Putin enjoys the popcorn as Europe freezes

By in Australian LNG, Commodities

| 32 comments

Ah Europe. The cheese-eating surrender monkeys of geopolitics. It means well but without any kind of force projection is completely useless.

Witness Vladimir Putin now running rings around it on energy:

“Let’s think through possibly increasing supply in the market, only we need to do it carefully. Settle with Gazprom and talk it over,” Putin said. “This speculative craze doesn’t do us any good.”

Of course, all Putin is doing is pointing out what he is really doing:

Yes, Vlad can fix it. When he gets what he wants.

Houses and Holes
Latest posts by Houses and Holes (see all)

Comments

    • rustyMEMBER

      Exactly… the solution for higher prices is higher prices! Europe wants gas for free, and that simply doesn’t exist. Where is this green transition?

      • rustyMEMBER

        Crisis solved… Gas prices swing wildly as Putin vows to boost supplies https://www.telegraph.co.uk/business/2021/10/06/state-aid-tax-cuts-table-brussels-battles-surging-gas-prices/ – Month-ahead natural gas contracts surged 40pc on Wednesday morning, climbing above 400p a them for the first time in Britain, as politicians on the Continent pledged to take action to cushion the impact. They fell back below 300p after the Russian president said he would seek to solve the crisis by pumping more gas into the European Union… Prices have been climbing for months due to a global supply crunch triggered by factors ranging from lower output in the North Sea, higher demand in Brazil and Asia, and constraints on supply in Russia… British Steel, the country’s second-biggest producer, placed a £25 per ton tariff on steel to help it cope with higher energy prices and added £5 per ton to cover rising transport costs.

  5. MathiasMEMBER

    Most EU’s I speak to, tell me that ” Europe will be fine. We are smarter then the egotistical Americans. We have better social equality in our countrys. “.

    Hmm… China might change that.

  6. C'est de la folieMEMBER

    The only thing holding up as much Russian gas into Europe as the Europeans want is Europe.

    They will have a point, when being averse to doing a deal with the Russians. Putin is fronting a dictatorship, he is involved in Eastern Ukraine, and he was quick to put Crimea back on Russia’s side of the border, legal process in Russia is often shaky, the system did kill Sergei Magnitsky, the Russians have splashed Novichok around in the UK and did attempt to poison Navalny’s underpants. The Russians can be serious work.

    But, on the other side of the coin. They do pride themselves on being the last word on a ‘we deliver, on time, every time’ mindset, particularly with gas – and they do. The only cutoffs to supply in Europe have been outside Russia (almost all Ukraine). And a lot of the middle men and traders in Europe, and more than a few European politicians too one should add, plus the Davos set, are no slouches when it comes to being ugly people. It was the Europeans who sold off all of their storage capacity to Russian interests.

    Then, one could for a moment consider – who else is the EU going to buy gas from? The Sauds or the Arabs – and their approaches to autocracy, law and kleptocracy? The Nigerians, Libya, Algeria? Turkmenistan? Iran? The Russians shape up as positively progressive and liberal, and plausibly ‘democratic’ when viewed alongside any of those.

    Right at this moment Russia has about the soundest budget position of almost any large nation on the planet.

    It has spent a generation since Putins advent to president…..

    1. Paying off Paris Club debt years before due.

    2. Limiting the scope of its oligarchs to pawn Russian production assets (primarily resources) for access to global capital markets

    3. Had access to global capital markets constricted even further by financial sanctions stemming from the Sergei Magnitisky/Crimea/Involvement with Eastern Ukraine imbroglio – this means that nobody in Russia has been borrowing, apart from minor borrowings by the State, on global capital markets.

    4. Throughout the period it has run a reasonably austere federal budget with the incoming revenues dominated by oil and gas revenues, and outlays pared or loosened to reflect that – but generally against a surprisingly conservative or tight budget setting.

    5. It has clamped/is still clamping down on the ability of people within Russia to send money outside Russia.

    6. It has been salting away energy revenues in a diverse array of capital assets with a skew against the US dollar. It has sizeable reserves of gold (and considerable reserves of gold which appear to be ‘off’ any books)

    My take is this. Putin is up for reelection as President in 2024. He may be a corruption beneficiary par excellence and the range of palaces ostensibly owned by Russian businessmen who appear to be owning these for his personal use may be impressive, but he is respected by the Russian punterariat (if not always liked). These tend to have a view that outsiders – be they the US, Europe, or even China, wouldn’t mind an enfeebled Russia and also tend to the view that a corrupt regime at home is passable provided it isn’t weak, and possibly threatenable by bigger powerful nations.

    The Russians have run heavier than anyone on oil and gas exports and tend to be fairly overt in a ‘sell it now while it is there to be sold’ mindset, often quite aware that the post fossil fuel age isn’t that far away. They are making preparations for that – an era in which Russian water could be particularly valuable, and in which any amount of global warming could bring lots of potentially arable land in Russia into greater play. The Russians tend to be only a border or two away from an awful lot of nations who have issues with Russia, and do tend to be alert to instability nearby.

    You could say what you like about VVP but he has restored a Russian sense of itself to Russians. It is deeply conservative and sometimes looks ugly to those outside (heavy security, profoundly corrupt, and not particularly LGBTI friendly), but tends to look OK inside Russia except for those aspiring to become like other ‘Western’ nations and aspiring to some greater level of ‘liberty’. Many Russians would like some of that liberty but many are also aware that a generations worth of NeoLiberalism has placed politics in the pockets of the 1% in the ‘West’ while the oligarchs in Russia still Jump when VVP says jump in Russia – and while it may be a vast kleptocracy it is a kleptocracy which has to appear politically and administratively competent. Quality of life for the punterariat may be lesser than for a lot of their counterparts in other nations, but has generally been on the up from about the moment VVP came to power – not as up as it could have been, but up.

    In 2024 he is about 71. 71 years old is very old for Russian men (the women have an average life expectancy in their high 70s, the men in their low 60s). The revised Russian constitution enables him to go for another 6 year term. The end of that would have him at 77. That may be OK for US Presidents but Russians tend to have memories of Brezhnev and Chernenko, let alone Yeltsin, running out of puff and coherence at about that vintage and will be wary of any sign of that with VVP.

    The current base case would be that he will win the 2024 Presidential election in a canter, and will hand over to someone in that term on his terms – who suits him and looks capable of holding the whole box and dice together. Russia traditionally has issues with instability in the concluding years of anyones reign and their handovers to successor individuals. The base assumption would be that the US and Europeans (mainly Davos set) wouldn’t hesitate a moment to fund whatever pawn they could get up as Russian president. There wouldnt be much doubt that Chinese money wouldn’t hesitate that long either.

    Russia has issues getting gas to Europe (vis Ukraine) and has been screwed to the floor in long term crude and gas contracts with China. Their coal export capacity is hampered a fair bit by Geography. Most of their coal is a long way from being shippable and needs to use trains – mainly to China. The difference between Russian coal exports this year and 2019 or 2020 is roughly circa 3-4 million tonnes a month – which is actually offset by Australia. I wouldn’t actually put it past VVP to note that the Chinese have their issues with Australia and take a little opportunity to just firm up on Russia vis a vis the Chinese (noting there have been a few little niggles in Central Asia of late – and with much Russian coal entering China by rail).

    VVP would also be well alert to instability in the ‘Western’ world and more broadly brought about by moribund economies, debt and dud employment serfdom, and the quality of life issues that can go with that, and the implications of the internet of things. He has made a great play of the Russian internet of things being in Russian hands, and is well aware that Russian consumer demand would be a serious attraction for a lot of international producers – and limits that access to those that play by Russia’s game standards. A very very major issue in Russia is demographics – with Russia’s population going backwards – and his own advisors have told him clearly the only way to get the turnaround required there is to bring about major quality of life improvements. There would be little doubt that he would like a stash set aside to both make himself popular in the lead up to the next election, possibly to underpin a sort of ’golden era’ in the mind of a lot of Russians (where there is a lot of spending on infrastructure – mainly as a superb conduit for epic corruption but it does often result in a social asset) as a parting gift and to invest in a few trinkets in case anyone wants to start some biffo anytime soon.

    He goes out on his terms, and one of the all time great ‘leadership’ legends if he can pull this off. My current thinking is he may well do that. It wouldn’t be ‘democratic’ and would look a lot like dictatorship – but that doesn’t mean it cant be done.

    If there is instability in Europe stemming from their handling of Covid and from their handling of their own energy, then that will play out over the coming year, and quite possibly lead to quite a lot of social discontent inside the EU. If you think that period is in the leadup to the next Russian Presidential election (March 24) then you would observe that plenty of Russians who may have issues with their own administration will also be thinking ‘things could be worse, at least we aren’t the EU’. Same if there is more chaos in the US (budget impasse, recrudescent Trumpism etc)

    • TailorTrashMEMBER

      Good write up

      Oh that Australia had such a leader. He may be
      corrupted by power but he’s competent and seems to get something going for the punters . Strayas leaders are don’t seem to care one iota for the punters .

    • Jarrod

      Due to the following appallingly gullible paragraph it is hard to consider that anything else in your excessive diatribe has any truth either.
      “They will have a point, when being averse to doing a deal with the Russians. Putin is fronting a dictatorship, he is involved in Eastern Ukraine, and he was quick to put Crimea back on Russia’s side of the border, legal process in Russia is often shaky, the system did kill Sergei Magnitsky, the Russians have splashed Novichok around in the UK and did attempt to poison Navalny’s underpants. The Russians can be serious work”.
      Unless you take NATO propaganda rags as gospel it was extremely clear that the US and Europe instigated a coup in Ukraine and installed literal neo-nazis when doing so. The residents of Crimea who are largely Russian by ancestry didn’t want a bar of that and voted to get out.
      The Skripal tale is a masterclass in western media manipulation and narrative control. But to know that it is not true all you have to have is the fact that both Sergei and Yulia left Sergei’s house both touching the outside door handle and then wandered around for multiple hours before both keeling over within minutes if not seconds of one another. The probability of that is extraordinarily low, add in the fact that the first person on the scene was the highest ranking nurse in the British military and it becomes impossible. There are also a lot more dodgy improbabilities that can be found here: https://www.theblogmire.com/the-salisbury-poisonings-two-years-on-a-riddle-wrapped-in-a-cover-up-inside-a-hoax/

      • C'est de la folieMEMBER

        Yeah, Yeah, ex Russian security officials swapped into the UK and lecturing UK security services on Russian operating procedures and the implications therein – plus their daughters visiting from Moscow – get sick in the UK all the time. Well spotted….

        Please feel free to leave another link to spurious nonsense from the gibberverse sometime soon.

        Signed

        Mr Litvinenko
        Mr Berezovski
        Mr Patarkatsishvili
        Mr Perepilichnyy
        Mr Golubev

        etc etc etc

        • skippy

          See John Helmer about all the finger pointing and VDUS when sunlight starts to hit the propaganda, same same for the plane that flew over a combat zone who done it ….

          Who funded the fascists in the Ukraine again – ??????

    • dodgy as

      Great write up, I would only add that as a western nation it is sometimes difficult for us to see the privilege/advantage that we have built into the global economic system. We simply view this advantage as the way thigs are (in other words our entitlement). Most westerns are so blind to the built in advantage that we don’t even waste a second of our lives to contemplate the inequity which underlies said advantage. For average Russians these global inequities are a constant reminder that “Might makes Right” as such they’re willing to put up with a lot if the nation is on a path forward, a path which will once again create these advantages for the Russian peoples.

      • Jumping jack flash

        All we really have is access to cheap debt for spending. Depending on how you look at that, and what the end game strategy for that is, its either a huge advantage or a huge disadvantage.

        I think the idea that Russia is limiting foreign spending is a bit stretched. Maybe with regards to corporate spending and foreign investment, but the people love buying cheap stuff from China as much as anyone and it doesn’t take 3 – 4 months to get there either (like it does here now!)

  8. myne

    I mean, honestly, do you blame Putin on this one?

    You don’t spend years and billions delivering a product to a customer only to wait for the customer to decide whether they want it or not.

    It’ll get emergency approval shortly.

    • Andrew

      Academic Tim Snyder has researched Putin and deems his greatest influencer as being a 1930s Swiss based fascist; cannot remember name, Lirin or something.

Leave a reply

You must be logged in to post a comment. Log in now