Date: Sat, 23 Nov 2002 08:13:54 -0200 From: "Alexandre Fenelon" <afenelon at zaz.com.br> Subject: Russia and Iraq
Any comments, Chris Doss, those guys are predicting Russian collapse since 1999, and theyÈ been systematically wrong, but now....
---- I make a few comments below interspersed with the text. I am certainly no expert on the subject though.
A lot depends on the extent to which high oil prices are really what's girding Russian economic growth and stability, which actually started while oil prices were still low. (They are, though, along with gas, what underpin the federal budget.) As I mentioned in a previous post, my current theory is that it's to a large extent middle-class consumption of domestic products. The middle class is somewhere between 10-30 percent of the population, depending on how you count. The Russian middle class does not pay rent; it does not pay more than a pittance for utlities, if that (nothing happens to you if you don't pay, really); it does not pay taxes, usually; it often does not pay for its phone bills; it does not put money into banks. After necessities, its money goes straight into cheap Russian-made consumer goods. I think the importance of oil is somewhat overrated at this point.
War in Iraq: What's at Stake for Russia?
Russian oil production is already at maximum levels, meaning that domestic energy companies would not be able to boost production significantly enough to take advantage of higher prices. In order to benefit from a temporary wartime price hike, they would have to increase exports by diminishing sales to Russian customers.
---- Won't happen. Oil gets sold domestically way, way below market rates by government decree. ----
Therefore, the country could face both an internal supply shortage and cosmic energy prices that would shut many Russian citizens and businesses out of the market. We should not forget that the Russian economy is correctly dubbed a "wild market" in which everything is for sale for a profit. ---- Like I said, Russian citizens and businesses don't buy their gasoline at market rates. They buy it at about 1/10th of the market rate. Russia has a heavily subsidized economy, which is a big bone of contention with the EU right now and why Russia will only enter the WTO with big reservations (probably). "Wild market" is pretty far off the mark.
"Cosmic enargy prices"? ----
Needless to say, an energy supply shortage or prohibitive prices, or both, would severely hurt industry and citizens alike. Vast, distant regions such as Siberia and the Russian Far East, which already have experienced energy shortages for several consecutive years, would be hardest-hit, possibly leading to the collapse of regional economies and businesses. ----
Not shortages of oil. The electricity grid (RAO Unified Energy Systems) turned off their electricity because of state non-payment. The state didn't have the money because they hadn't been getting enough taxes (because the middle class, as I said above, does not pay taxes).
----
It is one thing for Russia to support the U.S. war against al Qaeda -- something many Islamic governments also do -- but quite another to support, however halfheartedly, a U.S. military effort against Iraq. The Islamic world's perception of Moscow's stance would alienate not only radicals, but mainstream Muslims as well. Moreover, it would be easier for Muslims to blame and retaliate against a weakened Russia than the much stronger United States. Iraq's Hussein already appears to have issued a veiled threat to Moscow, telling the Kremlin it faces consequences unless it "takes the Chechens' cause into account." ---- Hard to see how this would be happen, considering that Russia has been pretty vociferous in opposing the proposed war. Also "mainstream Muslims" in Russia itself, at any rate, are violently anti-Chechen, and they see Chechnya has part of a larger struggle with "false Islam" (i.e., Wahabbism). Tatars, Bashkirs and Dagenstanis don't care about international Muslim solidarity. ----
Internal Stability at Risk
All of these factors -- economic deterioration, security threats and loss of international standing -- could have a severe impact on Russia's internal stability. In the event of a post-bellum oil price-slump, Russian citizens might see their last means of survival slipping away -- and begin demanding the resignation of their government and the president they see as unable to improve the situation he was responsible for creating. ---- The writer seems to have missed four years of economic growth. ----
To ensure their own dominance, parts of the Russian political and business elite then could seek alternatives to Putin and, possibly, to his openly pro-U.S. course. It is difficult to say which political forces might capitalize on the negative consequences of an Iraq war, but such attempts could be expected from every spectrum of the political opposition -- from liberals who are more pro-Western than Putin, to communists, or even to parts of the Putin administration who want to abandon his ship before it sinks.
---- This is what happened to Yeltsin. ----
At that point, the military's role in politics would become vital. Putin's popularity is already much lower with the army than with the general public because some generals and likely a majority of officers and soldiers perceive him as surrendering the nation's dignity and unable to defeat Chechen militants. ---- This is a pretty funny paragraph. The generals don't like Putin; the soldiers think he's kicking Chechen ass. The Chechen War is considered by the public to have gone on too long, but they blame Chechens, not the government. In principal, the war is a popular one. (How does Stratfor presume to know what a majority of officers and soldiers in the Russian Army think anyway?) (BTW the Army has a strong vested interest in prolonging the Chechen War, because it's a big moneymaker.) ----
Retired or active-duty officers might answer the calls from the populace and some political forces to take up arms and help change the regime. ----
This wasn't close to happening even in the darkest days of Yeltsin. The Russian populace by and large is politically apathetic and are not going to call out for the use of arms against the government or anybody else. ----
Putin is desperate to remain in power ---- !!!! Putin has a 75% popularity rate, a rubber-stamp parliament and no effective rivals. He is about as desperate to remain in power as Brezhnev. ----