Tag Archives: foreign policy

No War is Painless for Either Side

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But the war Russia is waging against Ukraine, and against Western values generally (against little things like the right of the citizens of a sovereign nation to govern themselves, the right of the people of a sovereign nation to run their economy their own way, the right of the citizens of a sovereign nation to hold their own, fair votes) can only hurt Russia in any serious way, if only Western leaders can find the courage to stand with Ukraine in a more meaningful and direct fashion than merely sitting courtside cheering the Ukrainians and clucking their tongues at the Russians.

There’s little to do, militarily, in the near term, but there are a number of devastating economic things that can be done, and these things will have their effect immediately and in the near and middle term (there’s unlikely to be a need for far term effects, but those would remain from the steps that can be taken now).  Such steps include

Treasury and State departments can much more aggressively target Russian banks and trading firms for their alleged involvement in such areas as arming Syrian President Bashar al-Assad or developing Iran’s nuclear program.  [To which I add Treasury and State can much more aggressively target the Russian banking system for its involvement in a nation committing this naked aggression against a sovereign country.  No special reasons are needed.  Full stop.]

Additional steps also can be taken, as I and others have outlined already.

Western leaders are fearful, though, and looking for bloodless solutions to an affair that’s bloody by its nature:

The US and other leading Western powers are focusing on individual, targeted sanctions because broader economic sanctions could directly harm Western businesses and lead Moscow to make good on its threats to retaliate against businesses from the countries pushing sanctions, according to current and former officials.

What these Nervous Nellies are ignoring, though, is that while Russian retaliatory sanctions will, indeed, hurt those Western businesses, Russian sanctions “would inevitably hit [Russia] like a boomerang.”  Russia, quite literally, has no economy beyond its oil and gas exports without those Western businesses and Western investments in Russia.  On top of that, as Western (read: US and Canada) oil and gas production and export increase, with special attention initially to exporting to Europe and Ukraine, and as prices drop from those increases, Russia would lose that remaining vestige of its economy.

And be unable to sustain its forces in Ukraine.  At that point, a suitable treaty would have Russia formally renouncing all claim on any territory outside the borders of the Russian Federation, canceling its lease on the naval base in Sevastopol and withdrawing all of its military units from Crimea, and removing all of its military and quasi-military units away from the Federation’s European borders by a distance of at least 200 miles.

Sanctions and Boomerangs

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Russian Foreign Minister Sergei Lavrov says that sanctions applied by us against Russia “would inevitably hit the United States like a boomerang.” But will they, or will they to any serious degree?  Polish Foreign Minister Radoslaw Sikorski doesn’t think so.  Sikorski had some thoughts on the matter in Monday’s Spiegel International Online.

SPIEGEL: The European Union imposed very mild sanctions against Russia on Thursday.  Isn’t it true that Putin, with his gas exports, has far more effective means for countering that pressure?

Sikorski: Only about 30% of the natural gas in the EU originates from Russia.  Norway is a larger supplier.  I do not believe Russia can use it to put us under pressure.  Moscow needs our money.

Indeed.

And

SPIEGEL: Why are the Poles so highly engaged in this conflict?

Sikorski: The Ukrainians are our neighbors. They are fighting for the same things we did back in 1989 – for a country that is more democratic, less corrupt and is European.

On what, then, is President Barack Obama waiting?  What is it of a Russian counterstroke that he fears so?

Sanctions and Competition

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Hungary, Poland, Slovakia, and Czech Republic have directly appealed to our Congressional leadership to expedite turning on the export spigot for our natural gas.  These four nations see the directness and immediacy of the advantage of buying natural gas from us rather than from the Russians.

There’s another effect, though, from our increasing our gas, and oil, exports as quickly and as far as we can.  That’s the effect on oil and gas pricing in the global markets.  Such a large and easy increase in supply will depress those prices, which will have a competition-based double whammy on Russia: it will deprive Russia of billions of dollars in income from its own oil and gas exports by lowering the price, sharply, that Russia can demand, through depriving Russia of its energy monopoly.  Keep in mind, also, that the Russian economy almost exclusively is built on oil and gas exports—it has nothing else other than cheap, second tier military equipment, and while that remains a strong Russian industry, it’s not strong enough to carry the Russian economy, much less provide the funding necessary for Russian…adventurism.

The other whammy also is in those sharply lower oil and gas prices.  That decrease will make it easier for erstwhile Russian “clients,” including Hungary, Poland, Slovakia, Czech Republic, Ukraine, the EU (Germany, France, and Great Britain especially) to get their energy from somewhere more reliable than Russia, and at a cheaper price.

That cheaper price for these others produces a separate whammy for them: cheaper energy can be only to the good for their economies as they struggle to break out of the doldrums remaining from the global Panic of 2008.

But that’s what competition does—it lowers prices and sets economies free to generate prosperity.  An attempt to boycott Russian oil and gas is unnecessary.

Crimea and Sanctions on Russia

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Promptly opening the export spigot on our own oil and gas production and accelerating our development of those fields, including on Federal land (which will have minimal production effect today; although it’ll have significant effect in the near- to mid-term by significantly expanding the supply of oil and gas on the global market) will produce an immediate spike down in the global price of oil and gas, which will have an associated immediate negative impact on the value of Russian oil and gas exports.

Blocking Russian access to credit on the global banking system—even just on the American banking system—and requiring cash-only transactions will have a negative impact on Russia’s cash reserves.

Seizing the personal banking and physical assets held by the Russian oligarchs and by Putin will remove billions of dollars’ worth of value from these folks—and it’s the oligarchs as much as a mendacious Russian legislature who are the source of Putin’s political power.

Of course, a significant fraction of the success of the sanctions will depend on how well Europe does its part.  Their participation will go a long way toward identifying who truly believes in the sanctity—as opposed to the convenience—of national sovereignty and who just engages in empty rhetoric for personal gain.  Their participation will go a long way toward identifying who our friends are and who are just summertime soldiers.  Their participation will go a long way toward determining who stands with Ukraine and who are willing only to talk about standing with Ukraine.

We can’t let their timidity stand in the way of our acting, though.  Nor can we let the fact that the sanctions will bring Russian retaliatory sanctions on us deter us.

Russian Foreign Minister Sergei Lavrov said Friday sanctions imposed by the West “would inevitably hit the United States like a boomerang.”  Their foreign ministry added they “will not accept the language of sanctions and threats,” and will respond if sanctions are imposed.

What sanctions can Russia impose?  They can block further Western/American investment in Russian oil and gas field development.  They can block further Western/American investment in oil and gas delivery systems (read: pipelines).  They can cease existing Western/American investments throughout their economy, not only in their oil and gas industry.  They can begin dumping their holding of American Treasuries.  They even could deny us access via their territory and airspace to our bases in the ‘Stans from which we support our war effort in Afghanistan.

This will hurt us, to be sure.  But who else will it hurt?  Russia can’t develop its oil and gas industry without us—that’s why we’re there.  What they have developed has been being depleted for more than 10 years; those assets are declining in value.  Their economy is utterly dependent on oil and gas.  Recall the damage done Texas’ strictly oil and gas economy during the first Arab oil embargo and the Nixon price controls.

Dumping their US Treasury holding will devalue the rest of what they hold, decreasing their ability to convert the rest into cash with which to complete the now-demanded cash only transaction.

Our war in Afghanistan is winding down, and those bases already are becoming less and less critical to our efforts.

The oligarchs’ loss of their own overseas assets and their loss of access to non-Russian banking, even to their overseas villas and other assets will hurt Putin’s primary supporters where it hurts the most: in their own pocketbooks.

The sanctions that will boomerang on us will boomerang right back on them, and worse.

And our own actions will determine whether our own administration truly believes in the sanctity of national sovereignty, with whom we are friends, whether we stand with Ukraine.  I’ve no doubt where the American people stand.

Administration…Foot-Dragging

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Russian energy exports.  Ukraine, for instance, gets some 40%-50% of its natural gas from Russia, and Europe gets roughly 30% its natural gas from Russia.  Recall, just a few short years ago, too, the Russian extortion of cutting off those gas flows—in the middle of winter—over an alleged bill-paying (or not) scandal: it wasn’t those who supposedly weren’t paying the country’s gas bill who were harmed, though, it was the citizenry threatened with freezing temperatures in their own homes.  And as part of the Russian extortion, they cut off gas flows to Europe, too.

Now comes the Obama administration, with its control over our own ability to export natural gas to various places—for instance, to Europe and to Ukraine—or to the world generally.  The one export targets would directly break Russia’s hold over Ukraine and Europe, while the other would, at the least, drive down the price of natural gas, making it easier for those two to find and import other sources.  Yet this is the claim of Bill Gibbons, spokesman for President Barack Obama’s Energy Department:

Regarding specific Energy Department actions on LNG exports, the Department remains committed to an expeditious and responsible process.  We continue to make public interest determinations on a case-by-case basis, carefully considering economic, energy security, environmental and geopolitical impacts, among other factors.

Surely, breaking Ukraine’s and Europe’s dependence on Russian energy sources is a matter of geopolitical impact, especially with Russia having invaded Ukraine.  Yet the Energy Secretary, who under DoE’s permitting process can deny applications to countries that don’t have a free trade agreement with us, has approved all of six applications in the last three plus years to such countries, and he has some 24 more applications sitting on his desk with no action in the offing.  Certainly, all of those predate the present Russian assault, but acting on those export applications, rather than dissembling about them, would have an immediate favorable impact on Ukraine and Europe, if only through natural gas pricing on the world market—which would help these while harming Russia.

This administration automatically foot drags, even in an on-going crisis, on any matter pertaining to international affairs.  It has no understanding of foreign affairs, and so it’s wholly incapable of anticipating and planning for global events; this lack underlies its foot-dragging.

It’s no wonder our enemies have such contempt for us—and Ukraine is in the strait it’s in.