukrainian was present and a Russian told a joke, the punchline of which was to compare Ukrainians unfavourably with those of African descent, (which in Russian parlance is seriously insulting). 

And here we are!  A recent Russian cartoon.

The caption is in cod-Ukrainian, which any Russian would understand.   The two Ukrainian cavemen, dwelling amidst the bombed-out ruins, have walked past a desecrated statue of Lenin that someone has replaced with a little sign saying 'glory to Ukraine'.   I'm having trouble translating one word - СОВОК **- but anyhow, one says to the other, That's how we smash up the entire Moscow "СОВОК" - now, back to the cave to celebrate the "victory"!  The twofold suggestion is clear:  they are sub-human neanderthals; and if they think they've done any serious damage to Russian plans, they've a surprise coming.

Q.E.D.  Not a recipe for taking the other side seriously.  And of course the surprises have mostly been coming from the opposite direction ...



** СОВОК, google tells me, means the same in both languages, namely "a scoop", in the wholly literal sense of a low-grade implement (- including, e.g., a pooperscoop) - with no indication it has a journalistic usage as in English.  In the cartoon, it's in inverted commas, either suggesting a colloquial meaning or, as with the other word in inverted commas, ПЕРЕМОГУ (victory), suggesting a gross misappreciation of something on the part of the cavemen.  

I'm assuming it's meant to imply the Ukrainians might have managed to destroy some modest piece of Russian military equipment that's of no consequence.  Or maybe it's the statue?  Or that they don't realise they've destroyed something much more valuable than they know?   But if one of our, *ahem*, many new Russian readers would like to put us onto a better rendering of the term in this context, we'd be happy to hear from them.

UPDATE:  a reader has kindly cleared this up for us - see BTL comments: it seems to be a slighting term for someone that hankers after the old Soviet days.  Makes perfect sense (it's relating to the defacement of the statue after all, then) - thanks!

Tuesday 19 April 2022

Might Starmer gets his Man after all?

 So last week I wrote about how Boris would survive, undeservedly, due to Ukraine and Labour being so weak. However, today he came to Parliament to apologise and was defenestrated by Keir Starmer. 

Not that in the long term this should matter, but the way the whole partygate story is unfolding may well end up doing for Boris. Firstly, on his own terms, he has lied and been fined. For me this is a very confected story for now, but still. he was guilty as charged. 

The bigger issue is that Priti Patel was also woeful before in defending the Rwanda policy; a policy which needed much better communications than it has had. it would always be controversial but the way it was announced does seem like a dead cat to distract from partygate. Which is a shame, as doing something about illegal immigration should be very popular and is needed after generations of politicians ignoring it as too difficult. 

The real mess will be if Boris gets more fines. Keir has laid the marker now that he is a convicted liar. Apparently Boris is under investigation by the Met Police for six more potential breaches. I can see him hanging on for one more, but after that the litany of abuse will be to  much and he will resign or be forced to face an internal election at best. 

So the odds on the Survivor appear to have come in shorter during the week!

Thursday 14 April 2022

Boris the survivor gets lucky again

 He seems to be a lucky General.

I don't think you could argue that without the Ukraine war Boris would still be Prime Minister. The whole partygate thing would have done for him and the Tories would have been working a bit harder this past few weeks to find an internal replacement. Rishi would still have come a cropper over his wealth but Gove, Raab or Truss would be on manoeuvres now. 

Instead we have Boris hanging on, knowing full well this will all be forgotten after the May elections which are going to be poor as a mid-term set anyway. 

Much worse, the press are not focusing on quite what a disaster the economy is. We have the highest taxes in decades, highest inflation in decades, record NHS waiting lists, record energy prices, highest house prices ever, rising crime  and rapidly rising immigration. I mean really, the Government deserves to be mightily unpopular given it has very few policies or ideas to deal with any of the issues outside of migration. 

Amazingly, Labour also have precisely zero ideas about how to get us out of this situation. really none at all. They wont build more houses, will want to raise taxes higher , want fantastical free and cheap green energy that doesn't exist and they welcome immigration anyway. 

So either way we are screwed, but I can't recall a time where the opposition was so weak since the Labour party elected Corbyn all the good people, few that there were, quit. now we have a bunch who are worse that this tired bunch of Tories.

Tuesday 12 April 2022

Sanctions and their hard-to-judge effect

There's a very long history of financial sanctions.  Apartheid-era South Africa and Rhodesia suffered for years, but somehow got by (and a lot of oil traders got rich).   It can't have done them any good, though.   The West managed against OPEC in 1973-74, but hardly emerged unscathed.  Cuba also got by, but hardly thriving by the standards of the hemisphere where it lies.  North Korea gets by, after a fashion, and scrimps together enough surplus resources to mount a nuclear ballistic missile development programme.  Iran hasn't obviously been brought to its knees.  Most societies only really prosper with a basic level of efficiency in day-to-day commerce, import/export etc.  Undue friction eventually wears things down.  *Eventually*, however, is to be measured not in months, but in years or even decades.

So what will be the impact of sanctions on Russia? (- imperial Russia, that is: oligarchs will just have to mourn their yachts in private.)

On the one hand, we gather Putin laid in quite substantial foreign currency reserves (and gold?).  Russia is probably OK for food, and obviously awash with energy (Germany's perpetual strategic weakness).  It seems - and this is truly remarkable, even granted the well-known long-term demographics - they are short of manpower for the fray, drafting in Syrians, Chechens, and the assorted orcs and dregs of the mercenary world: but sanctions don't really affect that kind of import.  Equally astounding, it seems they are also short of military supplies; but China can make good, if minded to do so.

Where's the short term pressure-point, then?  Or even medium term?  The only compelling answer I've read is that Russian manufacturing - such as it is, i.e. not much to write home about** - is wholly dependent on western imports for vital higher-tech components, and will rapidly grind to a halt without them.  Where will this bite?  (a) They'll need to import more or less everything from China & India eventually; and (b) their efforts to open up more remote oil provinces will be stillborn.

(b) is an interesting one for the long strategic haul.  "Upper Volta with rockets" is the traditional insult, but more recently I've heard Russia pithily described as "the oil exporter that ran out of cheap oil".  Yes, exporting oil is just as important to Russia as gas - and a lot more flexible when it comes to dodging boycotts and embargos, as those Swiss-based oil traders will helpfully confirm.  But, they're coming to the end of the cheaply-produced reserves.  The next few decades depend on opening up some much more difficult oil patches, which will be beyond them (and probably China, too) - this is the province of prime US / UK expertise.

(a), however, bites a lot more quickly, and equates to the severing of Russia from the modern world.  Do they care?  Well, Putin probably has his populace where he wants them: either patriotically onside, or thoroughly suppressed - and with a near-infinite capacity for suffering privations, let it not be forgotten.  And there's always the China trade, energy-for-stuff.  Surely that's not even remotely satisfactory, for Putin or anyone else in Moscow?   But is it sufficiently intolerable to be a deadlock-breaker, via something like a putsch, or a resort by Russia to massive escalation? ++

I really don't know the answer.  Never a good idea to place too big a bet on who can hold their breath the longest.  But it seems we may be limbering up for a contest of that sort.



** Obviously, there are some areas of remarkable strength: I gather Russia's titanium industry is second to none.  But that's just a North Korea phenomenon.  Their trucks (for example) are utter crap: as related here before, when the Chinese were first in the market for gas, Russia tried to make them buy a bundled offering, gas + trucks.  The Chinese laughed in their faces.  Either gas on its own - and deeply discounted, too - or nothing, comrade! 

++ Which can surely only mean tactical nukes, which turns out to be the only military thing Russia still has that impresses anyone.  PS, I'm willing to bet most of them won't work, either, if it comes to it.  But you might only need a couple ... 

Sunday 10 April 2022

Ukraine & Gas: What Germany Does Next ...

These are extraordinary times.  Some weeks ago I was finding it hard to believe German politicians really understood how their energy economy worked when they blithely approved their initial wave of 'anti-Russian' measures - rearming themselves, "suspending" Nord Stream 2, rowing back on decommissioning coal plants etc etc - and that Putin probably misjudged, i.e. badly underestimated, their ignorance, to his cost.   Even the economy minister, a Green, lined up behind the coal decision and initially thought they might be able to throw their nuclear closures programme into reverse.     

Well, his civil servants disabused him of that one in a hurry - and probably several others of his green fantasies, like *we don't really need fossil fuels at all*.  Before the Bucha footage hit the meejah, it all rather looked as though Germany and France were quietly backsliding towards self-interested appeasement of Putin.  National self interest: it's what politicians are for.

Then Bucha.  Now the cry goes up again: stop buying Russian coal (easy) / oil (bit more difficult) / gas (bloody difficult!).  Now obviously some of these cries are from quarters, e.g. USA, that would be little affected.  Others come from deeply ignorant greens on the one hand, and outright warmongers on the other - Guardian Newspaper, this means you.  (Probably well-represented in both categories, actually.)  But yet others seem to be from the German populace at large.  Initially their newly-educated politicians were in "Easy, tiger..." mode; but now the cry seems fairly widespread, and people are seriously asking: could Germany really do this?  Well, that's indeed a serious question on a serious subject: and some apparently intelligent people are saying 'yes'.

Here's where the difficulty starts when trying to figure out what's going on.  There is definitely a 'war' party, as well as an utterly naïve green faction, but let's put them to one side.  Do the apparently more sober boycott advocates mean:

  1. ... but we know it'll be very difficult, to be phased over 3-4 years  - ?
  2.  Do it now: we know it'll be catastrophic for the German economy & people, but it's a price we must pay  - ?
  3.  Do it now: we think there are clever ways of doing this, albeit at some cost, but no worse than (e.g.) covid lockdown or re-unification of East Germany  - ?
There are probably folks to be found in each category.  For what it's worth, my assessment of these three lines is as follows.

1.  Yes, even 3-4 years won't be at all cost-free, neither for Germany nor for its EU brethren (nor indeed us in the UK, as gas prices will soar).  But yes, at that cost, it's doable.  PS, Germany had better look out for the interests of several other EU countries, for whom the hit may be worse.  They'll certainly be invited to pay up in support, via some euro-mechanism or other.

2.  'Catastrophic' is putting it mildly for the outcome of turning off the Russian gas prior to next winter.  And in the longer term, as noted here before, Germany's natural energy resources beyond coal & lignite are very meagre - not a fraction of the wind potential that we enjoy, and not much sun to speak of.  Plus, of course, Merkel purposefully omitted to build any LNG import infrastructure, as we've noted oft before.

3.  Of course one should always be as clever as possible; and maybe my imagination is lacking: but I can't see anything other than some really obvious, and somewhat limited mitigants for the pain, certainly if next winter is cold, but also economic pain extending many more years than the covid-related hit.

Can Germany take such a hit?  Can we?  Well, "there's a great deal of ruin in a nation", as the EU clearly forgot when it came to Brexit, assuming as they did that the UK couldn't do anything other than roll over.  But, of course, it applies symmetrically to Russia, which may be able to manage with even heavy sanctions for quite a while: (they outlasted Hitler, didn't they?) - a topic we'll return to next week.

If indeed Germany does propose to don a genuinely painful hairshirt in defence of Ukraine, the internal consequences will be extremely severe, and lasting.  And the knock-on won't be a joke either - particularly for Eastern Europe (except, ahem, Hungary ... unless Germany takes steps to block them off, too) but without doubt hurting everyone else in Europe, including ourselves.  For us, it will mostly be via price, as everyone bids into a much diminished gas supply, which can't leak out via cargo-laundering as oil can.  But the price pain will be quite bad enough.

Later next week, we'll turn to how things would play out in Russia following a doomsday oil & gas boycott.


Friday 8 April 2022

To lighten the mood ... an FX story

I return early from a very pressured business week, with doom & gloom all around ... but contemplating a spot of gardening I was reminded of this cheery tale ...

*   *   *   *   *

A good few years ago, I was entertaining an excellent US business partner and friend at Schloss Drew for a weekend, as part of which I took him for a hike around some local hills where, inter alia, there's a fine viewpoint looking out across South London**.  Also a good restaurant; and finally, a rather quirky local geological feature.  If you know what you're looking for, on the heathland you can find pairs of largish pebbles that, when cupped in either hand and smashed sharply together, shatter to reveal often-beautiful patterns within the stone.  (I understand this to be a moraine phenomenon.)  Of course if you aren't wearing gloves you also often cut yourself, but hey, who's the wimp?

I showed him this, and he was entranced.  He asked me to select him a couple, and successfully tried it himself.

Being an earnest fellow, he then asked if I could select him four more pebbles, and whether it would be alright to take them back to the USA to give his two boys?  I told him that I didn't know of any relevant export restrictions, provided of course that he didn't fear anything adverse at the hands of the notoriously humorless US Homeland officials.  He thought he'd be OK on that score, and departed rejoicing with his four "rocks" (in US parlance).

A few weeks later we met again, and he solemnly gave me two silver dollars for my two children, "in return for the rocks".   I couldn't forbear to remark that, at that FX rate, I could suggest, errr, another transaction or two ...

Stay away from the MSM, and have a nice weekend!



** quiet at the back there: enough of your sarcastic cries of why? !  

Wednesday 6 April 2022

New UK Energy Security Strategy

It's usually part of the normal C@W service to pre-digest blockbuster energy announcements from government and serve you up a swift precis & crit.  Sadly, if the new Energy Security doc is indeed published today as heavily trailed, I'm very tied up and won't be able to oblige in quite the usual timeframe.  

Handily, though, Kwasi Kwarteng yesterday delivered himself of a short speech on the subject which I assume hits the highlights.  So here are some key phrases he offered, in sequence, that we might wish either to qualify heavily - or dismantle completely.  Or maybe even agree!

"Expensive gas is the problem. Cheap, clean, homegrown energy is the solution" 

Well it might be if there was any

"For as long as we depend on oil and gas – wherever it is from - we are all vulnerable to Putin’s malign influence on global markets"

See the final point, though.  "For as long as ..." - that's gonna be rather a long time 

"... with gas prices at record highs, and the price of renewable energy plummeting ..."

(a) - errr, yes.  (b) - errrr, ... 

"[we] will set out a new Energy Security Strategy to supercharge cheap renewables and new nuclear"

At least he didn't say 'cheap new' nuclear!  And we know EDF is incapable of building a new plant inside 10 years.  Remind me - what binding commitments on timescale has RR made for its so-called SMRs ..?

"It remains the case that there will continue to be an ongoing demand for oil and gas over the coming decades"

Oh yes.  He got that one right.


UPDATE:  due to Cabinet wrangling, it didn't get released today.  Doesn't help: I'm tied up tomorrow as well ... 

Tuesday 5 April 2022

Putin & war-crimes: always going to disgrace himself

Soldiers on the move through civilian areas are rarely paragons of virtue when the blood's up: even a determined disciplinarian like Wellington could only achieve so much with hangings and floggings; and looting is the least of it.  But everything about Russia's recent 'triumphs' in Chechnya and Syria told in favour of Putin's forces disgracing themselves on the humanitarian front, just as (and partly because) they have been humiliated on the military front.  Was Ukraine in danger of slipping down the news rankings?  Was the craven Macron going to succeed in toning down sanctions?  Not now.  Well done, Li'l Volodya.  Does even China want itself associated with this?  Russia contra mundum now.  

And maybe that's OK with him, for now?  Let's see to what extent his monolithic domestic 'support' holds up behind the defensive barrage of lies.  That support will surely run deep: Russians rally behind their strongmen - but not necessarily including the cream at the top.  The intelligentsia can't find this very edifying and there are reports of "scientists leaving Russia", for whatever they are worth (the reports, that is - I'm sure some of the scientists are good).  And not necessarily regionally, either.

Right after the start, when I was musing aloud as to why Russia manifestly wasn't following the doctrinally-expected pattern of attack, it crossed my mind that Putin might have issued some clear policy red-lines of his own amateur devising.  So: maybe the absence of the mandatory massive opening barrage by artillery and air, betokened not just that he expected a walk in the Ukrainian park (being greeted by grateful peasants offering vodka and roses instead of anti-tank munitions), but that he'd decided large-scale destruction would be a Bad Idea in general: bad for PR, bad for putative ongoing occupation.

Well, maybe.  But since all his major assumptions quickly proved false (at least, as regards the on-the-ground situation, even if you're one of those that seems to think he's reading the geo-political situation adroitly), clearly, all bets are off and it's to be ruthless brutality all the way.  Thus far that's just artillery targeting, and men with rifles.   

Plenty of scope for worse, of course.  So many 'maybes'.


Monday 4 April 2022

IEA: A Dog That Hasn't Barked (at Germany)

You'll often see pronouncements from the International Energy Agency being cited by all manner of differing parties & factions as authoritative & well-respected etc.  It is.  But it is also politically, errr, coy.

A note on the history.  Back in 1973 when the Arab-Israeli war (part 94) kicked off and the First Oil Crisis ensued, OPEC instituted an embargo - a blacklisting of certain importing nations (including the Netherlands for some reason I forget) which had a highly disruptive effect on world oil supplies.  The North Sea was in its infancy as regards oil production, and the UK was heavily affected, among many other western nations.  In order to coordinate the free world's oil supplies, the OECD in Paris set up an ad hoc group that did the business rather successfully (I've written about it here and here), encouraging all concerned to establish it permanently as the IEA**.   Although the moniker was 'energy' its early focus really was oil, and it staffed up with some very excellent oil people from around the western world.

By the 1990s a new concern was emerging.  Despite US opposition from the very start, Western Europe had become heavily dependent upon Russian gas supplies, notably Germany getting around 35% of its gas from Gazprom and rising (it's 40% now - not so very different); and of course former eastern-bloc countries even worse.  Although the Berlin Wall had well and truly fallen, the potential for disruption to gas flows from the east was starting to cause unease.  This was a bit left-field for some people, because (a) Russia had been at great, nay massive pains to be a really reliable source, cheerfully cutting off gas for its own people if needed to keep hard-currency exports going, even in the depths of winter: and (b) this was a lot more than could be said for the Netherlands, another big supplier to Germany, and statistically by far their most unreliable source.  Interruptions from Russia tended to be local to one pipeline, accidental in nature, and ultra-short-lived.  Everyone concerned had built substantial gas storage facilities to iron those out, and nobody ever really saw the need to make much of a fuss.

So in 1994-95 the IEA conducted a very thorough review on security of gas supply.  The resulting publication concluded that all major European countries could withstand one winter of curtailment of their single biggest source of supply, albeit potentially requiring massive switching to oil (which was far more substitutable back then than nowadays) and also shutdowns in industry.  The countries that couldn't withstand it were basically Ireland (dependent on supplies from the UK) and Portugal: the Baltics and Balkans were not included in the study (it was 1995).  The IEA made a number of recommendations, high on the list being: to liberalise the European gas market; debottleneck a large number of local pinch-points in the pipeline system; engineer reverse-flow options in many pipelines (easily done); and diversify import sources, especially via LNG.  All of these steps were taken, with the glaring exception being that Germany declined to involve itself in LNG: as pointed out here before, the sainted Merkel didn't commission a single LNG terminal in her entire reign, being wedded to the active-appeasement policy of Russenverstehen, so Germany still has none.  

The IEA 1995 publication was diplomatically worded, with not a hint that Russian political considerations might be lying behind the concerns.  But I can assure you, they were.

They've updated that report many times since, mostly recently 2020-21.  Then, the preoccupation was post-covid recovery plans.  So far as I can see (and I haven't trawled every single edition) the IEA has never troubled itself to speak openly about the concerns over Russia that I know for a fact they've harboured, and analysed, for nearly 30 years.  Right up until publication of a 10-point Plan++ in March of this year, that is - with a hint of concern being voiced as early as, oooh, January

OK, the OECD is a lumbering political beast.  But why nothing publicly from the IEA before March 2022?  We have to suspect a German veto at work.   C'est la vie.  And all a bit circular, really ...  Germany's got a problem but, oops, they'd rather we didn't mention it.

"As the world’s leading energy authority, the IEA will continue to serve as a focal point for global dialogue on how to ensure a secure and sustainable energy future."

Well speak up then, matey!



** not to be confused with America's EIA - also very authoritative

++ actually, they slip in Point #11 as an afterword:  maximise oil substitution for gas.  This won't yield nearly as much as it would have back at the time of the 1995 plan, but it's still material.  But, as they coyly mention, it might not be consistent with Net Zero 2050 ...

Update:  40% is too low for Germany's proportion of gas supply from Russia (though it's widely cited as such).  It's closer to 50%.

Saturday 2 April 2022

French Ukraine "intelligence" fiasco: poor stuff, frogs

It's worth a small laugh over this cold weekend, but you have also to feel sorry for General Eric Vidaud, head of French military "intelligence", who has been required to fall on his sword over Ukraine-related failings: 

France‘s military intelligence chief is leaving his post after Paris failed to accurately predict – in contrast with western allies – that Russia would launch a full-scale invasion of Ukraine ... France’s assessments had contrasted with the gloomy predictions by allies including the US and Britain who said a serious military assault was imminent. Senior figures from Emmanuel Macron’s government insisted there was no suggestion of a full-scale invasion and the French president kept diplomacy going to the last minute ... Le Monde said the war in Ukraine had exposed the differences between the intelligence services of France and those of the UK and the US ...  “Even if this reliance on Anglo-Saxon intelligence has existed for a long time, particularly in the fight against terrorism and in space, the war in Ukraine has shed light on it in a crude way”

Note "reliance".  Yup, that's what it is, much to the chagrin of France (and Germany and the rest).  Likewise France's dependence on the UK and USA for critical support that underpins its military operations in central Africa.  What a crap player Theresa May was, with cards like that in her hand.