Category Eastern Europe

Oil Prices

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Nice map here (repeated above): Deutsche Bank Map

Couple of things caught my eye:

  1. Nigeria & Venezuela
  2. Of course, Algeria & Libya
  3. Iraq & Iran (which is just been added to the world market)
  4. Kazakhstan
  5. Russia (where the situation is much worse than shown by this map because of their tax system)
  6. Azerbaijan (which just showed up in the news with conflict over Nagorno-Karabakh)

The quote to pull from this article is:

While Nigeria requires an oil price of $85 per barrel to balance its budget in 2016, Kuwait needs only $47 a barrel. If countries used government assets to finance their budget deficits while the oil price was low, Kuwait would hypothetically be able to do this for the next 122 years, while Nigeria could only manage 0.1 years.

 

Next Stop Berlin?

053.#2.1Article in The National Interest by Michael Peck on Russia reconstituting the First Guards Tank Army: Next Stop Berlin

This appears to be in response to us sending a brigade to Europe: U.S. Brigade

We send a brigade…they raise a tank army.

Anyhow, the First Tank Army (later First Guards) commanded by Mikhail E. Katukov plays a prominent role in my book on Kursk. In July 1943 it consisted of the III Mechanized Corps (Krivoshein), VI Tank Corps (Getman…love that name) and XXXI Tank Corps (Cherniyenko). It was better handled that many of the other armored units at the Battle of Kursk.

On page 447 on the book I do have a story of a phone call on the morning of July 6 1943 between Stalin and Katukov drawn from “unpublished memoirs” provided to me by the late Col. Sverdlov.  This may be the only published reference to that phone exchange. It stated:

Vatutin ordered that the First Tank Army, II and V Guards Tank Corps should counterattack Tomarovka. I was against this decision. Why would we move our dug-in tanks two kilometers forward exposing them to the 88mm guns that can destroy our T-34s? Our 76.2mm guns could not reach the German tanks even at the 1.5 kilometer distance! Luckily for me, I received a phone call from Stalin in the morning of 6 July. I told him that it would make more sense to fight German tanks from prepared positions. “Okay,” Stalin said, “You won’t counterattack. Vatutin will call you and tell you that.”

From the bio of Katukov (1900-1976) in my book (whose picture is at top of this post) is a story from Col. Sverdlov:

In 1990, the newspaper “The Red Star” asked me [Col. Sverdlov] to write an “unusual” article about Katukov (to commemorate his 90th birthday). I went to the apartment where he lived—an ordinary nine-story building on the Leningrad parkway by the “Sokol” metro [station] where many marshals and army generals used to live back in the days. His wife Ekaterina received me very kindly. She showed me right away all four spacious rooms of the apartment, which she transformed into a museum: pictures, photographs, Katukov’s things. “Our dacha (summer house) is also a museum now, except that it is only visited by combat friends, but that is very rarely,” she said. And then she dazed me with a phrase coming literally from an unknown person, “He did not have children either with his first wife or with me. He couldn’t. He followed treatments before, during and after the war, but with no results. I was, so that you understand, the “field and campaign wife” from as early as 1941 and loved him a lot. He divorced his first wife right after the war and we got married in 1946.” All of this was said in a burst.

The museum was marvelous, and apparently it was very expensive to set up. It revealed immediately that the woman Katukov spent all the war years with, loved him so dearly that it would make any real man jealous. “I even put a memorial granite plaque on the house at my expense; can one really wait for the government?” Ekaterina added.

It’s true that she said all that was already long ago and well known on Katukov’s combat journey. And there was not one single unrespectful word! When we parted, she gave me Katukov’s memoir “At the Edge of the Main Strike,” written by V. Titov based on archival documents and Katukov’s stories. The book had the inscription, “To F. Sverdlov—in hallowed memory of Mikhail Katukov,” and all this after 14 years after his death! That’s what you mean by the real love of a woman! I will take the liberty to suppose say that she inspired him in the war as well. Perhaps Freud was right?!

For the newspaper article, I only described the museum. I earned some praise and double royalties for the article.

Putin Presides over a Slide into Poverty

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Article in Newsweek today: Putin Presides over a Slide into Poverty

Nothing new here (if you have been reading the blog), but a few highlights:

  1. “Russian officials project that the economy will contract 1 percent to 1.5 percent this year…”

2. “Currency devaluation (in 1998), generous state bailouts (in 2008) and a commodity prices rebound (in 2012) allowed the economy to bounce back quickly. None of these fixes are available now….to save the day.”

Oil today is at $39 a barrel for crude (Russia needs at least $50). I don’t think it is going significantly higher anytime soon, and some people are thinking that it is going to slide down some more.

 

Greater Economic Backwardness and Revolution

An article in the History News Network got my attention

Greater economic backwardness

A few lines caught my attention:

  1. “For the first time the researchers found that the greater the development gap….the more likely a country has experienced non-violent and violent mass demonstrations for regime change…”
  2. “Events in the Arab Spring and in the Euro-Maidan demonstrations in the Ukraine, show that the frustrated desire to catch up with the frontier era can extend to the political sphere, particularly with repressive regimes.”

Well, this is probably very interesting work and I probably need to scare up a copy. The “for the first time” claim caught my attention in light of the work by Ted Gurr and Feierabend & Feierabend in the 1960s, which I am familiar with. I have posted on their work before. Of course, what Gurr and the Feierabends’ work showed was that (and this is paraphrasing from my memory):

  1. Poorer countries had more political violence that richer countries.
  2. Really poor countries had less political violence than developing countries (poor countries that are getting richer).
  3. Political violence went up when the economy went down.

The sense I have from the Gurr and Feierabend’s work is that the least stable countries are those that were developing economically and then stalled or went into recession. This, of course, is the scenario with Russia (and others like Venezuela) and possibly may become the scenario in China.

 

Influencing the Price of Oil and the War in Syria

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Caption: Kurdish Cavalry, 1915

 

The real problem the Russian economy is suffering from is that oil has dropped from $100 a barrel to $30 a barrel. The Russian government budget was once based upon oil remaining at least $80 a barrel. The current Russian government budget is based upon oil remaining at least $50 a barrel. This is not happening. The end result has been two successive years of 10% budget cuts.

Right now the Russian ruble is moving back up into the range of 60 rubles for a dollar. It was in the 70s, it used to be in the 30s. This recent rise is mostly caused by an increase in the price of oil. Russia and Saudi Arabia have agreed to hold production stable, which is having some impact on the prices. But, this is still not recovery. The Russian economy is going to be declining or stagnant for the foreseeable future (for at least the next two years…which gets us close to their March 2018 presidential election).

So, the question is, what can Russia do to bring the price of oil back up? Obviously, reduce supply or increase demand. In fact, demand seems to be decreasing as the Chinese and some other economies slow. This is probably not something they can control. They could reduce their own supply, which would cause the price to go up. But, this does not solve Russia’s problem as it would be at the expense of less barrels sold, and oil is a major part of their economy and the government budget.

Therefore, their only real option is to reduce supply world-wide. This is really only possible if Saudi Arabia and OPEC decide to. But they have a problem in that Iran, which is also supporting Assad and is an OPEC member, is putting oil back into the marketplace. Iran is now joining the world order and able to sell oil. This was one of by-products of the agreement on nuclear development limitations. Whether or not you agree with the Iran nuclear deal, it is helping us at the gas pump. It is also probably making it impossible for Saudi Arabia to really significantly boost the price of oil.

Of course, they may not want to. Saudi Arabia and Russia are on different sides of the war in Syria. A Russia directly involved in a war in the Middle East is kind of a unique event. They have had multiple wars with Turkey, but their last war ended with World War I (1918). They did occupy the northern half of Iran during World War II, but withdrew after the end of the war. They provided considerable support to the Egyptians and Syrians during the 1973 Arab-Israeli Wars, but stay away from active intervention. But this Russian intervention in Syria provides an additional incentive for Saudi Arabia not to let oil prices rise much, as this only feeds the Russian military. We have seen Russian recently limit and curtail their invention in Syria.

I have known a lot of Russians. Not one has ever told me in private conversation how much they love Bashar Assad and how much Syria contributes to Russia’s economy and defense. In fact, from an economic and military point of view, Russia’s defense of the Assad regime makes little sense. If he was gone from power tomorrow, not sure many in Russia would miss him.

So, what does Russia gain from supporting Assad?

 

 

Sortie Counts

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OK…..so U.S. has flown more than 55,000 sorties since August 2014 (actually we started our first air missions on 8 August…so almost 19 months).

http://www.bloomberg.com/news/articles/2016-03-16/u-s-bombing-of-islamic-state-fell-to-8-month-low-in-february?cmpid=yhoo.headline

Russian flew 9,000 sorties in 5 1/2 months (see two posts below).

55,000/19 = 2,895 sorties a month

9,000/5.5 = 1,636 sorties a month

 

 

Left Behind

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Nice article in the Economist:

http://www.economist.com/news/middle-east-and-africa/21694996-putin-appears-turn-hard-power-diplomacy-russians-show-their-hand

The interesting point is that they give stats as to what they are leaving behind (have no idea how they know this):

The first is that Russia is not pulling out its forces completely. It will retain its naval presence in Tartus; at least a dozen fast jets will continue to fly from its air base near Latakia; about 1,000 military advisers and special forces will stay; and the recently-installed S-400 air defence system covering the north-west of the country will also be kept in place. Should the fragile “cessation of hostilities” that Russia and America brokered last month fall apart, it can re-escalate very quickly. But for now, Russia can cut the $3m a day cost of its military operation, while preserving much of the leverage it has bought.

Not sure how they got the price tag either. Very cheap compared to U.S. deployments (which usually are in the billions). Maybe we can contract them.

Short and Sweet

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 It would be nice to have short, quick, sharp interventions. Basically, go into a troubled country, kick tail, and then leave shortly thereafter with everything resolved. Sort of like we did in Libya in 2011; or that peacekeeping mission in Lebanon in 1982-1984 that was effectively ended by the barracks bombing that killed 241 Marines; or the brief humanitarian mission to Somalia 1992-1994 that generated the book and movie Black Hawk Down; or the 1991 Gulf War; or one-year deployment to Bosnia in 1995; or any number of short and sweet interventions that were not always so sweet and short.

Obviously the real “short and sweet” list is pretty short. Panama 1989, Grenada 1984 and….and….and…… Most commitments either take much longer that that (like Bosnia), or the conflict continues rattling on long after we left (pretty much the rest of the cases mentioned in the first paragraph), and sometimes they require us to re-engage or they mutate in ways we did not expect (for example: Libya and Somalia). Getting in, kicking tail, taking names, and getting out sounds like a great idea. Just doesn’t work out that way very often.

Russia is now wrapping up its 5 ½ month commitment in Syria. It was not that big, maybe 3,000 to 6,000 uniformed personnel, plus aircraft. Still, this mission was unique in many ways. It was really the first case of Russia doing an intervention away from its immediate borders (and pretty much one of the few cases of the Soviet Union doing one also). Neither Russia nor the Soviet Union had ever played far from home, if you ignore the communist international, world wide revolutionary movements and a few dozen missiles sent to Cuba. Still, Russia/Soviet Union had rarely actually committed conventional forces into combat in a country that is not connected to it by border. Even their failed war in Afghanistan (1979-1989) was connected by a border. They were part of the Kosovo peacekeeping forces. But besides that, Syria is the only case I can think of in the last 100 years of a Russian or Soviet ground invention in a country not connected by a border.

They are now withdrawing (so they claim). Syria is the location of the only Russian military bases outside their country, so obviously some forces are remaining.

But, Syria remains Syria. It is a country of 18 million people that is only around 13% Shia (primarily Alawite). Up until the civil war started five years ago, the Alawite minority ruled the country under Bashar Assad. It is around 10% Christian (which were sometimes allied with their fellow minority, the Alawites), 3% Druze, 9% Kurds (Sunni) and 60% Sunni Arab (and no…these numbers don’t add up to 100%). Of course, having an Alawite minority over the top of the Sunni majority pretty much guaranteed that there would eventually be a conflict. Now the Russia intervention has bolstered the Alawites. Hard to imagine if Russia actually pulls out, how the bolstered Alawites maintain their current position.

Still, perhaps Russia has given Assad and the Alawites enough breathing space for them to now stand on their own. This has not been the case in a number of past interventions (U.S. in Vietnam, USSR in Afghanistan, U.S. in Iraq).

A Brazilian Protestors

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If you watch the international news (probably best done by not watching American news channels) you may have noticed a few protestors in the streets of Rio and Sao Paolo, more than a million actually. This is a very big set of protests against a government that recently won reelection with 51% of the vote in October 2014. What happened?

Well, without going into depth into all the issues, the Brazilian economy is now declining. The Brazilian economy, which grew at annual average of 3.3% to 3.4% a year over the course of 14 years (from 2000-2013), only grew 0.1% in 2014 and then declined 3.8% in 2015. Now it is forecasted to decline 3.5% in 2016 (IMF forecast). This is a big deal and we are seeing the natural backlash.

There are a couple of countries in Eastern Europe with similar large economic declines. The Russian economy declined by at least 3.7% last year (official figures) and will be continuing to decline this year. The Ukrainian economy did even worse, declining by something like 12.5% in 2015.

Walls

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Walls are all the rage now. According to various articles, Ukraine is planning on building a wall along its border with Russia. This is some 1200 miles and costs $200 million. It is not a wall, it is a actually a 2 meter (7 foot) tall fence, with a tank ditch 6 meters wide and 2-3 meters deep.

See:

http://www.rferl.org/contentinfographics/the-great-wall-of-ukraine/27573891.html

https://www.rt.com/news/258837-ukraine-fence-russian-border/

http://uatoday.tv/politics/lsquo-great-wall-of-ukraine-rsquo-russian-border-fortification-less-than-10-built-478829.html

http://www.thedailybeast.com/articles/2014/10/27/the-great-wall-of-ukraine.html

(Note: The Daily Beast article may not link).

We actually did do a chapter on the effectiveness of border barriers in America’s Modern Wars (Chapter Ten: Sanctuaries, Border Barriers and Population Resettlement). In our 83 examples there were 13 in which the counterinsurgency force utilized border barriers. Thus, barriers were present in approximately 16% of our cases.

  1. Indochina War (1946-1954)
  2. Algerian War (1954-1962)
  3. Vietnam II (1961-1964)
  4. Vietnam War (1965-1973)
  5. Namibia (1966-1989)
  6. Rhodesia II (1972-1979)
  7. Polisario Rebellion (1973-1991)
  8. Cambodia (1978-1989)
  9. USSR in Afghanistan (1979-1989)
  10. Kashmir (1988 – present)
  11. Second Intifada (2000-2005)
  12. Hamas War (2006)
  13. Hezbollah War (2006)

We conducted a statistical analysis of the relationship between outcome and the presence or absence of border barriers among the 83-case MISS dataset using Fisher’s Exact Test (see below).

 

Outcome by Presence/Absence of Border Barriers
Outcome Yes No Total
Blue 2 40 42
Gray 2 9 11
Red 9 21 30
Total 13 70 83

 

When we test the hypothesis about a nonrandom relationship between insurgency outcome and the border barriers factor in the two-by-three table above using Fisher’s Exact Test, the p-value is 0.0090. The data suggest strong evidence that the two factors may be associated.

We also tested the more specific hypothesis that the odds of a Blue outcome are different in the absence vs. the presence of border barriers by ignoring the gray observations in the testing procedure. The p-value from the Fisher’s Exact Test is 0.0045 in this case, which can be considered strong evidence in support of this hypothesis.

Thus, it appears that the tests confirm that border barriers have not been significant in combating insurgencies, based on the outcome. This is not unexpected, although it could perhaps be considered counterintuitive. Overall, the insurgents won 69% of the time when there was a border barrier vice 30% of the time when there was not one. We suspect that there is another factor in play here (for example: border barriers are usually built in response to large, intractable insurgencies).