The travails of a dictator
Well, I'm an idiot, and inadvertently deleted Trevor's post for today. Why? Because I'm an idiot.
So in recompense, we shall look at the travails of one Vladimir Vladimirovich Putin. (Pronounced "putina". Which, if you know Spanish or French, is not nice.)
This story came across my radar yesterday:
Putin's backlash against European sanctions has backfired, and it could cost Russia $150 billion this year, according to RBC strategist Timothy Ash.
"The dilemma that Putin caused Europe was this: the continent was asked whether, given its need for gas to heat homes and power industry, it cared more about continuing this relatively cheap and critical supply, or whether it cared more about Ukraine," Ash said in an op-ed for the Center for European Policy Analysis on Tuesday, referring to Russia's reprisal against European sanctions. The nation slashed pipeline gas supplies headed to Europe this summer in retaliation for western trade restrictions, causing gas and electricity prices to skyrocket.
Now, Russia is planning a similar retaliation against the western oil price cap, which prevents Russian oil suppliers from using western shipping and insurance services unless crude is sold below a $60 threshold. The nation has halted oil trade with western nations, and has threatened to trim its oil production by 700,000 barrels a day – which could spike oil prices into the triple-digits for the west, UBS warned.
But so far, Russia has been paying the price for those retaliatory measures, not Europe. Ash noted that Urals crude, Russia's flagship oil blend, is currently trading at a 30%-40% discount to Brent, a difference that could mean a total $150 billion loss for Russia this year. Along with increased military and social spending, that could hike Russia's budget deficit from 2.3% of its GDP to up to 7% of its GDP this year, Ash said.
I mean, I'm no genius world strategist, but even I could have predicted that beginning the first major land war in Europe since 1945 would have had deleterious consequences of the fool foolhardy enough to have done it.
Here are the brass tacks: Putin is a secret policeman. He was trained with a secret policeman's mindset. Not one of openness and curiosity, but one of suspicion and paranoia. And while that may get you to the top in a mafia state like Russia became under his predecessor Boris Yeltsin, it won't win you a place at the table of powerful nations.
Russia has no industry. It has no economy to fall back on. Putin's gamble on invading Ukraine and scoring an easy and quick victory before the West could coalesce was a risky one. He underestimated Joe Biden's resolve. He thought him weak, for reasons I cannot guess at. Much like Hitler thought that the US was a sybaritic pleasure-seeking nation, and wasn't "manly" enough to fight in a general conflagration. Both President Biden and President Roosevelt put paid to that bias. Hitler paid for it with his life. We have yet to see Putin's fate.
War, in general, drives economic progress. The US came out of the Depression, finally, with the war. But the US had an industrial base which was laying fallow. Russia doesn't have that. Its only resource is energy. And if no one is buying that, it's fighting this war at a frightening deficit. It won't be able to maintain this adventure for much longer, for it just won't have the money.
Russia already has grave issues in supplying its troops. Ukraine is being fed Western weaponry at a rate that Russia can't match. A war which was supposed to last three days may end up in defeat for the aggressor by the summer. And then? Who knows? But it won't be good for Russia, or the men who took it into an unnecessary war.
Our friend Rational Left had a Russian émigré professor who detailed to him that Russians think that they are the center of the universe, and that the West is out to destroy it. No, we're not. We just want Russia to not muck up things as it always does. Far from the demise of the Soviet Union being the single greatest geopolitical catastrophe in Russia's history, as Putin said, for Russia it will be the invasion of Ukraine. We will be dealing with the fallout for years to come.
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