RUSSIAN FEDERATION SITREP 29 January 2015
RUSSIA HAS HAD ENOUGH. I agree, as I usually do, with Alexander Mercouris: here and here he argues that Putin and his team have given up trying for a diplomatic solution. Moscow used its influence to stop the rebels' offensive last year when they believed themselves on the edge of routing the Kiev forces, forced the Minsk ceasefire, made several proposals to Kiev and... nothing. I believe that Putin stopped believing anything the West said after Libya, but I think he kept hoping Europe would not be willing to harm itself in subjugation to Washington. Or maybe he just needed time; time to strengthen links with the BRICS and especially Beijing, time to de-dollarise (Russia is buying a lot of gold), time to build up and exercise the military; time to make his case to the “not-the-world” (I love this cartoon). I'm sure he has the next move figured out and I'm equally sure Brussels, Washington and their dependants will be just as stunned by it as they were the last times.
RUSSIAN ECONOMY. Two takes on it that argue that the situation is serious but recoverable: Goldman Sachs repeats points I have mentioned; Chris Weafer says rally but not boom. Yes inflation is up, yes the Ruble is down, but there much import substitute is going on, industrial and agricultural production continue to rise and unemployment is unchanged. As for rating downgrades, China has a different opinion. Time, as they say, will tell. But I'd bet on China.
DEMOGRAPHICS. Excellent summary by Anatoly Karlin. By the way, Russia now has a higher crude birth rate than anywhere in Europe.
GAS. After welcoming the decision to stop South Stream, the Europeans are starting to realise that they had better build some infrastructure to pick up Russian gas. Nordstream too. Or do without. Or find another supplier. Or something. They've got about four years. Here's the new reality.
FIGHTING. Putin made a last appeal for both sides to withdraw following the Minsk agreements but Kiev attacked. The “cyborgs” were driven out of the airport (your local media outlets took a week or so to tell you: here's The Guardian saying the Kiev forces had re-taken the airport. They didn't; cancel your subscription.) Another “cauldron” is forming and the neo-nazis are saying all is lost. What's their answer: coup or götterdämmerung?
HOW TO READ THE WESTERN MEDIA. When they say Kiev forces have re-taken the airport, know that they have lost it. When they say giving up South Stream was a defeat for Putin, know it was a brilliant counter-move. When they say Russia is isolated (a stopped clock, here's The Economist in 1999!), know that it is expanding its influence and connections every day. When they say Russians are turning against Putin, know that the opposite is true. When they speak of nation-building in the new Ukraine, know it's degenerating into armed thuggery (see video). Know that when they speak of Kyrzbekistan, they're not just stenographers, they're incompetent stenographers. Take what they say, turn it upside down, and you'll have a better take on reality.
THE MERKEL MYSTERY. I, like many, thought, when the Ukraine crisis began, that German Chancellor Merkel would prove to be key in settling it. This has not proved to be the case at all; in fact she often throws more fuel on the fire. I believe that Gilbert Doctorow may have the answer. In essence, he believes that Berlin dreams the “pre-WWI dream of Mitteleuropa” with cheap, docile workers in Poland, Ukraine and the others forever. Of course, it hasn't worked out very well, but that, he thinks, was the plan. There was no “End of History” after all; a rebirth of history it seems.
THE WHEELS ARE COMING OFF THE BUS. A US official expressed concern that Russia and China were narrowing the military-technology gap. Threaten them and they come together; nothing is working out the way it was supposed to, is it? Do people in Washington ever wonder if they're trying to juggle too many balls at once? And now Greece is throwing grit in the machinery.
DECLARATION OF WAR? The Ukrainian parliament just declared that Russia was an “aggressor state”. Is that a declaration of war? Can Russia now legally go in and stop the killing?
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