Banal reasons for war

karta

 

2014/09/27 • Politics

Prologue

As the classics go, war is the continuation of politics, and politics is an extension of economics. For the broad masses, Putin’s regime creates nonsense constructs to justify their aggressive policies, in reality we are talking about very real money. Especially after the recent information leak that the U.S. intends to block 40 billion dollars of Putin’s money in Switzerland alone, the money he’d just received from oil and gas companies; the relevant question would be: who paid for the start of this war?

A little on the prices

So, what became the basis of this war. As has been said above, the root of any war lies in economics. It is good to remember here that prices on oil and gas are connected through their energy value in terms of thermal capacity. In broad terms, gas prices are tied to oil prices. Let’s also remember what the price on oil was in 1999, when Putin came to power. In February that year, Brent oil cost about 10 USD per barrel. After this oil prices grew continuously, with certain amplitudes. Oil prices reached their peace before the crisis in 2008. Back then it constituted 135 USD per barrel. The fastest and most exponential growth began in 2004. The next four years were a parade for the countries that exported oil and gas, gas prices grew at approximately the same speed. As such, Russia, starting 2004, got a source of financing for their own ambitions in the shape of surplus revenues from selling their natural resources. It was oil prices that created Putin’s macho image, and the image of an alcoholic and a loser for his predecessor.

The price dynamic was such, that at a certain moment, the government of the country became intoxicated from income overdose. They developed a conviction that prices on oil, gas, gold etc. will continue to grow forever. And here we have to understand another important thing. While oil is mostly imported with tankers, gas (due to its physical properties) is best supplied through pipelines. So it is not enough to have gas, one should also control the pipe! Let’s keep this in mind. We remember the statements made by the Russian government officials and representatives of state-owned corporations, made at the peak of the prices, that the gas reserves have been exhausted and the more is extracted, the higher the price. They named prices at 600, 800 and even 1000 dollars per thousand cubic meters, in the short-term perspective.

Looking for their style

The ambitions of the world empire awakened in close ties with the growth of revenues. But the first troublesome catastrophe happened in 2008. The crisis struck and prices started going down. Prices fell together with demand. At the moment the Russian government still hoped it was a temporary occurrence, but decided to employ assertive measures in order to preserve the status quo as a supplier of raw material to Europe. The first thing Russia did was get rid of the gas contract between Turkmenistan and Europe. A very well-time explosion at the gas compression station, together with part of the gas pipeline. Back then we still wanted to believe the Russians’ claims that a pressure jump had occurred or something. Now it’s clear it had been sabotage. Turkmenistan stopped playing around with Gazprom, and went to China. But they also left Europe! One competitor down.

Georgia

Aggression against Georgia was the first serious test. Back then it was conditioned by the necessity to create a source of tension on the Nabucco pipeline. I remind you that Nabucco is an alternative project to supply gas from Azerbaijan, Kazakhstan and Turkmenistan to Europe. Taking into account the fact that Iran had been subject to sanctions, the only corridor went through Georgian territory. The goal was achieved. The Nabucco project was suspended.

The brutality of the invasion demanded immediate information and political cover-ups. Back then they tested the mechanism of total brainwashing of those who were unlucky enough to watch or read Russian media. The population was successfully infected with the neo-imperialist virus. However, the same efforts were made at the other end of the pipe! Political workers and entire parties bought their property in retail and in bulk in Europe. Oil dollars started streaming into the pockets of lobbyists and European media. In the end, the situation became totally absurd: the Europeans started saying out loud that Georgia had attacked the Russian Federation and the latter had been forced to defend itself.

Since that moment, the government of Russia had received a precedence of the lack of backbone on part of European structures. As such, the element of impunity was probed and comprehended as the reality. Back then military invasion became part of the Russian foreign policy toolbox.

In general, the Kremlin decided that the situation on the European export market had to be controlled. The schemes of mutual calculations take enormous sums of money to the shadows, from where they smoothly flow into the pockets of the Russian government and their agents of influence in Europe. The decrease of this flow will directly be reflected both on Kremlin bandits and their European authority. Besides, ambitious projects inside the Russian Federation gave funds to feed the millions of officials and military men. The regime depends on their loyalty. It would be suicide to allow income to decrease. Everything was great, but high prices on fuel enact compensatory mechanisms. Those include effective energy-saving technologies on one end of the pipe, and new methods of extraction on the other.

U.S.A. – Qatar

Trouble came from a place nobody had ever suspected. Shale gas in the U.S. turned out to have been an unpleasant surprise. I think that the reality and efficiency of this technology was immediately correctly evaluated. However, Gazprom head Miller made fun of the Americans’ efforts about 1,5 years ago and claimed that it was just advertising, saying the bubble would burst within a couple of days. Media reports that gas prices in the U.S. had fallen below 100 USD were explained by hidden state subsidizing of the project. However, 100 USD on American gas against the 450 USD on Russian gas couldn’t be ignored. Mr. Miller’s bravado and courageous humorous escapades ended at the moment when the U.S. suspended import of liquefied gas. This is the time to remember economic geography. On the U.S. West coast there are and there were plans to construct new terminals to import liquefied gas by means of gas ships. At the same time South Korea started inaugurating the gas ship fleet. And those who ordered this fleet was a small state with huge gas reserves – Qatar. In order to imagine how rich this tiny state is, it should be noted that besides a gas fleet, Qatar ordered a fleet of the newest and most luxurious airliners for their airline. 128 of the newest planes are already there, another 50 are being constructed. There are no second-hands ones, all of them are brand-new. Of course, they are not Emirates with their 229 liners and 50 more in production, but they are not Transaero with its 103 antique buckets. It is quite comparable to Aerflot, which has 144 airliners. And this is Qatar, which is barely visible on the map! Why use the example of airliners? Because weapon producers are standing in line there, knee-deep in water, but military contracts are closed and we can only guess about them. Let us note that all of this is being ordered and constructed simultaneously!

Syria

Such attention to Qatar is not an accident. There are rumors that when the U.S. said no to Qatar’s liquefied gas, talks were held with Europe to import Qatar gas there. Such approval was given and we all remember how Europe started talking about diversifying gas import. However, two obstacles arose there. Qatar can bring in as much gas as necessary with their gas ships, however, terminals are needed to offload it. Time and funds counted in billions of Euros are needed for their construction. Nonetheless, construction is underway in various parts of Europe, but as of today, there are no mass supplies yet. The second obstacle is a lack of piping between Europe and the countries around the Bay area.

Qatar tried to solve this problem alone. The task was easy: construct the pipe all the way to Turkey, and later resurrect the Nabucco project in its Turkish and European parts. As we see, the pipe may enter Turkey from Iraq or Syria. As we remember, permanent civil war is going on in Iraq, and Syria was peaceful just several years ago. The choice was obvious. Qatar invested over 10 billion dollars into Syria’s infrastructure, with Assad’s consent to build the pipe. And suddenly, Assad, after talking with his Russian brothers, refuses. Everyone knows what happened next. The KGB-Gazprom style is obvious. The war in Syria closed this corridor.

Ukraine 

So it looks like they worked well, the pipes were cut off everywhere, everywhere there is either war or tension which will not allow to finance alternative pipelines because of high risks. But it turned out suddenly the not only did Ukraine not follow the example of Belarus and give up the pipe, but turned out to be the owner of the biggest shale gas reserves in Europe! The majority of these reserves are on the territory of Donetsk and Kharkiv oblasts (this is where Novorossiya and the massacre for Slovyansk came from!). So there is a real possibility that the Ukrainian gas transport system will start sending our gas to Europe. Since that moment the option of invasion became the main and only one. What was at stake was Russia’s survival as a single geographic space. The suspension of the oil and gas pipeline to Europe means a swift and guaranteed death to the energy superpower.

This is how the elements of invasion were launched. European lobbyists got orders to drown the reaction of healthy powers in demagogy, you know very well what the media did, the FSB creature consisting of a clear division of law enforcement and bandits hit from the inside, and Crimea fell into their hands like a ripe apple. The same scenario was launched in Donbas. I think that Russian aggression in Ukraine had been planned at an earlier time. It looks like we have Qatar to thank for the delay.

Epilogue

It looks to me like this war is being led by Gazprom and the small number of people who are sucking on the pipe and fairly consider the ownership and loss of the pipe an issue of their own life or death. If we examine the situation from this angle, almost all Moscow’s actions find their own simple explanation. Another thing is that it is already impossible to make Europe buy oil and gas from their exclusively and to make us love the elder brother.

What lies at the root of this stream of blood and destruction? Greed! Animalistic, all-consuming and limitless! If Putin were a smart politician, he would decrease his own appetites (as he’d stolen over 100 billion dollars!), decrease the number of absurd budget programs and decreased the price enough to make shale gas insolvent. Nobody would engage with it then. Now it is too late. Extraction technologies are developing swiftly. Shale oil follows shale gas. The net worth is falling irrevocably, and the U.S. economy is consuming cheap fuel.

We have not yet reached the crash and fall of the ‘energy superpower,’ but we are obliged to withstand it and we will!

Glory to Ukraine!

Translated by: Mariya Shcherbinina
Source: PolitKuhnya

Tags: , , ,

  • Rods

    Good article. I was aware of the importance of Slavansk, where there is a joint program with Shell on developing a test fracking well and drilling had started before the Russian organised, recruited and armed terrorists invaded. I guessed that this was why Slavansk was attacked and held so robustly by the terrorists.

    My impression is that the EU and their member countries have had enough with Russia playing the gas weapon all of the time to achieve their political ends and think they will now make a considerable effort to have complete gas independence, so Russia at best will be one of a number of suppliers and they will have to compete on terms and price. Customers always have a choice and when they are lazy and limit themselves to one supplier they are asking for trouble. There are already LPG terminals in the UK and Italy which are operating at well below capacity. Lithuania is constructing an LPG terminal to reduce their dependence on Russia gas and the three Baltic countries are looking at building an additional joint terminal.

    The UK intelligence services have uncovered alleged links and funding by Russia with anti-fracking green movements in the UK and Europe where they have provided a rumoured $82m in funding.

    With the current global oversupply of gas and global weak demand, prices are soft and will hopefully continue to drift down. This will be good for growth in the west, while Putin tries and fails to balance the Russian economy’s books.

    Personally, I have always though that once Putin took the dictator / nationalist route with his regime, that his days in charge were numbered. History is not on his side and it will only take one failure on one of his overseas ‘adventures’ for him to be replaced. Cunning is not the same as smart.

  • Murf

    This is why I have been saying that Ukrainians need to be patient. The ceasefire is far from ideal. It isn’t even palatable. but there is hope.
    Putin’s window of influence over Europe is closing.
    The EU is talking about importing LPG from Iran and soon the US will start exporting gas all of which will continue to drive down the price.
    Most importantly for UA is their own shale gas fields one of which is in the west which Russia can’t touch. Within 5 years UA can be self sufficient and perhaps and exporter.
    Additionally many of the areas lost were the biggest commercial consumers of gas, which is now no longer UA’s problem.
    Concentrate on getting the culture of corruption under control to improve investment.
    Keep reducing the consumption of Russian gas while building up your own production.
    Rebuild the army into a first class organization using domestic industry.
    Be ready for round two.
    Putin will not last forever.
    Time is on Ukraine’s side.

  • George

    Not just the shale gas of the Donbas, but the unexplored gas/oil fields in the waters surrounding Crimea, one of the reasons for occupying it, plus the possibility of re-routing the pipeline onto the shallower shelf waters of the Black Sea.
    http://geostrategy.org.ua/en/analitika/item/323-gazovyie-podtekstyi-krizisa-v-kryimu/323-gazovyie-podtekstyi-krizisa-v-kryimu

  • sandy miller

    Please don’t refer to Russia as Ukraine’s elder brother….Ukraine is older than Russia..it all started in Kyiv….it’s our bigger brother…can you even call them a brother after their brutality towards Ukraine for centuries.