Tuesday, July 25, 2006

the real petroleum president

Of all of the G8 leaders, Vladimir Putin remains the most mysterious and autocratic. Like many politicians, he can be both a chest-thumping hawk and a sober pragmatic realist when needed. While Chancellor Merkel has been learning about videoblogging and other leaders have come to recognize both the power and the limits of new forms of media, Putin remains an island all to himself, consolidating the media under the aegis of the state and trumping up criminal charges in order to rout any potential rivals. The most worrying political move was a wholesale change in the structure of regional government, abolishing numerous elected governors for seven 'plenipotentiaries' appointed by the chief executive. When questioned as to the undemocractic nature of this move, Putin defensively suggested that after Florida 2000 that the Electoral College could be seen as equally undemocratic.

Even Darth Cheney saw fit to make a comment about democracy in modern Russia, earning a stinging rebuke from Putin: "I think the statements of your Vice-President of this sort are the same as an unsuccessful hunting shot." During the G8 summit, Putin made a jab at Bush, saying, "We certainly would not want to have the same kind of democracy as they have in Iraq, quite honestly." in response to Bush's accusations of the decline of democracy in modern Russia.

As a 2005 article in the Atlantic noted:
Putin is a difficult character study. An ex-KGB colonel, he is at times deliberately indistinct. And his secretive and tight-knit court tends to operate according to the old Russian village principle of "Iz izby soru ne vynesi"—literally, "Do not carry rubbish out of the hut." In the emerging school of Putinology, theories abound as to what makes him tick. Many analysts emphasize his intelligence training and his Soviet-era background. Alexander Rahr, the author of a biography of Putin calling him "the German in the Kremlin," sees him instead in the context of his KGB posting in Dresden and his affinity for German culture (he speaks German fluently). Others see a somewhat ambivalent Putin, split—as Russians often are—between an outward-facing Western orientation and an inward-looking Slavophilic one. The boisterous, red-faced Yeltsin—that bear of a man—more naturally fit the Western idea of a Russian leader. But Putin is as much a product of the Russian environment and heritage as Yeltsin was. In fact, Putin's Russianness, in the broadest sense, is the key to his character; in certain respects his rule is re-enacting distinctive Russian political traditions.
Who is Wladimir Wladimirovich Putin and what are plans? Much of the information about Putin comes through a 2000 collection of interviews called First Person, including several personal anecdotes. As a child growing up in a rough section of Leningrad, the diminutive Putin (5'5") resolved to defend himself and became city-wide judo champion as a teenager. In a fascinating aside, the above Atlantic article mentions the hypothesis of a 'movement analyst' who noted certain irregularities in Putin's walk and his grasp which led her to doubt that:
"...Putin ever crawled as an infant; he seems to lack what is called contra-lateral movement and instead tends to move in a head-to-tail pattern, like a fish or a reptile."
...which to the analyst makes his judo prowess nothing short of inspiring.

But his acerbic comments can be astounding in their own way: when a reporter suggested he was "trying to eradicate the civilian population of Chechnya" under the auspices of counter-terrorism, Putin angrily replied that if the reporter wanted to become an Islamic radical he should cut his dick off too. No doubt, this is quite a personal issue as Chechens have offered $20 million for his head and openly scheme about capturing his nubile teenager daughters.

Much has been written about his service in the KGB. In fact, Putin represents a class of politicians moved over from the security services known as the siloviki, from a word roughly meaning 'power' or 'strongman'. Some argue the rise of the siloviki will lead to a crushing of liberties under a Slavophilic hyper-statism, while others see them as the natural counterweight to the Russian oligarchs who might otherwise corrupt and pilfer the government. Even his colleagues at this fearsome intelligence agency noted his piercing metallic blue eyes and ability as a human lie detector. Despite what must be incredible temptations to game the system for personal benefit, he has kept only a few expensive gifts (like a Super Bowl ring from the Patriots coach) and only draws about $5,000 a month as a salary. He is also the first Orthodox president of the post-Soviet era, Yeltsin being an atheist. His advocacy of the revived Church and especially its historic reunification with Orthodox churches abroad leads to some theocratic parallels with the US Religious Right, particularly their mutual drive to ban abortion and contraception.

Here's the angle I find the most interesting in understanding Putin: during the 1990s, he received a sub-doctoral level degree in economics from a mining institute in St Petersburg. His dissertation was titled "The Strategic Planning of Regional Resources Under the Formation of Market Relations." This is a stunning plan to use Russian natural resources to squeeze the West like a neck crank. More specifically, it is a plan to build the petroruble.

Namely, since dollars are the sole currency used to calculate the value of and acquire oil we speak of petrodollars, a condition known as dollar hegemony. But if there were to be an alternative currency which offered a better rate, than the primacy of the dollar over oil prices would diminish. Countries would no longer need dollars to buy energy and they Recently speculation has arisen that the OPEC energy cartel may switch from the US dollar to the Euro, inaugurating the petroeuro. This will establish a Euro-based pricing mechanism, or "oil marker" as it is called by traders. The three current oil markers are US dollar denominated, which include the West Texas Intermediate crude (WTI), North Sea Brent Crude, and the UAE Dubai Crude. So far, OPEC has resisted this move although some OPEC members (such as Iran and Venezuela) have been pushing for a switch to the Euro.

This hypothesis does not seem to account for the fact that declining dollar would lead to increased U.S. exports and decreased imports, which would decrease the United States trade deficit. It is disputed as to whether or not a falling dollar would actually hurt the American economy: given the general tendency for crude oil prices to rise and become more volatile crude oil trading may be a significant long-term liability for the stability of the currency in which the trade is conducted.

Nevertheless, we can see the fear of a petrodollar alternative in the background of many geopolitical conflicts: in 2000, Iraq converted all its oil transaction under Oil for Food program to Euros. When U.S. took over Iraq in 2003 one of the first things it did was to return oil sales from the euro to the U.S. dollar. Iran is planning to open an oil bourse denominated in euros. It was planned to open in March 20, 2006, in a free-trade zone on the island of Kish, but the opening was postponed without future date set. Proponents of this theory fear that it will give added reason for the U.S. to topple the Iranian regime and close the bourse or revert its transaction currency to dollars.

In 2005, Putin and former German Chancellor Gerhard Schröder negotiated the construction of a major oil pipeline over the Baltic exclusively between Russia and Germany. He shut off a pipeline running through the Ukraine, blaming an abundance of siphoners, when most conventional wisdom sees it as retribution for the Orange Revolution. And the biggest oligarch to fall was the head of the oil giant Yukos, whose empire was subject to some government-sponsored vulture capitalism.

And where the Iranians have pushed back indefinitely their plans for a new oil bourse, on May 10, 2006 Putin announced the project for the creation of an Oil Exchange denominated in rubles to trade oil and gas. The Oil Exchange would operate from 2007 and will give rise to the petroruble as those countries that buy oil and gas from Russia will have to acquire them and use it as reserve. The dollar, Putin noted, is too unstable for continued long-term reserves.

Whether the reality of this global domination scheme is as strong as it is formulated here is a question likely to be decided years into the future. We can note one striking comparison in relation to the psychology of nations and their leaders: in almost every way, Putin is the mirror of Bush. Where Bush blusters and leaves the decisions to his trusted cadre, Putin is reticent to make snap decisions and handles everything he can personally; Bush claims to be the great oilman, but Putin has the degree to prove it; Bush's dream is boiling away gold in a bloody sandpit, while Putin's success will give future technocrats multiple orgasms; where Bush clings to mountain biking and brush clearing as a getaway from responsibility, Putin publishes books on his judo technique; where Bush spends his whole life in the promotion of oligarchy, Putin has (through manuevers which may seem extreme) forced them from the political arena. Perhaps there is more truth to the notion that nations get the leaders they deserve than we would like to admit.

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