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Today a ceasefire has been agreed upon between Azerbaijan and the Nagorno-Karabakh Republic, which unlike the unilateral ceasefire declared by Azerbaijan three days ago seems to be holding.

This allows us to make some more conclusions observations on what happened.

map-nagorno-karabakh-april-2016

Source: http://caucasus.liveuamap.com/, via Cassad.

Nagorno-Karabakh War 1.5

First, the Azeris have made gains, but their advance was ultimately quite modest – only around a quarter of a kilometer across a narrow stretch of the northern front – and ultimately ground to a halt. A total of eight defense positions were lost, as well as the village of Talish in the north. There are conflicting reports on whether Mataghis was captured – the weight of the evidence suggests that the Azeri assault failed with high casualties – while the main town and operational center for that front was never seriously threatened. It did suffer a bombardment, and was the target of intensive Azeri drone surveillance. Several Azeri drones were shot down around that area. The conflict also saw the first use in anger of the Israeli Harop “kamikaze” drone by the Azeris, which was remotely steered into a bus carrying Armenian volunteers, resulting in seven deaths.

Second, as has become familiar from the War in Donbass, official and unofficial casualty figures differ by an order of magnitude. Oficially, there had been to date 35 Armenian military deaths 37 Azeri deaths, although each side claims 300-400 enemy casualties. I suspect it is closer to around 50-75 for the Armenians (especially once the 28 listed as MIA, most of which usually end up dead in the end, are accounted for) and up to 150 for the Azeris. The photographic evidence appears to show a lot more Azeri than Armenian troops, and in any case it stands to reason since it was the Azeris who were assaulting well-fortified positions.

Furthermore, the NKR’s tally of how many tanks it lost – some fourteen of them – are virtually the same as Azeri claims of how many tanks it destroyed. In contrast, Azerbaijan implausibly acknowledges the loss of only one tank, whereas the Armenians claim they destroyed 29 tanks. Since it is harder to hide hardware losses, this suggests an NKR-Azeri combat loss ratio of 1:2. Apart from this, the Azeris have also lost several APCs, 1-2 Mi-24 helicopters, and tons of Israeli UAV’s (one of them was apparently downed by a hunter with a rifle! Not very good PR for Israel’s defense export industries).

old-armenian-soldier

Armenian volunteer.

deluded-aliyev All in all, it’s safe to say that at least so far, this has been a comprehensive defeat for Azerbaijan, regardless of how earnestly President Ilham Aliyev prevaricates on Twitter and the rather unconvincing assertions of Azeri propaganda.

Their purely military gains were insubstantial, and attained at the cost of much higher losses in personnel and equipment than the worse-armed but far more motivated, skilled, and dug in NKR Army. This was accomplished without any reinforcements from Armenia proper. Any hopes for a blitzkrieg campaign have been dashed. Consequently, if the Azeris also intended to test the limits at which Russia would start moves to intervene, they failed at that as well through their failure to achieve any major military successes against NKR in the first place.

Political Aspects

The Azeris also lost the information war. Although this flareup elicited very little European or American official commentary, it was clear that public opinion outside Turkey and Azerbaijan itself – at least as gauged by social media on Twitter and Reddit – was overwhelmingly on Armenia’s side. This was especially so after evidence of Azeri war crimes began to crop up, including the execution and mutilation of three Armenian civilians in Talish and the ISIS-style parading of the decapitated head of a Yazidi soldier from the NKR ranks (note that both links are probably NSFW). While the provenance of the former is uncertain, the latter appears to have definitely happened, appearing on a pro-Azerbaijan military Vkontakte page. There were also claims from pro-Armenian media sources that many Azeris in the ranks of Islamic State were turning to Azerbaijan. There is reason to be skeptical about this since it is unlikely that the sorts of Azeris who would go off to Raqqa would return to fight for a secular Shi’ite state.

If the intent was to use military assault to catalyze the diplomatic process, that too must be considered a failure. Apart from Erdogan’s boorish but entirely predictable expression of unconditional support for Azerbaijan, nobody else followed suit. Instead, everybody from Russia and Iran to NATO and the US issued formulaic injunctions to observe the ceasefire and resolve the issues through the OSCE Minsk Group (i.e. back to the status quo of doing nothing).

Even the US was noncommital, with a State Department spokesman saying that the final status of Nagorno-Karabakh will be determined on the principles of “non-use of force or threat of force, territorial integrity of states, and the equal rights and self-determination of people.” The second and third points are of course self-contradictory in this case, but the reference to “threat of force” might have been a veiled rebuke against the Azeri Defense Minister for his threats to bomb the NGK capital Stepanakert.

The only countries of note apart from Turkey to assume a decidedly pro-Baku position were Pakistan, Georgia, and Ukraine – but this ghost of the GUAM alliance is not really a diplomatic triumph by any stretch of the imagination.

There was however one Azeri success, though. Or rather an Aliyev success. In Azerbaijan’s current economic circumstances, one might think the ruling dynasty could certainly do without is the media quacking about its offshore network of secret holding companies revealed by the Panama Papers. And unlike with Putin, Aliyev’s family members are directly mentioned as owners. It is worth noting that Mossack Fonseca had informed its clients of the data breach several months in advance, and they would have been aware of the approximate dates of its publication.

Is there a conspiracy theory here? Who knows. It need not have been a decisive factor, since the mainstream media doesn’t have the freedom to talk about such things anyway, while foreign journalists can be fobbed off with the always reliable “[the children] are grown up and have the right to do business” excuse. Even so, it might well have been a significant contributory factor.

After all, it is better to have people rhapsodizing about a “short victorious war,” or failing that at least about “our heroic shahids,” than grumbling about the plummeting currency and the offshore secrets of the elites.

A Final “Optimistic” Note

As I pointed out in my last post, this year represents the likely peak of Azeri military power relative to Armenia for at least the next decade. With Baku getting engulfed by financial crisis in the wake of the collapse of oil prices, it is cutting its military budget by 40% this year, in addition to already substantial cuts in 2015. This means its military modernization efforts will crawl to a stop. Those hi-tech toys its been “testing” these past few days are probably not going to be replaced anytime soon. Meanwhile, while the Armenian economy is hardly booming either, it can at least expect to maintain spending at similar levels or even increase them further considering the rising incidence and fierceness of its clashes with Azerbaijan.

This means that for Azerbaijan, it is a question of now or later… where later might either be decades down the line, or even more likely, never.

On the other hand, though these skirmishes were a far cry from what a real large-scale war would look like between Azerbaijan and Armenia-NKR, they were exceedingly useful from a calibration point of view in that they allowed the Azeris to get a good gauge on the actual combat effectiveness of their rebuilt army. They might well have concluded that the oil-splurge spending of the past decade didn’t automatically translate to much higher proficiency or combat effectiveness, with all that it entails for the prospects of a future large-scale operation to reconquer Nagorno-Karabakh (even putting to the side the issue of Russian intervention).

In this sense, the continued bellicose rhetoric of the Azeris – and the Turks – regardless, the chances of a serious war in the future for Nagorno-Karabakh may well have actually diminished in the past few days.

EDIT 2016/04/06: Now that the fog of war has cleared up, it has become clear that the Azeris even failed to retain the village of Talish. What a debacle.

 
• Category: Foreign Policy • Tags: Armenia, Azerbaijan, Corruption, Military 
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azeri-tanks

Column of Azeri tanks around the Talis region. Via Cassad.

Another Flareup in the Caucasus

The past two days has seen some of the most intense fighting over the disputed region of Nagorno-Karabakh since the 1994 ceasefire that froze the conflict. It was a typical post-Soviet tale: Illogically drawn up borders, stranded Armenians in the historically Armenian territory of Nagorno-Karabakh, the flareup of nationalist tensions in the late 1980s that resulted in the outbreak of anti-Armenian pogroms, and the slide into war between two collapsing states as Nagorno-Kabakh declared independence and deported its Azeris.

As it was, Azerbaijan collapsed faster. Composed of incompetent generals and unenthusiastic soldiers and facing a highly motivated enemy with support from Russia and the vast Armenian diaspora, the Azeris were unable to make gains in the region’s mountainous terrain and eventually retreated after being bled dry by a 5-1 casualty ratio. The Azeris continue to pine for revenge. There are monthly small-scale artillery exchanges, their borders are sealed (Turkey also blockades Armenia), and there was an infamous case in 2004 when an Azeri officer axed a sleeping Armenian to death while they were both on a NATO-sponsored training seminar in Budapest.

Officially, there were 18 Armenian dead and 12 Azeri dead in the recent clashes, as well as the loss of some military equipment. The Azeris claim this was provoked by Armenian bombardments. However, the higher number of Armenian dead plus the fact that the Azeris were the ones who seized a chunk of Nagorno-Karabakh territory throws some doubt on these claims. (That said, the usually well informed Colonel Cassad claims that both sides’ losses were substantially higher, especially those of the Azeris).

azeri-gains

The territories Azerbaijan has taken on April 2 according to an Azeri news source.

Three graphs that explain the renewed clashes in Nagorno-Karabakh

First, Russia is in a precarious position. The situation in Syria can change at any time while the conflict in Donbass has again been simmering up (recent reports from NVF troops indicate intense Ukrainian Army attempts to seize the E50 highway from Donetsk to Gorlovka and dozens of deaths on both sides). It is also apparently committed to keeping a low profile until the next EU vote on extending sanctions. Although Russia is formally committed to come to Armenia’s defense as part of its CSTO obligations, it has been carefully ambiguous on whether the guarantee applies to the territory of Nagorno-Karabakh, which is internationally recognized by noone. All of this will be factors that the Azeris are sure to be weighing and considering.

Second, since the 1990s, the Azeris have massively increased their military preponderance over the Armenians. It may by now be cliche, but it is true nonetheless that Azeri military spending exceeds the entire Armenian state budget. Although Armenia enjoys preferential rates for Russian weaponry – it is something like Israel with regards to the US in this regard – ultimately soaring oil revenues matter more. The two biggest spurts, around the mid-2000s and the early 2010s, were clearly associated with high oil prices.

armenia-azerbaijan-military-spending

According to the Comprehensive Military Power (CMP) index, which integrates personnel quantity, equipment stocks, and technology to provide an assessment of each country’s military potential across time and space, Azerbaijan’s preponderance over Armenia has climbed from a multiple of no more than 1.5 in the 1990s – nowhere high enough to force a breakthrough across heavily defended mountainous terrain – to a multiple of 3 in the last few years. At this degree of disparity, formerly impossible things become possible.

cmp-armenia-vs-azerbaijan

Third, the Azeri economy is extremely fragile. The collapse in oil revenues has forced Baku to impose capital controls and devalue the manat twofold, but nonetheless, foreign currency reserves have plunged from a peak of $15 billion to $4 billion by January. Its credit ratings have been reduced to junk. Discontent is beginning to brew with the Aliyev dynasty, which is criticized for corruption and the ineffective use of Azerbaijan’s oil wealth.

azerbaijan-forex

 

Most tellingly, military spending is going to be axed by as much as 40% in 2016. This will allow Armenia to tilt the balance of power back in its favor a bit.

What next?

So to sum this all up, as I noted at the start of the year, now would not be the absolute worst time for Azerbaijan to engage in some geopolitical adventurism, to take minds off economic woes. If there ever was a time for reclaiming Nagorno-Karabakh, it’s now. All the more so if in addition to the factors listed above Azerbaijan also enjoys support from a Turkey (and even Ukraine? Though tying the clashes around Yasinovataya to this would be a long stretch, and is probably connected mainly to Poroshenko’s visit to the US) whose relations with Russia have collapsed in recent months.

But there are reasons for be optimistic. The recent clashes are appearing to die down instead of escalating into something bigger. Neither side has declared a mobilization. Instead, Azerbaijan’s President Ilham Aliyev is appealing to the Security Council with a renewed demand for Armenians to vacate the “occupied territories.” And the fate of the late President Abulfaz Elchibey – whom Ihham’s own father replaced in a coup after his string of losses during the Nagorno-Karabakh War – must weigh heavily on President Aliyev’s considerations.

 
• Category: Foreign Policy • Tags: Armenia, Azerbaijan, Military 
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In recent days, some Armenians have been up in arms over increases in electricity tariffs by the evil Russian-owned electricity monopoly that will bring them up to… well, a level slightly higher than in Russia and about 2-3x lower than in most EU countries (don’t you love comparative context?). Discourse in both Russia and the West has now shifted to the familiar template of color revolution. Cookie girl Victoria Nuland was in Armenia last February in a closed meeting with NGOs, which is never a good sign, and the Maidanist Ukrainian elites are salivating over the prospect of a color revolution in Yerevan, with Interior Minister (and ethnic Armenian) Arsen Avakov going so far as to express his support for the “Electromaidan” couched in a bizarre anecdote about his adventures with a thermos in (Ukraine’s) Euromaidan.

Does this presage the overthrow of Russia’s colonial “puppet” in Armenia and its inevitable transition to the promised land of freedom, prosperity, and end-of-history that all such revolutions inevitably entail? At first, one might have cause to be skeptical. The numbers of protesters has been few so far: No more than 1% of Yerevan’s one million strong population. And while they do include the usual young pro-Western and anti-Russian types, there’s also plenty of older leftists and apoliticals, so for the most part it could be said to be a domestic political affair with no particular connection to questions such as Armenia’s membership in the Eurasian Economic Union or its hosting of a Russian military base in Gyumri. In opinion polls, Armenians are highly positive towards Russia. On the other hand, pretty much of all of this could also have been said of Ukraine’s Euromaidan before November 2013.

There is however one very critical difference between Ukraine and Armenia and it is summarized in the following chart (figures are from SIPRI):

armenia-azerbaijan-military-spending

Azerbaijan does not much like Armenia. The two fought a war in the early 1990s soon after the collapse of the Soviet Union over the territory of Nagorno-Karabakh, which was officially Azeri but populated by Armenians (thanks to Georgia’s Stalin). Occupying favorable defensive positions and enjoying high morale and funds from the diaspora, the Armenians got by far the better of the exchange, and Nagorno-Karabakh has since been de facto theirs, albeit that is hotly disputed by the Azeris and unrecognized by the world community. Azerbaijan is fully committed to revanche, and relations between the two countries are poisonous to an almost slapstick degree. This is mostly amply demonstrated by the case of an Azeri military officer who murdered an Armenian counterpart while on a NATO exchange program in Hungary. Upon being sent back to Azerbaijan to serve the rest of his life sentence, he was immediately set free by Presidential decree, named a national hero, and given a free flat. Azerbaijan is backed to the hilt by Turkey, but is constrained by uncertainty over Russia’s possible response to overt aggression.

The two countries maintained a rough parity in military spending until the mid-2000s, with Armenia also benefitting from below market cost Russian weapon supplies. Since then, however, Azerbaijan has surged massively ahead, and its oil-fueled military spending is now higher than Armenia’s entire state budget. It now enjoys an approximately threefold preponderance in air and armor, and its equipment is on average more modern. Once relatively isolated, Azerbaijan now enjoys good relations with Turkey, Israel, the US (especially its neocon/corporatist nexus), and even Russia. A new war between them – absent Russian support – will almost certainly no longer be a repeat of the early 1990s when the Azeris suffered debacle after military debacle.

As a result, any even minimally sane Armenian administration will take great pains not to alienate Russia, even if they should come to power as a result of a color revolution. For a country surrounded by two avowed enemies (Azerbaijan and Turkey), a neutral (Georgia), and one lukewarm friend (Iran), alienating Russia would be so phenomenally stupid and counterproductive that it would be functionally close to treason. The discomfiting thing, though, is that said stupidity and chiliastic fanaticism is a feature of all Maidan-like movements in Eurasia. If the Washington Obkom commands them to sacrifice their national interests just to spite and undercut Russia, they will generally do so with pleasure – as happened in Saakashvili’s Georgia and (twice) in Maidanist Ukraine – since if worst comes to worst ,they can always retire to a comfortable position at Columbia University, while it is the ordinary people who are left to pick up the pieces.

 
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Continuing from my previous post (which focused mostly on trends), this one focuses exclusively on international comparisons as per the results of Transparency International’s Global Corruption Barometer survey of 2010-11. The graphs represent affirmative answers to the question of whether the respondent had paid a bribe in the past 12 months to each of 9 institutions if he had come into contact with them.

Is Russia the most corrupt of the BRICs?

This is the conventional wisdom, both as per the widely cited CPI as well as numerous pundits. Is it correct? Well, going by the best possibly objective measure of corruption – asking people whether they (or a member of their household) paid bribes in the past year – no, it isn’t. The honor goes to India. China is modestly less corrupt than Russia, while Brazil is basically a First World country in this respect.

brics-corruption-chart-institutions

Is Russia especially corrupt by Central-East European standards?

No, it isn’t. While it’s certainly more corrupt than average, that particular honor has to go to Azerbaijan. The Ukraine is systemically more corrupt than Russia, with a higher percentage of respondents reporting bribing all nine institutions. Even Lithuania is, on average, more corrupt than Russia. (So much for the pro-Western democracy automatically leading to cleanliness and transparency thesis).

cee-corruption-institutions

On the other hand, for the sake of honesty and consistency, one has to acknowledge that Saakashvili’s campaign against corruption in Georgia was a genuine and astoundingly successful achievement. In fact, if these polls are perfectly accurate, Georgia now has less “everyday” corruption than the US!

(Republished from Da Russophile by permission of author or representative)
 
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One of the staples of the neocon-Russophobe narrative is that Russia is alone in the world, utterly bereft of friends, left only with the likes of Nicaragua and Nauru to indulge it in its anachronistic “imperial fantasies”. Not really. Conflating the West with the world won’t change the fact that amongst the peoples of China, India, and most of the Middle East and Latin America – that is, the regions containing the bulk of the world’s population and future economic potential – Russia is actually viewed rather favorably. But what about peoples recently liberated from the oppressive, iron boots of Russian chauvinism – surely they dislike Russia? Not that simple. Some sure do – Estonians, Poles, West Ukrainians, Georgians… But plenty more don’t (Armenians, Bulgarians, East Ukrainians). It’s a complex picture of significant political and geopolitical import.

Back in November 2008, the VTsIOM polling site released some very detailed results about what peoples in the former Soviet Union think about each other. The first graph below asks people which countries they consider to be friends or allies of their country.

And these were the results. Some 74% of Belarussians, 58% of Ukrainians, 49% of Moldovans, 82% of Armenians, and 67-89% of Central Asians named Russia as a friend and ally. In contrast, only 11-17% in Georgia, Azerbaijan and Lithuania like Russia this way, but that is hardly surprising. (The Latvians are rather higher at 26%, presumably because of their large Russian minority, though far higher numbers, almost half of them, orient themselves with the other Baltic states).

The poll below is even more telling. It asks peoples in the former USSR to name which countries or blocs they would like to unite with, the main contenders being Russia, the EU, and “independence”.

Russians are mostly split between those favoring some kind of Slavic or Eurasian bloc (37% – Belarus, 29% – Ukraine, 24% – Kazakhstan), and Russia-as-is (32%); the European Union really isn’t that popular at 15%. This isn’t much different in Ukraine or Belarus. Some 56% of Belarussians and 47 of Ukrainians would like to unite with Russia, while 25% and 22% favor the EU, and 18% and 25% favor independence, respectively. Some 51% of Kazakhs favor Russia and 32% independence.

The Moldovans are equally split between Russia and the EU or independence (which in practical terms would mean the Romanian sphere of influence). The Azeris identify most strongly with Turkey, with 31% expressing a desire to join it, followed by 24% yearning for the EU and 24% for continued independence. Big majorities (65-73%) in the Central Asian nations of Tajikistan, Kyrgyzstan, and Uzbekistan would like to rejoin Russia, which is unsurprising given their relative underdevelopment and the relative success of Russification there. Georgia has always had a strong sense of national identity, including during the Soviet period, so by far the majority there wants independence (38%) or the EU (37%); only 10% wouldn’t mind falling back into Russia’s sphere of influence.

Why is this important? Because to some extent, even in semi-authoritarian systems, national leaders are to some extent beholden to popular sentiment. This is not to say, of course, that this is the only factor – an objective assessment of national interests (which are often synonymous with the interests of the ruling elites) almost always trumps anything else. But it does illustrate that the much ballyhooed “Russian resurgence” across the former USSR rests on firmer foundations than just political pressure or economic takeovers – of at least equal importance is that many of the peoples in its path back to regional hegemony aren’t actually that averse to it*.

PS. Another useful survey of attitudes towards Eurasian regional integration by Gallup: “In all countries except Azerbaijan, the median average wants at least an economic union across Eurasia”.

* The big exception is Georgia. This is where there is both a clash of primary geopolitical interests (the irreconcilability of Georgia westward path and Russia’s desire to anchor itself in the South Caucasus) and of civilizational values (AFAIK, the only social grouping in Georgia with a real pro-Russia tendency are the monarchist “People’s Orthodox Movement“). Coupled with simmering border tensions, it is probably not surprising that this developed into a flashpoint for armed conflict.

(Republished from Sublime Oblivion by permission of author or representative)
 
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paul-goble Mark Adomanis, who recently burst into the Russia-watching blogosphere like a fluffy pink grenade, has a series on “Who is the world’s worst Russia analyst”? (So far Stephen Blank and Leon Aron are in the running). Personally, I think that Ed Lucas would “win” hands down. However, since he’s already been exposed and discredited on this blog, – and I don’t have the time or will to flog dead horses – let’s instead take a closer look at Paul Goble, the oft-cited “Eurasia expert” whose output seems to consist entirely of recycling stories from marginal Russian commentators about the country’s imminent demographic apocalypse, breakup along ethnic lines, and takeover by Muslims. If one fine day some random Tatar blogger on LiveJournal decides to restore the Qasim Khanate, we’ll certainly hear about it on his blog… and guess what, we do!

Sure, he might be a fact-challenged Russophobe propagandist who worked for the CIA, Radio Liberty, and “democracy-promoting” NGO’s. Yes, he has extensive professional links to the Baltic nations and Azerbaijan. True, he is essentially an agent of a latter-day Promethean Project, the interwar Polish strategy to preempt the reemergence of a Eurasian empire by stirring up ethnic separatism in the Soviet space, a project now pursued by Washington and its proxies. That is all understandable and commendable – he serves US geopolitical aims, and geopolitics is profoundly amoral, so what’s the problem? Why am I writing a hit piece on Paul Goble? Simple. The utter hypocrisy and double standards I encountered in his Jan 2010 ‘No Ordinary Year’ for Azerbaijan article, in which the guy who incessantly condemns Russia’s human rights, takes to advising Western countries to refrain from reprimanding authoritarian Azerbaijan because the “level of anger about such criticism is so great” that it could lead to a “rebalancing of Azerbaijan’s foreign policy away from the West”. Or translated from quackademic neocon-speak into English, “They might be bastards – though nowhere near as bastardly as the Russians, I mean they even pay me my salary!, – but they are our bastards!”

Ali Novruzov, an Azeri human rights blogger, condemns this duplicity, characterizing Goble’s viewpoint as: “Don’t criticize Azerbaijan, no matter how many Emins and Adnans are beaten and jailed, how many grams of heroin are found in shoes of Eynulla Fatullayev, how many villages like Benaniyar is ransacked by government militia and its residents detained en mass, shut up you, Amnesty International and State Department, otherwise Azerbaijan will get angry, turn away from you and befriend Russia”.

He certainly has reason to be concerned. Even Freedom House, a “democracy measuring” organization that gives freedom cookies for being friendly with the US (bonus points if you have oil) and takes them away for being “anti-Western”, rates Azerbaijan as “unfree”, on the same level as despised Russia. Given that Azerbaijan hits the Full House in that it is 1) relatively pro-Western, 2) oil-rich, and 3) nestled in a crucial geopolitical region, there is cause to suspect that it would perform a lot worse on any objective analysis of political freedoms. We don’t even have to suspect this, we can just head over to Polity IV, – a vast research project that attempts to quantify levels of democratization in different countries since World War 2 – and observe that Azerbaijan scored -7 in 2008, on a scale from -10 to 10. This makes it a formal “autocracy”, the same as China (-6) or Iran (-7), – and far worse than its neighbors Russia (5), Armenia (5) or Georgia (6). No wonder, since unlike in Russia there is not even the simulacrum of political competition, and the Presidency is passed down along hereditary lines.

However, as alluded to at the beginning, hypocrisy, double standards, and Western chauvinism aren’t Goble’s only talents – they’re just the ones that roused my ire enough to write this piece. The fact of the matter is that article after article, Goble demonstrates the most fact-challenged, non-sequiturial, inane claptrap – and manages to get himself cited and listened to by major institutions which determine Western policy towards the region. Debunking his drivel is thus in any case long overdue.

1. Let’s start with this article (October 2008) on how the financial crisis was supposed to “compound” Russia’s demographic decline. It conveniently illustrates Goble’s OM – seek out the most sensational (and wrong) opinions in the Russian language media and reproduce them in his articles. By adding his label/name to them, they become citable to the rest of the Cold Warrior clique and even some respectable institutions that are ignorant of Goble’s incompetence and bias.

The financial crisis in the Russian Federation has pushed up the already high rates of mortality from heart and circulatory diseases there to third world levels, according to medical experts.

This sentence is wrong on so many levels. First, in Third World countries, mortality from heart/circulatory diseases is typically LOWER than in industrialized nations (since there are few older people and the population continues dying from infectious diseases, particularly amongst younger ages). Second, Russia has had one of the world’s highest levels of mortality from heart/circulatory diseases SINCE AT LEAST the 1980’s – it is NOT a recent development, as implied by Goble! Third, how the financial crisis figured into this I have absolutely no idea, since it only began to affect most Russians in October (the same month Goble’s article was written), and at which time the latest Russian demographic statistics only covered AUGUST 2008!

Yevgeny Chazov, one of Russia’s senior specialists on heart disease, told a Duma hearing that as a result of the difficult psycho-social circumstances and stresses from instability in the country, 1.3 million people – 56 percent of the total number of deaths there – now die from heart disease.

As has been the case FOR THE PAST 60 YEARS – i.e., a pattern of mortality heavily tilted towards heart disease – ever since the epidemiological revolution from 1930-50. And instability has been a feature of Russian life for the PAST 20 YEARS. Chazov was misquoted, or is a dummy; Goble, in any case, is certainly a dummy.

But if many speakers blamed the financial crisis or personal behavioral choices like smoking or alcohol consumption, one, Aleksandr Baranov, the vice president of the Academy of Medical Sciences, was prepared to blame the Russian government. Medical science knows how to lower mortality, he said, but we haven received an order from the powers that be.

There is a lot of investment in newly-equipped hospitals and clinics since 2007, and positive results are already showing. The current situation is far better than under Yeltsin or the early Putin years, when healthcare and social spending in general were cut and neglected, back when Russia’s robber barons wallowed in their ill-begotten billions with Western connivance. Baranov either lives under a rock, or wants to score rhetorical points. The financial crisis is irrelevant. Excessive alcohol consumption is what causes 1/3 of all Russia’s deaths. Reducing it is should be by far the #1 priority of any harm reduction strategy for Russia, and the “powers that be” have indeed recognized this and launched an anti-alcohol campaign. Nor surprisingly, Goble fails to mention any of this.

Finally, and most importantly, REAL LIFE HAS PROVED GOBLE TOTALLY, 200% WRONG. Contrary to the vision of demographic doom he peddled, deaths from cardio-vascular disease fell by 4.6% in 2009. Furthermore, RUSSIA SAW ITS FIRST POPULATION INCREASE IN 15 YEARS! And Goble’s predictable response to his utter failure at prediction?… “Russia’s Population Stabilization Only Temporary“.

2. Now let’s move on to the more general theme of Goble’s thesis on Russia – as an imperialistic country in rapid decline (demographic, cultural, etc), afflicted by an imminent, sub-Saharan scale AIDS epidemic, it will break up along its ethnic faultlines (Tatars, Bashkirs, Finno-Ugric peoples, Caucasians) and become majority Muslim by 2050. For instance, see a 2006 briefing he gave to Radio Liberty, which they summarized thus:

But Russia’s Muslims are bucking that trend. The fertility rate for Tatars living in Moscow, for example, is six children per woman, Goble said, while the Chechen and Ingush communities are averaging 10 children per woman. And hundreds of thousands of Muslims from Tajikistan, Uzbekistan and Kazakhstan have been flocking to Russia in search of work. Since 1989, Russia’s Muslim population has increased by 40 percent to about 25 million. By 2015, Muslims will make up a majority of Russia’s conscript army, and by 2020 a fifth of the population. “If nothing changes, in 30 years people of Muslim descent will definitely outnumber ethnic Russians,” Goble said.

Goble’s comments to RFERL made their way into the wider commentariat in 2006-07, such as this article in SFGate, Daniel Pipes, and certain plain demented Russophobe bloggers.

Unfortunately for Russophobes, Islamophobes, and Islamists alike (quite an adorable grouping, isn’t it?!), Goble’s projections are complete twaddle. In 2005, the year before Goble started spouting off about Russia’s Islamification, the homeland of Russia’s Tatars, Tatarstan (1.26), had a LOWER total fertility rate than the Russian average (1.29)! Where did Goble get the figure of 6 women per children amongst Tatar women in Moscow? Stormfront Russia?!

Likewise, the figure of 10 children per women amongst Muscovite Ingush and Chechen women is risible and should be laughed off by anyone with the smallest knowledge of demographic history. Not only did Ingushetia (1.56) and Chechnya (2.91) themselves have far lower figures in 2005, a total fertility rate of 10 children per woman HASN’T BEEN OBSERVED IN PRACTICALLY ANY COMMUNITY, EVER!! (Even in PRE-INDUSTRIAL times, the fertility rate typically flunctuated between 4-8 children per woman, depending on factors like urbanization and food affordability. The idea that it could be 10, or anyone near that number, in a modern metropolis, is ludicrous in the extreme).

As for the Muslim-takeover-by-2050ish claim, this is the usual bogus fallacy of linear extrapolation of the worst-case trends with total, cavalier disregard for positive trends (e.g., the convergence of ethnic Russian and Muslim fertility rates) and current day facts (e.g., that ethnic Russians still make up nearly 80% of the population, WHEREAS ONLY 4-6% OF THE POPULATION CONSIDER THEMSELVES TO BE MUSLIMS in opinion polls; that the fertility rates of the biggest Muslim ethnicities, Tatars and Bashkirs, is little different from the national average; and that Russia’s Muslims are far less religious than their counterparts in the Middle East and Western Europe alike).

In fact, sometimes I wonder if Goble really works for the CIA/Azerbaijan, or Russian Slavophile nationalists. He is certainly willing to cite the propaganda of the latter when it suits his purposes.

3. Now what about the imminent AIDS apocalypse, that will further decimate the ranks of Russia’s vodka-swilling, impotent hordes, making them too sick and too few to prevent Russia from disintegrating “into as many as 30 pieces by the middle of this century” (March 2009)? In his ominous-sounding article February 2009 article Russia’s HIV/AIDS Epidemic Enters New and More Dangerous Phase, Goble wrote:

In his briefing yesterday, Onishchenko did not provide much context for the numbers he reported. But in an interview with “Nauka i zhizn’,” Boris Denisov, a demographer at Moscow State University, suggested that figures like those Onishchenko provides are more disturbing than the public health chief in fact suggested (www.nkj.ru/archive/articles/15097/). …

The Moscow State researcher pointed to three aspects of the situation which suggest Russia has reached the tipping point regarding HIV/AIDS and that the epidemic is likely to result in an increasingly large number of deaths, something that will have a serious impact on the over-all demographic picture of that country.

First and foremost, 63 percent of the new cases in the Russian Federation last year were the result of sexual contact rather than intravenous drug use, a pattern that means the disease has now passed into the general population where it may spread more slowly but could potentially touch far more people and where an increasing share of its victims will be women.

This Eurasia “expert” can’t even copy from his Russian sources correctly. If you look at the source Goble cites, what Denisov actually said was that 63% of new FEMALE infections came from sexual contact in 2007, whereas 34% of OVERALL new infections came from heterosexual contact. If he’s so wrong on such basic facts, why should we have to listen to anything he says on Russia’s AIDS problem?

4. And it goes on and on. One of his most amusing/ridiculous articles was about how Putin was starving his miserable subjects (December 2009):

After seeing an improvement in caloric consumption since the 1990s, Russians are again consuming an average of only 2550 calories a day, an amount comparable to the amount provided by the diet given German POWs in Soviet camps at the end of 1941 and one that casts a shadow on that country’s demographic future. …

“According to the estimates of international experts,” the Russian leader said in striking language, “if the population goes hungry for two or more generations, a situation that in fact is quite characteristic for a large group of countries, then processes of physiological and intellectual degradation at the genetic level arise.”

What a load of claptrap even by Goble’s dismal standards. First, the recommended caloric intake for not very active adult men is around 2500 and around 2000 for adult women. Averaging it and taking into account children and the elderly, and the optimal for a nation where most people do office jobs is around 2100-2200 calories. In this respect Russia is far better off at its quoted 2550 calories, than the US is at 3700.

This is not to deny that there are problems. During crisis-wracked 2009, some 10% of Russians had difficulty buying food – slightly up from 9% in 2008, but massively down from the glorious prosperity of 1998-99, when some 36% of Russians could barely afford this privilege. (Incidentally, in the “free” Ukraine of 2009, the hungry indigent made up 35% of the population – i.e., the same as Russia ten years ago!).

But it gets worse. I simply have no words to describe the sheer inanity of the comparison between 2009 Russia and 1941 German POW’s. Really – how the fuck can he even take himself seriously after writing shit like this? Unless he means to say that during the 1990′s, when Russia’s economic policies were directed by a neoliberal cabal from Washington and many people really did go hungry, Yeltsin’s government treated Russians worse than Stalin treated soldiers who were fighting a war of extermination against Russians. So is Goble also a crypto-Stalinist, or just an asinine idiot?

(Not that Medvedev is the sharpest tool in the box either, if he actually spewed that insane drivel about genetic degradation. Since most of humanity has spent 99.9%+ of its entire history at near-subsistence levels of food consumption, why the hell isn’t everyone intellectually degraded like Goble or Medvedev?)

And the same shit goes on and on, Goble’s never-ending Groundhog Den’. All of Russia’s negatives are made apocalyptic, all its positives made into negatives.

Two examples of the latter. Take his befuddling assertion that the “Russian Federation will be more profoundly and negatively affected by global warming over the next 40 years than will any other country”. Come again? Sure the melting of Siberian permafrost might collapse a few buildings and fuck up some gas pipelines, but ALL serious analyses of global warming suggest that Russia will suffer FAR LESS than almost all other nations in a warmer world, and may even make big bank under moderate warming as its agriculture expands into Siberia, new energy and mineral deposits become accessible, and the Arctic becomes the world’s major trade region.

Second example. Medvedev declared a need for modernization and more accountability, and guess what – Russia is therefore a failing, decrepit state about to embark on perestroika 2.0! Ok, if you want (superficial) historical comparisons for Putvedev’s Russia, you could justify making it with Stolypin’s reforms, with Peter the Great’s “revolution from above”, even with the “Great Break” of 1929 if you’re feeling really bold and unafraid of being accused of reducing everything in Russian politics to Stalin. But the late 1980′s = today = WTF? Back then, the Soviet state truly was in a profound state of “imperial overstretch”, its citizens were disillusioned, and its mounting fiscal obligations were outrunning the resources and foreign currency at its disposal. Today’s Russia is a confident, rising Power, its elites are united, and a firm and consistent majority of Russians uphold the Putin system of illiberal statism (and if anything the main complaint you will hear from them is not that there is too much illiberality and statism, but too little!). Given such a tectonic shift in the very foundations of the Russian state during the past two decades, such vapid analogizing is superficial in the extreme, and indicative of an ideological decrepitude amongst the neocons that is every bit as profound as the one which afflicted the late Soviet Union.

So what is Goble’s game? He seems to be genuine in his bizarre beliefs – for instance, in an interview shortly after the 2008 South Ossetia War, he stated that Russia’s “illegal” violation of Georgia’s borders is “not in the interest of continued existence of the Russian Federation”, which will lead to “a more authoritarian and hence a more unstable and poor Russia in the future”. (Of course, how letting regional upstarts like Saakashvili rip off chunks from Russia’s southern underbelly would HELP the continued existence of the Russian Federation is not at all clear). Nonetheless, this kind of analysis seems highly favored by the lowest common denominator in the Russia-watching world – Paul Goble is, at least according to the number of tags assigned to him (“43 topics” at the time of this article’s writing), is the most popular outside authority at the infamous hate blog La Russophobe. He is also highly regarded at his former place of employment, the corrupt Radio Liberty.

Why? All these institutions are, in some way, and whether they realize it or not, pursuing a script first written in 1918 Poland – the Promethean Project to break up Russia and forever forestall its reemergence. What few of them realize is that 1) they are utterly ineffectual in this endeavor, and 2) their overt Russophobia, and close association with Russia’s “liberal” West-worshiping ass-lickers, ACTUALLY REINFORCES THE VERY SIEGE MENTALITY that the Kremlin shares with ordinary Russians. In other words, the lies and double standards espoused by people like Goble strengthen the very same “retrogressive” tendencies in Russia that they profess to loathe.

(Republished from Sublime Oblivion by permission of author or representative)
 
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I have long noted Russia’s resurgence back into the ranks of the leading Great Powers; I predicted that the global economic crisis will not have a long-term retarding impact on the Russian economy; and within the past year I have bought into Stratfor‘s idea that the defining narrative now in play in Eurasia is Russia’s intention to reconstruct its empire / sphere of influence / call-it-what-you-will in the post-Soviet space. This “resurgence” is advancing along several major fronts: geopolitical, economic, demographic, military, and ideological. In this post I will cover recent major news on the first four.

Ukraine Returns to the Empire?

The most consequential big event is the electoral victory of Viktor Yanukovych (35%) in the first round of the Ukrainian presidential elections, followed by Yulia Tymoshenko (25%), Serhiy Tihipko (13%), Arseniy Yatsenyuk (7%), and Viktor Yushchenko (5%) – a result that I called 100% accurately. Disillusioned with the incompetence, economic decline, and “anarchic stasis” of five years of Orange rule, polls indicate three times as many Ukrainians now favor a “strong leader” over a “democratic government”, so no wonder that the liberal ideologue Yushenko, though the only major Ukrainian politician who is consistent and sincere in his views, suffered a crushing defeat as the last true representative of the Westernizing “Orange” movement. This marks a threshold in the accelerating “regathering of the Russian lands”*.

Below is an electoral map of the first-round Ukrainian presidential elections. As is always the case, the urban, Russophone / Surzhyk-speaking, Russian Orthodox Church-affiliated south and east voted for the pro-Russian Yanukovych, head of the Party of Regions, while the more bucolic, Ukrainian-speaking, Kyiv Patriarchate-affiliated / Uniate center and west favored Tymoshenko.

[Click on map to enlarge].

This reflects the civilizational fault-line riveting Ukraine in half – commonly assumed to be along the Dnieper River, but more accurately, dividing the country into a pro-Russian south and south-east, the independence-minded Ukrainian center, and the pro-Western south-west.

Back in 2004, there was a clearly defined pro-Russian (Yanukovych) and pro-Western (Yushscenko) force. Yushscenko prevailed thanks to incompetent vote rigging on the part of the Party of Regions and a Western-supported popular uprising known as the Orange Revolution. The oranges are now regarded as rotten and nothing of the same sort can happen in 2010, since both Presidential contenders are now, for most purposes, beholden to Russia.

Yanukovych supports closer political and economic ties with Russia, would renounce NATO and EU accession plans, and enjoys the support of the Donbass oligarchs (including Ukraine’s richest man and king-maker, Rinat Akhmetov) and the senior managers of the Ukrainian military-industrial complex. There has been talk of a possible political union between United Russia (Russia’s “party of power”) and the Party of Regions, which will lay the institutional foundations for closer union with Russia, Belarus, and Kazakhstan, involving joint membership in Eurasec, a customs union, and even the CSTO. Finally, there have been rumors that Yanukovych will retain Yushenko in some minor political position, as a placebo for the west Ukrainians in order to nip secession movements in the bud and to undercut Tymoshenko’s support in a crucial region.

Tymoshenko is the unprincipled, chameleon-like politico par excellence, repeatedly reinventing herself from hard-hitting gas oligarch / robber baroness, to Lesya Ukrainka-inspired Orange liberal nationalist, to Putin-friendly aspiring Czarina. She has negotiated a well-publicized gas deal with Russia, took part in the sale of the major Ukrainian steelmaker, the Industrial Union of Donbass, to a Kremlin-friendly Russian industrial group, and publicly backed away from NATO membership. In doing this, she has tried to ride the geopolitical and emotional wave of the Russian resurgence, and succeeded in gaining the firm support of the central regions. However, although singularly charismatic in the gray world of Ukrainian politics, she has been unable to significantly penetrate into the Party of Regions electoral base. Coupled with low voter turnout in Ukraine’s western regions, due to their disillusionment with her newly-discovered Russophilia, this means that she will almost certainly lose out to Yanukovych in the second round of elections scheduled for February 7th** (assuming no extralegal interference from the 3000 strongarm Georgian “election observers” who are in Ukraine just for the girls, supposedly).

Geopolitically, this Ukrainian reversal marks declining US influence in the region and the imminent resurgence of Russia as a Eurasian hegemon. This is producing reverberations, with independence-minded countries throughout the region – Belarus, Kazakhstan, Azerbaijan, even Georgia – now accepting their eventual reintegration into Eurasia, or attempting to reach a new accommodation with the new reality of Russian power. Here is Peter Zeihan (Stratfor) on Ukraine’s Election and the Russian Resurgence:

These are all important factors for Moscow, but ultimately they pale before the only rationale that really matters: Ukraine is the only former Russian imperial territory that is both useful and has a natural barrier protecting it…. Without Ukraine, Russia is a desperately defensive power, lacking any natural defenses aside from sheer distance… The (quite realistic) Russian fear is that without Ukraine, the Europeans will pressure Russia along its entire western periphery, the Islamic world will pressure Russia along its entire southern periphery, the Chinese will pressure Russia along its southeastern periphery, and the Americans will pressure Russia wherever opportunity presents itself…

Ukraine by contrast has the Carpathians to its west, a handy little barrier that has deflected invaders of all stripes for millennia. These mountains defend Ukraine against tanks coming from the west as effectively as they protected the Balkans against Mongols attacking from the east. Having the Carpathians as a western border reduces Russia’s massive defensive burden. Most important, if Russia can redirect the resources it would have used for defensive purposes on the Ukrainian frontier — whether those resources be economic, intelligence, industrial, diplomatic or military — then Russia retains at least a modicum of offensive capability. And that modicum of offensive ability is more than enough to overmatch any of Russia’s neighbors (with the exception of China).

Incidentally, this episode brings to mind what the late political scientist Samuel Huntington wrote about the future of the “Orthodox civilization” in his well-known work The Clash of Civilizations and the Remaking of World Order. He predicted that Western attempts to orchestrate an artificial divide between these two members of the same civilization would have only deleterious results, perhaps resulting in a “Great Split” – quoting a Russian general, “Ukraine or rather Eastern Ukraine will come back in five, ten or fifteen years. Western Ukraine can go to hell!” Yet the more stable and likeliest arrangement would be the following:

The third and most likely scenario is that Ukraine will remain united, remain cleft, remain independent, and generally cooperate closely with Russia… Just as the [Franco-German relationship] provides the core of the European Union, the [Russian-Ukrainian relationship] is the core essential to unity in the Orthodox world.

With all major Ukrainian political blocs re-orientating themselves to Russia and the two countries increasing their cooperation in spheres ranging from politics to the military-industrial complex, Huntington’s prediction could be said to have been fulfilled.

PS. The (relative) silence about the total collapse of the Orange party in Ukraine on the part of normally Russophobic outlets has been deafening. Since everyone loves the West and liberal ideologues, how on Earth could this have happened? It’s like a bad dream. ;)

The Eurasian Energy Map Redrawn

Russia, China, Iran redraw energy map by the always-insightful Indian diplomat M K Bhadrakumar.

The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline on Wednesday connecting Iran’s northern Caspian region with Turkmenistan’s vast gas field may go unnoticed amid the Western media cacophony that it is “apocalypse now” for the Islamic regime in Tehran. The event sends strong messages for regional security. Within the space of three weeks, Turkmenistan has committed its entire gas exports to China, Russia and Iran. It has no urgent need of the pipelines that the United States and the European Union have been advancing. Are we hearing the faint notes of a Russia-China-Iran symphony? …

Second, Russia does not seem perturbed by China tapping into Central Asian energy. Europe’s need for Russian energy imports has dropped and Central Asian energy-producing countries are tapping China’s market. From the Russian point of view, China’s imports should not deprive it of energy (for its domestic consumption or exports). Russia has established deep enough presence in the Central Asian and Caspian energy sector to ensure it faces no energy shortage. What matters most to Russia is that its dominant role as Europe’s No 1 energy provider is not eroded. So long as the Central Asian countries have no pressing need for new US-backed trans-Caspian pipelines, Russia is satisfied.

During his recent visit to Ashgabat, Russian President Dmitry Medvedev normalized Russian-Turkmen energy ties. The restoration of ties with Turkmenistan is a major breakthrough for both countries. One, a frozen relationship is being resumed substantially, whereby Turkmenistan will maintain an annual supply of 30bcm to Russia. Two, to quote Medvedev, “For the first time in the history of Russian-Turkmen relations, gas supplies will be carried out based on a price formula that is absolutely in line with European gas market conditions.” Russian commentators say Gazprom will find it unprofitable to buy Turkmen gas and if Moscow has chosen to pay a high price, that is primarily because of its resolve not to leave gas that could be used in alternative pipelines, above all in the US-backed Nabucco project.

[Click on map to enlarge].

Third, contrary to Western propaganda, Ashgabat does not see the Chinese pipeline as a substitute for Gazprom. Russia’s pricing policy ensures that Ashgabat views Gazprom as an irreplaceable customer. The export price of the Turkmen gas to be sold to China is still under negotiation and the agreed price simply cannot match the Russian offer. Fourth, Russia and Turkmenistan reiterated their commitment to the Caspian Coastal Pipeline (which will run along the Caspian’s east coast toward Russia) with a capacity of 30bcm. Evidently, Russia hopes to cluster additional Central Asian gas from Turkmenistan (and Kazakhstan). Fifth, Moscow and Ashgabat agreed to build jointly an east-west pipeline connecting all Turkmen gas fields to a single network so that the pipelines leading toward Russia, Iran and China can draw from any of the fields.

Indeed, against the backdrop of the intensification of the US push toward Central Asia, Medvedev’s visit to Ashgabat impacted on regional security. At the joint press conference with Medvedev, Berdymukhammedov said the views of Turkmenistan and Russia on the regional processes, particularly in Central Asia and the Caspian region, were generally the same. He underlined that the two countries were of the view that the security of one cannot be achieved at the expense of the other. Medvedev agreed that there was similarity or unanimity between the two countries on issues related to security and confirmed their readiness to work together.

The United States’ pipeline diplomacy in the Caspian, which strove to bypass Russia, elbow out China and isolate Iran, has foundered. Russia is now planning to double its intake of Azerbaijani gas, which further cuts into the Western efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran is also emerging as a consumer of Azerbaijani gas. In December, Azerbaijan inked an agreement to deliver gas to Iran through the 1,400km Kazi-Magomed-Astara pipeline.

The “big picture” is that Russia’s South Stream and North Stream, which will supply gas to northern and southern Europe, have gained irreversible momentum. The stumbling blocks for North Stream have been cleared as Denmark (in October), Finland and Sweden (in November) and Germany (in December) approved the project from the environmental angle. The pipeline’s construction will commence in the spring.The $12-billion pipeline built jointly by Gazprom, Germany’s E.ON Ruhrgas and BASF-Wintershall, and the Dutch gas transportation firm Gasunie bypasses the Soviet-era transit routes via Ukraine, Poland and Belarus and runs from the northwestern Russian port of Vyborg to the German port of Greifswald along a 1,220km route under the Baltic Sea. The first leg of the project with a carrying capacity of 27.5bcm annually will be completed next year and the capacity will double by 2012. North Stream will profoundly affect the geopolitics of Eurasia, trans-Atlantic equations and Russia’s ties with Europe.

To be sure, 2009 proved to be a momentous year for the “energy war”. The Chinese pipeline inaugurated by President Hu Jintao on December 14; the oil terminal near the port city of Nakhodka in Russia’s far east inaugurated by Prime Minister Vladimir Putin on December 27 (which will be served by the mammoth $22-billion oil pipeline from the new fields in eastern Siberia leading to China and the Asia-Pacific markets); and the Iranian pipeline inaugurated by Ahmadinejad on January 6 – the energy map of Eurasia and the Caspian has been virtually redrawn.

And from Pipe dreams come true (bne):

Putin ordered construction to start on Nord Stream at the end of last year after the pipeline got the last environmental permits from Germany. And in January, Gazprom started building the first pumping station at the mouth of the first of two parallel pipes, which is supposed to be operational by 2011 with a capacity of 27.5bn cm/y. Thanks to Nord Stream, 2009 should be the last episode of the Russo-Ukraine “Gas for Cash” soap opera, which usually ends with Europe freezing. [AK: see also What difference would Nord Stream mean to European energy supply?].

South stream, the other pipeline project, will close the circle, but this pipeline has had a harder time getting off the drawing board and is competing with the EU-sponsored Nabucco pipeline, which is supposed to source Caspian region and Middle East gas and send it to Europe without crossing Russian soil. The problem is that there’s probably only enough demand to support one pipeline.

The R of the BRIC’s Remains Solid

Many of the economic predictions I made in Decoupling from the unwinding and Russia Economic Crisis are coming to fruition. See RUSSIA 2010: Slow build over first half to boom in 2011 (bne):

Russia was undoubtedly far more affected by the international crisis that started in September 2008 than anyone had expected – especially the Kremlin. It also stands out as the only one of the BRIC countries (Brazil, Russia, India, China) to show negative growth, leading to calls from the likes of analyst Anders Aslund to remove the “R” from BRIC.

This is rubbish, so Jim O’Neill, the man that coined the term in the first place, told bne at the 2009 International Monetary Fund (IMF) conference. “The only reason that Russia was hurt so badly was unlike the others, it borrowed heavily on the international capital markets and, of course, it is dependent on the price of oil.”

This was one of my major themes. When the Western financial system ground to a standstill in late 2008, the first countries to be cut off were the emerging markets. Having access to deep indigenous credit systems, the likes of Brazil and China were understandable far less affected than Russia, whose corporations had come to rely on Western intermediation of their credit inflows.

And in the longer term, excluding Russia from the BRIC’s makes little sense given its major growth potential (educated workforce, resource windfall, modernization policy, economic gains from global warming).

The Russian economy contracted by a bit less than 9% in 2009, but as the year came to a close it was already starting to recover – six months later than analysts were predicting at the start of the year. However, despite the pain of the crisis, the prospects for 2010 are looking much better than many had dared hope.

One should also note that this “pain” was insubstantial compared to the 1998 crisis, which is what many analysts were (unfavorably) comparing it to. While the percentage of the population barely making ends meet went up from 29% in July 1998 to 40% in December 1998, this figure remained stable at around 10% throughout the recent crisis. The main shift occurred amongst Russia’s “consumer class” (the ones who buy cars, PC’s, etc), whose percentage of the population tumbled by a quarter from 19% to 14%, and perhaps explains the reason for its large drop in GDP for 2009, i.e. the drop in large purchases. The silver lining is that this implies inequality has decreased during the crisis.

bne’s annual survey of investment bank outlooks suggests that growth will return to at least 4% and possibly go as high as 6% by the end of 2010. Inflation will remain low at about 5% while overnight rates at the Central Bank of Russia (CBR) will become real for the first time, finally giving the central bank a second tool to manage the economy and so be able to tackle Russia’s twin perennial headaches of inflation and ruble appreciation more effectively. …

The much discussed problems of the reappearance of a budget deficit will be much milder than appears now, coming in at something under 5% of GDP. This means the Kremlin will drastically reduce its international borrowing and has already cut the amount it needs to raise from $18bn to $10bn, but this could fall to $5bn or even nothing at all if oil prices rise to around $80 per barrel, which most of the banks bne surveyed believe will be the average price for 2010. Indeed the state will be able to raise all the money it needs to plug the deficit at home and pave the way for a return of private issuers to the international capital markets.

I predicted an oil price of around 90$ for 2010 (“oil prices in H1 will remain at 70-90$, and will rise to 90-110$ in H2″), so this is completely realistic considering my stellar record on oil price forecasting.

Finally, the RTS had a spectacular performance, rising over 120% in 2009 from its spring lows to end the year at about 1400. Unlike last year, the investment banks all agree that the index will end 2010 at around 1900-1950 and some say that it will reach and pass its all-time high of 2600 by 2011.

The themes for 2010 include: a turning inwards to growth driven by domestic demand, a push to introduce some real bottom-up economic reforms, a new focus on improving Russia’s productivity, increased inter-regional crediting, a shift towards closer ties with China, consolidation within many sectors and most important a gradual reassessment of Russia’s risk.

Again, much of this will not be new to S/O readers. I’ve already called the consolidation of Russia’s financial system, the shifting emphasis on domestic manufacturing, its decoupling from the insolvent Anglo-Saxon system, the imminent purge of corrupt siloviki, etc…

The collapse of the Russian economy in 2009 was dramatic, but emerging market crises are intrinsically less “sticky” than those in the West, largely because of the shallow penetration of debt in all its forms into the economy. As Liam Halligan, chief economist at Prosperity Capital Management, points out Russia’s fundamentals remain extremely strong and stand out from the rest of emerging Europe. And despite spending $200bn on rescue packages, the Kremlin still have $400bn in the bank, which was increasing again towards the end of the year, and remains the third richest country in the world after China and Japan, against the US and UK, which are 18th and 19th with a bit more than $80bn each. As the story going forward for the next several years will be all about the credit worthiness of countries, Russia finds itself, along with its newest buddy, China, in an enviable position.

Feel free to read the whole article.

Russia’s Population Grows in 2009

Russia registers its first year of population growth in 2009 since 1994.

Russia has registered the first population increase since the chaotic years which followed the fall of the Soviet Union, bucking a long-term decline that has dampened economic growth projections, officials said on Tuesday. Russia’s population increased by between 15,000 and 25,000 to more than 141.9 million in 2009, the first annual increase since 1995, Health Minister Tatyana Golikova told a meeting in the Kremlin with President Dmitry Medvedev. …

Russia’s dire population forecasts — some of which predict sharp declines over the next few decades — are a key function of economic predictions which see Russia growing much slower over the next 20 years than the other BRIC countries; China, Brazil and India.

a) None of this should be too surprising to my readers, given that back in mid-2008 I predicted:

I will make some concrete, falsifiable demographic predictions (something Russophobes going on about Russia’s impending demographic doom wisely avoid doing).

  1. Russia will see positive population growth starting from 2010 at the latest.

I was totally correct, and even better, a year early! (well, just about). Meanwhile, the Russophobe commentariat continues their happy life in la la land.

b) Russia’s approaching demographic doom is a major staple of pessimist and Russophobe assessments of its future prospects in areas like economic modernization and geopolitical power. To the contrary, far from the steep fall produced by most demographic models, a more realistic scenario is for Russia’s population to stagnate or grow very slowly in the next two decades, as a fall in the numbers of women in child-bearing age is balanced out by rising fertility rates and falling mortality rates. See 10 Myths about Russia’s Demography for my detailed exposition of Russia’s demographic prospects.

The Volatile Caucasus

Saakashvili’s megalomania probes new depths, so no wonder the opposition – who are no Russophiles, it should be said – are holding their noses and reaching out to their erstwhile enemy. Taking a cue from the Party of Regions:

The leader of Georgian opposition party the Movement for a Fair Georgia, former Prime Minister Zurab Nogaideli, said Jan. 26 that his party would like to form a partnership with United Russia, the ruling party in Russia led by Prime Minister Vladimir Putin.

See also this Russian-language report, Танки августа (“Tanks of August”) analyzing the buildup to, chronology, and course of the 2008 South Ossetian War, which is called “The Five Day War” in this publication. This is no pro-Kremlin propaganda, the Russian Army receives acerbic criticism for its performance.

However, most interesting, at least for me, was the chapter “Настоящее и будущее грузино-российского конфликта. Военный аспект” (pp. 85-109), a serious analysis of post-war dynamics in the balance of power between the two countries, is worth checking out. I’ll summarize it here.

a) Though Georgian military spending has fallen somewhat from its 2007-08 high of 8% of GDP, its military potential has continued growing at a fast rate and now exceeds its level in August 2008. Anti-partisan training has been deemphasized in favor of preparation for a hot conventional war against Russia, especially emphasizing the anti-tank and air defense aspects; battle-hardened troops have been returned from Iraq, the reserves system is being reformed, and military contracts concluded in 2007-08 are now bringing in masses of new Soviet and Israeli military equipment from abroad. The authors believe it is not unrealistic that Georgia will make another attempt at a military resolution of the Ossetian issue after 2011.

b) Counter-intuitively, the authors believe that though the revolutionary reforms now being implemented by the Russian Army will enhance its long-term potential, in the short-term there will be a certain loss of effectiveness due to the ouster of experienced officers, a shortfall which will not be immediately made up by the extensive NCO-training program which is only now getting started. The effective number of Motor Rifle and Tank battalions in the Caucasus military region has fallen from 65 in August 2008 to just 40 at end-2009, albeit their quality has been somewhat improved thanks to the rapid acquisition of modernized tanks and helicopters. Furthermore, their forward-positioning in Abkhazian and S. Ossetian bases will give them an advantage missing in 2008.

c) Finally, the authors also note the growing military superiority of Azerbaijan over Armenia. The two countries hold a long grudge over Armenia’s occupation of the ethnically-Armenian enclave of Nagorno-Karabakh. Revenues from the BTC pipeline have enabled Azerbaijan to massively increase its military potential, acquiring a panoply of modernized late-Soviet and Israeli weapons systems. Azerbaijan’s military budget now exceeds the entire Armenian state budget. However, Armenia is allied with Russia through the CSTO, hosts a big Russian base, and receives subsidized weapons systems from Russia, as well as some old Soviet stocks for free. The authors note that due to ethnic majority-Armenian unrest in the southern Georgian province of Samtskhe-Javakheti (which I noted in my post on the possibility of a new Russia-Georgia war), Russia would be wise to increase its military presence in Armenia and accelerate the modernization of the Armenian armed forces in order to be able to exploit Georgia’s soft southern underbelly in a new war***.

Power Projection & Military Modernization

Two more military things. Frustrated with the sorry state of Russian military shipbuilding, the Kremlin is considering the French Mistral, a helicopter carrier & amphibious ship. Such an acquisition will enhance two important Russian capabilities.

First, if deployed in the Barents Sea, it will reinforce its anti-submarine warfare (ASW) capabilities, which are growing in importance with its increasing strategic interests in the Arctic linked to the region’s oil-and-gas deposits and potential trade opportunities as the sea-ice melt accelerates. Second, these vessels would enable Russia to insert crack military forces behind enemy lines much quicker than had previously been possible. In the event of a potential conflict with Georgia or the Baltics, this capability will be incredibly valuable.

EDIT to add PAK-FA news: Second, Russia unveiled the PAK-FA prototype fighter, the first 5th-generation fighter to be produced outside the US. Below are some informative articles on the subject.

[youtube=http://www.youtube.com/watch?v=ovoo-n9b5Bs&w=425&h=344]

Despite delays and questions over its effectiveness, Russia being the 2nd nation in the world to test a 5th generation fighter after the US does prove that elements of the Russian MIC, especially military aviation, remain robust and capable of innovation. (Besides, one shouldn’t neglect to mention that the American MIC also has its own problems: cost overruns, questions over the JSF’s real utility, etc). As pointed out in earlier posts, Russia’s main challenge is now rooting out corruption and modernizing the MIC’s machine tools and management culture to enable high-volume production of state-of-the-art military equipment such as the PAK-FA, so as to modernize its armed forces by 2020 without returning to a Soviet-style militarized economy.

* To forestall criticism, this is not, of course, an expression of “Great Russian chauvinism”, but a historical reference to the state centralization and “gathering of the Russian lands” undertaken by Muscovy from the time of Ivan III (1462-1505). This formed the palimpsest for all future restorations of Russia’s empire, including the current one.

** Why Yanukovych will almost certainly win the Ukrainian Presidency – just a matter of beans-counting. In the first round, he got 35%, Tymoshenko got 25%. Yanukovych will net many of the Tihipko voters (13%), while Tymoshenko will get support from some of the Yatsenyuk (7%) and Yushenko (5%) voters. The rest of the electorate will split roughly in half, most likely. But even if Tymoshenko gets very lucky, it is hard to see her closing the awning 10% gap separating her from Yanukovych in the first round.

*** I would also add that though unlikely, it is not impossible that Armenia and Azerbaijan will fight a new war in the near future, as the Azeris despair of their long-term chances of ever reclaiming Nagorno-Karabakh in the face of Turkish-Armenian reconciliation and the hard reality of rising Russian power over the Caucasus. They could yet make a desperate gamble, perhaps in the context of the chaos unleashed by a US-Israeli war with Iran and its proxies. That said, the far likelier possibility is that the realistic-minded President Aliyev will reconcile himself to Russia’s growing power over the Caucasus.

(Republished from Sublime Oblivion by permission of author or representative)
 
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I would like to wish all Sublime Oblivion readers a very happy and successful New Year. One of my major motivations for writing is getting comments and feedback, so please continue – the more you inflate my ego, the more time I will feel compelled to spend on the blog. ;)

Year in Review: 2009

All in all, 2009 was rather less interesting that 2008, which saw three thresholds of portentous significance – the final peaking of global oil production, the discovery of the magnitude of the Arctic methane meltdown, and the collapse (and partial recovery, abetted by prodigious state credit infusions) of the global financial system. Simultaneously, Russia, China, and other rising powers have begun presenting a rising challenge to Western hegemony on an ever broader front. The key trends of 2009, whether leaders and pundits recognized it or not, were about managing the consequences and realities of 2008.

From the American viewpoint, 2009 was the year of Obama. He realized that the “cowboy diplomacy” pursued by Bush alienated key allies on perceived vital issues (Afghanistan, stimulus spending, etc), and sought to reinvigorate relations with its traditional allies and reach out to its enemies. Though publics tended to be enthusiastic, governments were not as moved; the European states continue stalling on commitments to Afghanistan, whereas Russia, China, and the Muslim world have decidedly spurned him on the basis that actions speak louder than words. They have a point. Obama has essentially continued post-2006 Bush policies based on a “realist” appraisal of American interests – prodigal military spending, “occupation” of the Middle East (as perceived by Muslims), support for Israel, resistance against Russian neo-imperial ambitions for the former Soviet space, engaging with China without reference to human rights, supporting sanctions against Iran while leaving “all options on the table”, etc. This creates a certain impression of schizophrenia to the administration’s actions – popular abroad but spurned by friend and foe; repudiating the Bush legacy but continuing it in practice; talking of reforming healthcare and closing Guantanamo, but stymied by discredited Republicans at home. It’s all a muddle.

So is the bind that the US is stuck in regarding Iran. Officially it supports gasoline sanctions, but they are unlikely to have much effect if Russia circumvents them (which it is likely to do given its continued geopolitical jockeying with the US) – and even if Russia acquiesces to the sanctions, enforcing the sanctions will be difficult. Israel is a loose cannon. It cannot allow the possibility of a radical Islamic regime acquiring a nuclear capability, and will do everything – including striking its nuclear installations – to prevent it. As a consequence, the US will be drawn in because of their fears that in the aftermath, the Iranian military will mine the Strait of Hormuz and interdict the Gulf oil shipping which carries 20% of world oil production. This may usher in a general Middle East war whose geopolitical, economic, and financial ramifications may veer wildly out of control, possibly culminating in the fall of Pax Americana itself. In both the US and Iran, domestic forces are driving the two countries to a confrontation. This is a geopolitical predicament that is becoming increasingly clear, with the US issuing greater threats and Iran intensifying its nuclear brinkmanship in the last few months of 2009.

Even as the US was focused on the Middle East, the Kremlin has been using the resultant “window of opportunity” to continue reasserting its influence over the former Soviet space – expanding the scope of the CSTO military alliance, strengthening ties with Ukraine’s Russia-friendly political forces, pressuring Uzbekistan with a new military base in Kyrgyzstan, and making a customs union with Belarus and Kazakhstan. Though its economic crisis was deep, it did not have major negative internal effects either humanitarian or political, which put Russia in a yet stronger position relative to its Near Abroad. With the Kremlin’s simultaneous strengthening of internal control (e.g. over the oligarchs), Russia continued to return to its past-and-future as a Eurasian empire.

Driven by desperate credit infusions and fiscal spending, the US and Europe began to experience an anemic recovery in mid-2009, – but one that cannot be sustained, especially since the resource fueling it (yes, oil) has peaked, and will decline at an accelerating pace after 2010. The price of recovery is massive new debt, transferred from private to sovereign hands, and a widening of the same imbalances that caused the crisis in the first place. Yet a far worse example of eating the seed corn is the debacle of the Copenhagen summit, where the nations of the world failed to agree on emissions cuts to check runaway global warming. We need to limit the temperature rise to no more than 2C, because after that there are numerous tipping points that will make an accelerating Klimakatastrophe inevitable; this implies that at the minimum, global emissions should peak by 2015, and decline by 80% by 2050 over 1990 levels. The commitments made at Copenhagen are feeble, more so even than Kyoto – largely thanks to Chinese sabotage. (Well, at least we didn’t die of swine flu). In related news, the increasing habitability of Greenland has driven it to make further strides towards declaring formal independence from Denmark.

Riding roughshod over Ireland and the Czech Republic, the EU finally passed the Lisbon Treaty, which gives the large, pro-strong-Europe countries like Germany, France, and Italy far more voting power relative to Euroskeptic nations. Should the Franco-German bloc wish, it now has many of the tools to dominate Europe and present an economic and cultural challenge to US hegemony; whether they will manage to do so is very much open to question, given the rising pressures on European unity presented by trends such as: 1) the rising power of France relative to Germany and 2) the deep-grained economic predicaments of the Mediterranean Rim.D

The skylines lit up at dead of night, the air-conditioning systems cooling empty hotels in the desert, and artificial light in the middle of the day all have something both demented and admirable about them: the mindless luxury of a rich civilization, and yet of a civilization perhaps as scared to see the lights go out as was the hunter in his primitive night. – Baudrillard

There is perhaps no better metaphor for the spectacle of Dubai going bankrupt just as it completed the greatest monument to petro-fueled Gulf vanity, the 818-meter tall Burj Dubai.

Though the Gulf states have increased moves to band together in a customs union, and are slowly but surely transferring their alliance to China – the country likely destined to be the last hegemonic power of the industrial age.

Edit 1/5/09 – There is a better metaphor (or personification?), and best of all it was probably unwitting. From Facebook: Vilhelm Konnander has just (LOL) read today’s “The National” about Burj Dubai: “The tallest tower in the world, its feet anchored in the UAE and its crown floating in the clouds, was inaugurated in an eruption of fireworks last night.”

2010 Predictions

1) World economy continues an anemic recovery, though there are significant risks to the downside.

2) Obama’s honeymoon period is over, his approval ratings are on the downslide, and his major domestic and foreign policy initiatives have almost all failed. Republicans will carry the mid-term elections in 2010, but there is a strong mood of apathy and a sense that what is really needed is a new party, a new politics – though this will only start playing a great role in the post-Obama, or post-2012, era. Rising violence in Iraq (perhaps abetted by Iran, to demonstrate to the US the dangers of attacking it); a false quiet in Afghanistan, as the Taleban limit activity to conserve their strength while the US presence in Afghanistan is strong (they know the Americans will retreat the bulk of their forces soon enough anyway).

In the UK, Gordon Brown (New Labour) will almost certainly lose to James Cameron (Conservatives) in the mid-2010 elections.

3) Possible wars. Foremost looms the shadow of Iran and the bomb, of course. I doubt the US will attack in 2010, unless Israel forces its hand. It will first exhaust its options with sanctions, etc, which will almost certainly be ineffective. The Iranian IRGC-linked hardliners in power (figurehead – Ahmadinejad), under pressure from the Rafsanjani / Mousavi clerical clan, will not yield, and will remain defiant internationally to justify increasing their hold on internal power. There will be tension, but no war – especially since the US still needs to develop its Massive Ordnance Penetrator, the next-generation bunker-buster, to have a high level of confidence that a bombing raid on Iranian nuclear installations have truly done their job. (True, postponing the strike to 2011 or 2012 makes the world economy more vulnerable to disruption because oil prices will be higher then and oil supplies tighter, but then again I highly doubt the administration takes “peak oil” into consideration in its strategic planning). Likelihood: 25%; Severity: 6.

What is much more likely to happen is a new war between Israel and Hezbollah. Since 2006, Israel may have infiltrated Hezbollah, aided by internal splits within the organization, and has taken stock of lessons learned during the unsuccessful last war; it may now want to send a signal to Iran and preemptively incapacitate one of its most effective means for retaliating against Israel into the bargain. Israeli special forces are more than capable of producing a false flag, even if Hezbollah refrains from doing it for them. Furthermore, Hezbollah is causing Saudi Arabia trouble by sending fighters and weapons to the Shia insurgency in Yemen fighting the Saudis; SA would appreciate an Israeli crippling attack on Hezbollah, and may give concessions to Israel, such as allowing it to use its airspace in a strike against Iran (the US has said it will shoot down Israeli planes flying to Iran over Iraq). This further increases the incentives for Israel to pummel Hezbollah, this time round with a real, large-scale ground invasion. Likelihood: 50%; Severity: 3.

A new Russia-Georgia war remains a serious possibility, if Saakashvili uses his rapidly rebuilding military forces to make another megalomaniac lunge at reclaiming South Ossetia, or if Russia orchestrates a false flag to give itself the justification to roll in the tanks to Tbilisi and set up a puppet regime. In the latter case, the “new cold war” atmosphere of August 2008 will begin to appear to be distinctly jovial. Likelihood: 10%; Severity: 4.

Finally, we should note that a) Azerbaijan and Armenia have a bitter rivalry, cultural and geographic over the Armenian-populated and -occupied Azeri enclave of Nagorno-Karabakh, b) though it lost a war to Armenia in the early 1990′s, Azerbaijan has been implementing a rapid military modernization since 2006 with the help of oil pipeline transit revenue from the BTC, and its military budget alone is now equivalent to Armenia’s entire state budget, c) Armenia and Turkey are slowly moving towards a reconciliation under Russian brokerage, which threatens Azerbaijan’s strategic position, and d) Armenian-Azeri talks over Nagorno-Karabakh have recently collapsed. The obstacle to war is that Turkey and the US, though friendly with Azerbaijan, are very unlikely to give it direct support; but Armenia is in the CSTO military alliance with Russia. An Azeri attack will almost certainly lead to a decisive Russian response, furthermore there is a large Russian military base in Gyumri, Armenia. Unlike Saakashvili, Aliyev is a rational leader, and for now Russian and Turkey have a mutual interest in keeping things contained. That said, the possibility of a new war cannot be fully discounted – especially if it is simultaneous with the chaos unleashed by a US-Israeli war with Iran and its proxies.

Expect instability, but not collapse, in Pakistan, Egypt, Mexico, some or all of the Baltic states. Despite the occasional rhetoric, there is very little chance of a new Korean war, a Venezuela-Colombia war, or an Israel-Syria war.

4) Given that Russia’s demography has continued improving even in 2009, a year of deep economic contraction and scare stories (false) of an abortion apocalypse, it is almost certain that it will continue improving further in 2010 and that the year will see the first year of positive population growth since 1994 (or 2009). Birth rate = 12.5-13.0 (reasons), Death rate = 13.5-14.0 (a reason), Net Migration = 1.5-2.0, all / 1000. Economic growth of around 3-5% of GDP sounds reasonable. Lots of privatizations and corruption investigations as part of the Surkov clan’s struggle against the siliviki and “their” state companies. Ukraine under Yanukovych will join Eurasec or the Russia-Belarus-Kazakhstan customs union, but is yet unlikely to join the CSTO or give Russian 2nd language status.

5) Oil production in 2010 will be around the same as 2009 – increased demand will collide with geological depletion to keep output stable. Oil prices in H1 will remain at 70-90$, and will rise to 90-110$ in H2 on the basis that background geological depletion will be cancelled out by OPEC going back on its 2009 production cuts to fuel the ongoing global recovery. Of course, if there are serious confrontations with Iran, the oil price will veer right off the historical charts.

6) No major AGW-related physical events (except for a heatwave or two), given that solar irradiation remains at an unusually long trough – expect the fireworks by 2012-15. AGW skepticism will become more popular in the wake of Climategate. China and its proxies will prevent any more significant action being taken at the next UN climate change summit in Mexico, than was “achieved” in Copenhagen. By year-end the performance of the world’s top supercomputer will exceed 3 petaflops (repeat of 2009 prediction).

7) China’s growth will slow from around 8% in 2009, to perhaps 5% in 2010 as it cuts back on the loose credit in recognition of the problems this is going to create further down the line (this is already happening). Otherwise, expect China to continue keeping a low profile as the US insists on shooting itself in the foot.

What about the 2009 Predictions?

How did my previous set of 2009 predictions go?

1) Correct about the American H2 2009 stimulus-boosted recovery, though too pessimistic about its strength. That said, doesn’t change the fact it’s unsustainable, even in the medium-term.

2) Correct about the end of deflation, resumption of credit flows, and rebounding commodities.

3) I was completely, 100%, totally right on my oil price predictions.

However, an incipient global recovery in the second half will result in a rebound in oil prices from around 40-50$ per barrel in the first half, to 60-80$ in the second.

Not so much on food, admittedly.

4) Right on Germany’s and Japan’s steep GDP declines, not so much on China’s anemic growth – massive credit expansion and fiscal stimulus in the People’s Republic has resulted in the building of ever more unneeded capacity, resulting in a growth rate of around 8% instead of the predicted 2%. Correct on rising protectionism, and the economic collapses in the Baltics and Ukraine.

5) The “flight to safety” ended, and as predicted the US $ weakened relative to the Euro (1 Euro = 1.41$ on Jan 1st 2009, = 1.46$ on Jan 1st 2010, now with an upward rather than a downward trend). The pattern for the yen has been similar. The latest CBO figures suggest that the US budget deficit will be 9.9% of GDP for 2009, within my predicted band of 8-13%.

6) Very wrong on Russia’s GDP growth – instead of 1%, it will decline by around 7-9%. I misunderestimated the depth of its consumers’ and companies’ reliance on credit, and the extent of its credit crunch. Nonetheless, the core of what I predicted, such as the declining influence of the oligarchs and the lack of any significant fall in real wellbeing, has been correct. There have been no serious political challenges to Putvedev, as Russia’s ruling tandem retain extremely high approval ratings. And as predicted, the RTS has recovered to above 1000 (to around 1500 in fact).

7) Wrong that Yushenko and Saakashvili would not survive 2009 as political leaders. Well, Yushenko will almost certainly (95%+) be kicked out of the Presidency in the coming Ukrainian elections, probably in favor of Yanukovych. Saakashvili, with his deepening megalomania, has managed to hang on, despite spirited defiance from the opposition and an attempted military coup. If he survived 2009, most likely he will survive for a few years more.

8) My optimistic forecasts on Russia’s demography, which bucked the conventional “wisdom”, have been fully validated, and in the case of the death rate even substantially superseded.

In Russia, the birth rate will be between 11.5 and 12.5 / 1000, the death rate at 14.5 and 15.5 / 1000 and net migration will fall substantially to 0.5 / 1000. For comparison, the figures for the first ten months of 2008 were 12.1, 14.8 and 1.7 respectively.

According to Rosstat figures for Jan-Nov 2009, the birth rate was 12.4, the death rate was 14.1, and the net migration rate actually rose to 1.8 / 1000 during Jan-Oct.

9) No major new wars.

10) Slightly wrong on supercomputer performance, totally correct on oil production fall. Contrary to prediction, no major AGW physical “event”.

(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.