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According to the latest estimates, Russia might harvest as much as 133 million tons of grain this year.

russia-grain-production

This would make 2017 a record harvest not just by post-Soviet standards, which were pretty dismal until the past decade, but relative to the RSFSR’s peak of 127.4mn tons in 1978.

(This is the case even after adjusting for Crimea’s absence from the RSFSR after 1954, since the parched peninsula only produces about a million tons of grain per year).

The US Department of Agriculture predicts that Russia will overtake the US and the EU to become the world’s largest single wheat exporter in 2017, accounting for a sixth of the world’s total and recovering its old Tsarist status as one of the world’s great breadbaskets.

world-grain-exports

Incidentally, if it were to also recover its Tsarist era borders, especially the Ukraine and Kazakhstan, it would account for about a third of world wheat exports.

One of the big proximate reasons for this are recent economic developments. Few sectors of the Russian economy have gained as much from the ruble devaluation and the sanctions as agriculture.

However, there are strong secular trends that Russia’s new breadbasket status is here to stay.

The world population is growing, and the climate is warming. This will raise global demand for calories, channeling investment into Russian agriculture, even as crop yields go up thanks to longer growing seasons and more atmospheric CO2, and previously inhospitable lands are opened up for agricultural exploitation.

burke-temperature-economy Russia is predicted to economically benefit more than any other country from global warming, and relatively speaking, agriculture can be expected to benefit more than any other sector. Meanwhile, conviently, major competitors such as Australia and the US will be wracked by droughts.

Russia is no longer the Soviet Union, where grain imports were running at 30 million tons by the 1980s – that is, about as much as just Russia by itself now exports – and draining the country of foreign currency. There are now many agricultural conglomerates competing in a free global market, responsive to price signals and intolerant of waste (about a quarter of the Soviet potato harvest rotted away in transportation). This is an opportunity that Russia will continue to exploit.

Minister of Agriculture Alexander Tkachev has suggested that in the future, Russian export earnings from grain exports may come to equal or even eclipse those from hydrocarbons, in effect fully returning Russia to its foreign trade position during late Tsarism.

This is unlikely any time soon. Even as late as 2015, Russia exported a total of $7.4 billion of crops, which is not only an order of magnitude lower than its $189 billion worth of hydrocarbons and minerals exports, but is not even sufficient to cover its $9.3 billion worth of crop imports (primarily vegetables and tropical crops like coffee and citrus fruits).

Nonetheless, both the global prices for and Russian production of grains is likely to continue soaring in the decades ahead. Meanwhile, the outlook for oil is far less certain. While the supergiants continue depleting rapidly, new extraction technologies have postponed the oil peak for an indeterminate number of future decades, and electric cars will increasingly bite away on the demand side. So Tkachev’s vision is not altogether fantastical.

 
• Category: Economics • Tags: Agriculture, Russia 
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The commentator T. Greer, who incidentally has a wonderful blog of his own, writes in response to my Charlie Hebdo post:

“And because of the critical import of IQ to virtually all aspects of human behavior, it explains a whole host of other domains – crime, unemployment, etc. – in which Muslim immigrants continue to underperform.”

Things are more complicated than this.

They sure are.

Today I have been reading through the data in the 2010 UNODC report on global crime and have been a bit surprised with what I’ve found. SS Africa is of course a pretty violent, crime ridden place. But the Near East isn’t. Rape, robbery, murders — on everything but kidnappings M.E. countries are safer than Latin America, Eastern Europe, Russia, and in some measures, China (!). Folks in the Middle East might be clannish, but they are not unusually violent.

There are some caveats here.

For instance, international rape statistics are all but useless. If you took them at face value, as a woman you would be terrified at stepping outside the door in Sweden, while not having a second thought about doing so in Pakistan.

Needless to say, that is not how things work. For a rape to happen, you need four male witnesses in Pakistan, and just one dissatisfied woman in Sweden.

The only crime statistics that are really are more or less consistent throughout the world, with the exception perhaps of some undercounting in the most Third World places, are homicides. Below is a map of the murder rate per 100,000 people as of the latest data.

Source: Wikipedia.

Source: Wikipedia.

The Middle East in general has higher criminality than both Western Europe and East Asia, including China. (Note that the homicide rate of the UK, France, and China is at exactly 1.0/100,000, just marginally missing out on the map’s lightest color). But it is not any higher than Eastern Europe’s, and very much substantially lower than Latin America’s

But lets say the stats are correct. Where does that leave us? Why do global IQ levels correlate poorly with global crime rates, violence, and terrorism?

Well, I wouldn’t say that the correlation is exactly bad. Sub-Saharan Africa is right about where we would expect it to be. Latin America is somewhat more violent than what we would expect from its IQ, and the Middle East less. At first glance, this is a real issue, because they are otherwise, at least superficially, similar (broadly similar average IQs and levels of economic development, high religiosity, high machismo). Meanwhile, by far the lowest violence countries – those in Western Europe and East Asia – are also those with the highest average measured IQs. The US is a substantial outlier, more violent that it “should” be. But once we adjust for its specific demographic characteristics – after all, your typical American suburbia with “good schools” are no more dangerous than any European or East Asian city – the puzzle resolves itself.

Source: The Bell Curve (Charles Murray and Richard Hernnstein).

Source: The Bell Curve (Charles Murray and Richard Hernnstein).

And as Charles Murray showed, IQ is a very good predictor of criminality rates amongst US whites. Why does it work less well for the world at large? Mostly because the world at large is a great deal less homogenous, and as such several other major factors, or “multipliers,” come into play. I think there are three really big ones.

Agriculture: Agriculture was generally associated with the appearance of centralized states, which gradually usurped a monopoly on violence. There is a tenfold decrease in homicide rates between hunter-gatherers and early agriculturalists (an anthropological fact recently popularized by Steven Pinker). And another tenfold decrease between early agriculturalists and advanced agriculturalists, as happened in Early Modern Europe and probably considerably earlier in China. The very first civilizations sprang up in what is now the Near East and Egypt, and through shackles, stones and scimitars, they’ve been weeding out the more individually psychopathic elements of their population for a very, very long time. These selective pressures had considerably less time to run in Africa and Latin America, before they were extinguished more or less altogether by human rights interventions (fun fact: Venezuela was the world’s first country to abolish capital punishment).

Alcohol: Crime rates were notoriously high among heavy-drinking Irish immigrants in the 19th century US, but over time they gradually sobered up and converged with the European average. Russia, and eastern Slavs in general, are a huge homicide outlier relative to the Caucasoid average. This is overwhelmingly a function of the region’s alcoholism epidemic, in particular of vodka binge drinking, which began to soar in the 1960s, peaked in the 1990s, and only began to sustainably retreat in the past decade. One estimate (Nemtsov 2003) showed that alcohol was involved in some 72% of Russian homicides. Your typical Russian homicide isn’t getting shot in the streets by some young punk, but a bunch of middle-aged dudes hacking each other to death in their vodka-soaked apartments (just read through scandalous magazine The Exile’s archived “death porn” columns from the 2000s and you’ll get the idea). Remove that, and Russia’s homicide rates become almost European. The most alcoholized Western European country is Finland, whose homicide rates are twice to two-and-a-half times as high as that of Sweden, Denmark, or Norway (all of which have far more Third World immigrants), and the same as Greece (which is far more macho, in contrast to the Finns’ more depressive, placid personalities, and is up to 0.5SD lower in IQ). Alcoholism is endemic in peoples who made the transition to modernity, or at least its accoutrements, without the interval of agriculture. Greenland has a very high homicide rate. So, too, do the northernmost Canadian provinces. In Russia, of the ten oblasts with the highest homicide rates, four are majority populated by indigenous peoples (including the top three), while another three have very substantial indigenous minorities.

Blue = boobs, red = butts. Source: Pornhub.

Blue = boobs, red = butts. Source: Pornhub.

Alphas: Latin Americans are known for their machismo. So are Africans and Arabs. The men have an acutely developed sense of jealosy, displaying an aggressively possessive attitude to women rarely seen nowadays in the West, and both the men and womenfolk respect traditional masculinity. Those who do not are despised, and are called “faggots” without the slightest trace of irony. They prefer butts over boobs, a macho/alpha/r-strategy vs. wimpy/beta/K-strategy Rorschach test if there ever one. You can see it on the roads, and you can see it in the nightclubs. That said, I would wager that as it relates to individual violence, there is a very big difference between the machismo of Latin Americans and Africans, and the machismo of Arabs. It all comes down to family types. Both Africa and Latin America are characterized by exogamous family types, while the Arabs are highly endogamous. The former is characterized by intensive competition for mates, with women enjoying a large degree of social and sexual freedom – which translates to hypergamy in practice – so there is a large payoff to being all rough and badass. In contrast, in most of the Muslim world and virtually all of the Arab world, by the logic of the endogamous community family and its institution of cousin marriage, many men already have a partner “pre-arranged,” and if not, there is not much they can do about it anyway, no matter how hard they posture. They have to act much more respectable because marriages are arranged through families.

One obvious factor I left out is the prevalence of guns. Though I am pro-gun myself, I think it is very likely that in net terms, they do increase homicide rates – after all, killing someone with a pistol is much easier than with a knife – although they might well reduce other crimes such as burglaries. But the overall effect appears to be much smaller than that of IQ, agriculture, alcohol, and alphas.

So, to return to T. Greer’s comment:

There are other factors — sociological or genetic — that need to be part of this discussion. IQ doesn’t take us the whole way.

Add in (limited historical exposure to) agriculture, (vulnerability to) alcohol, and (unrestrained) alpha males as multipliers.

Higher IQ is invariably better than low IQ. All of the high IQ regions (>100) have low homicide rates.

While Arabs are more macho than Westerners, they are restrained by their traditional family system. Islam prohibits alcohol, and the peoples of the Middle East have a longer history of agriculture than any other.

If you’re affected by just one of those three factors, you’re still basically fine.For instance, Finland is substantially more alcoholized – if to nowhere near as big an extent as Russia or Ukraine, let alone Greenlanders and Yakuts – than either the US or the rest of Western Europe. But its homicide rate is only very modestly higher than what it “should be” going just from its average IQ.

But when you start getting affected by two or more of these factors, things start getting hairy fast.

How would this theory logically pan out in various regions?

Africa: Short history of agriculture, too many alphas, low IQs. The traditional family system, which is polygamistic, just accentuates the problem, as female hypergamy and hence intense male competition is unleashed in full. Result – Very high homicide rates.

Latin America: Short history of agriculture, too many alphas, mediocre IQs. In some Latin American cities, as a man, you are as likely to die a violent death as you’d have had as a member of a constantly warring hunter-gatherer band in the Paleolithic. Result – Very high homicide rates.

Middle East: Very long history of agriculture, mediocre IQs. The Islam they currently practice bans alcohol entirely, and pretty successfully at that. While they are macho, this personality factor is neutralized by their family system (it is worth noting that Turkey and Iran, where the family system isn’t as rigidly endogamous as among the Arabs, also happen to have generally higher homicide rates despite being richer and more developed). That leaves just the low IQs. Thus, their homicide rates are substantially higher than the most civilized parts of the world, i.e. Western Europe or East Asia, but no higher than in Eastern Europe, and much lower than in Africa or Latin America.

Eastern Slavs: Respectable IQs similar to Mediterranean Europeans, as are machismo levels, but significantly less exposure to agriculture. And a lot more alcohol. So as expected, homicide rates amongst South Slavs, e.g. Serbs and West Slavs, e.g. Poles are now pretty low – almost as low as in Western Europe proper (though against that you have to adjust for them having far fewer Third World immigrants). The East Slavs and Balto-Finnish groups, however, are still in the grip of a strong if receding alcohol epidemic, so their homicide rates are considerably inflated, if to nowhere near African or Latin American levels. Even in Russia itself, homicide rates amongst ethnic Russians veer higher as you go north, where Slavic Russians admixed with Balto-Finns. The Balto-Finns were the last major European ethnic group to adopt agriculture. (While the alcohol epidemic as of today is less severity in Estonia or Latvia than in Russia, to say nothing of Finland, that is a function of their greater socio-economic progress).

Indigenous northern peoples: IQs aren’t bad, but short history of agriculture, plus alcohol. They aren’t near as macho as the above groups; children would have needed much more paternal investment to survive in the frozen north, hence too much male competition would have been an evolutionary dead end. But their alcohol epidemics tend to be so vast in scope that it really needs to be observed to be appreciated.

19th century frontier Americans: Had extremely high homicide rates. In his book The Better Angels of Our Nature, Steven Pinker gives homicide rate figures of 50/100,000 for Abilene, Kansas, 100/100,000 for Dodge City (no wonder you want to get the hell out of it), 229/100,000 in Fort Griffin, Texas, and 1,500/100,000 (sic) in Wichita. Back then, apart from being a bit less intelligent than today (Flynn Effect), Americans were also far more alcoholic. This is little known now, but back then, the US was known as the “Alcoholic Republic,” with alcohol consumption per capita being roughly twice what it is today despite much lower incomes. The frontier towns would not only have been more alcoholized than average, but were also extremely macho, explained in theory by the high male-to-female ratio, and immemorialized by the lingering cultural legacy of the Colts and cowboys of the Wild West.

 
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The Paleo Manifesto” by John Durant, published in 2013. Rating: 5/5.

Most books on the paleo diet follow a set pattern: An inspirational story about how the author wrecked his health with junk food or vegetarianism before the caveman came riding on a white horse to the rescue; an explanation of why, contrary to the popular expression, almost anything is better than sliced white bread; a long and exhaustive guide to the do’s and don’ts of paleo with plenty of scientific explanations; and finally, a list of recipes and suggestions for further reading.

Don’t get me wrong, you’ll still get a solid idea of how to eat, move, and live by paleo principles from John Durant’s THE PALEO MANIFESTO. But at its core, this is no diet book.

It is a bold attempt to situate the paleo lifestyle within the “Big History” of human biosocial evolution, which is divided into four distinct “ages”: Paleolithic, agricultural, industrial, and information. Each of these ages was characterized by diets that created new problems, problems that were in turn partially mitigated by solutions specific to the very age that spawned them. This is a narrative that evokes a whiff of historical materialism, though John Durant is far more of a neo-reactionary than a Marxist.

Well aware of its pervasive violence and cultural backwardness, Durant does not unduly glamorize paleolithic life. (Nor does virtually anyone in the movement, strawmen set up by paleo’s detractors regardless). But one can’t escape the physical evidence that hunter-gatherers were far taller, stronger, and healthier than the early agriculturalists hunched over their hoes. An anthropologist shows off a male specimen who was 5″10 (175 cm) tall and weighed 150 pounds (68 kg), despite having a musculature that would put the vast majority of modern humans to shame. Average heights decreased by 5 inches after the transition to agriculture, and tooth and bone health deteriorated drastically.

The Bible tells the story: Man took up farming and began eating bread, and then cities appeared, famine and disease stalked the land, and childbirth became painful and dangerous. But childbirth also became more frequent, and the vast (if low-quality) caloric surpluses from grains enabled farmer populations – armed with metal weapons and commanded by literate elites – to gradually displace the world of Enkidu. That world might never have been paradise on Earth, but it “probably seemed like the Garden of Eden” compared to the lives of early farmers.

Agricultural civilization, over time, evolved sociobiological antidotes to the new ills it had spawned – first and foremost, disease. Wine and hot tea appeared as substitutes for (filthy) water. Spices, which have antimicrobial properties, became a universal staple of southern cuisines. Fermented foods and beverages negated some of the poisons inherent to the new diet. Early fertility cults and promiscuous attitudes gave way to patriarchal structures that enforced heterosexual monogamy – a natural adaptation to the appearance of STD’s.

In a stunning insight, and highlight of the book for me, Durant argues that Mosaic Law can be interpreted as one of the most comprehensive – if unintentional – disease prevention guides in history. Cleanliness was associated with godliness; taboos appeared against cannibalism, and eating (potentially spoiled) meat after the third day; leprosy sufferers were to be shunned. Only virgin women could be captured, while all the others had to be killed (the past is a foreign country). The entire “kashrut” system of “clean” and “unclean” animals rested on a valid scientific basis. Vermin, shellfish, and most insects were disease vectors; pigs, lizards, snakes, amphibians, bird of prey and carrion, and cats – which were worshipped in Egypt! – gobbled the former up. In contrast, no plants are forbidden – even though many of them are poisonous – and nor do primarily plant-eating insects such as locusts, whose consumption would provide a double benefit in terms of both protein and fewer crops destroyed. All these strictures were backed up by severe punishment for transgressors, on both the early and godly plane; disease control was a matter of “life and death for the entire community,” and could only be effectively carried out with the cooperation of the entire community.

Industrialization brought a whole new set of nutrition problems. Sailors died like fleas from scurvy on long voyages; obesity started appearing in Britain in the 19th century as sugar became a staple; rickets increased in frequency as people stayed indoors for longer on what was an infamously sunless island in the first place. Instead of religious commandments, this time it was science and technology that constituted the solution. Limes and lemons were packed on ships in addition to the traditional salt pork and gin; in 1863, a formerly obese Englishman called William Banting published the world’s first diet book, based on restricting sweet and starchy foods (see a pattern?); in 1933, the US government started fortifying milk with Vitamin D to combat rickets, and a few decades later celebrities and sunbeds made sun-tans cool again. “Again, we learned how not do die.”

We are now entering the age of biohackers: The Pareto Principle followers, the fox thinkers, Qualified Selfers, the n=1 experimenters who are seeking novel and individualistic ways of improving their health without waiting for formal science – which advanced “one funeral at a time,” as Max Planck so eloquently put it – to catch up. They try to take a big view of the progress and pitfalls across the ages, and adjust their diets and lifestyle to get the best of all worlds: The paleo diet intrinsic to humans for 99% of their existence as a species; the cultural traditions against disease and recent-adaptations like lactose tolerance of the Agricultural Age; the soaring successes and arrogant foibles of the Industrial Age; and the wealth of individually-tailored data and analytical tools now available on the information highways. For the first time ever, optimal health is within our grasp.

The second and third sections deal with the details of the paleo lifestyle, and as such is much closer to the content of most books on the subject. It’s all pretty much standard: Avoid grains and legumes, eat meat (from tail to tail), vegetables, fruit, nuts, and insects (both the familiar oceanic and unfamiliar land versions). Don’t fear saturated fat; the French Paradox is no paradox. Mimic a hunter-gatherer or herder diet. Follow ancient culinary traditions (experiment with broths, fermented and raw foods, organ meats, etc.) and practices (e.g. fasting). Move naturally – humans are evolved to stand, walk, squat, lie down, and occasionally sprint; they are not evolved to sit or do moderate jogging (check out CrossFit and MovNat). Running was traditionally done barefoot, which enables a more natural and less stressful action; consider that or getting a Vibrams. Do cold plunges and saunas. Don’t fear the Sun – the risks of getting skin cancer from it are negligible compared to the warding effects it gives from depression, other cancers, and a multitude of other ailments.

Nonetheless, we still find some clever insights – as well as controversies. For instance, I liked how he destroys the Whole Foods-shoppers’ worship of organic and whole foods over processed. He points out that “organic sugar is still sugar,” and that the absurdity has even spread to “organic tobacco,” while processed foods can be both very healthy (e.g. cooking, fermentation) or very unhealthy (e.g. Coca-Cola, Mars bars).

He does a good job of defending the ecological role played by responsible hunters – though I wouldn’t go quite so far as to say lion burgers are a good or valid way of advancing an animal preservation cause – and of rebutting vegetarian arguments. These range from the rational-seeming but factually wrong (e.g. the assertion that hunter-gatherers got most of their calories from plants, or references to T. Colin Campbell’s deeply flawed interpretation of the China Study), to politicized absurdities such as Carol Adam’s assertion in THE SEXUAL POLITICS OF MEAT that meat-eating is a mechanism to enforce “patriarchy” (in reality, hunter-gatherer tribes were far less hierarchic and male-dominant than complex, grain-based civilizations). Still, while it might be true that vegetarians are crazier than average, there was no need – no need whatsoever – to go off on that bizarre tangent about Hitler’s vegetarianism. What the hell, dude? If you’re trying to present yourself as a voice of reason against the filthy grain-eating peasants, calling on the curse of Godwin probably isn’t the smartest way to go about it.

But a few quibbles cannot detract from what is, all things said, a monumental contribution to the nutritional canon. THE PALEO MANIFESTO is eminently readable, greased along by Durant’s endearingly morbid sense of humor (he advises against cannibalism on account of modern people having a “much higher ratio of omega-6 to omega-3 fatty acids due to their grain-based diets”). There is a consistently fluid command of the relevant medical, nutritional, and anthropological literature, as might be expected of the organizer of the world’s largest paleo Meetup group. Above all, he succeeds at contextualizing the paleo lifestyle within the big story of humanity’s biosocial evolution, and his conclusions – earlier jeremiads against the Standard American Diet and vegetarianism regardless – end up acknowledging the critical importance of integrating lessons from all four of the major nutritional epochs.

Though paleo is the most “natural” way to eat, it eminently cannot feed a global population of seven billion. The agricultural system – that is, local and organic – plays a vital role in maintaining plant genetic diversity, but it probably cannot feed the world either, short of most of us returning to a hardscrabble existence in the fields. The industrial system is the caloric workhorse that feeds the world, but it suffers from “serious health, ethical, and environmental drawbacks.” According to Durant, the most realistic, sustainable, and humane way forward is to keep the industrial system, but mitigate its worst effects by drawing on the best of what the paleolithic and agricultural systems have to offer. Meanwhile, the information system that industrialism enables can continue to push forwards our understanding of optimal health and nutrition through the vision and self-experimentation of the 21st century’s biohackers.

And really, who can argue with that?

(Republished from AKarlin.com by permission of author or representative)
 
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This post is a meta-commentary on media coverage of Russia’s drought and wildfires. Now make no mistake, I admire the yeoman work of some journalists in covering Russia burning: no doubt a few will even make their way into the classical cannon such as The Saga of the Burned Foot (Miriam Elder) or The Tale of How Aleksandr Pochkov Quarreled with Vladimir Vladimirovich (A Good Treaty). :) But in my opinion, they almost all fail to consider the key facts that render their Kremlin criticism moot and fail to grasp the “big picture”: the Great Russian Heatwave of 2010 as a mere herald of things to come.

In summary: 1) There is nothing the Russian government could have done to contain a natural disaster of such magnitude, 2) many of the lectures about how Russia could have done better to prepare itself would have been counter-productive had they actually been implemented, 3) the hysteria about Moscow turning into a giant morgue from heat stress and smog or radioactive ash clouds is overblown, and 4) the real problem, or rather predicament, is global warming, the effects of which are expected to transform Russia’s heartlands into Central Asia within the next few decades.

Unprecedented Drought, Reductio ad Putinum

I’m going to be using Julia Ioffe as a foil in this section (not because I hate her but because I’ve actually read her articles). In her August 5th shock piece, Russia on Fire, she writes:

A strong argument could be made for calling this disaster Putin’s Hurricane Katrina. In 2006, then-President Putin, in consultation with the Russian timber industry, “reformed” forestry regulations, eliminating positions for rangers, making each of the remaining ones responsible for more territory, increasing paperwork so they spent hardly any time outdoors monitoring the forests—and, on the off chance that they did spot a small fire while on patrol, making it a punishable offense (a misuse of state funds) to put it out.

So assume that the Kremlin had listened to forestry expert Ioffe, and restarted the Soviet practice of forest fire suppression whenever they sprang up. That would have solved the problem, right? No. It would have made it a lot worse.

Left alone, forests experience small, contained fires every few years, which clear out excess undergrowth, replenish the soil and maintain the resilience of the forest ecosystem. But as soon as you start playing Canute to the woodlands, layers of dead biomass accumulate on the forest bed. Eventually, it reaches such a critical mass that the next heatwave is bound to create a conflagration, made catastrophic of the interventionist’s own hubris.

But that too would inevitable have been the Kremlin’s fault, according to the Gospel of Julia. Damned if they do, damned if they don’t. In her discourse, the main things are personalities, Tsar-Batyushka, the Tatar-Mongol yoke… As Mark Chapman remarked on AGT’s blog:

If Russia’s leaders stay remote and aloof from their subjects, they’re cold and indifferent. If they make any attempt, even one that looks suspiciously scripted, to connect, they’re Janus-faced Tsars.

Now I’m not denying the possibility that the current fire suppression efforts have been riddled with corruption and incompetence. Time will tell. But consider this from another angle. This drought is unprecedented in its severity for at least the last 140 years, if not the last 500! Some much needed facts and figures (as opposed to anecdotes) from Jeff Masters:

At 3:30 pm local time today, the mercury hit 39°C (102.2°F) at Moscow’s Domodedovo Airport. Moscow had never recorded a temperature exceeding 100°F prior to this year, and today marks the second time the city has beaten the 100°F mark. The first time was on July 29, when the Moscow observatory recorded 100.8°C and Baltschug, another official downtown Moscow weather site, hit an astonishing 102.2°F (39.0°C). Prior to this year, the hottest temperature in Moscow’s history was 37.2°C (99°F), set in August 1920. The Moscow Observatory has now matched or exceeded this 1920 all-time record five times in the past eleven days, including today. The 2010 average July temperature in Moscow was 7.8°C (14°F) above normal, smashing the previous record for hottest July, set in 1938 (5.3°C above normal.) J uly 2010 also set the record for most July days in excess of 30°C–twenty-two. The previous record was 13 such days, set in July 1972. The past 24 days in a row have exceeded 30°C in Moscow, and there is no relief in sight–the latest forecast for Moscow calls for high temperatures near 100°F (37.8°C) for the next seven days. …

Dr. Rob Carver has done a detailed analysis of the remarkable Russian heat wave in his latest post, The Great Russian Heat Wave of July 2010. A persistent jet stream pattern has set up over Europe, thanks to a phenomena known as blocking. A ridge of high pressure has remained anchored over Russia, and the hot and dry conditions have created helped intensify this ridge in a positive feedback loop. As a result, soil moisture in some portions of European Russia has dropped to levels one would expect only once every 500 years.

Furthermore, consider the vast territorial extent of Eurasia’s drought.

[Russia blanketed by forest fire smoke. Source: NASA.]

In retrospect, the current death toll from the fires, at 50, might well be remarkably low, considering the extreme circumstances (compare with 173 deaths in the Black Saturday bushfires last year in Australia, a country Russia’s critics would all consider “civilized” and developed).

But what do I know? According to Julia Ioffe and Foreign Policy, forest fires only happen in countries with non-liberal Presidents.

Moscow Morgues & Radioactive Ash Clouds

Two rather hysterical stories doing the rounds. Make no mistake: premature deaths from heat stress are tragic. Moscow’s mortality rate rose by 29.7% in July 2009, relative to the same period last year. August might be even worse if the searing temperatures continue into next week. The morgues are overflowing, with the numbers of daily deaths multiplying by 2-7x over normal in recent days (the sources differ).

But this does happen when record-breaking heat waves strike, anywhere. I was unfortunate enough to be in Paris during the 2003 heatwave, when temperates hit 40C and more. It was a torrid hell of heat and concrete: I remember taking several cold showers per day and avoiding sun-drenched spaces like a vampire. But I had it good. People with pre-existing medical conditions were dying early. The French capital observed a 142% mortality increase in August 2003, with deaths spiking to 2-8x their normal levels during the week of the heat wave.

[Number of deaths in Paris during August 2003 heatwave.]

But at least Parisians are more used to hot summers and didn’t have to contend with the smoke. Neither can be said for Muscovites. So a high number of excess deaths – estimated to reach 40,000 by Jeff Masters – is regrettable, but to be expected.

[The 2003 European Heatwave and the Great Russian Heat Wave of 2010 compared.]

What about the fires releasing radioactive ashclouds from the areas around Chernobyl? Pure hysteria. Even if the inferno spread there, the radioactive particles released in 1986 have long since become diluted in the environment. Rinse and repeat if taken on an airborne ride by the fires a second time.

The Real Meaning of the Great Russian Heatwave of 2010

Most commentators prefer to spend their time discussing Putin’s ownage of the Sovok citizen blogger or the destruction of the naval aviation storage base that spawned a firestorm of blame and recriminations. It certainly doesn’t shed a good light into the nefarious workings of the Russian bureaucracy (few things do), but guys, this is largely irrelevant. What’s really significant is that this once-in-a-century (or is now once-in-a-millennium?) drought is a symptom of global warming, a few more degrees of which will transform the Russian heartlands into Central Asia.

So here are the really important things:

1. The collapse of Russia’s grain production, estimated to fall from 100mn tons in 2009 to just 65mn tons this year. This is huge. It reverses practically all the agricultural revival (in volume output) achieved in the past few years, bringing Russia back (maybe even below) its post-Soviet agricultural nadir. Furthermore, the depression may continue for another two years, if the earth is baked too hard for sowing the winter crop: a nation accounting for 25% of the world’s wheat exports will be out of business for two years. Coupled with agricultural decline in other countries (e.g. floods in China to reduce its rice crop by 5-7% this year) and rising food protectionism, social welfare in poor food importers like Egypt and Pakistan will plummet. The conditions aren’t in place for a repeat of the 2008 food crisis, but this does confirm that our age is now one of increasing scarcity.

2. This year is unprecedented everywhere: it is the hottest July on record (and the hottest year on record). Thermometers have been snapping left, right and center as new temperature records are set from Belarus to Sudan. The Arctic has given up the ghost, with sea ice volume plummeting into oblivion.

["Daily Sea Ice volume anomalies for each day are computed relative to the 1979 to 2009 average for that day. The trend for the 1979- present period is shown in blue. Shaded areas show one and two standard deviations from the trend."]

This is despite the fact that we are at a periodic, deep minimum in solar irradiance. One can only imagine the kind of havoc we’ll see in 2012-15 as it bounces back to its maximum.

And that’s not all the bad news. The Russian fires will have burned an unholy amount of biomass, which is even now making its way into the atmosphere in the form of CO2. Historically, heatwave years are associated with above-average increases in atmospheric CO2 as the carbon cycle reverses direction. It is not impossible that 2010 will be the first year in which atmospheric CO2 increases by more than 3ppm (the previous record was 2.93ppm in 1998, a scorcher year that saw massive peat bog fires in Borneo).

The general agricultural and climate crisis is the context in which Russia’s wildfires must be framed.

3. The extent to which Russia benefits from global warming surely ought to be reassessed. Most climate models predicted a moderate increase in agricultural output on the cold Eurasian steppes with up to 2C of warming, making up for declining yields in the mid-latitudes and tropics. These assumptions might have to be reassessed if Russia’s Black Earth metamorphoses into a Dust Bowl. Though mass migration to the Arctic is a possible (and probably inevitable in the long-term) adaptation, it needs generations to be effected.

The preparations have to begin now. The sooner Putin and Medvedev realize this, the more favorably history will judge them; minor things will be forgotten. (I intend to write a post on Russia’s future as an Arctic civilization sometime in the next few weeks).

Russia is unlikely to ever have problems feeding itself, as long as its agricultural policies remain more or less sane. Nonetheless, its massive drought (which may become the norm rather than the exception sooner rather later) and grain export ban indicate it’s unwise to rely on it to bring big food surpluses to the global dinner table in the next few decades.

UPDATE, August 10: So it really is not just a one in a hundred years but a once in a thousand years event: Russian Meteorological Center: There was nothing similar to this on the territory of Russia during the last one thousand years in regard to the heat.

(Republished from Sublime Oblivion by permission of author or representative)
 
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In most Russian bookstores, there is a bookshelf or two dedicated to so-called “patriotic literature” – reappraisals of Stalin against “liberal revisionism”, overviews of Russia’s secret super-weapons, the exploits of its special forces and Russian theo-philosophy. Much of it is (apparent) nonsense, but the economic crisis has forced me to reconsider one particular “patriotic” thesis – Andrei Parshev’s Why Russia is not America.

His big idea, an elaboration and tying together of earlier work, is that Russia’s economy is structurally uncompetitive on the world stage, and that integrating with the global economy will lead to catastrophe. This is because of his counter-intuitive observation that Russia is overpopulated. Though its population density is low on paper, the cold climate, huge landmass and poor riverine connections means that the carrying capacity of north Eurasia is nowhere near as high as that of the world’s other centers of economic and political power – the US, China, and Europe. Because manufacturing is inherently loss-making on the Eurasian plains, it is much more economically “efficient” to just ship out Russia’s mineral resources to fuel manufacturing in warmer, coastal regions such as the Pearl River Delta or the Great Lakes. No more than 20mn Russians are needed to service the pipelines and grow fat from the proceeds; the other 120mn are free to eke out a subsistence living on Russia’s marginal lands, or die out (as indeed many did during the era of neo-liberal reforms). He recommended a return to sovereignty, autarky and sobornost as the solution to these woes.

I agreed with Parshev’s analysis upon my first reading of his book in 2002, a time when I still thought Putin was no more than a better-dressed, sober gangster in Yeltsin’s mold and the country showed little signs of real recovery. Yet as evidence mounted that Russia really was prospering by the mid-2000′s and I became influenced by Krugman’s criticisms of competitiveness, I increasingly came to reject his ideas (e.g. see this comment). However, since then increasing awareness of the vital role played by protectionism in “catch-up” industrial development, the reality of peak oil and above all the economic crisis forced me into reconsidering Parshev.

Russia’s Geographic Curse

According to the geographic-determinism school of economic development, Russia is afflicted by a panoply of woes experienced by no other country or region to anywhere near the same extent. This is held to explain its special path of development, in which attempts to “catch up” with the West only end up reinforcing a Sisyphean loop of unrealized ambitions and tragic legacies.

1) Russia is too cold.

But aren’t Canada and Finland prosperous liberal democracies, despite their harsh climate? Yes, they are. But most of Canada’s 30mn-strong population is concentrated around the Great Lakes, Vancouver and Newfoundland. The former has great riverine connections with the dynamic US heartlands, while the latter two have maritime climes with excellent deep sea ports. There are a few millions living in the agriculturally productive Canadian Prairies (equivalent to Russia’s Black Earth regions). However, Canada has nowhere near so many people living so far north and so far inland as Russia.

Without central planning and subsidized energy flows, it is highly unlikely that settlements in deepest Siberia or the High Arctic could have developed into substantial population centers. Manitoba-Saskatchewan-Alberta (5.9mn) together have fewer people than the demographically weakest Russian Far East (6.7mn), let alone Siberia (20.1mn), the Urals (12.4mn) and the Volga (31.2mn) which all have similar or worse climatic conditions. Just compare the populations of the following rough climatic equivalents: Moscow (14.8mn) and Calgary (1.1mn); Irkutsk (594k) and Yellowknife (19k); Norilsk (135k) and Churchill (923).

As for Finland, it is climatically and geographically equivalent to St.-Petersburg and the Leningrad Oblast, which are atypical in having relatively mild climes and sea access during the warm seasons. Even so, Finland has an unremarkable GDP per capita compared to other developed nations, despite it having some of the best human capital in the world.

The cold makes growing seasons short and late spring droughts are a recurrent problem. This traditionally made Russian agriculture outside the southern Black Earth regions (where the cold is mitigated by exception soil fertility and access to the seas) unproductive and barely sufficient for population subsistence.

This in turn gave rise to peasant cultural traditions deeply averse to the development of capitalist enterprise, with its emphasis on individual initiative and steady capital accumulation. The classic Kluchevsky quote from the 19th century:

There is one thing of which the Great Russian is sure − that a sunny summer day is valuable, that nature would allow little time convenient for agricultural work and that a short Great Russian summer can be shortened even more by a sudden untimely turn of bad weather. This would force the Great Russian peasant to hurry up and toil in order to achieve as much as possible over a short while and take the crop in good time… In this way the Great Russian would learn to take an extraordinary but short effort, would learn to do rush, hasty work and then take a rest during forced idleness in autumn and winter. No other nation in Europe is capable of such short extraordinary effort; but, on the other hand, such lack of habit to regular, moderate, constant work is unlikely to be found anywhere in Europe.

Though peasants view capitalists with suspicion throughout the world (money relations are a threat to the village social relations that serve to guarantee subsistence to its members), the precariousness of Russian agriculture reinforced the antipathy and encouraged the formation of a strong state capable of accumulating and protecting surpluses in the good times to insure the people from dearth in the bad times. It is probably no accident that the Russian state arose out of Muscovy, one of the remotest and least agriculturally productive regions, which however compensated with overwhelming military and political power.

Of course, the influence of climatic factors is much weaker on industry and services, than on agriculture. They have higher added value and the severe cold is mitigated by Russia’s energy riches, made exploitable by the Industrial Revolution. That said, the infrastructure costs remain significantly higher than in more climatically benign nations.

As you can see from the map above, east of Poland and north of Romania, Crimea and the Caucasus, Eurasia is afflicted by deep permafrost. This necessitates laying thick, heated concrete foundations and makes constructing housing, factories and skyscrapers far more costly than in developed nations, despite Russia’s cheaper labor force.

2) Russia is too big and remote.

Russia is in the paradoxical position of being at once overpopulated and underpopulated. Overpopulated in that it is too cold and harsh to sustain a big population; underpopulated in that the population density is low, which makes transport costs per capita prohibitively high. The challenge posed by its huge size and lack of sea ports was noted as far back as the 18th century by Adam Smith in his Wealth of Nations.

…all that part of Asia which lies any considerable way north of the Euxine and Caspian seas, the ancient Scythia, the modern Tartary and Siberia, seem in all ages of the world to have been in the same barbarous and uncivilised state in which we find them at present. The Sea of Tartary is the frozen ocean which admits of no navigation, and though some of the greatest rivers in the world run through that country, they are at too great a distance from one another to carry commerce and communication through the greater part of it.

This is also a constant theme of Stratfor‘s analysis (e.g. see The Recession in Russia).

Throughout history, Russia has lacked navigable river transportation and access to ocean trading routes. Furthermore, Russia’s population is scattered across its vast territory, its natural resources are mostly found in unpopulated areas and a number of regional challengers constantly threaten its territorial integrity. Russia’s core is essentially the northeastern portion of European Russia…

With vast territory, constant expansion to the buffers and a lack of internal transportation, Russia requires a substantial amount of resources to maintain and defend its borders. It requires top-down management of the economy to focus resources on overcoming geographical impediments to development and security. As such, Russia is not a capital-rich country; it is starved for capital by its infrastructural needs, security costs, chronic low economic productivity, harsh climate and geography. Unlike the United States or the United Kingdom, where industrial and post-industrial economic development can spring forth with little or no direction thanks to favorable geography (intricate river transportation systems in the United States and access to oceanic trade routes for both) and the relative security of oceanic barriers, Russia has had to rely on firm state-driven economic development.

Railways ameliorated Russia’s situation by vastly decreasing transport costs across its barren continental swathes, thus reducing the relative advantages enjoyed by the Rimland nations through virtue of their access to sea traffic. (This development was noted more than a hundred years ago by the geopolitical theorist Mackinder, who was concerned by the strategic threat Russian railways posed to British-ruled India). Meanwhile, the telegraph, telephones, radio, TV and eventually the Internet nullified the effects of distance on information exchange.

Nonetheless, Russia continues to incur great costs on account of its cold, continental nature. Road and railway maintenance are relatively hard and expensive in Russia, which has more limited spare resources in the first place. It also largely misses out on the great productivity gains accruing from the cargo freighter revolution of the late industrial age. Outside the Moscow road rings and the Moscow – St.-Petersburg corridor, highways remain little more than directions.

3) Russia has too many enemies.

Given its origins as a settled, economically-weak civilization surrounded by foreboding plains dominated by Asiatic horsemen to the east and Germanic, Scandinavian and Polish rivals to the west, Russia’s rulers have always felt insecure. This drove them to expand the Empire since the 15th century to occupy natural buffers, as far down the North European Plain as possible, to the Carpathian Mountains to the southwest, the Caucasus and Hindu Kush to the south and the Altai Mountains, Tian Shan and Stanovoy Range in the Far East. As Catherine the Great pithily put it, “I have no way to defend my borders except to extend them”. Below is a map showing how Russia’s geo-strategists view the world:

Poor internal communications and technical deficiencies forced Moscow to main large standing armies on every potential front, incurring a constant drain on scarce resources and the productive labor pool. More resources were required for administering non-Russian lands, maintaining a formidable internal policing apparatus, and funding the development of strategic sectors, above all those tied to military applications. Security vacuums in Russia’s periphery drew in Russian troops and bureaucrats. All this makes imperial overstretch, economic inefficiency and primitive consumer markets constant features (not bugs) of any Eurasian empire.

4) Russia retains a burdensome Soviet legacy.

Though technological developments partly mitigated the negative roles of climate and geography in Russian economic development, the Soviet physical legacy of single-industry towns, “gigantism”, remote settlements, and “structural militarization” acted in the opposite direction.

Towns were built in remote areas, including the High Arctic and the Far East, regardless of costs and explicitly designed to serve a planned economy. Heating in apartment blocks was centralized, meaning that even if half the inhabitants left the rest were still entitled to utilities services. All this constituted a massive diversion of energy flows from more “efficient” purposes. Many of these towns relied on just a few large industrial employers to survive; closing the enterprise down, even if it was high unprofitable, would have resulted in humanitarian catastrophe. Incidentally, this is precisely the reason why the neoliberal reforms of the 1990′s weren’t (and probably couldn’t be) really carried through.

Stalin built up the foundations for a gargantuan military-industrial complex (MIC) centered in the remote, uninviting Urals. After the 1960′s, the MIC metastasized to such an extent as to constitute around 30% of Soviet GDP by the mid-1980′s. Though activity collapsed in the 1990′s, Russia retains a structurally militarized economy. Though currently dormant and atrophied, it can be easily reconstituted. In the mean-time the MIC continues to lock up a great deal of Russia’s human and capital resources, along with the armed forced and its vast array of security agencies.

Why America is not Russia

The US is structurally different in almost all respects. Though it has a huge continental interior, its fertile areas are interconnected by an extensive riverine network that remains ice-free throughout the winter months. It possesses excellent sea ports on both coasts. The Great Lakes region is perhaps the best place anywhere in the world for industrial development.

America’s strategic isolation and massive internal potential allow it to maintain a world class navy and expeditionary forces with ease. The US uses them calculatedly and sparingly to check the emergence of any Eurasian hegemon, the only construct that has any chance of challenging its global preeminence. And it is not afflicted by economic distortions from its deep past because America was, at least internally, a consistently free market nation since the earliest days of its founding. Its small population and abundant resources produced large per capita surpluses, sparing it from the Malthusian crises that periodically stunted older civilizations, and instead spurring on the development of free-wheeling capitalism.

From Stratfor‘s The Geography of Recession:

The most important aspect of the United States is not simply its sheer size, but the size of its usable land. Russia and China may both be similar-sized in absolute terms, but the vast majority of Russian and Chinese land is useless for agriculture, habitation or development. In contrast, courtesy of the Midwest, the United States boasts the world’s largest contiguous mass of arable land — and that mass does not include the hardly inconsequential chunks of usable territory on both the West and East coasts.

Second is the American maritime transport system. The Mississippi River, linked as it is to the Red, Missouri, Ohio and Tennessee rivers, comprises the largest interconnected network of navigable rivers in the world. In the San Francisco Bay, Chesapeake Bay and Long Island Sound/New York Bay, the United States has three of the world’s largest and best natural harbors. The series of barrier islands a few miles off the shores of Texas and the East Coast form a water-based highway — an Intracoastal Waterway — that shields American coastal shipping from all but the worst that the elements can throw at ships and ports.
The real beauty is that the two overlap with near perfect symmetry. The Intracoastal Waterway and most of the bays link up with agricultural regions and their own local river systems (such as the series of rivers that descend from the Appalachians to the East Coast), while the Greater Mississippi river network is the circulatory system of the Midwest. Even without the addition of canals, it is possible for ships to reach nearly any part of the Midwest from nearly any part of the Gulf or East coasts. The result is not just a massive ability to grow a massive amount of crops — and not just the ability to easily and cheaply move the crops to local, regional and global markets — but also the ability to use that same transport network for any other economic purpose without having to worry about food supplies.

The implications of such a confluence are deep and sustained. Where most countries need to scrape together capital to build roads and rail to establish the very foundation of an economy — transport capability — geography granted the United States a near-perfect system at no cost. That frees up U.S. capital for other pursuits and almost condemns the United States to be capital-rich. Any additional infrastructure the United States constructs is icing on the cake. (The cake itself is free — and, incidentally, the United States had so much free capital that it was able to go on to build one of the best road-and-rail networks anyway, resulting in even greater economic advantages over competitors.)

Third, geography has also ensured that the United States has very little local competition. To the north, Canada is both much colder and much more mountainous than the United States. Canada’s only navigable maritime network — the Great Lakes-St. Lawrence Seaway —is shared with the United States, and most of its usable land is hard by the American border. Often this makes it more economically advantageous for Canadian provinces to integrate with their neighbor to the south than with their co-nationals to the east and west.

Similarly, Mexico has only small chunks of land, separated by deserts and mountains, that are useful for much more than subsistence agriculture; most of Mexican territory is either too dry, too tropical or too mountainous. And Mexico completely lacks any meaningful river system for maritime transport…

With geography empowering the United States and hindering Canada and Mexico, the United States does not need to maintain a large standing military force to counter either. The Canadian border is almost completely unguarded, and the Mexican border is no more than a fence in most locations — a far cry from the sort of military standoffs that have marked more adversarial borders in human history. Not only are Canada and Mexico not major threats, but the U.S. transport network allows the United States the luxury of being able to quickly move a smaller force to deal with occasional problems rather than requiring it to station large static forces on its borders.

Like the transport network, this also helps the U.S. focus its resources on other things.

Taken together, the integrated transport network, large tracts of usable land and lack of a need for a standing military have one critical implication: The U.S. government tends to take a hands-off approach to economic management, because geography has not cursed the United States with any endemic problems. This may mean that the United States — and especially its government — comes across as disorganized, but it shifts massive amounts of labor and capital to the private sector, which for the most part allows resources to flow to wherever they will achieve the most efficient and productive results.

Russia’s Return to the Future

As I pointed out earlier here and here, Russia is returning to the future. Its demography is stabilizing after the precipitous collapse of the 1990′s, and social morale and faith in the nation is slowly returning, to the dismay of geopolitical competitors, “Russophobes” and “social progressives” alike. Russia is implementing an industrial policy aimed at manufacturing growth and technology diffusion. The state brought the regions back under its thumb and is again becoming the linchpin of the Russian economy. The party’s over for Russia’s oligarchs:

Because of the financial crisis and government consolidation, the once-powerful oligarchs no longer have a say in their future and are merely along for the ride. Indeed, they no longer constitute a powerful and distinct business “class.” Some oligarchs will survive the shakeout, but not with their independence. To some degree, they all will become part of the Kremlin machine so carefully engineered by Putin. As copper oligarch Iskander Makhmudov said in a rare interview: “The oligarchs now have mixed fortunes, but we will all end up being soldiers of Putin one day.”

Instead of liberalizing, the economic crisis has simply reinforced already latent trends in Russia’s economic development. Russia’s ongoing globalization since the 1970′s is slowly beginning to reverse itself; Russia’s decision to apply to the WTO as part of a customs union with Belarus and Kazakhstan is an early indicator of an accelerating trend. Much of what I predicted in The Importance of Self-Sufficiency half a year ago is already coming to pass:

A wave of consolidation will occur in the Russian banking industry, Russia Inc. will close the oil windfall-foreign intermediary-cheap credit loop that was its prior financing mechanism and the country will emerge with a stronger, self-sufficient financial system. The oligarchs, Moscow and the middle classes bear the brunt of the crisis, while the provinces, agriculture and domestic manufacturing benefit, thereby reinforcing already latent tendencies in national development.

Though the drop in Russia’s output was far greater than I expected, it was far worse in Ukraine and the Baltics. Ukraine’s project of Westernization has failed utterly. According to my quick back of the envelope calculations, its GDP is currently (taking into account the recent collapse) around 30-40% lower than it was in the late USSR! (Russia’s is around 0-10% lower, but it is not faced with a fiscal or political crisis). Thus, though there is a possibility of a humanitarian crisis and a demographic shock in Russia, it is much lower than in Ukraine – where in any case a post-Soviet fertility recovery is much less in evidence in the first place. Damningly, opinion polls indicate that Putin and Medvedev are by far the most popular politicians in Ukraine.

Decline and disillusionment in Ukraine, and the return of isolationist nationalism to Russia. What next? History is a guide. A fundamental feature of autarkies is that to be truly self-sufficient they need to expand their domain, much as the Bolsheviks created the Union of Soviet Socialist Republics, which in turn expanded it to COMECON. It has to expand territorially in order to have access to all the vital building blocks of an industrial economy and to be able to hold its own against other economic blocs, which are more tightly interwoven into the world market. As such, it is very likely that within the next decade Ukraine, Belarus and Kazakhstan will again become integrated with Russia, on a spectrum of possibilities ranging from an EU-like structure to a unitary state-empire.

Reintegration will create a state with 210mn souls and will significantly increase the industrial (including military-industrial) power at Moscow’s disposal by at least 50%. One has to keep in mind that Eurasia’s industrial base was meant to be unified when it was constructed during the Soviet era, and as such the gains accruing from reintegration will be more than just the sum of its parts. One of Russia’s geopolitical priorities is to thwart an independent energy corridor for the proposed Nabucco oil pipeline and to link up with its ally Armenia, so it will no doubt continue pressuring Georgia to return into its orbit. Saakashvili’s days in power are almost certainly numbered. Whether Russia will choose to expand in Central Asia is more questionable. On the one hand, they have respectable energy reserves (especially gas), constitute demographic reservoirs amidst graying Slavdom and are geopolitically important. There are few problems with radical Islam and on the whole they appreciate Russian culture. On the other hand, they will present a development burden and China will likely oppose an overt Russian reassertion in Central Asia.

I do not think these trends are possible, or even desirable, to arrest, even should the Kremlin leadership want to (they will be pulled along by the Russian people). The reasons why they are inevitable, I leave to a later post.

Why they are nothing to lament over can be answered now – because of other key global trends. Russia’s oil production very likely peaked in 2008, along with global production. Conserving what remains for its own use should be a priority; exports should only be allowed on the most favorable terms, in exchange for Western technologies, not US Treasuries, Chinese trinkets or oligarch mansions in London. One consequence is that there will be increasing competition for resources. The industrial core (the US, Europe and China) will probably strike up strategic alliances to control and influence resource-rich nations, either overtly (latter-day gunboat diplomacy) or covertly (influence operations, information wars, etc). In this world, much like in the 1930′s, the strong will beat the weak. As such, Russia’s geopolitical priorities would logically be – and this already seems to be happening – to a) maintain its military strength, including the nuclear deterrent, b) neutralize and co-opt Europe and c) extend influence over the energy-rich Arctic, Central Asia and the Middle East. To pursue these goals effectively, it needs economic sovereignty, morale, and the attributes of an empire (in Russia’s case, these are all inter-linked).

The era of childish enchantment with the West, pursued by Andropov’s successors, is coming to an end, at last dispelled by the deafening crash of globalization.

(Republished from Sublime Oblivion by permission of author or representative)
 
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For all the noise being made this month about Georgia, about NATO, about Tibet, etc, possibly the most portentous is that it seems Russia hit its oil peak (strictly speaking, its second – the first happened in 1987), well in line with peakist predictions. Production increases via application of new technology, as seen in the late 90′s and early 2000′s have been mostly exhausted; there are no megaprojects to bridge the gap beyond 2010. (There has been some noise about new oil field discoveries off Brazil’s coast which could contain as many as 33bn barrels, which has our dear Economist rejoicing: “the discoveries do suggest that the gloomiest pundits are wrong to predict that the world will soon run out of oil”. Just two problems. The issue is not about the world running our of oil – it’s about economically damaging declines in production which will, and are, hitting crucial sectors like transport and agriculture. Secondly, and more to the point, even the high estimate of 33bn barrels is enough for less than half a year of today’s demand of 85bn barrels.) Massive expansion in Russia has been the main reason while oil is peaking now, rather than five years ago. This, coupled with stagnant Saudi Arabia ‘refusing’ to increase oil production so as to leave more for future generations and oil prices rising to 120$, looks set to vindicate the Oil Drum predictions below.

The phenomenom of peak oil is starting to become a new conventional wisdom. Krugman penned an excellent article on this, an interesting example of mainstream economists and “doomers” getting wedded:

Nine years ago The Economist ran a big story on oil, which was then selling for $10 a barrel. The magazine warned that this might not last. Instead, it suggested, oil might well fall to $5 a barrel.

In any case, The Economist asserted, the world faced “the prospect of cheap, plentiful oil for the foreseeable future.”

Last week, oil hit $117.

It’s not just oil that has defied the complacency of a few years back. Food prices have also soared, as have the prices of basic metals. And the global surge in commodity prices is reviving a question we haven’t heard much since the 1970s: Will limited supplies of natural resources pose an obstacle to future world economic growth?

How you answer this question depends largely on what you believe is driving the rise in resource prices. Broadly speaking, there are three competing views.

The first is that it’s mainly speculation — that investors, looking for high returns at a time of low interest rates, have piled into commodity futures, driving up prices. On this view, someday soon the bubble will burst and high resource prices will go the way of Pets.com.

The second view is that soaring resource prices do, in fact, have a basis in fundamentals — especially rapidly growing demand from newly meat-eating, car-driving Chinese — but that given time we’ll drill more wells, plant more acres, and increased supply will push prices right back down again.

The third view is that the era of cheap resources is over for good — that we’re running out of oil, running out of land to expand food production and generally running out of planet to exploit. I find myself somewhere between the second and third views.

There are some very smart people — not least, George Soros — who believe that we’re in a commodities bubble (although Mr. Soros says that the bubble is still in its “growth phase”). My problem with this view, however, is this: Where are the inventories?

Normally, speculation drives up commodity prices by promoting hoarding. Yet there’s no sign of resource hoarding in the data: inventories of food and metals are at or near historic lows, while oil inventories are only normal.

The best argument for the second view, that the resource crunch is real but temporary, is the strong resemblance between what we’re seeing now and the resource crisis of the 1970s.

What Americans mostly remember about the 1970s are soaring oil prices and lines at gas stations. But there was also a severe global food crisis, which caused a lot of pain at the supermarket checkout line — I remember 1974 as the year of Hamburger Helper — and, much more important, helped cause devastating famines in poorer countries.

In retrospect, the commodity boom of 1972-75 was probably the result of rapid world economic growth that outpaced supplies, combined with the effects of bad weather and Middle Eastern conflict. Eventually, the bad luck came to an end, new land was placed under cultivation, new sources of oil were found in the Gulf of Mexico and the North Sea, and resources got cheap again.

But this time may be different: concerns about what happens when an ever-growing world economy pushes up against the limits of a finite planet ring truer now than they did in the 1970s.

For one thing, I don’t expect growth in China to slow sharply anytime soon. That’s a big contrast with what happened in the 1970s, when growth in Japan and Europe, the emerging economies of the time, downshifted — and thereby took a lot of pressure off the world’s resources.

Meanwhile, resources are getting harder to find. Big oil discoveries, in particular, have become few and far between, and in the last few years oil production from new sources has been barely enough to offset declining production from established sources.

And the bad weather hitting agricultural production this time is starting to look more fundamental and permanent than El Niño and La Niña, which disrupted crops 35 years ago. Australia, in particular, is now in the 10th year of a drought that looks more and more like a long-term manifestation of climate change.

Suppose that we really are running up against global limits. What does
it mean?

Even if it turns out that we’re really at or near peak world oil production, that doesn’t mean that one day we’ll say, “Oh my God! We just ran out of oil!” and watch civilization collapse into “Mad Max” anarchy.

But rich countries will face steady pressure on their economies from rising resource prices, making it harder to raise their standard of living. And some poor countries will find themselves living dangerously close to the edge — or over it.

Don’t look now, but the good times may have just stopped rolling.

No wonder survivalism is becoming respectable again.

(Not that I think the world is going to become a Mad Max abode; there’s still plenty of discretionary energy consumption that can be cut, and in the longer term future both wind and solar energy have very good prospects. Nonetheless, according to this study, “Exergy services can be equated to exergy inputs multiplied by an overall conversion efficiency. which, of course, corresponds to cumulative technological improvements over time. Based on this hypothesis economic growth from 1900 to 1975 or so is explained almost perfectly, exceptfor wartime perturbations.” Hence I suspect there will be a period of serious economic disruption in the period between 2010-20, when oil and natural gas spiral down and both coal and uranium will be hard pressed to fill the gap (economically viable reserves may well be close to peak, as described here (coal) and here (uranium), and 2030-50, when renewable energy starts to come on-line in a really big way.)

Not surprisingly, two key trends – rising energy prices and climate change – are colluding to produce a scramble for the Arctic and its lucrative hydrocarbons deposits. Russia has foresightedly been marking territory by staking claims in the UN, planting its flag at the North Pole sea floor and carrying out strategic bomber flights over the Arctic. Canada, Denmark and Norway have also been getting on in the action, while the US has been lethargic. Climate models indicate an ice-free summer by 2015, meaning northern Russia will become a major new transportation hub between Europe and East Asia (thus making the old dream of a North-East passage a reality).

While wildlife wilts, agriculture booms – “Greenland is experiencing a farming boom, as once-barren soil now yields broccoli, hay, and potatoes”, and Russia keeps getting warmer. (What with rising world grain prices and the big lands left fallow following the Soviet collapse, it is easy for Russia to cement its status as a leading grain producer (from 81mn tonnes in 2007 to 110-120mn tonnes within a decade) by expanding the agricultural sector, a trend explained in The Medvedev Economy and confirmed by state investment into agriculture.) Not only will Russia remain a major hydrocarbons exporter, but will add cereals to its portfolio (which will, besides, increase in price), thus avoiding the fatal Soviet situation where profits from oil exports were eaten up by having to buy Western grains.

But returning to the FP Arctic Meltdown article and hydrocarbons,

The largest deposits are found in the Arctic off the coast of Russia. The Russian state-controlled oil company Gazprom has approximately 113 trillion cubic feet of gas already under development in the fields it owns in the Barents Sea. The Russian Ministry of Natural Resources calculates that the territory claimed by Moscow could contain as much as 586 billion barrels of oil — although these deposits are unproven. By comparison, all of Saudi Arabia’s current proven oil reserves — which admittedly exclude unexplored and speculative resources — amount to only 260 billion barrels.

Currently, Russia has passed its second oil peak. Could the above make for a third peak? Discovery precedes recovery by around 30 years. 586bn barrels is about twice bigger than oil reserves in Russia proper before extraction ever began. Without ice, the extractive environment in the Arctic will be comparable to that of the North Sea. As such, it is plausible that Russia may even, around 2020-30, experience a third oil peak, at a time when global supply is severely constrained and prices are at 300-400 $ per barrel. What with its current (relatively low) consumption, this means that Russia may be spared from the energy crunch that will hit other energy-dependent economies in this time period.

Perhaps most significant will be the geopolitical impacts (which, btw, we have covered in Towards a New Russian Century?). Russia is going to have to fundamentally rethink its traditional conceptions of itself as a land power, strategically weak and surrounded by predatory peoples who periodically exhaust the carrying capacity of their lands and launch invasions. It is going to become surrounded by ice-free water on two sides, along whose coasts will accumulate a rapidly expanding population (especially if environmental collapse causes mass immigration from South Asia, the Middle East and the Far East). This, along with a much greater stake in coastal transportation and off-shore hydrocarbons deposits, will require a much more powerful navy. No wonder Russia has tentative plans to create the world’s second largest surface navy within the next two decades, to which purpose a 410x100x14m drydock is currently under construction at Severodvinsk.

The IMF has released its prognosis for the world economy. A slowdown is inevitable, driven by a US correction due to a housing crisis and its contagion of the world financial system.

Global growth will decelerate in 2008, led by a sharp slowdown in the United States, amid a housing correction and a financial crisis that has quickly spread from the U.S. subprime sector to core parts of the financial system, the IMF says in its latest World Economic Outlook.

Citing the unfolding financial market turmoil as the biggest downside risk to the global economy, the April 2008 report said the IMF expects world growth to slow to 3.7 percent in 2008—0.5 percentage point lower than what was forecast in the January 2008 World Economic Outlook Update.

Further, world growth would achieve little pickup in 2009, and there is a 25 percent chance that the global economy will record 3 percent or less growth in 2008 and 2009, equivalent to a global recession.

The main emerging market economies will diverge rather than decouple, with growth in China, India, Russia and CEE slowing but not catastrophically so, remaining close to their long-term trend rates.

However, the government is even more optimistic, projecting 7.6% growth for 2008. Considering that Q1 GDP growth was 8.0%, driven as in the year before by consumption and investment, they have grounds for their optimism. On the other hand, CPI (inflation) is rising worrying fast, reaching an annualized rate of 13.3% this March, although it should be noted this is a worldwide phenomenom experienced by China (8.3%), India (8.6%), Czech Republic (7.1%) and Latvia (16.8%).

The Ukraine (26%+) has been hit not only by high food and energy prices, but populist government largesse. (To take their minds off these matters, perhaps that’s why Hitler action dolls have gone on sale there, more proof if any is needed of the proclivities to fascism of certain sections of Ukrainian society. Gazprom will probably end 2008 as the company with the world’s second highest revenue (around 41.5bn $), similar to the budget of an economic basket case, say, Ukraine (43bn $). (Can’t help making these cheap shots, just ignore them if they irritate you).

The IMF has also released new estimates for GDP growth through to 2013. By the end of that period, Russia’s PPP GDP should overtake Latvia’s and be level-pegging with Poland’s. The rise in nominal GDP is projected to be more dramatic (graph lifted off this thread):

The Economist has an interesting graph breaking down GDP increase for major regions in the world by capital, labor and total factor productivity (GDP itself can be expressed as a Cobb-Douglas function of the above 3 components) from a WB report, Unleashing Prosperity.

It is a splendid vindication of the ideas I expressed in Education as the Elixir of Growth. There, I made the argument that the education/’Human Capital Index’ (HCI) of each country is matched to a ‘potential GDP level’; where there is a large gap between potential and actual GDP, economic growth is highest. This above all explains the impressive economic growth we’re seeing in well-educated but relatively poor countries like Russia (once it abandoned its socialist shackles), and explains well the unimpressive growth of countries like Brazil, an badly-educated country with a correspondingly unimpressive economy.

However, the linkages between HCI and productivity are even higher than between HCI and GDP (as GDP also depends on labor and capital inputs, which themselves depend on other demographic and social factors). From the chart, we can see that middle-income CIS countries (of whom Russia is, by far, the largest and most significant) had the largest increases in TFP, thus reflecting the huge gaps in its potential and actual productivity. While China’s absolute growth was much larger, almost half of it was down due to increases in labor and capital. However, considering China’s recent labor shortages and its unsustainably high investment rates, it is very unlikely that double-digit growth will continue in the near-to-medium future, particularly further taking into account that a) exports will be hit by US recession and b) from 2009 onwards the oil peak will start biting ever harder (as covered above). Latin American countries were the worst performers, seeing no improvement in TFP – in other words, they are about as productive as their levels of human capital allow them to be (withouta resource windfall or two).In a snapshot of other economic and related news, the housing bust has spread to the UK. Haiti’s government collapses after food riots – an ominous foreboding of things to come elsewhere? Between 2000 and 2007, median family incomes stagnated in the US, in stark contrast to the period between every other recession (the fact that the 2000′s saw a broad consumer boom becomes all the more worrying). The falling dollar has made US assets attractive, and Russia has accumulated around 10% of US steelmaking capacity – although it has not limited itself to the US, but also went on a shopping spree around Germany. Russia may allow the ruble to appreciate to rein in inflation. Moscow’s budget is now as big as New York’s. Confidence in the economy is increasing. According to the FT, Moscow could become Europe’s second financial center (after London) in ten to fifteen years. The Russian ‘brain drain’ has to a large extent ceased as funding and salaries increase in academia.


On 21st April, Georgia accused Russia of an “unprovoked act of aggression” after a Russian jet allegedly shot down an unmanned Georgian reconnaissance plane over Abkhazia. This came in the wake of Russia stepping up its political representation in the region, while Georgia implicitly compared Western policy towards Russia with Nazi appeasement. Meanwhile Putin urged the West not to ‘demonise’ Russia. (The IHT has a piece that criticizes US aloofness in its relations with Russia in The Missing Debate.)

Watch the cool video below, it’s now every day that you get to see a MiG-29 fire an R-60 missile at CBDR, within visual range and head on.
Presumably Russia wishes to make a statement that it is ready and willing to defend Russian citizens (i.e. the vast majority of Abkhazians, and South Ossetians). It is also Russia’s traditional foreign policy level over Georgia – it’s separatist enclaves – being exploited. When Georgia pursued a relatively neutralist line towards Russia (under Shevardnadze), Russia kept at arms length from the separatists, but established a military presence in the region. Now that Georgia has received a promise of eventual membership from NATO, however, the levers have been pulled. If Georgia received MAP at the next summit, expect formal recognition of Abkhazia and South Ossetia.
A German man is on trial in Germany for allegedly selling military technology to Russian intelligence. The Russian Army apparently has some serious problems with obesity. Greece agrees to host a section of Gazprom’s planned South Stream pipeline. Berlusconi held his first foreign meeting with Putin on 17th April, and Robert Amsterdam penned an acerbic yet poignant portrait of the less wholesome similarities between the two countries.
The most recent data on Russian and American strategic nuclear armaments, as declared for the START Treaty, is available here. In contrast to the late Soviet period, it is now the US that has a preponderance of platforms. The breakdowns in deployed systems, Russian and US respectively, go as follows: ICBM’s (481 to 550); SLBM’s (288 to 432); heavy bombers (79 to 243); total (848 to 1225). The breakdown by numbers of deployed warheads is: ICBM’s (2027 to 1600), SLBM’s (1488 to 3216); heavy bombers (632 to 1098); total (4147 to 5914). The breakdown by throw-weight for ICBM’s and SLBM’s is 2370MT to 1830MT. In other words, while Russia has a slightly larger overall megatonnage, it has fewer strategic platforms and its missiles are less accurate. This is not yet a critical situation, what with the current international relations paradigm; nonetheless, further investments are necessary, particularly into the submarine and bomber part of the triad as well as ABM, in anticipation of the end of MAD due to the development of effective and comprehensive missile shields – which are closer to fruition, at least in the US, than most people realize. Perhaps I’ll write more on this in the future.
An interesting article from the Times on WMD developments in Syria and North Korea.
Foreign Affairs has The Age of Nonpolarity as its kindpin article for May/June.
Summary: The United States’ unipolar moment is over. International relations in the twenty-first century will be defined by nonpolarity. Power will be diffuse rather than concentrated, and the influence of nation-states will decline as that of nonstate actors increases. But this is not all bad news for the United States; Washington can still manage the transition and make the world a safer place.
Indeed, one of the cardinal features of the contemporary international system is that nation-states have lost their monopoly on power and in some domains their preeminence as well. States are being challenged from above, by regional and global organizations; from below, by militias; and from the side, by a variety of nongovernmental organizations (NGOs) and corporations. Power is now found in many hands and in many places…Today’s world is increasingly one of distributed, rather than concentrated, power.
Getting everyone to agree on everything will be increasingly difficult; instead, the United States should consider signing accords with fewer parties and narrower goals. Trade is something of a model here, in that bilateral and regional accords are filling the vacuum created by a failure to conclude a global trade round. The same approach could work for climate change, where agreement on aspects of the problem (say, deforestation) or arrangements involving only some countries (the major carbon emitters, for example) may prove feasible, whereas an accord that involves every country and tries to resolve every issue may not. Multilateralism à la carte is likely to be the order of the day.
I agree that the US is in relative decline and about the rise of multilateral pragmatism in diplomacy. Nonetheless, I question the thesis that state power is eroding. The state remains as strong as ever, and far stronger than their equivalents a hundred years ago. Several European nations take in more than 50% of their GDP in taxes. This rate in the distant past was only reached during times of total war, e.g. WW2. States are most certainly not “challenged” by either global organizations (which are simply assemblies of states where they can seek concensus), militias (which have always existed) or NGO’s (which operate under statal jurisdictions).
Putin has become leader of United Russia, in addition to being the Prime Minister. Sean’s Russia Blog already has an excellent analysis in Gensek Putin (which also features a nice little demographics discussion in which my posts on the matter were mentioned).
That of course raises the issue of whether a nothing party like United Russia will actually give Putin something. As Konstantin Sonin noted in the Moscow Times, leading United Russia wouldn’t necessarily give Putin any guarantee over controlling the government. “The party has nothing to offer Putin in his struggle for power,” says Sonin…
The chairman position gives Putin virtually unlimited power within UR. Putin will have the power to appoint party leaders and suspend their powers, and override any party decision expect for those adopted at congresses. His removal is only possible with a 2/3 congressional vote.
If Putin can be taken at his word, he has plans for United Russia. In his address to the Congress he stated that the party of Power needed to “reform itself become more open for discussion and for taking into account the opinion of the electorate, it must be de-bureaucratized completely, cleared of casual people pursuing exclusively their own material gains.” Look out, there’s a new sheriff in town.
Plans have already been set in motion for the recognition of internal factions. Three “clubs” have been created within United Russia to represent its right, center, and left. There is the Center of Social Conservative Policy, headed by Andrei Isaev, the liberal-conservative “November 4th” club led by Vladimir Pligin, and the State-patriotic club led by Irina Yarovaya. Whether these clubs will actually mean anything in terms of inter-party dialog remains to be seen.
Putin’s chief task, if he chooses to take it, will be to rid the party of what he calls “corrupt people.” A task easier said than done. Historically, attempts to clean up party corruption have horribly failed. Often the anti-bureaucratic campaigns, purges, and even arrests within the Communist Party created more corruption. And like the Communist Party of the past, United Russia seems allergic to any real cracking down on its corrupt members. Last week, the United Russia dominated Duma rejected a bill which would require deputies to declare the incomes and property of their relatives up to three years after leaving office. Hiding wealth and property in the names of family members is a common, albeit crude way, of hiding corruption.
Basically, if Putin actually decides to lead United Russia, he’s going to have his hands full. Just because he is the almighty Putin doesn’t mean he will be successful.
Michael Averko has an excellent article in American Chronicle, Ukraine and “Russophobia” Uncensored, which covers more on the Annals of Western Hypocrisy (which goes on and on, World and Time without End). I’ve quoted the first three paragraphs:
Since the Soviet breakup, Ukraine has been geo-politically spun in two ways. When Ukraine’s less Russia friendly side appears to have enhanced its stature, there is an increased yearning to drive Ukraine away from Russia as much as possible. When Ukraine’s more Russia friendly grouping seems strengthened, there is greater talk of mutual respect for the two Ukrainian ways of viewing Russia. Another Ukrainian perspective falls somewhere in between the two.
On NATO expansion, “the will of the people”, takes a back seat for the Russia unfriendly crowd. The Orange Ukrainian government’s desire to have Ukraine in NATO has consistently run contrary to the majority of its citizenry. The explanations for this unpopularity include a not so well informed Ukrainian public, caught in a Cold War time warp.
In comparison, there is little second guessing of polls showing that most Ukrainian citizens have a positive attitude on their country joining the European Union (EU). For some, Ukrainians are ignorant when stating apprehension about NATO and knowledgeable upon agreeing with the anti-Russian consensus; albeit for not always the same reason.
Sean’s Russia Blog has comprehensive coverage of the Putin / Kabaeva rumors. Also a story about the hobbies of Russia’s nanotechnologists, e.g. building marchhead-sized chess sets.
Demographic stats from Rosstat have come out for Jan/Feb 2008. While the birth rate increased by 11.3%, so did the death rate by 2.6%, reaching 15.8 / 1000 from 15.4 / 1000 in 2007. Seems that January was not an anomaly – the rapid improvements seen since 2005 have petered out, at least temporarily. But this is not totally unexpected, however. As I noted in my demographics posts, there is a very close correlation between mortality and the alcohol/food price ratio. Overall inflation in Jan-Feb was 3.5%, food price inflation was 3.6%; but the price of alcohol increased by 1.9%. The alcohol/food price ratio has fallen further, perhaps to its lowest ever historical level. In other demographic news, in 2006 there were 1.6mn abortions in Russia, hugely down from the 1990′s but still 2 to 3 times higher per capita than in the West.
Finally a few public opinion polls. In February 2008, PEW released figures that showed 6 3% of Russians preferred a strong leader over democracy, down from 70% and 21% respectively in 2002, but a lot higher than in 1991, when a majority (51%) favored a democracy over a strong leader (39%). 74% would rather have a strong economy, while only 15% would like a good democracy. Ukraine, Bulgaria and even Poland show similar figures. In another rather interesting result, half of Russians agreed with the statement that ‘most people in society are trustworthy’, which is higher than the average for Eastern Europe and about average for Western Europe.
59% of Russians (almost certainly correctly) say there is no life on Mars, while 26% disagree. 49% of them believe that there’ll be a human on Mars and 59% think there’ll be a lunar base within the next 50 years. (Russia, like the US and China, has tentative plans for both enterprises). A new ‘Space Competitiveness Index‘ (whatever that means) has been compiled, in which Russia takes third place behind the US and Europe. China is fourth.
(Republished from Sublime Oblivion by permission of author or representative)
 
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Anatoly Karlin
About Anatoly Karlin

I am a blogger, thinker, and businessman in the SF Bay Area. I’m originally from Russia, spent many years in Britain, and studied at U.C. Berkeley.

One of my tenets is that ideologies tend to suck. As such, I hesitate about attaching labels to myself. That said, if it’s really necessary, I suppose “liberal-conservative neoreactionary” would be close enough.

Though I consider myself part of the Orthodox Church, my philosophy and spiritual views are more influenced by digital physics, Gnosticism, and Russian cosmism than anything specifically Judeo-Christian.