I had already discussed how Obama had outplayed Putin in the game of chess. This is an achievement that few have recognized. But now there have been developments that even fewer have spotted that indicate we are in the end game—and both players know how it is going to turn out. The next twelve months are very predictable.
It really is exasperating how slow the media is to figure stuff out, how absurd the standard narrative is. Today it appears that Putin is basking in imperialistic glory, his armed forces achieving spectacular results—yet the reality is the exact opposite of standard perceptions.
I was getting my hair cut the other day and had to endure a fellow patron’s discussion with his barber. This guy had just returned from London, and was saying people in Britain were scared by Putin, by Obama’s ineffectiveness—and the soon there would be a World War as a result.
I bit my lip—hearing a Stupidparty disciples take on British public opinion made me quite nauseous. First and most important is that virtually all of Europe supports Obama, not America. Europeans are delighted to be dealing with a very smart and honest man of principle—rather than a rather silly, yet very dangerous war criminal. The British have pretty much accepted that Blair is a war criminal and it is time for Americans to accept the same realities.
But here is the thing: Putin has actually been beaten by Obama, and the proof is already beginning to materialize in not so subtle forms. This is why Putin has lost everything bar the public relations game—and by the way Putin “losing” is not such a bad thing for Russia as it gives them a huge opportunity, a second bite at the cherry.
The Russians are trapped by the following combination of events:
- Expensive imperialistic adventures. Crimea, Ukraine and Syria—a 2015 military budget about to be exhausted.
- 2015 GDP shrinkage of up to 4%
- Collapsing oil revenues. No end in sight.
- Chinese economic contraction.
- Western sanctions, long term impact far greater than generally understood. Inability to fund long term capital projects necessary to maintain levels of energy production, knee capping domestic projects.
- Hosting the World Cup soccer tournament in 2018.
The Crimean annexation was costly on many levels, not least of which the expectations of the people who supposedly greeted the Russians as liberators from a free society. Crimean tourism is down 70% and Putin has taken to busing in Russian tourists. Of Russia’s eighty three regions, sixty are in crisis mode and some are speculating that a bunch of regions may already be defaulting on their debts. Wages are down 8.5% as inflation heads to 15%. However you slice that, there will be no way round reduced consumer spending, spurring the recessionary environment. With interest rates still needing to be held high (around 11%) to protect the ruble from further collapse (causing more inflation), cheap money can not be used to bailout the economy, which was the trick used to save the American economy, that could borrow virtually unlimited money for next to 0%. The concept of borrowing for virtually nothing is a concept too complex for Stupidparty.
Before proving my point, let us deal with the big red herring in the room: Syria. I am going to say what few will acknowledge and what the West cannot acknowledge. The worst outcome in Syria would be for the Assad Regime to collapse and the void being filled by radical Islam. Secondly a continued stalemate exacerbating the refugee crisis, potentially spreading disaffected radicalism into more corners of the planet. Everyone knows this, Arab nations know this. But the West cannot face the thought of supporting a man who has used chemical weapons on his own people—in short, the West cannot support a war criminal. Having morals can have catastrophic consequences, but that does not mean one should not have morals.
Putin is not constrained by such niceties. But let us be clear here: American and Russian interests are aligned. Yes there is a downside for Western interests in that Russia gets to bolster its only ally and they will get prestige. Yes they are not targeting ISIS and thus ISIS will make temporary gains at the expense of the rebels. But the game is up for ISIS—they will be beaten. Russia has as much reason to detest ISIS as anyone. ISIS’s transparently sick ideology and for Islam their highly embarrassing execution of such ideology, combined with the fact that every superpower and power in the region has had enough, spells the end for ISIS. These will be the glory days of Russian involvement, but then the early days of all such interventions by superpowers are always glorious; until the butcher’s bill has to be paid. So Putin is doing what the West cannot do, plus he is footing the bill.
So in this hour of glory, what is Putin confronting and what must he do about it? It is quite simple; the Russian economy cannot withstand the forces it is up against over the long haul. Of all the conditions listed above, there is only one item that Putin can actually influence, that being western sanctions. It is the nature of these sanctions that few really understand. The long term implications are massive. By way of example, on Sept 15th, 2015 a Russian energy official announced that they now do not expect Arctic sea drilling until 2020 at the earliest, Exxon-Mobil having been forced to pull out of the project.
Sanctions inhibit the ability to secure the technology needed for shale oil and gas development. Natural gas facilities are barred from using long-term dollar denominated loans. Alternative Chinese financing is now less available and more costly. Russia is therefore not only facing falling oil prices, but also falling production. With clean energy making great strides, Scotland now getting 98% of its energy needs from wind and other countries executing aggressive clean energy strategies, Iran likely having its sanctions lifted, the long term prognosis for oil prices is that oil is likely to under-perform projections. The argument that cheap oil makes clean energy less worth investing in is less relevant today that it has ever been.
Such western sanctions are also impacting Russia’s financial system. As the ruble has collapsed, so has Russia’s willingness to use up its reserves—reserves it badly needs if the economic environment takes another turn for the worse. Finally Russia really cannot reciprocate such sanctions without cutting its own throat.
So as usual, the answer lies in the math—the very basic math.
So what will happens now?
- Do not expect to see significant Russian boots on the ground in Syria. That would have immediate dire budgetary implications.
- The Ukraine situation will be resolved peacefully with Ukraine getting back most if not all of its territories whilst conceding some influence of the most easterly eastern parts of Ukraine to Russian sensibilities. Key proponents of the Ukrainian separatist movement are presently being silenced, as is the separatist artillery.
- The Russians will tone down their hostilities to the USA and look to be seen as cooperating with the West in various parts of the world including Iran, Syria and North Korea.
- Obama and Putin will likely meet in a constructive manner before the end of Obama’s term. Putin has been very anxious for such a meeting for quite some time.
- Sanctions will likely be lifted in time for the 2018 World Cup—a huge showcase event, an event that will require considerable infrastructure investment, an event that will seek to position Russia as being a positive force, rather than a force that shoots down commercial airliners and gets to deny it.
So what would Obama have achieved?
- A peaceful outcome in the Ukraine without even using military threats.
- The ultimate end of ISIS, without having to support a war criminal, and without having to be the world’s policeman.
- Greater stability in the in Middle East with counties such as Russia, Iran, Turkey, the Kurds (I like calling them a country, as it irritates Turkey), Egypt, Saudi Arabia, Jordan and dozens of other countries cooperating against ISIS.
- Patient use of Western sanctions (and the ability to humiliate Russia over the FIFA scandal) to get Putin to realize than his antagonistic policies were not financially sustainable.
- A face to face meeting with Putin on his own terms.
So much for that Stupidparty forecast of World War. Stupidity becomes a self-fulfilling prophecy. But as of today, the Stupidparty does not control the Presidency. The USA has a highly intelligent Commander in Chief, a person of such character that he can happily outsmart the so called grand master Putin, a person of such character that he will one more time, win the peace—without ever receiving the public acclaim. Winning the peace is just so much less flashy than “shock and awe.” It would be like going to a fireworks display without any fireworks, and instead being advised to simply enjoy the nightly stars, and our place in the cosmos. Only those who have time to step back and smell the reality would appreciate the difference. Such acclaim will come after he leaves office—as history gets to be the judge, not the famously lame-stream media, who couldn’t figure out the easiest of mathematical puzzles unless their ratings depended upon it.
As a final note to this story, never ever let anyone say falling oil prices are a bad thing. It is a bad thing only to bad people, who happen to be very powerful both in the US and around the world. The fact that oil interests have been running US foreign policy since 1953, explains why the Middle East is a mess today, and the lack of domestic spending on infrastructure, education and health that has led to the US’s dismal standings in international standings in virtually every metric. By not promoting energy conservation, by not having a meaning full gas tax, (such tax increased to offset falling oil prices, in an unrelenting virtuous circle) this has led to increasing demand for oil, such pricing hurting consumers, enriching the interests of powers aligned against the West—not to mention the horrendous impact on the environment. Oil is our enemy, oil corrupts, oil is unnecessary, and when oil prices plummet we are better positioned to execute intelligent foreign policy, and invest in vital domestic needs—rather than suffer the horrific consequences of Stupidparty foreign policy.