Thursday, August 7, 2014

Putin Is Check-Mated

Things have gone horribly wrong for imperialist Vlad Putin.  At one point, it appeared that he had the upper hand in the Ukraine having sent in his thugs to lead Russia sympathizers in Eastern Ukraine. This after he illegally seized the Crimea.   But the downing of flight MH17 changed everything and galvanized previously reluctant European support for real sanctions against Russia. And it's about time!

Russia and Putin want to re-establish a Russian empire again and upset the entire post-Cold War order.  Unacceptable!

Putin's behavior after the crash, the brutish treatment of the bodies and his refusal to act in a helpful way to the crash investigators and Dutch officials shows the true nature of the still-evil Russian empire.  Not a conciliatory word was spoken. In fact, battle erupted at the site with Ukrainian forces pushing eastward.  So, the Europeans and US enacted more sanctions -- this time with more bite.   But then yesterday Putin, in a tit-for-tat, enacts his own sanctions on the West.  Meanwhile, Ukrainian government forces have put the separatists on the ropes in Eastern Ukraine.  Local pro-Russia support has failed to materialize and the Ukrainian forces are about to win control.

Worse for Putin is that the prize in all of this is the Ukraine.  The Ukraine is in dire economic straits and is hardly an economic prize for Russia.  And the Ukrainian people don't want to be part of a USSR-style thugocracy.  It seems to be all about Putin's ego and re-establishing the old Soviet Union empire.

As of today, with 20 to 40,000 Russian troops again at the Ukraine border threatening an invasion, NATO's General Rasmussen spoke and warned Russia to pull back from the brink.  And just a few moments ago, Canada, a NATO member, has offered to send military equipment to Ukraine.   It's about time!   Obama doesn't have the balls to do anything like that.  He likes to lob words at Russia.  Putin was (foolishly) Obama's best friend after all.  Obama keeps trying to save face but he is thoroughly discredited in every way at this point.
 
So, Vlad, after fomenting a nationalistic and 'macho' chauvinistic fever at home, can't withdrawal or relent.  He would be seen -- GASP! -- to be weak!  But an invasion would be a disaster for Russia. The West could cripple his economy by just halting the flow of funds and his access to foreign banks.  Russia is clearly integrated into the international banking system, so the West has him by the balls.   Yeah, he could halt oil and gas sales to the West, but it would cripple Russia in a few months. It's their entire economy.  Putin has done nothing to build up his nation's industrial base and only has oil and gas in his "hollowed-out" economy.  Europe's LNG import facilities are hardly being used and international LNG supplies are improving now that Japan has committed to restarting some nuclear reactors (and reducing LNG imports).  And Russia's economy is about the size of California's.   If Putin picks a fight with the West, it faces a David and Goliath economic showdown with a $40 Trillion economy of the West versus a measly $2 Trillion Russian economy.  The West can crush Russia..

Already the ruble has crashed.  Interest rates on their 10 year note is 10%. 

In a conflict with the West, his only ally is China and a few BRIC countries.  And China isn't exactly a friend.  In fact, (h/t to Ambrose Evans-Pritchard) China could take advantage of a crippled Russia and seize Eastern Russian lands that were seized from China in the Qing Dynasty in the 19th century. China may be the big winner in this scenario but this would send another red flag up the pole regarding another imperialistic problem child for the West.

Either way, Putin is screwed.  However, it IS possible that Merkel will offer a face-saving deal for "secure" natural gas supplies in exchange for an agreement to not invade -- or something like that.  I suspect he'll go down in a blaze of gunfire rather than slink away defeated and -- GASP! -- weak.  Batten down the hatches.

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