Ukraine: Still at the Apex

Ukraine is still the epicenter of US International policy- the US appears tethered to Russia’s goals for global domination

From Crimea to North Korean Missiles

The Obama sanctions against Russia countered the bald aggression Putin’s government showed when invading Ukraine, fomenting civil war in the Don Bas region, and annexing the Crimean Peninsula. Russian military aggression depends on the banking and finance that make its government run, and the Obama sanctions put a devastating hole in the Russian economy.  

 At the height of the effects of the global oil crash and the sanctions, the Rouble fell to all-time lows. The military machine ground to a slow and halting state,  and the Russian population suffered severe disruptions and substantial deprivations.

In summer of 2017, the US Congress voted to extend sanctions and increased the severity of them in response to intelligence agency findings that Russia interfered with the national elections in November, 2016. The Trump administration opposed the sanctions and worked in the legislative buildup to reduce or eliminate them. There was no explanation for that strategy in the face of universal agreement from US and allied intelligence of the Russian election cyberwarfare. The Congress voted overwhelmingly to extend sanctions and impose additional costs; thus far, the Trump Administration has not acted as needed to carry them out.

Ukraine and Russia deja vu

In Dnipropetrovsk, Ukraine- a very nice city that I have visited and enjoyed- there is a mammoth government installation. It takes considerable time just to drive past it. As the walled areas make it difficult to grasp the scale of the place, it is the plant where generations of Soviet missiles and rockets were developed, designed, and constructed. 

Recently, North Korea made some surprising advances in rocketry- a new design and remarkably advance capabilities. North Korea can launch and effectively strike targets as far away as the continental United States The sudden advance?  Yes, they apparently came from models developed for Russia in the Ukraine, and in the sprawling facility in Dnipro. How they became property of the North Korean Dictator is as at yet unsolved mystery. Again, Ukraine and Russia at the center of US international policy.

The Pattern of Serving Russian Goals

In July 2016, there was a mysterious action taken at the GOP convention; an abrupt change in policy in the Platform to stop the sanctions, reduce participation in NATO, and accept the Russian Occupation of Crimea and the elections thereafter which international agencies have condemned as illegitimate.

The Russia investigations in the House and Senate each seek to establish whether there was some form of collusion between the Trump campaign and Russian leadership as the quid pro quo for Russia’s successful efforts to influence key parts of the US electorate.

Iran, Syria, and Russia

Again, the sanctions and the tilt towards doing Russia’s bidding occurs at the fulcrum of the most difficult international challenges.  In the spring of 2017, the Administration abruptly announced it would no longer seek regime change in Syria- consistent with Russia policy. A few days later, Assad gassed his own people again. The following day, the US advised Russia it would make a symbolic missile strike on a Syrian base. The TV cameras covered the missiles, and Syria moved its equipment in advance of the attack and sustained no damage or reduction of its ability to carry out attacks. 

Today, the US will begin to dismantle the Iran nuclear agreement. The refusal to certify Iran's compliance could free Iran's government to develop its nuclear program as well as continue its support of Assad in Syria. The US foreign policy continues to  align and contour itself to support Russian objectives and to do so when and if they damage US policies and traditional principles.

The word of a nation is important in its conduct of international relations. Ultimately, we would like to negotiate a nuclear deal with North Korea that could advance their stagnant and under served economy , improve the level of living there , and move them closer to normal relationships with other regional powers. Such agreements depend on the trust that other nations have in US commitments. 

The current administration as removed any semblance of trust or confidence in US policy or commitments. The chaotic messages come from Tweets, ill-advised public papers, news leaks, and public statements that often defy understanding. The confluence of these behaviors weakens America, diminishes our role in international events, and makes us increasingly subservient to Russian interests.  It is an odd pairing with an admitted enemy that currently points thousands of tons of nuclear explosives at us.

The Changing Face of Oil Markets

I have a habit of buying gasoline at $15 per fill up. I have convenient locations on my daily flight path and so I don’t mind the constant stops. But as prices have fallen I have noticed that in the beginning I barely got one-third of a tank. Today for my $15 I got more than one-half tank and paid less that $2 per gallon (--)  Thank you President Obama!

The worldwide glut of oil is a fairly small differential; the overproduction is not dramatic, but as better spoken by Shakespeare- paraphrasing here- tis not so deep as a well nor so wide as a church door…But tis enough.  The critical factor is the U.S. market, it was the U.S. market after all that began the illegal control of oil prices by the oil producers in a nation whose basic laws require the opposite- The fundamental legal policy here is to oppose monopoly control and trusts.  By allowing the producers to control the price and supply of crude oil, we auctioned our national future for the sake of a few oil companies and their stockholders.  Finally, the flown birds have come back to roost.
The trigger was U.S. Shale oil production and the noxious hydraulic fracturing technology. The kicker was the technological refinements in that technology that significantly increased production efficiencies and yield per well, per day.

There are many international scenarios intertwined in the changing face of oil markets, and even as the price of oil continues to fall, there are signs of a further economic slowdown in Europe, a profound slow-down in Russia, and the lessened strategic value of oil as a political and military weapon. Consider the extraordinary effectiveness of Western sanctions against the Russian Invasion and Occupation of Ukraine. A Republican U.S. President would have ignored it with no more than passing bits of harsh language. The weak-kneed Republican response would have been to increase arms sales to the satellite nations that could afford to buy more. But Obama established a definitive global impact that has had a profound effect on the Russian economy; oil is the engine for its military aggression. A shrouded public in Russia will not understand that the invasion of Ukraine and Occupation of Crimea has little to do with national pride and a lot to do with creating vast luxuries for his network of fellow Russian billionaires. But controlled media cannot douse the growing hungers, unemployment, and shrinking purchasing power. The face of oil has changed in Russia, from the great fountain to a meager flow.
 In the U.S. drivers enjoy low priced gasoline, some ancillary consumer benefits may come in the form of lower production costs for goods and agriculture- intertwined with petroleum-based chemical processes- may also see some commodity price benefits. More than anything, the drain of petroleum prices was a drag on economic growth; along with insurance, petroleum siphoned much of the lifeblood of the U,S, economy, which can have substantial periods of consumer-driven expansion(--) or simply pay $4 at the pump and stagnate- we see growth and it is impelled by  lower fuel costs and increased discretionary spending. The face of oil markets has changed in America.
Lower prices may eventually shut down some new production, and this is the floor for oil prices; when production declines. However, as an insular market - we do not export crude oil- there is an insulating price factor too. Domestic shale oil can survive below $60 per barrel, and low prices will encourage greater efficiency.  There is a window of production efficiency that is a by-product of the rush to establish production, Not enough care to some, but certainly room for improvement in capturing useful substances that were initially cast aside as wastes.  While some projects will close and other will never open, the impact has been felt, and production will continue even as prices fall below $50 per barrel.
In the near future, as alternative energy continues to grow, many structural users of petroleum and natural gas will adjust their reliance on crude oil, electric cars too will have some immediate force, and then a far more pronounced market impact. The U.S. will once again face an opportunity to move further past oil. Whether hydrogen powered vehicle as envisioned by Toyota or national deployment of solar production, a set of panels on every roof, we will have opportunities to use national policies to further change the face of oil markets.

The XL Pipeline has become obsolete before its construction, and this is a telling impact of change. The dirty, difficult-to-process mountains of tar sands have no place in the world's markets, and only continue due to the influence of money on the U.S. Congress. Seen in the light of changed oil markets, it appears to be a nearly corrupt abrogation of national interests. To burden the world with un-needed, life choking levels of pollution, and to abuse the precious American heartland to deliver Canadian oil profits. Even in news and truth-sheltered and limited American public will begin to wonder why we would do such a thing, inflict such a scar on this beautiful country. They will wonder of the patriotism of the corporate Senators and Congress-persons, and they will wonder why we would make such an effort to raise oil prices, there is no cheap way to process tar sands.

Sources:
Chevron Shuts Down Arctic Deep Water
http://switchboard.nrdc.org/blogs/ddroitsch/reality_bites_chevron_indefini.html?utm_source=fb&utm_medium=post&utm_campaign=socialmedia

XL Pipeline is no longer financially sound
http://www.latimes.com/nation/la-na-keystone-20141216-story.html

http://www.politico.com/story/2014/12/oil-keystone-xl-113551.html

hydrogen cars from Toyota
http://www.businessweek.com/articles/2014-12-17/toyota-embraces-fuel-cell-cars-for-post-gasoline-future

FREEFALLING…Putin Style (Opinion)

The rouble has crashed, it has fallen to 80 then resuscitated to 70 to one dollar. The Russian government is unable to support the currency.   People rush to dump roubles and salvage goods for them as best they can. Rising interest rates seem to have failed to stabilize banks or the currency. While not admitting a financial panic, watching local behavior, the conclusion is hard to avoid. People are urgently trying to maintain themselves while the currency loses value before their eyes.

This is the true price of Putin’s invasion of Ukraine, it is a price paid by the average Russian citizen, their pensions and salaries becoming more and more meaningless as the consumerism they have grown to cherish is pushed further away from their reach. The people have been told by their leaders and the state-controlled media that the economy has been attacked by the West, and that they will prevail by being morally strong. The call to patriotism and pride resonates with the common people; they believe they will defeat the West. Some stories are heart warming reminders that people will find silver linings no matter how foolhardy their leader’s behaviors might be.  

Oil Prices Continue the Slide

The Russian plans for $95 per barrel benchmark prices have been buried beneath a gusher of U.S. oil production. Oil shale projects with low interest financing have proven influential and persistent despite low market prices. As benchmarks fall below $60, there are few signs of falling U.S. production, and the world still has an oversupply of crude. The ironies are not lost here. It resembles a Russian tragedy of its ages, and played out many times before. Whether by Czarists aristocrats, class and privilege conscious communists, or as now, billionaire oligarchs, the common people find the reasons to go on believing. They buy into a dream that they will never share, or, perhaps as in America, the poor feel it is their role- to be loyal to the rich. While appealing to patriotism, It appears that much of the international aggression is aimed at creating greater luxuries for the oligarchs.

The motto emblazoned across this prow of this sinking ship is that:  the Crimea is ours…. This is little comfort to the growing bottom economic layer where inflation and a crashed currency have made comfort less obtainable. It is not a substitute for the middle class preferences that keep them preoccupied with personal progress, it is not a substitute for the capital flight from Russia as investors have withheld or withdrawn nearly a trillion dollars in investment capacity from the Russian economy since the invasion of Ukraine. While Putin makes news by elaborate gestures to Turkey, China, and India this path to diversification is characterized by weakness and desperation. It is not the high-tech super warship cancelled by France, or the elaborate gas pipeline into central Europe.  All over the world, fast money moves are building new Russia-free linkages, and this is the true damage brought by Putin, he has set Russia on a path of isolation as the global economy grows exponentially around his military aggression.

The Powers of Political Media

Like the United States, Russia has a propaganda machine that feeds a constant stream of counter-reality to its people. In the United States for example, they were fed a multi-billion dollar deluge of ant-Obama, ISIS, and Ebola.  Many believed that the U.S. was under siege by Obama, ISIS and a flood of immigrants from Latin America, who also carried ISIS and Ebola.  The hysteria worked and despite a booming economy and amid excellent signs of economic recovery, the American people recently voted a radical, pro-corporate government into place that is determined to depress the middle-class. There is a similar dynamic in Russia, where news media have created a narrative that holds Obama to blame for Putin’s aggressions. While Putin may be building seaside resorts for his rich allies, the average Russian believes they are in a Holy test of will and patriotism.  The problem in both the U.S. and Russia is simply this, under media influence people support political causes that will limit progress and do permanent damage to their future prospects.

Sanctions Accelerate Damage

The world owes a debt of gratitude to President Obama’s leadership on Ukraine sanctions. The Obama response to the invasion of Ukraine marks a noticeable first: oil is not a fuel for military aggression.  The oil-money powered Russian military has not achieved its objectives so far. The simple and easy conquest of Ukraine has brought instead an economic maelstrom.  War is a failure of reason; historically, it has been a tool of base convenience and essential evil.  Sanctions are an effort to bring about reason, debate, and positive change. In Russia, there is a gravity–defying syndrome of patriotism and bravery in the face of growing economic chaos. The people, their hopes and political will, all committed to keeping the society moving forward. However, like any objects spinning in air, there is a good chance that, in the end, gravity will prevail.

Inside Ukraine- A Testing Time

The remnants of the Russian offensive inside Ukraine have maintained the offensive with goals of establishing a predicate for formal declaration of hostilities. In the Eastern region, Ukraine President  Petro Poroshenko has ordered military action to defend Ukraine territory and population. This is a testing time; the original goal of the rebellion was to present an image of endangered pro-Russian population groups in Ukraine that require rescue.

Ukraine is not accustomed to war, it has been a big part of their history but they are not like the U.S. Russia or most NATO countries- with tested military machines.  Ukrainian culture is rich in values but little to do with warfare. They are among the more vulnerable countries to an armed insurgency. The entire governmental ordeal from the demonstrations and fighting in Euro Maiden to the present has increased patriotic feelings in Ukraine, they will not lack for heroism and effort to defend themselves. But they do lack a cadre of tested war veterans, and a track record of military actions.

Through all, President Putin has remained in a low profile, and the situation presents  an opportunity which may be beyond his ambition but within his abilities. Putin can join President Obama and stand as a leader, not only of a great nation, also of humanity. He can lead the world into an era of peace and cooperation.  Russia like the U.S has a group of influential men intent on war, and invested in the profits of global conflict. However, like the U.S., it has a leadership structure which invests strategic military policy in one person-- a President.  Putin has an opportunity to compete for preeminence on the world stage that matters most, the path to Global peace. He can lead the Russian people inside Ukraine on a constructive path of power sharing and democratic processes.

This is the shape of the world when we all grow-up. Where we seek opportunities for embracing the value of life. It is a stage when we accept the blessing of life and agree it is the most valuable thing on Earth.

Better than bullets...

In the Soviet invasion of the Ukraine, following the drama of heroes in the Maijden in Kiev, the theft of Crimea, and the continued onslaught by State sponsored thuggism, a ray of hope and sunlight emerged. Proof of sanity in international relations. The United States under the leadership of President Obama, has stood boldly even where European nations have been too timid to act and established a landmark of peaceful resolution of armed conflict.

Far from the furious buildup of thousands of troops along the Ukraine border, and the brazen capture of the luxurious Crimean Peninsula, stands Russia now beginning to feel the deep chill of money blowing the other way.  It appears that they and most of the world forgot how dependent the Russian economy is upon foreign investment. The true engine of the Russian Economy is not oil and gas, but the money needed to exploit resources at home and abroad.
So much depends upon the willingness of bankers and creditors. So much depends on open arms in trade and on Wall Street. There is only so much money in selling arms all over the world, in the end it takes a lot of money to produce advanced weaponry.

There is a lesson in wisdom, that banking systems can fold a fragile national economy like a cheap Chinese fan, this is a better idea than a land war in Eastern Europe, it is a dollar war in cyberspace and on the floor of the Gulf of Mexico where they partner with Exxon for deep sea wells-- anywhere that Russia needs to be engaged in making profits.

The world is one step closer to finding resolve to handle a military dictatorship without a $trillion dollar invasion that only benefits the U.S. War machine. This is a grand bargain, peace at a price-- and on Mother's days yet to come, it will be a Grand Bargain.