The Fall of Gazprom

For decades Russia has wield its vast reserves of oil and gas as a political weapon. Despite being “privatized” after the collapse of the Soviet Union, Gazprom, the world’s largest producer of natural gas, functions as part of the Russian government. Europe’s dependence on Russian energy left the continent vulnerable and at the mercy of Kremlin policies. However, Russia is quickly learning that this strategy is a double edged sword. “Those same policies are making it difficult to maneuver, as Gazprom finds itself competing against a wide array of ever more deft and efficient private drillers and shippers in the natural gas industry” (Kramer). By overusing energy as leverage Moscow has encouraged European countries to look elsewhere for its energy needs. Furthermore, recent technological advances in the industry, such liquefied natural gas is providing a financially viable alternative to Russian gas.

While Gazprom has been one of Moscow’s most effective political tools, it’s also Russia’s Achilles heel. Energy exports account for the majority of the Russian state budget. Low energy prices coupled with Western sanctions over the Ukraine crisis has devastated Russia’s economy. The shale revolution in North America and possibly an unrestricted Iran has further depressed Gazprom’s market share. Today Russia’s cash strapped government is equally dependent on its European markets for revenue as these countries are dependent on Russian energy. Even in Russia’s tradition sphere of influence, Eastern Europe, the Kremlin is finding it increasingly difficult to advance its agenda. Unless Putin completely depoliticize Russia’s energy sector it will continue to be noncompetitive like the rest of its economy. Russia no longer has a monopoly on Europe’s energy sector; as such the Kremlin must act accordingly if it’s to survive in the global world.

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The Yes People Federation

Propaganda has long been used by governments to further their agenda. However, Russia has taken it to the next level by inventing and dictating the discourse. The Kremlin already had vast control over the media, but in recent years began implementing internet censorship similar to Beijing’s Great Firewall as well. Now Putin has even created entire agencies dedicated to the multiplication of his disinformation. “The nondescript building has been identified as the headquarters of Russia’s ‘troll army’, where hundreds of paid bloggers work round the clock to flood Russian internet forums, social networks and the comments sections of western publications with remarks praising the president, Vladimir Putin, and raging at the depravity and injustice of the West” (Walker). According to former employees, these are 24 hour operations, with two shifts. They were unofficially employed, required to sign a nondisclosure agreement, paid in cash, and quotas were strictly enforced. Jobs range from maintaining multiple pro-Kremlin blogs, to teams of three choreographing all sides of the debate. Every day these employees received “technical tasks”, a list positions they were to advance. “The scariest thing is when you talk to your friends and they are repeating the same things you saw in the technical tasks, and you realise that all this is having an effect,” the former worker said. When anything is repeated enough times, it becomes the new reality.

Over the years Putin has consistently been one of the most popular leaders. That has been understandable given a renewal of nationalism and strong economic growth in Russia. However, Western sanctions due to the ongoing Ukraine crisis, along with low oil prices has devastated the economy. Nevertheless Putin’s approval rating has defied logic, remaining at an all-time high of 86%. While the numbers may not lie, it’s safe to assume that the lack of basic goods and inflation erodes support for the government. The Kremlin has virtually achieve full control of the media and information. Even those who are unconvinced by Russia’s propaganda machine feint support out of fear. Through a system of deception Putin has social constructed a monolithic society that answer only to him.

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Dysfunctional Europe

NATO was created in 1949 to deter the Soviet Union from invading Western Europe. The collapse of Soviet Union in1991 challenged the need for this World War II era organization. Soon the alliance struggled remain relevant, intervening in the Balkans and later focused on terrorism. Since 2014 NATO is quickly returning to its original mission amid Russia’s involvement in the Ukraine crisis. Despite being members of NATO for more than a decade, countries such as Poland, Estonia, Latvia, and Lithuania are increasingly alarmed by Russia’s assertiveness.

The United States’ response was Operation Dragoon Ride, which involved a convoy of 120 armored vehicles and 500 American troops, after a deployment in the Baltics. “And not just drive, but take a meandering, 1,100-mile trek through six countries, stopping in towns and villages along the way to mingle with local people and reassure allies by showing that the American military’s presence was more than a rumor” (Lyman). However, the move was largely symbolic as the United States continue to focus on it Asia-Pacific rebalance and reducing defense spending. There’s no permanent presence of U.S troop in the region and the Baltics has a minuscule military compared to Russia.

As former Soviet republics on the periphery of NATO, the Baltics states are extremely vulnerable. The conflict in Ukraine has emboldened Russia, after annexing the strategically Crimean peninsula and destabilizing the country, with little recourse from a deeply divided NATO. It’s conceivable that Russia will use its proven strategy of disinformation and hybrid warfare against its other neighbors. Since WWII Europe has failed to adequately provide for its own security, instead free riding on American guarantees through Article 5 of NATO. Europe can no longer take this for granted. The United States’ military presence in Europe has steadily decreased for decades, reflecting American economic priorities. For 2015, only the U.S and Estonia pledged to invest more than the NATO recommended 2% of GDP on defense. Unless Europe send a clear message of unity Russia will continue to take advantage of its indecisiveness and complacency.

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Basketball, Olympics, and the World Order

International relations is a holistic discipline, yet it’s often simply analyzed from the economic and political relations between nation states. In today’s interdependent world anything can be studied from an international perspective. Culture, more specifically, sports is one area that has become an important part of international affairs in recent years. Professional sports in the United States has long been a lucrative industry. In 2014, American boxer Floyd Mayweather was the highest paid athlete in the world, earning $105 million. Recently, even national governments have invested heavily in the industry. The 2014 Sochi Olympics was the most expensive in history, costing $50 billion and topping the $40 billion record set by Beijing just six years prior. While the Olympic Games rarely generate a profit, cities and countries continue to bid for the honor of hosting it because they understand the value of exposure and propaganda.

Like many other professional sports, basketball is dominated by the United States. Yet, this is just one aspect of U.S hegemony being chipped away by globalization. Playing abroad during the off season is nothing new for American professional athletes. But until recently, it was always just that, a part time job, secondary to the big leagues in the U.S. However, with more opportunities available, players are not only willing to switch jerseys, but flags as well. A good example is the WNBA, where star players have steadily moved abroad. “Taurasi’s decision to sit out the W.N.B.A. season this year has drawn attention to some of the shortfalls of the American system. Unless the league restructures its wage scale or introduces other incentives, it risks losing other standout players to a bullish international market” (Wilder). Today playing in the U.S isn’t even worth the off season.

Countries can no longer assume patriotism from its citizens by default. Individuals today are loyal to the best paying job, not the nation state. For decades the United States have benefited from the convergence of the two, but even a superpower is at the mercy of global currents. Russia on the other hand emerged from its decline understanding the fragility of the nation state. It responded by embracing a new version of nationalism, characterized by the policies of Vladimir Putin. The world is heading toward the final stage of globalization, where nation states are becoming less relevant. Will the United States adapt to the new world order or struggle like Russia to remain relevant?

Ripple Effect

I started my blog writing broadly, while providing background information for current events. As time proceeded I focused more on specific issues such as Russia’s oil economy and the Ukraine crisis. A broad theme within my writing is geopolitics, the global implications of seemingly localized events. Whether its increased shale oil production in North America or regime change in Ukraine, the effects have rippled across the world. Current events usually have short lifespans because the media quickly moves from one crisis to the next. Yet, the two that I have focused on has remained relevant, with no resolution in sight. It will be interesting to continue following and analyzing their effects on the world order. The act of writing weekly has made me more attentive to detail and analytical. While I’ve consistently followed current events, never did I look below the surface. As a result, my blog posts doesn’t just summarize, but draw on the historical context and explain the “so what”.

After the collapse of the Soviet Union there was legitimate hope that Russia would integrate with the West. Under the leadership of Boris Yeltsin, Russia made radical reforms that sought to expand democracy and implement capitalism. However, within years Russia’s liberal democratic transition screeched to a halt. Since 2000 Vladimir Putin has led Russia in the opposite direction, back towards Cold War era confrontation. For my research paper I’ll write about Putin’s Russia and how it has and will influence the dynamics of world politics. It’s impossible to comprehend the policies of Russia without first understanding who is Vladimir Putin. Over the last 15 years Putin has built a personality cult around himself while consolidating power, effectively making him tsar. Russia has given up on its illiberal democracy, “electing” Putin for a third presidential term. Political dissidents are routinely assassinated. Government propaganda and internet censorship have reached new heights. At the same time, Putin’s popularity is at an all-time high. My paper will also address the correlation between Russian domestic and foreign policy. Lastly, the question I seek to answer:

How does domestic Russian issues affect Putin’s foreign policy, thus the world order?

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Deja Vu

The world finally took notice of Ukraine at the end of 2013. However, Ukraine has been in continuous crisis since the collapse of the Soviet Union. After gaining independence, like many other former Soviet republics, the country was caught in a tug of war between the Russia and the West. In order to understand the current crisis we must look at the recent history of Ukraine. Nine years before the current crisis was an analogous movement called the Orange Revolution. A series of protest took place after the run-off vote of the 2004 presidential election. Pro-Russian authorities claimed Viktor Yanukovych was the victor despite inconsistencies with results from exit polls. Under domestic and international pressure the run-off vote was annulled by Ukraine’s Supreme Court. The second run-off vote that was declared fair and free resulted in the clear victory of pro-European opposition leader, Viktor Yushchenko. While there are certainly differences between the two events, their similarities can’t be overlooked. First, Yanukovych was the antagonist of both movements. Not only was he not convicted of any crime after committing electoral fraud, he continued to serve as prime minister of the new government. Yet these crisis were just symptoms of a more serious underlying condition. Ukrainian society was and continue to be extremely divided between the pro-European western Ukraine, and pro-Russian east dominated by Russian speakers.

Although the Orange Revolution resulted in a peaceful transition of power, the current crisis has evolved into a full blown civil war, with the Russian Federation intervening on behalf of rebel separatists. Despite steady NATO expansion into traditional Russian sphere of influence, Moscow decided not to act. This proved to be the correct course of action when Yanukovych was elected president in 2010. However, Adrian Karatnysky of Foreign Affairs warned that, “Ukraine’s victory over tyranny has been dramatic and inspiring. But the implications of that victory–throughout the region and the world–will be fully understood only in the years to come”. Indeed less than ten years later Ukraine’s increase integration with the EU, followed by the ouster of Yanukovych in was considered unaccepted by the Kremlin. This time Russia responded decisively by annexing the strategic Crimea Peninsula, while supporting an increasingly deadly conflict in eastern Ukraine. Yet Russia’s early gains has all but vanished. Initially, Moscow was able to shrug off Western sanctions, but the untimely oil crash has devastated the economy. Russia now has virtually no influence in Kiev. The economy was projected to shrink by 3% in 2015. Nonetheless, President Putin hasn’t flinched in his strategy. In fact, he suggested a 30% increase in defense spending this year. Russia has watched powerlessly as its influence in Eastern Europe dwindled in the last two decades. Aside from Belarus, Ukraine was the last country in the region where the Kremlin had significant influence. The hint of Ukrainian membership in NATO or EU was a red line for Moscow, therefore, Putin cannot and will not kneel to the west now.

An aerial view shows Independence Square during clashes between anti-government protesters and Interior Ministry members and riot police in central Kiev

Oil and Geopolitics

Over the last eight months the price of oil has dropped by more than fifty percent to around $50 for a barrel of crude. While there are many factors contributing to the current low prices, the main reason is simple economics. Above all, supply and demand is the biggest contributor to the price of commodities in today’s globalized world.  The United States continues to flood the market with oil due to technological advances in hydraulic fracturing and horizontal drilling. In the last six years the United States’ oil production has doubled, making it the largest oil producer in the world. The planet’s biggest importer has also begun exporting oil, displacing millions of barrels a day. Countries such as Libya and Iraq have also increased production despite ongoing conflicts. On the other hand, China’s slowing growth, Europe’s halted economy, and recession in Japan have drastically reduced demand. Traditionally, OPEC (Organization of Petroleum Exporting Countries) has been able to regulate the global supply of oil to stabilize price. However, between the increase in supply and decrease in demand, OPEC (led by Saudi Arabia) has declined to reduce production to prop up oil price. Without intervention by OPEC it’s no surprise that oil price continue to free fall. With huge foreign reserves, Saudi Arabia and other gulf states can afford to wait in hopes that higher cost North American producers will cut their output.

While low oil prices benefits all oil importers, the United States is in a unique position, benefiting economically as well as politically. Many of the United States’ antagonists are suffering, however the effects on the Russian economy has been the most severe. The ruble has lost roughly half of its value, trading at 67 per dollar compared to 33 less than a year ago. Russia relies heavily on imports of basic goods, as such a severely weakened ruble is costing consumers 20% more on food. In addition to the oil crash, western sanctions over Russia’s involvement in Ukraine have also contributed to its current economic woes. Even Russia’s economic minister have admitted to the dire circumstances of the country’s economy, estimating a 3% shrink of its GDP in 2015.  So far President Putin has not changed his aggressive policy of supporting separatist rebels in eastern Ukraine. However, if current economic trends continue even the egotistic Putin have to reevaluate his strategy in Ukraine.

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