winthrop360's Douche of the Week

for the week ending June 29, 2008

Winner: Marko Mihkelson, head of the Estonian parliament's EU affairs committee

Bonehead Mihkelson had the audacity to argue that Dmitri Medvedev is not being "constructive" because he has stood up for the rights of "non-citizens" in the Baltics and condemned Nazi glorification in the region.

"Medvedev’s own actions and speeches have shown that in sensitive matters in Estonian-Russian relations, like Estonia’s citizenship policy or questions connected to the Second World War, he isn’t ready to behave constructively at all," wrote Mihkelson on his foreign language blog (Google Language Tools can't identify the obscure language, so I have no idea which it is).

So, let me get this straight. The President of Russia can only be "constructive" if he stops being patriotic, abandons issues that are close to Russian's hearts, and give foreigners a free-hand to pursue anti-Russian policies at home and abroad. Sure sounds right.

Mihkelson is a major league douchebag who's still living in 1998 - when Russia was weak, getting picked on from all directions, and being forced to hand over its most prized assets. That entire decade was a freak anomaly, yet people like Mihkelson can't seem to move on from it and are acting completely delusional.

Mihkelson is this week's Douche of the Week.

Honorable mention: Toomas Hendrik Ilves, William Harrison

Russian Court Hears Testimony From Experts in $22.5 Billion Lawsuit Against Bank of New York; Will Rule on Application of RICO on July 3rd (PRNewswire, 6/30/08)

G. Robert Blakey, Author of RICO, Tells Court International Application of U.S. RICO Law is Proper

The Moscow Arbitration Court today heard testimony from leading U.S. and Russian legal experts in the case of the Russian Federal Customs Service claim of $22.5 billion against The Bank of New York (NYSE: BK).

The next hearing is scheduled for July 3rd at which time the Russian Court is expected to decide whether to apply United States RICO (Racketeer Influenced and Corrupt Organizations Act) statutes for money laundering activities to which the Bank of New York has previously admitted. Russian Federal Customs Service contends that the Russian Court should apply the U.S. RICO statute in its claim against the bank.

The Federal Customs Service filed suit against the Bank of New York, the world's second largest custodian of investor assets, in May 2007. The lawsuit stems from a 2005 U.S. Department of Justice investigation that ended with a non-prosecution agreement forcing the bank to pay $38 million to the U.S. government to settle two criminal probes and admitting it failed to report $7.5 billion in illegal Russian transactions. [CW: lol]

Federal investigators for the United States determined several accounts that existed at the Bank of New York were used illegally to transfer funds in and out of Russia in violation of currency controls, causing the Russian Federation billions in damages. Under the RICO statutes, plaintiffs are entitled to treble damages. This is the largest civil suit ever brought by a foreign government against a U.S. corporation.

"The Customs Service and Russia as a whole were devastated at the time by the economic conditions created in large measure by capital flight which the Bank of New York illegally aided and abetted," said Steven C. Marks, plaintiff's U.S. attorney with Podhurst Orseck, P.A. "Under the circumstances, we are confident, after its thorough review of all the evidence, the Court will agree this is indeed a proper and appropriate application of the RICO statute."

Experts providing testimony in support of the Russian Federal Customs Service included G. Robert Blakey, principal author of the RICO statutes in 1970, retired U.S. Federal Appellate Judge George C. Pratt, and prominent Harvard Law School Professor Alan Dershowitz.

In his testimony, G. Robert Blakey informed the court that, "Neither United States laws, nor judicial practice, contain a ban on applying RICO in courts outside the United States. RICO's text and legislative history do not reflect a legislative intent on the part of the U.S. Congress to preclude RICO's application in foreign courts. To the contrary, RICO's application by foreign courts would well-serve the statute's remedial purposes for victims of unlawful conduct."

Blakey is the nation's foremost authority on the RICO Act and has served on the Notre Dame Law School faculty for more than 20 years. He teaches in the areas of criminal law and procedure, federal criminal law and procedure, terrorism, and jurisprudence. Blakey was selected to participate in the Attorney General's Honors Program at the U.S. Department of Justice in 1960, and worked as a Special Attorney at the Department of Justice in the Organized Crime & Racketeering Section from 1960 to 1964. He also served as a professor of law and director of the Cornell Institute on Organized Crime at Cornell Law School.

George C. Pratt agreed. "From my perspective as a former federal trial and appellate judge, there is nothing that would distinguish a foreign court's using or applying U.S. civil RICO law from its applying any other U.S. civil law."

Alan Dershowitz also supported Blakey's position adding, "With respect to RICO's application in foreign courts, the statute's text does not forbid its application abroad and judicial practice has not precluded foreign courts from applying RICO. Indeed, it is questionable whether the United States Congress could enact an enforceable law that would prohibit a foreign sovereign from applying or enforcing a United States statute that provides for civil remedies in a civil suit brought in the sovereign's courts."

Although he submitted written testimony to the court, the Russian Federal Customs Service decided not to call Professor Alan Dershowitz to give oral testimony today out of respect for the court due to the sheer number of expert witnesses testifying. However, Professor Dershowitz may be called upon to give oral testimony on a future date.

Lawyers for the Russian Federal Customs Service maintain that courts throughout the world, including U.S. courts, regularly apply foreign laws. Such action is done without the "permission" of the country from which the laws emanated. Russian law explicitly provides for the use of foreign law in its proceedings. Applying RICO to this matter is no different than any other U.S. law that is routinely applied in foreign courts around the world. At the next hearing on July 3rd, the Russian Court is expected to decide whether or not it chooses to apply RICO in this case.

Leading experts expect the Bank of New York to honor the Russian Court's ruling should it determine that RICO laws are enforceable internationally.

"If they adhere to the position that it is unenforceable it would make them look like they are an outlaw bank in the 92 countries in which the Bank of New York does business. Wherever the money is there will be an attempt to enforce it," said Dershowitz. [CW: Woah]

For additional information on this matter, please visit http://www.russianbanksuit.com.

Continuing a bit with the topic of the previous post...

Believe it or not, but Russia has recently become a responsible steward of the environment, taking a leading global role.

Most notably perhaps, the Kyoto Protocol only came into force on February 16, 2005 after Russian ratification satisfied the "55% clause." "Russian ratification [ensures] that the protocol enters into force and launch[es] an exciting new phase in the global campaign to reduce the risks of climate change," declared Joke Waller-Hunter, the executive secretary of the U.N. Framework Convention on Climate Change. UK Environment Secretary Margaret Beckett praised the Russian move as "a vital step forwards for global efforts to tackle climate change." As many know, the world's largest economy has yet to ratify Kyoto, but with Russia's ratification the rest of the world has been able to move on without it.

On April 26, 2006 President Putin announced that ESPO, a strategic oil pipeline from Siberia to Russia's Pacific Coast must be routed away from Lake Baikal to protect its environment. Lake Baikal is a UNESCO World Heritage Site and accounts for 20% of the world's surface fresh water. Despite the $1 billion cost of the diversion, Transneft, the state-owned oil pipeline company, rerouted ESPO away from Lake Baikal. The World Wildlife Fund called the move "a truly momentous victory for Russian conservation" and "applaud[ed] the Russian Government’s decision to relocate the pipeline and terminal."

Earlier this year, Russia's State Fisheries Committee proposed the introduction of a five-year moratorium for all Caspian littoral states on the fishing of caviar-producing sturgeon. Moscow has also been active combating overfishing in its Pacific waters, which happens quite often by Japanese vessels. As a matter of fact, in an interview prior to the 2007 G8 meeting, Putin singled out Japan for having a history of overfishing until "there are no longer any resources to be fished," urging its leadership "to discuss this problem and find [an] acceptable solution."

Russia has the world's largest forest reserves and is known as the lungs of Europe, second only to the Amazon Rainforest in the amount of carbon dioxide it absorbs. It provides a huge amount of oxygen for not just Europe, but the world.

Its nature reserves cover about 330,000 square kilometers (larger than Poland), while its national parks total 71,700 square kilometers (larger than either Estonia, Georgia, or Lithuania).

Assessing Truth and Accuracy in Russian Reporting Internationally

--> volume three

From: When Gray Looks Green, by Owen Matthews (Newsweek, 6/29/08)

He wrote: Last year Mitvol compiled a dossier on alleged environmental violations by an oil-and gas-drilling consortium led by Royal Dutch Shell on the Pacific island of Sakhalin. An indignant Kremlin promptly suspended Shell's operations. As soon as Shell and its partners agreed to sell a controlling stake in Sakhalin to state-owned Gazprom last year, Moscow lost interest.

The truth: Gazprom acquired 51% of Sakhalin II for $7.45 billion on December 21, 2006. Here are but a few of the environmental developments at Sakhalin since (and in just a five month timespan):

- 7/26/07 (Dow Jones): Russian environmental regulators have asked Sakhalin Energy Investment Co. Ltd., operator of the Sakhalin-2 project, to suspend work on an onshore pipeline, a top Russian official said Thursday

- 8/24/07 (RIA Novosti): Russia's environmental regulator said Friday it had found new legal violations committed by Gazprom-controlled Sakhalin Energy, which operates the Sakhalin II oil and gas project off the country's Pacific Coast

- 10/6/07 (New Europe): Russian Natural Resources Minister Yury Trutnev plans to visit Sakhalin in November to see how the violations uncovered at the Sakhalin II project are being dealt with

- 10/26/07 (RIA Novosti): Sakhalin Energy, operator of the Sakhalin II oil and gas project off Russia's Pacific Coast, said Friday it would rectify violations, identified by Russia's environmental watchdog, within a year

- 12/19/07 (RIA Novosti): Russia's environmental regulator said on Wednesday it is fining the operator of the Sakhalin II oil and gas project in the Far East more than 390 million rubles ($15.8 million) for deforestation

Does any of this sounds like lost interest ???

I first heard about Youssef M. Ibrahim when I read Time to Push the Saudis on Oil Prices, written by him in March. In the article, Ibrahim demands Saudi Arabia increase its oil production, since it is an American protectorate.

Ibrahim describes how the United States mobilized 400,000 U.S. troops to save the Saudis’ hide from Saddam Hussein’s claws, when having taken Kuwait in 1990 he was getting ready to swallow Saudi Arabia. He uses this as justification and demands Saudi Arabia open its pumps and stop hogging billions of dollars without regard to the consequences or do they want to play a responsible role on the world stage. He concludes that oil prices will be cut in half when the Saudis make a mere statement about its production intentions. In his opinion, the 50% drop is a sure bet.

Well, Saudi Arabia has made such a statement. It's gone even further than that, acting on its words. Kuwait too, I think. Yet, the price of oil today is $35 a barrel more than it was when Ibrahim was made his predictions, with such great certainty no less !

Many people have been wrong about the price of oil, myself included. I fessed-up, blamed Daniel Yergin for my fallacy, and moved on.

Ibrahim, however, can't. So, this is what he writes now.

Total genius; a scholarly work, for sure.


The Saudis’ Oily Con Game, by Youssef M. Ibrahim (Pajamas Media, 6/24/08)

How can we convince Saudi Arabia to pump more oil when it reaps the profits of pumping less?

Once more Saudi Arabia told distressed oil consumers to drop dead this past weekend.

Speaking at a world conference summoned to discuss what to do about insane oil prices, Saudi King Abdullah went around the room telling representatives of 35 countries there is no crisis, as his oil minister assured them there will be no Saudi oil to relieve it. Instead his royal majesty mused about "selfish" speculators, muttering assertions of enough oil out there and far too many Western bottlenecks holding it up.

Saudis have been playing this three-card Monte con game for some time. On one hand they tell anyone who would listen they are the world’s guarantors of oil stability, sitting on at least an extra two million barrels in immediate daily output — it is called swing production in oil lingo. Yet they will not "produce" it because it is so much better to get more money, honey. [CW: He's such a great writer]

The Saudis never tire of asserting that their role as "guarantor" of oil stability is reason enough to get protection by Western armies against ayatollahs and Iraqis. Yet, they cannot be imposed upon to pump more when the very health of those Western economies teeters under quintupling oil prices.

In addition to oil industry knowledge that Saudi Arabia can immediately increase production by 20 percent, it can keep on doing so into the foreseeable future. The country sits atop the world’s largest proven reserves of oil, conservatively estimated at 500 billion barrels. [CW: lol] Only Iraq’s reserves come close to that in the Gulf region and the Iraqis, amidst war and chaos, are indeed producing all they can and plan to up it.

By contrast the Saudis, along with Kuwait and the United Arab Emirates, who are so-called allies, are literally holding oil back. Twice this year, Saudi Arabia delivered a royal nyet to President Bush’s pleas for more oil on behalf of American consumers whose tax dollars — and soldiers — were deployed to rescue those allies from Saddam Hussein’s claws. Bush, too, was told by King Abdullah to take a walk. [CW: Ouch]

To be sure, a proper working of world economies depends on the laws of supply and demand, but this is not a crisis of too much demand. [CW: We can also always blame it on the Indian middle class] It is one of holding oil back under the active leadership of friendly Saudi Arabia and OPEC, with the full complicity of such foes as Iran and Venezuela.

What to do?

Instead of saying pretty please, the president could have suggested what his irate citizens may demand if they do not get relief.

It is worthwhile remembering Iraq was invaded when gasoline stood at only $2 a gallon.

It seems the president did try to explain this to the King. During his last visit, Bush — whose major expertise is as an oilman– told ABC News he explained to his majesty that "when consumers have less purchasing power because of high prices of gasoline, in other words when it affects their families, it could cause this economy to slow down." [CW: I can't remember who, but someone important said this week that the demand for oil is proving to be insatiable. We might reach a breaking point, but we haven't reached it yet. Who knows how high this level will be - $200? $300? No one knows]

A follow-up can be delivered in inimitable Bush style like: "Hey King, time to fork it out. You’ve got it. We need it. What do you not understand?" [CW: Hemingway-esque]

In a famous historic deal struck just after World War II on an American destroyer, President Roosevelt and King Abdulaziz al-Saud pledged America would help the Saudis find and produce their oil and protect them in return for fair and secure supplies. The meeting is recorded in abundant grainy documentaries and numerous official documents. [CW: Sorry, but this won't hold water in a court of law]

America and the West have kept their end of that deal for 60 years. Neocons might argue it is time for payback. Crazy as they can be sometimes, they may argue to some sympathy that the health of world economies, indeed world order, demands cheaper oil. One sure way of doing this is by invading and occupying Saudi Arabia’s Eastern Province, the mother of all oil reserves. [CW: Cool]

This seems an insane scenario now [CW: Not to me it doesn't. Let's go!], but maybe not by summer’s end. As Mr. and Mrs. Smith [CW: Brad and Angelina] drive into gas stations to be greeted by $5 or $6 a gallon signs and hundreds of homes prepare next winter for a doubling of heating costs, the Saudis should not sleep too soundly. [CW: Let's shock n' awe 'em !]

No war-mongering intended, but we invaded Grenada in 1983 and Iraq in 2003 for a lot less. Holding that Saudi Eastern Province pumping station under "Western stewardship" for, say, a 99-year lease may sound like fair compensation, once we go past $10 at the pump — which is what Europeans already pay. [CW: Those dumb Europeans]

Youssef M. Ibrahim, a freelance writer and risk consultant, is a former New York Times Mideast correspondent and Energy Editor of the Wall Street Journal. He can be reached at ymibrahim2004@yahoo.com

Look West, Go East, by Adrian Pabst (The Moscow Times, 6/27/08)

When the leaders of the European Union and Russia gather for their summit on Friday in Khanty-Mansiisk, the main items on the official agenda will be a new partnership and cooperation agreement and an energy charter. But the real challenge is to find common political ground between Russia and Europe.

Dmitry Medvedev's election as president was expected to mark a new chapter in relations with Europe. After Russia's growing assertiveness and belligerence under President Vladimir Putin [CW: I guess he means standing up for itself ?], many politicians and pundits in the West hoped that a more liberal president would opt for closer cooperation with the EU and a firmer anchoring of Russia in the European-Atlantic community. [CW: Cooperation is a two way street.. but since Russia was mistreated and pushed around for a decade and is in such a strong position today, the one side that will need to make most of the movement, if there is to be cooperation, is the European Union]

But the early signs are that Moscow is privileging its relations with the East. The destination of the new president's first official state visit abroad was Kazakhstan and China in late May. In Astana and Beijing, Medvedev's talk of special relations and strategic partnerships was more than lofty rhetoric. Like Putin, he is determined not only to reinforce bilateral ties, but also to consolidate and extend multilateral frameworks such as the Commonwealth of Independent States and the Eurasian Economic Community, a union of Russia, Belarus and Kazakhstan.

In reality, this apparent commitment to multilateralism masks the Kremlin's intention to cement its regional leadership, enhance its global power status and provide an effective counterweight to the U.S.-led Western hegemony in international affairs, particularly in Eastern Europe, Central Asia and the wider Middle East. [CW: Yup]

The CIS remains the main vehicle for guaranteeing what Moscow considers its legitimate sphere of influence in the post-Soviet space -- from Ukraine and the Caucasus in the west to Central Asia in the east. One of Medvedev's first foreign policy decisions was to set up the Federal Agency for CIS Affairs, charged with providing an integrated strategy and coherent approach that maximizes Russia's interests.

And on his visit to Kazakhstan, there was even talk of developing the EEC into a full-fledged Eurasian Union -- Moscow's response to Brussel's cooperation agreements with countries in Central Asia, where the EU is already the single biggest trading partner. [CW: I would be surprised. Hypothetically speaking, however, the organization he's describing could stretch to Turkey and the Balkans. Further even - north, south, west] Coupled with plans to establish permanent naval bases in the Syrian ports of Tartus and Latakia [CW: Not confirmed yet], Russia's growing energy ties with Iran and Turkey [CW: There you go] provide a nexus between Central Asia and the wider Middle East. Indeed, Russia views this space as a key arena in the global battle of ideas and influence with the EU, the United States and China.

Of course, Russia's geographical position, national interests and cultural identity prevent any exit from Europe or the West. [CW: True] And closer relations with the EU and a growing presence in Central Asia are not mutually exclusive. [CW: False] But it appears that under the Medvedev-Putin joint leadership, the focus of Moscow's foreign policy has shifted toward the east. [CW: I didn't know Germany moved. Italy too?]

The EU must shoulder some blame for this evolution. At least since its eastern enlargement, Brussels lacks a coherent and unified strategy for relations with Russia. New member states, such as Poland and the Baltic states, have frequently used the existence of bilateral tensions with Moscow to veto stronger EU-Russia ties advocated by old member states like Germany and France. [CW: In my opinion, the countries in the EU that favor strong EU-Russia ties now outnumber those who don't. The majority also have a good momentum going and the number of outcasts could trickle down to just five real soon - two in Eastern Europe, two in the Baltics, and one not even on the Continent. With such a strong mandate, Russia's friends in Europe could then demand and get the unity then want to forge strong ties with Russia that will benefit both sides. Today, Russophobes like to use the term "EU unity" under different connotations - they think that it means confronting and bossing Russia around. In reality, "EU unity" will become their worst nightmare]

Divided over Iraq and plans to install a U.S. missile-defense system in Poland and the Czech Republic, the EU has been unwilling and unable to develop its 1999 vision of a strategic partnership with Russia. Unsurprising, the European focus on economic cooperation and some legal harmonization has not produced a shared sense of political purpose. Linked by a growing volume of trade and investment, the EU and Russia are drifting apart geopolitically.

This tendency bears significant mutual risks. Without more EU engagement, Russia's weight in the international system will be largely based on natural resources and military might, not civilian "soft power." [CW: Not true] Without further Russian cooperation, the EU will lack military capabilities and a political presence in Central Asia. It is hard to imagine how the EU and Russia can be effective global actors without closer political integration. [CW: Think outside the box]

In consequence, EU-Russia relations are at a crossroads. The current outlook that pits an eastward-looking Russia against an Atlanticist EU must be abandoned in favor of a new, shared vision. Moscow must end unilateral support for autocrats throughout the post-Soviet space and accept that Russia's future lies in the wider Europe. [CW: Russia cannot make that commitment. It's hot right now, it's going places, and it does not need an anchor to hold it back] For its part, Brussels needs a new Ostpolitik, in which relations with Russia, its biggest and most important neighbor, assume geopolitical priority. What Russia and the EU require is a clear commitment to a strategic alliance. [CW: The second party mentioned needs it more and that's an important fact. Just sayin']

Such a mutual commitment could translate into concrete policies and confidence-building measures such as further information sharing in the fight against terrorism, closer cooperation on transnational crime and cross-border illegal migration, as well as common approaches to climate change, poverty reduction and a better global balance of power within the existing international institutions, such as the United Nations, Group of Eight, International Monetary Fund and the World Bank. [CW: I agree, here]

On his first visit to a EU member state on June 5, Medvedev spoke in Berlin about the limits of Atlanticism and the need for ''unity between the whole Euro-Atlantic area from Vancouver to Vladivostok.'' Under the present leadership, Russia is looking west but going east. Now is a unique window of opportunity for the EU to provide an alternative. [CW: Make an offer and make it a good one. Otherwise, Russia will take the slow and cautious approach. Because as far as relations with EU go, time is definitely on Russia's side]

Adrian Pabst teaches religion and politics at the University of Nottingham and is a research fellow at the Luxembourg Institute for European and International Studies

There were two interesting stories yesterday concerning Russian meat imports.

Canada
First, Canada announced that it has come up with a "fool-proof" certificate to prevent the passing off of other foreign pork as Canadian. "They do have some situations over here where there is a black market, and our certificates were being photocopied and used on other products. We worked with [Russia] over the winter to come up with a certificate that was impenetrable," said Canada's Agriculture Minister Gerry Ritz.

As we all know, Russia had a similar problem with Poland recently. Instead of seeking to rectify the situation, however, for two years Poland tried to use it score political points, crying out that Russia was trying to influence it and seeking European Union condemnation. To Poland's chagrin, Russia held firm and got what it wanted in the end - comprehensive veterinary inspections of Polish farms and meat plants.

Brussels
Second, anonymous EU officials complained that Russia has barred chicken and pork imports from 70 European companies, since April, because they contained traces of antibiotics.

The 70 companies are from seven nations - Belgium, Denmark, France, Germany, Hungary, Italy and Spain. None of these countries have any notable hostilities with Moscow at the moment, so unjustified charges of a bilateral nature are probably not on the horizon. Moreover, an EU official acknowledged rightly that "Russia has the right to its norm and to not want traces of antibiotics."

Still, others tried to make baseless excuses - Russia's rules are not clear; Russia wants to boost its national producers; etc.

Moscow's ambassador to the EU, Vladimir Chizhov, said Russia was obliged to take the action due to "concerns linked to public health," adding that the matter could be "easily solved by stopping the use of antibiotics."

Obviously that is sensible and perfectly logical.

Churchill
In my opinion, the EU should learn from Poland's failure, follow Canada's lead, and listen to Russia because, most of the time, Russia does not like to play games - when it says something it means it.

A British Prime Minister once famously said: "I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma."

Today, some people are taking this too literally. They think that everything Russia does has ulterior, usually evil, motives.

Ironically, these people who think about and analyze Russia and Russia's behavior the most, sometimes understand it the least.

Russia may end European gas supplies in favor of Asia - scholar (RIA Novosti, 6/24/08)

Russia could call time on natural gas supplies to Europe in 10-15 years in favor of sales to China and India, a prominent U.S. scholar said. [He mustn't know about Russia's looming "gas gap," theorized by Michael J. Economides and other ignorant and prejudiced Russophobes lol]

Marshal Goldman, an expert on Russia and the author of the recently published book, "Petrostate: Putin, Power and the New Russia," said the switch was likely because China and India - with their growing economies hungry for energy - were very interested in Russian natural gas supplies. The only question was whether Russia would be able to deliver the gas.

According to Goldman, China already purchases large quantities of petrol from Russia. "Every day, up to ten freight trains loaded with Russian petrol leave for China," he said in an interview with RIA Novosti.

In the book, Goldman said Russia has become a powerful state that can use energy supplies to exert pressure on its European partners.

"Russia has become a strong state," Goldman told RIA Novosti, adding that he would like to discuss this issue at a meeting with Russian leaders within the framework of the Valdai International Discussion Club.

[CW: This is what free markets and competition are all about. In the end it could come down to two things: 1) Who can afford Russia's gas, and 2) Who can renounce nationalist tendencies and open-up their markets to Russian companies. So, I totally agree with Goldman that Russia will eventually be able to pick and choose who it sells gas to]

[CW: Moreover, I believe that Russia is actually looking to curtail its energy exports and, by diversifying its economy - at hypersonic speeds no less, it's putting itself in a position to do so fairly soon. The repercussions of this are significant. As a matter of fact, just yesterday, Gazprom's CEO forecasted (a must read) such a scenario : "A new and powerful rival to Europe and Asia has appeared -- the Russian domestic market"]

Russia revels in the flair that has wowed Europe, by Jonathan Wilson (The Guardian, 6/24/08)

Victory over Holland at Euro 2008 sparked unprecedented celebrations at home, as much for its style as the result

The catalogue of catchy but erroneous predictions from Pele is vast, but it does not make the slights sting any the less. "Russians," he once said, "will not win anything in football before the Brazilians win something in ice hockey." Well, as one gleeful headline put it at the weekend, "Hiddink has done great things for Brazilian hockey".

These are unknown times for Russian football, and they have been greeted with incredulity and delirium. Driving in Moscow is never easy, but after the victory over Holland last Saturday, it became impossible as the streets filled with celebrating fans. Traffic lights, pedestrian crossings, all laws of the road became an irrelevance. An hour after the game, police gave up even trying to enforce any sort of order.

Even class distinctions broke down. One newspaper reported a fan spraying beer over the windscreen of a Mercedes and yelling that he was so happy he didn't care what happened to him. At which point the driver leapt out, hugged him, clambered with him onto the roof of the car and started dancing. It sounds like a ridiculous propaganda tale - and perhaps it is - but on that night perhaps it was possible.

On Manezhnaya Square the Russian anthem was sung continuously for hours. [CW: This brings up two memories of mine. I was in Montreal once for a three-day weekend. After Canada won a basketball game (ironically) everyone came out of the bars on boulevard Rene-Levesque and started singing O Canada over and over again. The second time was in 2004 in Astoria, New York when Greece won this same tournament. The Greeks there celebrated and sang their anthem. I cannot say that I have seen any of this sort of comradery after American victories - Olympics, Women's World Cup, etc.] T-shirts were printed bearing the words (is there a greater anthem in Europe? Listen to Paul Robeson singing the old Soviet version and tell me it doesn't send a tingle down your spine.) Motorcyclists put on a hastily arranged show with the synchronised growling of engines and release of smoke. One rider, supported only by his hands, zipped along clapping his feet together above the handlebars. Fireworks were let off. A Russia scarf was wrapped around the neck of the Pushkin statue.

"We had 1,500 police officers working," said Viktor Biryukov, spokesman for the municipal department of internal affairs of Moscow. "But there were 500,000 people celebrating, including 200,000 in the central part of the city. They went on until 5am, but there were no incidents or any arrests. The police themselves couldn't contain their happiness."

It was anarchic and joyous and quite unprecedented. Vladimir Putin has restored pride to the nation, and after Zenit St Petersburg's Uefa Cup triumph, after victory in the world ice hockey championship, after Eurovision, perhaps an even greater glory awaits.

It isn't just that Russia are in the semi-final, it is the style with which they have got there. "This match will be canonised", another headline said after what has been dubbed the game of "vodka and orange". "Catch the moment, dear Russian fans," wrote Igor Rabiner in Sport-Express. "When have we ever known this, that Europe admires our game? When did everybody wish us success because we are playing the best football? I admit, I can still hardly believe the reality of it. It is a wonderful dream. The bronze medal is already guaranteed, which is fine, but a thousand times more important is that the world admires Russia. We have not done this in the Greek way."

That is a recurring theme. Niko Kranjcar said much the same after Croatia had beaten Germany. This is a tournament that has seen a lust not merely for victory, but for glory. Greece's success in Euro 2004 with a stolid, uninspiring mode of football has, paradoxically, encouraged more attacking football, for what is the point of winning, if you remain unloved? Who outside Greece remembers now - beyond a vague recollection of headed goals - a single moment of their victory?

...

It is Russia now who are playing with that passion. "The dreadful boredom of the Spain- Italy match has given us the sympathy of neutrals," Rabiner went on. "After the group stage, sympathy was with the Dutch, but when a team beat them in open play, Europe became a fan of Russia. What convinced them was the sepulchral cold which blew in from the Spanish-Italian exhibition."

The shadow is Russia's 4-1 defeat to Spain in their opening game. Can the return of Sergei Ignashevich and the introduction of Andrei Arshavin after suspension really make enough difference to reverse that in the semi-final? There are precedents, which in Russia are being regarded as omens. Last time Switzerland hosted a major tournament, the 1954 World Cup, West Germany were beaten 8-3 by Hungary in the group stage but then beat them 3-2 in the final. The USSR beat Holland in the group stage in Euro 88, but lost to them at the last.

Most pertinently, though, given the parallels that have been drawn between the style of this Russian side and the "clap-clap" ice hockey of the great Soviet red machine, is what happened in the ice hockey Canada Cup of 1981. Then the hosts Canada beat the USSR 7-3 in the group stage, but the Soviets improved as the tournament went on and, when they met again in the final, they produced what is widely regarded as their greatest ever performance. Unstoppable, they thrashed the defending champions 8-1 and inked their name in history. For Hiddink's team, similar glory beckons.

[CW: If you scroll through the article, you'd see that The Guardian's readers agree with Wilson in unanimity. Not just that Russia's game is beautiful, but on how friendly Russians are, including this great story by Berlinerbob: I tell you what is strange, a few of us Brits were mobbed by a load of Russians here in Berlin on Saturday, really happy to talk and were dead friendly. The Beeb have put out several Panorama programmes telling us how disliked the Brits are by Ruski's . Apparently, they cannot think for themselves and agree with everything Putin says. I saw evidence to the contrary on Saturday. Anyone in Moscow for the Champs League final reading this - could you let us know how you were received? Very nice and friendly people.]

Businessmen are the same everywhere, by Stan Polovets (The Times, 6/20/08)

Sir, How ironic that Western commentators have decided to join in BP’s campaign to bully the Russian Government into intervening on its side in a business dispute between BP and its Russian partners in TNK-BP (World briefing, June 18).

The Russian investors in TNK-BP are acting like businessmen everywhere, pressing for maximum return on their investment and seeking to hold corporate managers accountable. They are asking questions such as why TNK-BP’s market capitalisation has grown at a far lower rate than that of other Russian oil companies and why BP has prevented TNK-BP from entering foreign markets, blocking involvement in 20 international projects over the past five years.

Unhappy with TNK-BP’s management, the Russian investors are resorting to the tools of frustrated shareholders everywhere, demanding the appointment of independent directors and filing legal actions to protect their rights. And how does BP react? By crying foul and asserting that it is the victim of coercion. Unless the Russian Government intervenes to restrain BP’s Russian partners, BP implies, Russia’s reputation will be ruined and Western investors will have nothing further to do with it.

The fact is that BP is taking advantage of old stereotypes of Russia in an effort to force a political solution to what is fundamentally a business dispute.

Stan Polovets
Chief Executive Officer, AAR (the consortium that represents the Russian 50 per cent ownership of TNK-BP)

It was a bit underreported in the press, but Iraq awarded no-bid contracts to ExxonMobil, BP, Royal Dutch Sell, and Total last week despite, presumably, better offers from Chinese, Indian, and Russian energy companies.

Totally transparent, competitive, and "modern" lol.

Rachel Maddow, I think, put it best on Keith Olbermann's show on MSNBC:

What actually does make sense, the actual, simple explanation that has been staring us in the face since before the beginning, since a guy had to quit Halliburton in order to become vice president, is that they want Iraq to be an oil colony. It‘s a very 19th century idea. It‘s their natural resources. It‘s our markets. It‘s our profits. It‘s an old idea, but it‘s always been what has been staring us in the face.

The theory
That said, here's my personal theory regarding this oil-inspired invasion and current occupation.

- In 2003, the United States realized that a spike in the price of oil was around the corner due to a increased Asian demand, cooperation within OPEC, and the rapid depletion of European and American oil fields

- Therefore, the invasion of Iraq was not about oil per say, but rather about the price of oil. Cheney and others believed that low oil prices secured Western economic growth, enabled a God-given, but unsustainable, American lifestyle, kept oil-exporting nations down, and, most importantly, left the "peak oil theory" to conspiracy boards, outside of the mainstream. Russia, which was showing signs of life in 2003, would also be brought back down [where it belongs] and go on fulfilling its fate of being a natural resource appendix, unable to even afford diversifying its economy

- The plan was to invade Iraq and dramatically increase its oil production, guaranteeing low oil prices for a generation. After that, move on to Iran. Then Saudi Arabia. Totally like a pyramid scheme, over decades, remaining one step ahead of supply and demand

- Things went wrong when Iraqi oil production couldn't be meaningfully increased despite modern technologies, effective managers, MBAs, consultants, etc.

- In fact, a big irony in all this is that in its efforts to quickly increase oil production immediately after the invasion, the United States might have permanently damaged some Iraqi oil fields

- Still, expect Iraqi crude to flood the world's markets sooner or later. Will it matter? Who knows. But the rabbit's come out of the hat, America's naked, and Russia's strong

Score update
Half Time: Unpredictability of life 3, Cheney's computer simulation 0

Upon returning from his trip to Russia, the Finance Minister of Cyprus said that "Russia is by far the most important economic partner for Cyprus."

Cyprus is not reliant on Russian gas or anything, so the Finance Minister was referring to Russian investments in Cyprus, Cypriot exports to Russia, and Russian tourists, in no particular order.

It's a mutually-beneficial relationship and a beautiful thing. In my opinion, this is a just sign of things to come.

Russia's "secret weapon" is not its natural gas, but rather its growing wealth and prosperity. This is a weapon that can be used for both offensive and defensive purposes. It wins friends and it can become completely sustainable, if the holder behaves wisely and responsibly. And, in the world we live in, this is the most legitimate weapon to have.

So, so many ex-Warsaw Pact nations that had chilly relations with Russia through the 1990s and up until even a couple of years ago have completely changed course and are seeking to make deals with Russia. Attract Russia investments. Sell their stuff to the vibrant Russian consumer class.

The way it's going, Russia might just be on its way to becoming the new United States - the one country that can lift the world's economy on its shoulders.

Suffice to say, in the years to come, Moscow will be the common destination of many of the world's Finance Ministers.

"Russia and Russian sports are on an permanent and irreversible decline"

Although I wasn't following Russia at the time, I remember hearing this plenty of times by sports commentators covering the 2002 and 2004 Olympic Games.

They dismissed any Russian successes (Yagudin, Sautin, Nemov, Khorkina, Berezhnaya and Sikharulidze, etc.) as the last symbols of Soviet state's sports system - symbols that would surely vanish with time.

I mean, nobody gave Russia a shot in the world of ever regaining its spot as a perennial sports superpower. They figured Russia was poor, people in poverty, infrastructure rotting, confidence lacking.

Few knew at the time that the situation was in the process of completely reversing itself. Others simply hoped that it wasn't happening.

The 2006 Turin Winter Games proved to be the turning point, as Russia improved upon its Salt Lake City results.

Now, sporting successes are constant, convincing, and complete. And as I read about the Russian men's soccer team, which just beat Holland in a game televised on ABC, I'm particularly impressed that it's the youngest team in the tournament.

This means a lot, perhaps most of all that the mantle has been passed from one sporting superpower to another.

Who knows if Russia will win the Euro. They face the winner of Spain and Italy, two good teams, but the message has been sent to anyone listening: Russia's back, it's hot, it's young, it's confidant, and it likes sticking it mightily to those who root against Russia and the Russian people.

Terry Wogan !
Terry Wogan had this to say: "Tennis, basketball, ice hockey, Eurovision, and now soccer? When will this nightmare end? Russia has begun to be a bit bearish again and the Slovakian referee clearly favored the communists. If people enjoy it as entertainment, that's great, but it's all a bit empty and meaningless as a competition. I will have to decide whether I want to cover yet another one of these debacles again"

Gazprom seen as potentially world's largest company (RosBusinessConsulting, 6/17/08)

If Gazprom's capitalization reaches a fair market level, it will be the world's largest public company, Chairman of Renaissance Capital Group Alexander Pertsovsky told an annual investor conference. Only two companies, LUKoil and Gazprom, are undervalued by an amount equal to the Russian market volume in 2003, he added. He believes the capitalization of Russia's oil sector could more than double against the backdrop of Russia's impressive economic and financial results of late. [CW: The argument is that on a per reserves basis, Russian energy companies are undervalued. But, to be fair, Russian companies don't benefit from ultra-high oil prices like Western majors do due to Russia's export tax. Don't get me wrong, I totally agree with the export tax and definitely think it's the right way to go, but that's the reason why Russian energy companies give off the appearance of undervaluation] Pertsovsky expects Russia's GDP to top $5 trillion in the next seven or eight years, yet to sustain its development Russia needs huge investment in its national infrastructure. [CW: I guess he means in purchasing power parity terms. Reaching $5 trillion would be a major event, considering $5 trillion is more than the twice current level. But it's more than possible and if you've become a believer in the Russian economic juggernaut and realized that the story has evolved beyond oil and gas exports and commodity prices, you'd know it's doable. Russia would become the third country in history to reach $5 trillion, after the United States and China. Who would have thunk any of this in 1998?]

In addition, the Russian financial sector has found itself in an ideal situation, when the world's traditional financial centers are failing as intermediaries, and a new type of financial relations between growth economies is emerging, Pertsovsky said. [CW: I agree]

I've scanned through some articles about Tony Blair's comments at Renaissance Capital's 12th annual Investor Conference. Here's a short summary of his major points:

- "Power is shifting to the East and it is shifting fast – not just to China and eventually to India but also to the Middle East and to Russia"

- The West faces stagnation if it does not strengthen ties with the emerging powers. "We need strong strategic partnerships between the West and China, the West and India, the West and Russia"

- The West has to reject the temptation to pursue anti-immigration policies or to pursue economic protectionism. "World economies must be open to be successful, Western countries must enter into strategic partnership with eastern ones"

- The West is still coming to terms with Russia's new economic strength. "They have a pride in Russia today they didn't have ten years ago." "We, in countries like mine, have to understand that change in psyche"

- A solution to global issues such as climate change, nuclear, and energy policy is not possible without Russian involvement

- Putin gave Russia stability and strong leadership in his eight years as president

sources: The Telegraph | DPA | Russia Today | The Guardian | Kommersant


Regarding Blair's assertion that the West must understand Russia's newfound pride, one observer noted that this confirms "the Kremlin line, portraying the country as a mistreated victim deserving of exceptional treatment." I totally agree and well remember what Putin said on 7/24/07:

They need to change their thinking and not tell us to change our Constitution. Let me tell you why. They need to change their thinking because what they are suggesting is clearly a relic of a colonial-era mindset. They have perhaps forgotten that Britain is no longer a colonial power, that they have no colonies now, and that Russia, fortunately, never was a British colony. Giving this kind of advice is an insult to them themselves and shows that their mindset is still stuck in the twentieth or even in the nineteenth century.

Anyway, the record has been set straight and if I were Russia I would accept Blair's courageous words as a personal apology. Not to rub it in or anything, but the guy pretty much admitted it - in Moscow - and I think that's good enough.

Moscow to be major world financial centre - bank, by Michael Stott (Reuters, 6/16/08)

Highly liquid domestic markets, strong economic growth and a position at the heart of a booming region will make Moscow one of the world's top financial centres inside a decade, a senior Russia-based banker said on Monday.

"I have no doubt that this will be one of the biggest capital markets in the world and Moscow will be the second financial centre with London (in Europe) ... within the next five years or so," Stephen Jennings, the CEO of independent Moscow-based finance and investment conglomerate Renaissance Group told Reuters in an interview.

"The size of markets we have now (in Russia) are far beyond the wildest dreams of anyone five years ago."

Russia is currently in the tenth year of an economic boom, with GDP growing 8.5 percent in the first quarter of 2008. It was the world's third-biggest IPO market last year and Jennings said there was an "enormous pipeline" of potential issues.

"The underlying investor appetite is there. We just need a little bit of stability in the global markets," he said.

Renaissance is holding its annual investor conference on Monday and Tuesday and Jennings said there was tremendous interest in domestic growth plays in Russia, including government plans for big infrastructure investment.

"The Russian infrastructure play is one of the most exciting in the world in terms of potential returns," he told Reuters.

Prime Minister Vladimir Putin last month requested parliamentary approval for $550 billion in infrastructure spending between 2010-2015 and the Kremlin plans to spend at least double that figure by 2020.

Jennings said the ball was now in the government's court to create the right kind of institutional framework to attract major foreign investment into Russia's infrastructure.

"The government has to play its role in terms of making the rules of the game clear and transparent," he said. "Integrity of long-term tariff structures, enforceability of those arrangements and so on."

INTEGRITY

Asked about the controversy surrounding Russia's second-biggest foreign investment, the troubled joint venture oil company TNK-BP, Jennings said institutional integrity was Russia's "biggest issue".

Russian shareholders have been publicly arguing with co-owners BP over TNK-BP's future strategy and ownership and the company has been attacked on nine separate fronts, including lawsuits, tax investigations and raids by the security services.
"Ideally, it shouldn't be a political issue," Jennings said.

"It shouldn't be a legal and regulatory issue, it shouldn't have anything to do with tax authorities or security services. It should be resolved in the courts and the question is: Is Russia really at the stage where it's ready for that to happen?"

The Renaissance head said it was still too early to judge how new President Dmitry Medvedev's government, which took office last month, would treat foreign investors.
"They're saying the right things but the proof of the pudding is in the eating and it's very early in his presidency," he said.

Jennings rejected predictions made by Goldman Sachs last week that Russian growth from 2010-2020 would be in the region of 2.9-3.3 percent per year, saying he saw average growth rates of over 5 percent.

"Russia is converging with the rest of Europe," he said. "The likelihood that Russia will not converge over that kind of timeframe to be within the band of middle income European countries is quite low. That requires significantly higher growth than 3 percent."

So this morning I did my daily blog roll thingy. At Publius Pundit, I read a prejudiced and completely misinformed anti-Russian POS by Kim Zigfeld (speaking of feces).

Anyway, blogger Timothy Post had a really good reply to Zigfeld's hate-speech; I think something about her not knowing anything about Russia and being intoxicated by hate and/or jealousy of it.

Cool deal and good enough.

But, when I checked Publius Pundit again just now, lo and behold, Post's reply has been removed !

Are the Russophobes this desperate to resort to... censorship ?

Russia has discovered the formula to neutralize Russophobes and it is not by debating them or appeasing them. Instead, Russia can and must become more and more successful - in everything.

Be it economic growth, widespread prosperity, victories in sports, or a confidant and assertive foreign policy, any and all of these things inflict some sort of damage on the fragile facade that Russophobes are desperately trying to hold together.

With Russia's consistent successes over the past few years, Russophobes realize that they're losing the battle. For this reason, desperation has shown its shadow and that's why, in my opinion, good and well-informed people like Timothy Post are having their replies censored - in this case completely deleted.


By the way, censorship is a 5 point violation. So here are the new official point standings:

1. Gary Hart 47 points
2. Michele Obama 31 points
3. Ron Paul 20 points
4. Alf 3 points
5. Kim Zigfeld 2 points

Alexei Miller's Bluff on $250 Oil, by Robert Amsterdam (Robert Amsterdam, 6/11/08)

It will remain open for debate what Gazprom's and Alexei Miller's true intentions were this week when he announced the company's perspective that the price of a barrel of crude oil will rise above $250 as soon as next year, but we can see that 1) he is likely dead wrong [CW: If Robert Amsterdam de Nostradame is so sure about the price of oil, he can make a fortune in the futures markets. But that would mean putting his money on the line, and people become less sure of themselves when it comes down to that. For sure, Amsterdam can't make these bold assertions without a qualification. Anything can happen. And, to be fair, Miller said that $250 could be reached as soon as 2009] and that 2) this is a dramatically irresponsible and reckless sort of announcement for an industry leader to make. [CW: Is the responsible oil executive the one who says that everything is fine and dandy, peak oil is just an urban legend, supply is plentiful - always and forever, and that there's nothing to worry about? Or is the responsible oil executive the one who acknowledges, frankly, that there's unprecedented demand and competition for resources and assesses that, because of this reason, the price of oil could dramatically rise in the future?]

Miller's projection boldly goes far beyond even the most adventurous predictions, such as that of Goldman Sach's theory of a "super spike" in demand to drive oil to $200 (Goldman, like many others, is heavily hedged into oil). Many other analysts predict maximum short-term prices rising to between $150 and $200, and others are calling it bubble phenomenon, and that prices could soon sink back to $115. [CW: If oil rises from $137 to $200, it would be an increase of 46%. From $200 to $250, it would be an additional increase of 25%. $200 and $250 are really just a skip and a jump from each other and with these $6-10 daily movements we've been seeing, Miller's basically in the same neighborhood as Goldman. Now, remember, Goldman increased their oil target recently from $115 to $200. Banks revise their targets all the time and, who knows, maybe in a couple of months $250 will be in the lower part of the analyst's target range, while $400 becomes the new $200]

Already Gazprom's $250 oil bluff has received some harsh reactions. [CW: Completely wrong terminology! In no way can this be regarded as a "bluff" because there's nothing to bluff about - oil prices are determined by the markets. This is merely an assessment of the industry, and cannot be classified as a "bluff"]

Peter Sutherland, Chairman of BP, took the opportunity to outright reject this "apocalyptic" forecast, remarking that he doesn't believe we are in for this kind of demand spike. [CW: lol. We're in a demand spike already - and everyone knows so] One commentator mentions that as an energy monopoly, Miller has a considerable interest in pushing speculation on oil prices, so "his expectations of crude nearly doubling after already rising nearly 45% this year has to be taken with several billion grains of salt. (...) But $250 just seems crazy - even with strong demand from India and China and tight supplies." [CW: lol. If Amsterdam clicked on the Talkback link on that page, he would have seen that most readers disagreed with the "commentator" and agreed with Miller] The United Kingdom is on the brink of experiencing a rush of panic buying.

When Goldman Sachs presented Arjun Murti's super spike paper, there was at least abundant statistical analysis to support the argument - and this was the same analyst who correctly predicted in 2005 that oil could receive a super spike to rise to $105. [CW: Again, Goldman and Miller are coming to the same conclusion - far higher prices down the road. $200 and $250 are in the same neighborhood and, in all likelihood, if and when oil reaches $200 Goldman will raise its target to $250 or higher. While Goldman and Miller are in conformity, Lehman Brothers thinks oil will go down - so that's the only argument Amsterdam can make. I mean, to argue that Miller's estimate of $250 is inconsistent with Goldman's estimate of $200 is completely ignorant]

However when Alexei Miller made the $250 prediction, he offered no statistics, no charts, and no basis for the declaration. [CW: Amsterdam's grasping at straws again. The lack of common sense of this guy totally baffles me sometimes] The Wall Street Journal reports that like most infrequent Gazprom meetings, investors were provided with next to nothing substantive with regard to company financials, business plans, or strategy.

I happen to be in the camp of those who think the $250 price prediction, or even the $200 price prediction, is a bluff. [CW: So how exactly can this "bluff" be "called"? (maybe by not cutting back and consuming more oil - that will really show them!) In reality, no one's playing poker and this isn't a "bluff" because there's nothing to "bluff" about] Most importantly, we can already see that demand is showing signs of slowing down - even the SUV-loving Americans are changing their consumption habits, driving less, and coming up with other ways to burn less petrol. The U.S. Energy Agency and International Energy Agency are already cutting their forecasts for oil demand. [CW: For weeks now, inventory reports haven't signaled any of this. It might be true, but it's too soon to tell and many analysts think that emerging Asia, Russia, and, fittingly, the Middle East, will "pick-up" the slack and "make-up" for lower demand in the United States and Europe. A net-zero effect, globally]

There are of course several factors pushing prices up, including the slipping value of the dollar, OPEC reserves, and rampant speculation by the banks. Our energy correspondent Derek Brower (with whom I jovially disagree with from time to time), has a pretty comprehensive breakdown of the recent price surge that makes a clear argument that we aren't dealing with a supply issue - so no matter what kind of demand projections we see from India and China, we still have plenty of product (for example, Brazil's new mega-field). [CW: "British energy giant BP said on Wednesday that worldwide crude oil production fell 0.2 percent last year, in a global market report which highlighted tightening energy supplies." If Amsterdam and/or Brower were to pay attention to the financial news , they would know that the new consensus is that oil has risen primarily because of supply and demand issues. Most recently, John McCain joined the chorus]

But what is troubling about Miller's statement is not that he is likely to be proven wrong, but rather the timing with which he chooses to stoke consumers nerves. With the escalating fuel prices, local populations in a number of countries are nearing a state of protest, riots, and panic buying. The Spanish government has had to enact an emergency supply plan in the wake of a crippling trucker's strike. Public discontent is quickly creating a political crisis - even leading to a potential crackdown on speculators. [CW: If Amsterdam tells Goldman Sachs the same thing they'll laugh at him]

At a moment in which private oil company executives are at great pains to talk down any energy crisis and guard their high earnings, Alexei Miller's alarmist call from a monopolist energy giant is a particularly insensitive gesture to international partners and consumers, and an illustration of why Gazprom encounters so much resistance in Europe and elsewhere to be treated as a normal company. It is moments like these which explain Western distrust of Russia as a reliable energy partner. [CW: Grasping at straws again and again and again]

[CW: By sheer dumb luck, Robert Amsterdam might claim victory in a couple of months if oil prices fall a bit, like I think they will. But, that said, the points he made in this article were laughable to me. I don't know if he does this because of ignorance or prejudice, but it just comes out looking totally pompous, inconsistant, and hypocritical on paper. In no way can he be taken seriously unless you're hooked on Russophobia and need a dose of his rants to get you through the day]

I vaguely remember SWOT Analysis from an Introduction to Management class back in college, so I had to consult wiki on this one:

SWOT Analysis, is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective

Wiki goes on to define SWOT:

Strengths: attributes of the organization that are helpful to achieving the objective.

Weaknesses: attributes of the organization that are harmful to achieving the objective.

Opportunities: external conditions that are helpful to achieving the objective.

Threats: external conditions that are harmful to achieving the objective.


The actors that I will analyze are Russia, the United States, and the European Union. Besides Russia, I don't claim to be an expert on any other region, but don't hold that against me. I mean, I am an American and I sporadically check-out what's going on in this country (and I do work at an investment bank in Midtown Manhattan so a lot of stuff happens around me). I'm also fairly aware of the European Union, having traveled there on several occasions. My dad was also born in the European Union.

Today I shall begin with Strengths. Once more, Strengths will only identify positives inside the organization. Hopefully SWOT Analysis will be completed this week; it all depends on the weather.

Russia

∞ Fast growing middle class
∞ Availability of fossil fuels
∞ Availability of many strategic metal and mineral resources
∞ Financial resources (F/X reserves, stabilization fund)
∞ Economic stability (high budget and trade surpluses)
∞ Strong economic and industrial growth
∞ Science and technology advancements and potential
∞ Well-planned and successful educational system
∞ Nuclear deterrent
∞ Geostrategic location dominating the Eurasian landmass
∞ Strategic relations with Old Europe, Central Asia, China, India, and many developing nations
∞ Earned historical trademark of defeating emperors and world conquerors

The United States

∞ High standards of living
∞ Expanding population
∞ Availability of fossil fuels (albeit the exploitation of which is severely limited by the government)
∞ Availability of many strategic metal and mineral resources
∞ Food production
∞ Monopoly share of many industries globally, including entertainment, consumer products, IT, pharmaceuticals, and finance
∞ Proven ability to print and/or borrow an infinite amount of finances to keep "party" of mammoth budget and trade deficits going
∞ Domination, along with the European Union, of the international financial and political institutions formed after World War II
∞ Political stability
∞ Science and technology advancements and potential
∞ Nuclear deterrent
∞ Conventional military deterrent
∞ Geostrategic location making invasion impossible
∞ Strategic relations with the UK, New Europe, Japan, Canada, and Australia

The European Union

∞ High standards of living
∞ Virtually "borderless" (territorial expansion is totally possible)
∞ Food production
∞ Strong market shares in several niches, like premium autos, luxury apparel, mobile phones, etc.
∞ Economic stability (shaky and not on par with Russia, but good for now)
∞ Domination, along with the United States, of the international financial and political institutions formed after World War II
∞ Pretension of moral authority after American embarrassments in Iraq and Guantanamo
∞ Geostrategic location close to key energy exporters - Russia, North Africa, and the Middle East
∞ Ability to "split" foreign policy; half the group is friendly with Russia, the other half with the United States

From Gazprom wants Azeri gas, by John C.K. Daly (UPI, 6/6/08):

On June 4 U.S. Deputy Assistant Secretary of State for European and Eurasian Affairs Mathew Bryza, speaking at the Caspian Oil and Gas-2008 conference in Baku, could not resist floating the idea that perhaps Gazprom did not have enough gas to fulfill its European contractual obligations, drawing an immediate aggrieved riposte from Gazprom spokesman Sergei Kuprianov, who sniffed, "Gazprom has always performed its contractual obligations, and there is no doubt that it will do so in the future," adding, "Gazprom's gas production in Russia has increased considerably over the past five years, unlike that of many other producers, including in the U.S."


From Gazprom ponders building Russia-Alaska gas pipeline (RosBusinessConsulting, 6/7/08):

Miller also noted that Gazprom's interests were not confined to the European continent. He reiterated that, while natural gas production had fallen more than 30bn cubic meters in the US since 2001, it had climbed 70bn cubic meters in Russia during the same period. Furthermore, Gazprom has experience in gas transportation through pipelines, as well as all the necessary technology, Miller stated.


The numbers speak for themselves. Western energy companies like to complain about their "lack of access" to 90% of the world's energy reserves, but they are also failing miserably with existing fields in North America and the North Sea, not to mention complex fields like Kashagan, where they're criminally over-budget and horrendously behind schedule.

Whatever of "advanced technology" and "superior management skills" ? lol

And as far as access goes, how about the United States itself. The Governor of Montana was on CNBC last week complaining of this. He mentioned that more than 50% of our reserves are in areas closed to drilling, for example.

Hypocritically, we complain if Russia chooses to employ any environmental sense. At Sakhalin, we translated Russia's strict environmental policies as "Kremlin-linked resource nationalism" (we care to forget that Gazprom paid the Sakhalin II shareholders something like $9 billion for half of that project). When Russia chooses to take a cautious approach in the exploration and production of its precious Arctic shelf, Europeans claim that it's because of "state-run Gazprom's ineptness" and cry-wolf about an upcoming natural gas "gap." I mean, the hypocrisy just gets silly.

Anyway, Gazprom sure seems confidant of itself now and it's choosing to become more and more assertive. As far as dissing the United States goes, does Gazprom know something the public doesn't - i.e. about a possible peak in North American natural gas?

Medvedev Blames U.S. For Economic Crisis, Offers Moscow's Help (RFE / RL, 6/7/08)

Russian President Dmitry Medvedev, in his first major speech on economics since taking office, has blamed the United States for the global economic downturn and offered Moscow's help.

Medvedev gave the keynote speech at the St. Petersburg Economic Forum, Russia's main annual event for international investors, and explained his views about the reasons behind the current financial crisis.

"The failure to properly assess risk by the largest financial corporations, combined with the aggressive financial policies of the world's largest economy, have led not only to losses for those corporations," he said, "but unfortunately have impoverished the majority of people on the planet."

Medvedev also said the gap between the United States' leading role in the global economic system and its real abilities was another "key" reason for the crisis. He said that while Russia was helping to boost global energy security by developing its energy sector, its partners concentrated on investment in biofuels, inflating food prices around the world.

Surprising Tone

RFE/RL Russian Service correspondent Danila Galperovich, who attended the forum, said Medvedev's tone probably surprised many observers.

"I think the surprise was that the rhetoric of Mr. Medvedev was the same, in his harsh approach to the West as was [heard] in the speeches of Mr. [Vladimir] Putin," Galperovich said. "Everyone who followed [Medvedev's] recent speeches probably expected him to be softer, to be more cooperative with the West."

Medvedev, who took over as head of state last month after Putin's eight-year presidency, said Moscow is ready to be part of the solution.

"Russia today is a global player, and understanding our responsibility for the fate of the world, we want to take part in forming new rules of the game," Medvedev said, "not because of our alleged imperial ambitions, but because we have the ability and corresponding resources." [CW: The idea that Russia has a historic responsibility is an interesting one; Medvedev used the same expression last month when speaking to W.W. II veterans. American politicians like to use the same language. It's definitely something people can stand behind]

Russia's economy has expanded steadily under the presidency of Putin, who now holds the post of prime minister, on the back of soaring energy-export revenues. The country is the world's biggest gas producer and its second-biggest oil exporter.

Medvedev said Russia wants a key role in reshaping ineffective international institutions. Recalling Russia's past as a grain exporter, Medvedev pointed to the country's potential as a food supplier to overcome the food problem. He said Russia could also convene an international conference on the financial crisis involving the heads of the biggest financial companies and leading financial analysts "as early as this year."

System 'Cannot Meet Challenges'

Russia's new president said Russia wants a key role in reshaping international institutions, saying they are not ready to remedy the world's economic problems.

"The crisis unfolding before our eyes -- the financial crisis, the rise in prices of natural resources and produce and also a series of global [natural] catastrophes -- clearly demonstrate that the current system of global institutions cannot meet the challenges before it," he said.

Medvedev said the world also lacks liquid investable assets because of disappointment with the U.S. dollar. He said Russia would adopt an action plan in the near future to become a global financial center and make the ruble one of the key leading regional reserve currencies.

"Turning Moscow into a powerful financial center and the ruble into one of the leading regional reserve currencies are key elements will ensure the competitiveness of our financial system," he said. "A plan of action to put these policies into effect will be adopted in the very near future."

Medvedev also said recent moves to liberalize Russia's domestic gas market and reduce taxes on the oil sector would help stabilize global energy markets.

[CW: Earlier this year, Medvedev condemned the United States as a "financial aggressor" and "economic terrorist" that forced its monetary unit and free enterprise standards on the rest of the world. During the 2006 World Economic Forum in Davos, Medvedev said that "the current state of the economy in the United States -- the issuer of the world's sole reserve currency -- raises concerns... and gives us the moral right to initiate a discussion about the need for more balanced rules in this area." And, today, Medvedev lambastes the United States for overreaching its economic capabilities, citing its "economic egoism" and "economic nationalism." Suffice to say, this guy's about changing the rules of the game, taking power away from those who rigged the system, used and abused it, and gave it enough power to come back and destroy them. Medvedev's not about overhauling this system, he's about completely bringing it to an end, replacing it with equitable, sustainable, and transparent rules-based system that is capable of combating financial crisis and spreading prosperity and economic stability throughout the world. This is major stuff]

Russia may double gas price for Ukraine - report (Reuters, 6/6/08)

Russia may charge Ukraine almost twice as much for its gas exports next year to pass on a price increase from central Asian producers, Interfax news agency quoted Russia's foreign minister as saying on Friday.

Sergei Lavrov said Russian president Dmitry Medvedev met with Ukrainian president Viktor Yushchenko to discuss the sensitive issue during the economic forum in St Petersburg.

Ukraine depends heavily on Russian natural gas supplies and also serves as a transit country for the bulk of Russian gas exports to Europe, which account for a quota of European Union needs.

Elsewhere at the forum, Lavrov said they would rise significantly without saying specifically that they would double.

"From Jan.1 Central Asian countries are switching to European prices in their gas sales...And this gas goes through Russian territory," Lavrov told reporters after the meeting.

"So the Russian president reminded the Ukrainian president Yushchenko that from Jan.1 the gas price for Ukraine will rise significantly," he added.

Russian gas export monopoly Gazprom raised its gas price for Ukraine to $179.50 per 1,000 cubic metres (tcm) in 2008, up from $130 in 2007. The increase led to a hike in inflation and another turn of political instability in Ukraine.

For comparison, Gazprom charges Europe around $400 per 1,000 tcm.

Russia has said it wanted to bring gas prices for Ukraine and other former Soviet countries to its European export prices by 2011 after having supplied them with cheap gas for 15 years. But it has promised to raise the prices gradually.

Uzbek, Turkmen and Kazakh gas helps Gazprom, the world's largest gas producer, cover gas demand in Russia, the former Soviet Union and Europe amid stagnant output in Siberia.

Gazprom last year agreed to raise the price it pays for Turkmen gas to $130 per tcm in the first half of 2008 and $150 in the second half, up from $100 last year.
Uzbekistan, another major Central Asia producer, also asked Gazprom to pay more for its gas from $100 per tcm it charged in 2007. The two countries agreed on gas price for 2008, but did not disclose it.

Repeated gas pricing disputes between Moscow and Kiev have led to the interruption of Russian exports to Europe, causing jitters among European politicians and industry.

Ukraine consumes around 75 billion cubic metres (bcm) of gas per year and imports 55 bcm.

(Reporting by Oleg Shchedrov, writing by Tanya Mosolova)

[CW: This is tantamount to blackmail ! No, just kidding, I'm not Dick Cheney (p.s. how absurd does his Vilnius speech sound now, looking back?). This is just reality. No cartels, no subsidies, no discounts - just whatever the market dictates. And if it's painful, tough, because it's painful for everyone - including countries Russia's on good (Belarus) and bad (Ukraine) terms with. Fair is fair and, fortunately, I think that Ukraine has begun to understand this and will do the right thing (stop complaining, pay-up, and conserve and adjust its economy as needed and where necessary)]

Matthew Bryza: "Gazprom seems not to have enough gas to execute commitments before Europe" (Today.Az, 6/4/08)

Gazprom's intention to buy Azerbaijani gas by market prices on the basis of a long-term agreement may be connected by the lack of sufficient resources of the company to execute commitments before the European countries, said deputy assistant US Secretary of State on Europe and Eurasia Matthew Bryza.

It should be reminded that such a proposal was voiced by chairman of the Russian company Alexei Miller during the meeting with President of Azerbaijan Ilham Aliyev during the working visit to Azerbaijan on June 2.

"Very many companies are ready to purchase Azerbaijani gas, which proves importance of Azerbaijani reserves. As for Gazprom, it seems to have insufficient reserves for execution of contract duties on supplies to Europe", said Bryza.

[CW: I get the sense that Bryza's ticked off that Azerbaijani gas is destined to be sold at market prices. As far as Russia goes, I'm not completely certain. I mean, it might have enough gas to fulfill its commitments, might not. Regardless, I am beginning to think that Russia's long-term game plan is to stop being a natural resource supplier. It has the human capital and is diversifying its economy at a pace to make this a reality relatively soon. So, in a few years Russia will be competing for the world's resources, not the opposite. A geostrategic 360]

Last night, various news agencies reported that Gazprom has offered to buy Azerbaijani natural gas at market prices under a long-term contract, with a Gazprom delegation arriving in Baku to meet President Ilham Aliyev.

This is major coup with far-reaching implications for Europe and Nabucco, but most of all for the nation of Georgia.


Right after the Cold War, Russia felt an obligation to sell natural gas to the FSU at prices well below what it could get in Europe. Other gas-rich newly independent states followed Russia's example, including Azerbaijan, Turkmenistan, and Kazakhstan.

For sure, it was a clusterf#$%.

Things began to change rapidly when Russia famously asked for market level prices from Ukraine and Belarus and Turkmenistan demanded better prices from Russia. But the major turning point, the gamechanger so to speak, was March 11th of this year when Gazprom confirmed that it will be buying natural gas from Central Asia at market levels, beginning in 2009.

To everyone paying attention, this signified that the era of natural gas subsidies in the FSU had officially reached an endpoint.

Therefore, it is of no surprise that Gazprom is up for paying market prices for Azerbaijani gas!

Now, who knows how Georgia can respond - I mean, there's only one response it can make, but can it afford it?

Yes, no, or maybe, anyway you spell it, Gazprom comes out a big winner because these are the three possible scenarios (in order of likelihood, from most likely to least likely):

1. Georgia matches Gazprom's offer and Azerbaijani gas goes to Georgia. This verifies that the era of market prices is the status quo. It also gives Gazprom added leverage in negotiations with Ukraine and Belarus.

2. Georgia doesn't match Gazprom's offer and Azerbaijani gas is sold to Russia. Azerbaijan gas imports to Russia mean it'll have to use less of its own, saving it for later. Any possibility that Nabucco can be supplied from Central Asia simply evaporates (I happen to think, however, that Iraq will eventually supply Nabucco).

3. Georgia doesn't match Gazprom's offer, but Azerbaijani gas is still sold to Georgia at subsidized prices. This will create chaos down the road for the two parties because the economic community agrees that subsidies like these aren't sustainable and lead to economic and political disorder.


In regards to Europe, I have a feeling that some anti-Russian Europeans think that once Nabucco was completed, their "buddy" Azerbaijan would sell gas to it at preferential terms, say $100 per 1,000 cubic meters or something like that. These women and men are quite bitter that Russia has grown wealthy by selling it gas at prices determined by the... market.

These same officials feel that that Azerbaijan wouldn't look after its own interests like Russia did. They feel that the laughable price $100 per 1,000 cubic meters would suffice... for the Azerbaijanis.

Fortunately, the world has changed and people like these are in for a rude awakening. Because I am certain that, in the end of the day, Azerbaijan will look after its own interests and make the right decision which, in all fairness, is legitimately the right decision: cross-border subsidies and preferential prices are a thing of the past.


Here's a breakdown of Georgia's natural gas imports. They currently come from three separate sources (references below):

- Approximately 59% from Russia at a cost of $235 per 1,000 cubic meters

- Approximately 26% from the State Oil Company of Azerbaijan (SOCAR) at a cost of $120 per 1,000 cubic meters

- Approximately 15% from the BP-operated Shah Deniz gas field in Azerbaijan at a cost of $63 per 1,000 cubic meters

[as a comparison, Russia sells natural gas to Europe at a price exceeding $370 per 1,000 cubic meters - and this is the price Gazprom's implying when it mentions market prices]

[references: source1, source2, source3, source4, source5]

Woah, this just came across the wire:

Dershowitz to Argue Against BoNY in Russian Money Laundering Suit (PRNewswire, 6/2/08)

Harvard Law Professor Alan Dershowitz, Along with Professor G. Robert Blakey the World's Leading Authority on RICO, and U.S. Federal Appellate Judge George C. Pratt to Provide Expert Testimony Against the Bank of New York

A group of the nation's top legal experts have agreed to appear in a Moscow court in support of the Russian Government's $22.5 billion RICO lawsuit against the Bank of New York Mellon (NYSE: BK). Attorneys representing the Russian Customs Service announced today that they will be submitting expert testimony from a team of preeminent legal scholars including Prof. Alan Dershowitz of Harvard Law School, Prof. G. Robert Blakey, the principal author of the RICO Statute, and the Honorable Judge George C. Pratt (ret.) of the U.S. Court of Appeals for the Second Circuit.

The case against the Bank of New York hinges on the Russian Court's interpretation and application of U.S. RICO law. BoNY has argued that the RICO claim is being misapplied in this case. But Russia's legal team maintains that not only is the application of RICO proper, but given the specific elements of RICO that are involved; the legal arguments against the bank are extremely compelling. Each side has been asked by the Court to provide expert testimony regarding RICO and its applicability in this case.

G. Robert Blakey, universally considered to be the foremost authority on RICO law, will be testifying on behalf of the Russian Customs Service. Blakey was the principal draftsman of the RICO Act of 1970. In addition to authoring the original legislation, he has written and lectured extensively on the subject and his opinions and written scholarship on RICO are regularly referenced by both U.S. and foreign courts -- including the United States Supreme Court -- when interpreting RICO laws.

BoNY, for its part, hired career politician and former Nixon appointee Dick Thornburgh to give an opposing view on RICO. Thornburgh will have a formidable task trying to debate the legal subtleties of RICO, such as "congressional intent", with Professor Blakey. Dick Thornburgh may try to divine the original intent of congress back in 1970, but during that period Blakey was actively deliberating with members of congress, while he was drafting the actual legislation. It is very difficult to argue with somebody who can say, "I know the correct interpretation of the RICO statute, because I wrote it."

Russia's attorneys are confident they will be able to demonstrate to the Russian Court that they are seeking the proper application of U.S. RICO law against the bank. Russia's lead U.S. counsel, Steven Marks says "it is reckless for the Bank of New York to continue proclaiming that this lawsuit is 'totally without merit' and that the bank is 100% protected. The willingness of Professors Dershowitz and Blakey, as well as the Honorable Judge Pratt, to provide independent legal testimony on Russia's behalf speaks volumes about the legitimacy of the claims against the Bank." It also undermines the Bank's official position that no court in the world will recognize a Russian verdict. Mr. Marks dismisses that type of absolute statement as, "absurd on its face" and "a transparent attempt at 'PR spin' by the bank, aimed purely at short-term damage control."

The trial has now entered its final stages according to Maxim Smal, a lawyer representing the Russian Federal Customs Service. The court will hear legal arguments by the experts who are scheduled to appear in Moscow at the next hearing on June 30th. "I believe the case is nearing an end, and if not June 30th, then a subsequent hearing may be the last one," Smal said.

[CW: This is just the tip of the iceberg. Foreign corporations and governments, as well as some Russian citizens, saw 1990's Russia as the wild wild west. They took advantage of the situation and stole from Russia and the Russian people untold fortunes, numbers that most people would be unable to fathom. And, frankly, the situation was such that no one at the time would ever have imagined Russia reemerging so quickly and so strongly to be able to take control of the situation and put itself in a position to demand justice and, now, restitution]

Russia's very popular in Asia, including with the great powers there - China and India.

Russia's also becoming more and more popular with many nations of Europe, notably France and Germany.

But the question remains - will Russia try to consolidate its newfound popularity?

Bridge
Under the Bridge scenario, Russia forms an informal grouping including both its allies in Europe and Asia. The group's authority can be political, economic, scientific, humanitarian, and cultural in nature, but it can't include defense cooperation.

Although this sounds like a paper tiger, it's really not. It will have wide-ranging effects, including amongst the nations not invited to participate. Among other things, the grouping could look to replace the biased anti-Russian organizations based in Europe, like OSCE and the ECHR, and provide a platform for a honest dialogue between civilizations.

Pact
Pact is the most extreme case, in my opinion. It entails Russia forming a defense and political pact, a counterweight to NATO, composed of Asian and European nations (including many that would have to give up NATO membership).

While this is highly unlikely, it's not completely impossible. I mean, I can imagine some scenarios where shortsighted hawks in Washington and London go so "over-the-line" that it breaks-up our North Atlantic alliance.

AM / PM
AM / PM is basically what Russia's going for currently. Russia feels that the world is stable enough and it's capable enough to not intermix its allies in the East with its allies in the West. For example, it is enhancing the Paris-Berlin-Rome-Moscow axis while also forging ahead with the SCO and the Russia-India-China troika.

I agree that this is the best policy right now and a great East / West type hedge for the one country that dominates the Eurasian landmass.