Washington’s economic war against Russian gas supplies to Europe unacceptable – Gerhard Schroeder
RT | October 20, 2017
The United States would like to weaken Russia’s energy cooperation with the European Union, said former German Chancellor Gerhard Schroeder, adding it’s unacceptable to create barriers to Russian gas deliveries to the German market.
“It’s wrong if the Americans and the European Union somehow resist each other on this issue. And still there are attempts to create some difficulties for this project [Nord Stream 2 gas pipeline – Ed.],” he told Rossiya 24 news channel.
According to Schroeder, “the fact the Americans will try entering the German market with the help of sanctions and to dominate with its liquefied shale gas is nothing but the signs of an economic war, and such war is unacceptable.”
Germany is interested in gas which it “will receive for sure and which will be cheaper than shale gas,” said Schroeder.
The ex-chancellor said German authorities were right to call the Nord Stream 2 gas pipeline purely an economic project which should not be politicized.
Last week, European Commissioner for Competition Margrethe Vestager said the EU has no legal means to stop the pipeline that will deliver natural gas from Russia to Germany.
The Nord Stream 2 pipeline will double the capacity of the existing Nord Stream pipeline, which goes under the Baltic Sea to Germany. The Gazprom-led project is opposed by the Baltic States and Poland.
During the EU summit on Friday, Polish Prime Minister Beata Szydlo described the Nord Stream 2 pipeline as a threat to European energy security.
Russian President Vladimir Putin said this week Moscow faces obstacles constructing the new route despite the fact that diversification of gas supplies is cost-effective, beneficial to Europe and serves to enhance the security of supplies.
The Kremlin has repeatedly said the pipeline is strictly about business, accusing the United States of trying to thwart the project, as it wants to export its own liquefied natural gas to Europe.
How Much America’s Tax Payers Pay for the Pentagon’s Global Presence
By Denis Bototsky | Sputnik | October 20, 2017
America’s military presence has been the cause of protests in many countries where US troops are stationed – among them Japan, South Korea and Germany. But besides problems with the allies, maintaining military infrastructure overseas is a heavy burden for US taxpayers, costing them billions of dollars annually.
At the turn of the millennium, the United States went on a massive military spending binge. According to the 2010 report “Debt, Deficits & Defense”, within several years of 9/11, the budget of the Department of Defense grew by 119%. Barack Obama and his predecessor George W. Bush were ruling a nation which was fighting wars in Iraq and Afghanistan, but even with war costs subtracted, the increase was at 68%, which is 13% more than the sum allocated for health and human services.
Pentagon’s global military presence has always been a costly affair. David Vine is the author of the book “Base Nation: How U.S. Military Bases Abroad Harm America and the World”. In his 2015 New York Times Op-Ed he wrote that the US taxpayers spent 10 to 40 thousand dollars a year more for each service member stationed abroad, compared with those at home.
Even though Barack Obama promised to withdraw American troops from the conflict zones, the process of closing US overseas military facilities looked like a shell game. While some bases, like the ones in Europe, were closed, Uncle Sam spent billions building new military infrastructure in other locations, such as the Persian Gulf and Asia Pacific.Ron Paul – a former US congressman and the founder of the Ron Paul Peace Institute – addressed the wasteful military spending in one of his columns in November of 2016, saying that military expenses should not be confused with the defense budget. While defense expenses are vital, military spending, according to Paul, is the money spent not to defend the United States, but “to enrich the military-industrial complex, benefit special interests, regime-change countries overseas.” In his article, the former politician wrote that some activities of the US military and intelligence services abroad may lead to the country’s economic collapse:
“Do we really need 800 US military bases in more than 70 countries overseas? Do we need to continue to serve as the military protection force for our wealthy NATO partners even though they are more than capable of defending themselves? Do we need our CIA to continue to provoke revolutions like in Ukraine or armed insurgencies like in Syria? If the answer to these questions is “yes,” then I am afraid we should prepare for economic collapse in very short order.”
Donald Trump shared the same concerns about America’s NATO allies, when he called the organization obsolete during his campaign. Trump upheld some of his criticism during the 2017 NATO summit in Brussels when he called on the wealthy organization members to increase their defense spending.
However, it seems that Trump’s words have fallen on deaf ears. Germany still spends just 1.26% of its GDP on defense (which is much less than the 2% pledge made by NATO member states in 2014), so paying for the maintenance of the large military facilities, such as Ramstein Airforce Base, which also hosts NATO Allied Air Command, is a heavy burden for America’s taxpayers.
In 2015, David Vine estimated that the annual price for maintaining US military facilities and troops abroad was about $85 billion. He wrote that closing down foreign and domestic military facilities will contribute to improving the country’s financial and physical security.
However, with Donald Trump’s recent proposals to increase military spending, it seems that the chances of seeing major changes in the US global military presence strategy in the near future are slim.
Pharmaceuticals can be a license to print money
By Pete Dolack | Systemic Disorder | October 11, 2107
It’s no secret that the United States suffers from by far the world’s highest costs for health care. As the most market-oriented health care system among advanced capitalist countries, this is no surprise. Health care in the U.S. is designed to deliver corporate profits, not health care.
On that score, the U.S. system is quite successful. Pharmaceutical companies are at the head of the class in this regard, frequently justifying the spiraling costs of medications by citing large research and development costs that include the costs for drugs that don’t make it to market. There are many drugs that fail to survive testing and become a cost that will never be compensated, that is true. But are these failures really so high to justify the extreme costs of successful drugs?
It would seem not. Firmer proof of that lack of justification has been published by the JAMA Internal Medicine journal, which found that revenue for cancer drugs far outstrips spending on research and development. The article, “Research and Development Spending to Bring a Single Cancer Drug to Market and Revenues After Approval,” prepared by Drs. Vinay Prasad and Sham Mailankody, found that revenue from 10 drugs (one by each of 10 companies) exceed those companies’ total research and development costs by more than seven times.
The total revenue hauled in from these 10 drugs did vary considerably. Two of them earned more than US$20 billion after approval. Both of these high performers cost less than $500 million in research and development costs. The revenue from each of the 10, however, exceeded costs, with widely varied margins. Still profitable: The median revenue of these 10 drugs was $1.7 billion, more than double the median development cost of $648 million, the JAMA Internal Medicine authors report.
The authors write that the median cost to develop a cancer drug represents “a figure significantly lower than prior estimates,” adding that their analysis “provides a transparent estimate of R&D spending on cancer drugs and has implications for the current debate on drug pricing.”
To obtain these figures, the authors analyzed U.S. Securities and Exchange Commissions filings for pharmaceutical companies with no drugs on the U.S. market that received approval by the U.S. Food and Drug Administration for a cancer drug from January 1, 2006, through December 31, 2015. Cumulative R&D spending was estimated from initiation of drug development activity to date of approval. Earnings were tracked from the time of approval to March 2017.
The sky’s the limit for pharmaceutical prices
The increase in pharmaceutical prices (blue) versus the general increase in commodities prices (red).
Another way of looking at this would be to examine the increases in the cost of pharmaceuticals against other products. Here again the numbers stand out. Using data gathered by the St. Louis branch of the Federal Reserve Bank, the consumer price index for pharmaceutical preparation manufacturing for the first quarter of 2017 was 747.8, with January 1, 1980, as the benchmark of 100. In other words, the price of pharmaceuticals is seven and half times higher than they were at the start of 1980. (See graph above.)
How does that compare with inflation or other products? Quite well — for pharmaceutical companies. That more than sevenfold increase in drug prices is an increase nearly two and half times greater than inflation for the period, and nearly four times that of all commodities.
So, yes, unconscionable price-gouging is the cause here. By the industry as a whole, not simply individuals like “Pharma Bro” Martin Shkreli, who might be an outlier in his brazenness but not in his profit-generation plan.
Although not the entire picture, this snapshot of corporate extortion plays a significant role in why the cost of the United States not having a universal health care system is more than $1.4 trillion per year.
Among 19 broadly defined “major” industrial sectors in the U.S., health technology is again expected to be found the most profitable for 2016, with a profit margin of 21.6 percent. Higher even than finance at 17 percent. When narrowing to more specific, narrowly defined industry categories, generic pharmaceuticals sit at the top with an expected 30 percent profit margin for 2016. Major pharmaceuticals rank fourth at 25.5 percent on a list in which health products and finance claim nine of the top 10 spots.
The sky’s the limit for pharmaceutical profits
That’s a repeat of 2015, when health technology had the highest profit margin of 19 broadly defined industrial sectors, at 20.9 percent, topping even finance, the second highest. When a separate study broke down profit margins by more specific industry categories, health care-related industries comprised three of the six most profitable.
Nothing new there, either. A BBC report found that pharmaceuticals and banks tied for the highest average profit margin in 2013, with five pharmaceutical companies enjoying a profit margin of 20 percent or more — Pfizer, Hoffmann-La Roche, AbbVie, GlaxoSmithKline and Eli Lilly. The world’s 10 largest pharmaceutical corporations racked up a composite US$90 billion in profits for 2013, according to the BBC analysis. As to their expenses, these 10 firms spent far more on sales and marketing than they did on research and development.
If those facts and figures aren’t enough, here’s another way of looking at excessive profits — a 2015 study found that, of the 10 corporations that have the highest revenue per employee among the world’s biggest corporations, three are health care companies. Two of the three, Amerisourcebergen and McKesson, both distribute pharmaceuticals, and the other, Express Scrips, administers prescription drug benefits for tens of millions of health-plan members. Each of these primarily operates in the United States, the only advanced-capitalist country without universal health coverage.
The extra layers represented by those three companies demonstrate that there are ample opportunities for corporate profiteering that contribute to extraordinarily high health care costs in the U.S., beyond drug manufacturing and insurance.
And because corporations have the ear of politicians and other government officials, it’s no surprise that one of the primary ongoing goals of the U.S. government for so-called “free trade” agreements, such as the Trans-Pacific Partnership, is to impose rules that would weaken the national health care systems of other countries. This was done in TPP negotiations at the direct behest of U.S.-based pharmaceutical companies, incensed that countries like New Zealand make thousands of medicines, medical devices and related products available at subsidized costs.
By far the most expensive system while delivering among the worst outcomes and leaving tens of millions uninsured, where tens of thousands die from lack of health care annually. That is the high cost of private profit in health care. Or, to put it more bluntly, allowing the “market” to decide health outcomes instead of health care professionals.
Identity politics and the growth of inequality within racial minorities
By Eric London | WSWS | October 7, 2017
A September 2017 report published by the Federal Reserve shows that social inequality in the US has grown to record levels over the last decade. From 2004 to 2016, the wealth of the bottom 90 percent of the population drastically declined while the top 1 percent saw a sharp increase. (See “The social and economic roots of the attack on democratic rights”)
The data also show that the growth in social inequality is most acute within racial minorities. Over the course of the last 10 years, affluent African-Americans and Latinos have seen their wealth skyrocket at the expense of the working class of all races.
This large shift of wealth has had a dramatic impact on the social anatomy of the population, placing wind behind the sails of sections of the affluent upper-middle class whose racialist political outlook has come to play a dominant role in bourgeois politics.
Matt Bruening of the People’s Policy Project analyzed data from the Federal Reserve report and showed the extreme degree of inequality within racial minority groups.
Among both African-American and Latino populations, roughly 65 percent own zero percent of the total wealth owned by their respective racial groups. The richest 10 percent of African-Americans own 75.3 percent of all wealth owned by African-Americans; the richest 10 percent of Latinos own 77.9 percent of all Latino wealth; and 74.6 percent of the wealth owned by whites is owned by the top 10 percent of whites.
Top one percent share of wealth by race, Credit: People’s Policy Project
The level of inequality within racial groups has skyrocketed since the coming to power of Barack Obama. Over the course of his presidency, from 2007 to 2016, the top 1 percent of African-Americans increased its share from 19.4 percent to 40.5 percent. Among Latinos, the top 1 percent increased its share from 30.7 to 44.7. The figure also increased among whites, but less dramatically, from 31.9 to 36.5.
In another dataset, Bruening shows that during the Obama administration, wealth for the top 1 percent of African-Americans and Latinos skyrocketed, while declining for the bottom 99 percent within those groups.
Bruening also explains that due to higher levels of poverty among African-Americans and Latinos, only the top 2 percent within each racial group has sufficient wealth to enter the overall top 10 percent among all racial groups. In other words, the years 2007 to 2016 further devastated Latino and black working people while greatly enriching the minority members of the wealthiest 10 percent.
Black wealth distribution by decile, Credit: People’s Policy Project
The Federal Reserve data show that the wealth of Latinos in the overall top 10 percent increased by $298,161 from 2007 to 2016, and by $275,414 for African-Americans in this group. The wealth of those whites who comprise the top 10 percent overall also increased under Obama.
Bruening’s analysis also shows that sections of the Latino and African-American working class which had previously been more economically stable—those in the 60th to 95th percentile in their respective groups, and situated in the 40th to 80th percentile overall—were particularly devastated from 2007 to 2016, as compared to the poorer halves of their racial groups who also lost wealth but had less to lose. These sections of the minority working class, which would have had relatively well-paying jobs with benefits in earlier decades, lost between $100,000 and $350,000 over the past decade.
Latino wealth distribution by decile, Credit: People’s Policy Project
This massive transfer of wealth exposes the sham of Obama’s presidency. Hailed by the corporate media and pseudo-left as a “transformative figure” on account of his race, his administration oversaw the bank bailout, the bankruptcy of Detroit, the poisoning of the water in Flint, the deportation of 2.7 million immigrants, the expansion of NSA surveillance and a permanent state of war, and major cuts to social programs, education and food stamps.
The Democratic Party consciously used Obama’s skin color to give a political cover to social counterrevolution. The super-rich were primary beneficiaries, but the affluent middle class, including sections of African-Americans and Latinos, were among the greatest beneficiaries of this policy of intensified class exploitation. This created the conditions for the victory of Trump, who benefited from a decline in the vote for the candidate of Wall Street, Hillary Clinton, among all workers, including minority workers.
The Federal Reserve report shows that workers of all racial groups face declining wealth and stagnant incomes, and that growing economic hardship is prevalent across different strata of the working class. In other words, workers of different races and at differing income and wealth levels are objectively being drawn closer together by the impact of the ruling class’s social counterrevolutionary policies.
American society is increasingly polarized—not between races, but between classes. In this context, the class basis of the upper-middle class’s obsession with racial and identity politics becomes clearer. This is the reactionary political essence of groups like Black Lives Matter, authors like Ta-Nehisi Coates, and academics like Keeyanga-Yamahtta Taylor, who push racial politics to better fleece the working class members of their “own” racial groups, and the working class overall.
Their claims of a unitary “black community” or “Latino community” are fraudulent attempts to hide the immense class divisions that exist within these groups. At the same time, the affluent sections of these racial groups seek to manipulate discontent to advance their own claims to a greater share of wealth and privilege within the top 10 percent.
Identity politics has become a key mechanism through which the next 9 percent situated below the top 1 percent advances its grievances within the political establishment, fighting for “space” in the universities, trade unions, political parties, state apparatus, and corporate media. This layer, which forms a principal social base for the Democratic Party, is generally pro-war and supportive of the right-wing policies that have produced a soaring stock market.
Socialists fight not for a redistribution of wealth within the top 10 percent, but for a complete restructuring of society to abolish social inequality and end the domination of the corporate and financial elite over social and economic life. The social basis for the building of a revolutionary socialist movement lies in the bottom 90 percent, the working class, which will attract the support of the most socially-conscious and humane elements among the next 9 percent.
The social interests of all nationalities, races and social strata of workers are being drawn together by the impact of the social counterrevolutionary policies of the two parties. The task of socialists is to fight to give political expression to this objective process, breaking the barriers of racial chauvinism, linking workers across the world in a common revolutionary fight for social equality and socialism.
US Treasury Department slaps sanctions on Iran’s IRGC
Press TV – October 13, 2017
The US Treasury Department has imposed sanctions on Iran’s Islamic Revolution Guards Corps (IRGC) over accusations that the elite force provides support for terrorist organizations in the Middle East.
The Treasury added the IRGC to its anti-terrorism sanctions list on Friday, claiming in a statement that the military unit had been designated “for providing support to a number of terrorist groups, including Hezbollah and Hamas, as well as to the Taliban.”
US Treasury Secretary Steven Mnuchin stopped short of declaring the IRGC as a terrorist group, but claimed that the force has “played a central role to Iran becoming the world’s foremost state sponsor of terror.”
The department also sanctioned four entities — three based in Iran and one based in China — over claims of providing “support to the IRGC or Iran’s military.”
“We urge the private sector to recognize that the IRGC permeates much of the Iranian economy, and those who transact with IRGC-controlled companies do so at great risk,” Mnuchin said.
In a White House speech on Friday, US President Donald Trump also said his administration would place “tough sanctions” on the IRGC.
“I am authorizing the Treasury Department to further sanction the entire Islamic Revolutionary Guard Corps for its support for terrorism and to apply sanctions to its officials, agents and affiliates,” he noted.
The remarks were made as Iran had earlier rebuked the United States for supporting terrorist groups in the region, vowing to retaliate against any action targeting its Armed Forces, including the IRGC.
The US’s efforts to blacklist the IRGC come as advisers of the Iranian elite force are currently assisting the Iraqi and Syrian forces in their anti-terrorism campaign against Daesh Takfiri militants and other terrorist groups in both countries.
Daesh launched a terrorist offensive inside Iraq in 2014 and swiftly took over territory in the Arab country, posing a threat to seize the capital, Baghdad. Iran then offered military advisory assistance to both the central government in Baghdad and the regional government in Iraqi Kurdistan, helping them both maintain ground and win back territory lost to the terrorist group.
In Syria, too, Iran has been offering advisory support to the government. An armed conflict broke out in Syria in 2011 and soon transformed into a foreign-backed militancy by a hodgepodge of terrorist groups, including Daesh.
The terrorist group, which is by many accounts on its last legs in Iraq and Syria, is now seeking to establish footholds in countries beyond the Middle East, including Afghanistan.
US House committee introduces new sanctions bill against Iran missile program
Press TV – October 13, 2017
The Foreign Affairs Committee of the US House of Representatives in Congress has introduced new legislation that would expand sanctions against Iran over its ballistic missile program.
“Today’s important bill requires a comprehensive investigation to identify and designate the companies, banks, and individuals – both inside and outside Iran – which supply the regime’s missile and conventional weapons programs, subjecting them to sanctions,” House Foreign Affairs Committee Chairman Ed Royce said in a press release on Thursday.
The bill, the Iran Ballistic Missiles and International Sanctions Enforcement Act, targets Iran’s ballistic missile-related goods, services and technologies.
The measure requires President Donald Trump’s administration to identify the persons and the “foreign and domestic supply chain in Iran that directly or indirectly significantly facilitates, supports, or otherwise aids” the ballistic missile program.
The US Departments of Treasury and State have already imposed sanctions that target Tehran’s ballistic missile program.
Trump administration officials have argued that Iran’s ballistics program violates the “spirit” of the nuclear agreement and violates a 2010 UN Security Council resolution that calls on Iran not to conduct missile tests.
However, Tehran insists its missile tests do not breach any UN resolutions because they are solely for defense purposes and not designed to carry nuclear warheads.
The Islamic Republic has said it will spare no effort to meet its national security needs, and does not allow any party to intervene in the imperative.
Washington also claims Iran’s missile program is in breach of United Nations Security Council Resolution 2231, which endorsed Tehran’s nuclear deal with the P5+1 states in 2015.
Trump is expected to declare to Congress on Sunday that retaining the 2015 nuclear deal is no longer in the US national interest, opening the possibility for Congress to re-impose sanctions against Iran and undermining a landmark victory of multilateral diplomacy.
The Cardiff Bay Tidal Lagoon – can it power 1.3 million Welsh homes?
By Roger Andrews | Energy Matters | October 10, 2017
“Cardiff Tidal Lagoon is now being developed as the first full-scale lagoon in our programme. With a potential installed capacity of around 3GW, this project could provide enough green, clean home-grown power for every home in Wales.” Mark Shorrock, Chief Executive, Tidal Lagoon Power.
In this post we investigate this claim. The results, as usual, are predictable.
The Cardiff Bay tidal project sneaked in under my radar. In fact I didn’t even know about it until I came across the article recently featured in Blowout Week 196. It has yet to get the go-ahead from the government (and may never get it), but planning is obviously well along, with the project reportedly in its “twelfth design iteration”. In addition, a lengthy environmental impact scoping report has been completed and the project has just received approval to connect to the national grid. According to the schedule the project will generate its first power in 2022.
And Cardiff Bay is big. It will have a nominal capacity of around 3GW – the official number is 3.24GW – and is estimated to cost around £8 billion. Production will be approximately 5.5TWh per year (giving a capacity factor of around 20%). The lagoon covers 70 sq km and is enclosed by a sea wall 20.5 kilometers long. In short, it’s Swansea Bay times ten. Figure 1 shows the project layout. The lagoon takes up half the width of the Bristol Channel:
Figure 1: Cardiff Bay lagoon showing sea wall location and turbine inlets/outlets (red). From Tidal Power’s environmental scoping report
I’m not going into technical details here because these have already been dissected by Euan Mearns and myself in previous posts on the Swansea Bay tidal lagoon project here and here. Instead I will concentrate on Mr. Shorrock’s claim that the project could “power … every home in Wales.”
The thing to remember about tidal power is that while it’s 100% predictable it’s also non-dispatchable, meaning that we can predict exactly when we won’t be able to dispatch it. And the reason it’s non-dispatchable is that the tide in the UK comes in and goes out twice a day and the lagoon generates power when the tide is ebbing or flowing, but no power at all when the tide turns. The result is four daily power spikes, separated by periods of zero generation, that bear no relation to fluctuations in demand. Figure 1 shows broadly what these spikes will look like. (No values are given on the Y-scale because the plot is purely illustrative. Values will come shortly):
Figure 2: Illustrative plot of daily tidal lagoon generation.
Another problem is the large difference in generation between spring and neap tides. Figure 3 shows Cardiff tide heights for October 2017. As discussed in the Swansea Bay post generation is a function of somewhere between the square and cube of the tide range, and as a result the Cardiff lagoon, were it in operation, would generate roughly ten times as much electricity per day during the spring tides around the 8th and 21st as it would during the neap tides around the 1st, 15th and 29th:
Figure 3: Cardiff tides, October 2017, data from Cardiff BSAC
Now we will turn to Welsh homes. According to the Census Bureau there are 1.3 million of them, and according to Energy UK the average UK household consumed 3,938 kWh of electricity in 2015, the last year for which I can find data. Assuming that Welsh households are average consumers then 1.3 million of them will consume 1.3 million times 3,938 kWh = 5.07Twh/year. This is less than the 5.5TWh Cardiff Bay is expected to generate. So far so good.
Now let us further assume that Cardiff Bay goes ahead and that its generation is evenly spread out between the 1.3 million Welsh households. Each household consumes 3,938kWh/year, representing an average load throughout the year of 0.45kW. But what does the household’s daily load curve look like? For want of better information I’ve assumed it’s the same as the total UK load curve, and after appropriate scaling I came up with the three load curves shown in Figure 4:
Figure 4: Daily load curves for the average Welsh household. Based on a graphic from energymag
Then I divided Cardiff tidal lagoon generation by 1.3 million households and superimposed it on the Figure 4 curves. The results for neap tides and spring tides are shown in Figures 5 and 6:
Figure 5: Comparison of Cardiff lagoon tidal generation (blue) with daily load curves for the average Welsh household, neap tides
Figure 6: Comparison of Cardiff lagoon tidal generation (blue) with daily load curves for the average Welsh household, spring tides. Tidal generation tops out around 2.3kW
What’s a Welsh homeowner to do about this? He or she has two options. Either fill a boxcar with storage batteries or believe Mr. Charles Hendry’s reassurance that National Grid can somehow smooth out these wild fluctuations:
There is an inevitable question about how the system could accommodate very significant volumes of power generation from tidal lagoons that may be predictable but not necessarily when demand is greatest. National Grid have been reassuring in their evidence to us that such power could be accommodated and managed, and as we move towards ‘smarter’ ways of managing energy demand, consumers will be more able to use power more cheaply when it is most plentiful.
Better get your washing done quickly, Mrs. Davies.
What Saudis hope to get out of Russia ties
By M.K. Bhadrakumar | Asia Times | October 8, 2017
The mishap at the Moscow airport on Wednesday when the Saudi King Salman bin Abdulaziz arrived on a historic visit, was a wake-up call that even the most carefully choreographed enterprises may hold unpleasant surprises.
When Salman exited his plane and stepped out onto the special escalator he travels with, something went wrong. It malfunctioned halfway down, leaving the king standing awkwardly for about 20 seconds before he decided to walk the rest of the way. For ordinary mortals, this wouldn’t have been an uncommon occurrence but divinity ordains when a king is involved.
The Russian-Saudi entente is not going to be smooth. The climactic event last week drawing Saudi Arabia into President Vladimir Putin’s Middle East sphere of influence, must be assessed with a sense of proportions.
Salman had hardly departed from Russian soil when the Pentagon issued a statement announcing that the State Department had on Friday approved a possible US$15-billion sale of Terminal High Altitude Area Defense (THAAD) systems to Saudi Arabia. The statement recalled that Saudi Arabia had requested to purchase from America 44 THAAD launchers, 360 missiles, 16 fire control stations and seven radars.
The US officials confirmed that the sale was part of the $110-billion package of defense equipment and services initially announced during US President Donald Trump’s trip to Saudi Arabia in May. The Pentagon statement said, “This potential sale will substantially increase Saudi Arabia’s capability to defend itself against the growing ballistic missile threat in the region.”
The timing of the US announcement is highly significant. It comes in the wake of claims by Russian officials that Saudi Arabia had shown interest in buying the S-400 missile defense system from Russia. The Saudis have successfully pressured the Trump administration to approve the sale of the THAAD system. And Washington has signaled that the US will not let Russia make an entry into the Saudi arms bazaar.
Hard-nosed realpolitik
The hard-nosed realpolitik in the Saudi-Russian entente had a dramatic start when the then Saudi intelligence chief Prince Bandar bin Sultan visited Russia and held a four-hour meeting with Putin at the latter’s dacha outside Moscow in early August 2013. According to media leaks from Russian sources, the Prince allegedly confronted the Kremlin with a mix of inducements and threats in a bid to break Russia’s support for the Syrian regime, which Riyadh was trying to overthrow.
Bandar’s package was riveted on the alluring proposal of a unified Russian-Saudi strategy to keep oil production quantities at a level that keeps the price stable in global markets via an alliance between the OPEC cartel and Russia. And, in return for throwing the Syrian regime under the bus – thereby leaving Iran to face the brunt of the ISIS threat – Bandar promised that Russia could retain the naval base in Tartus under a successor regime in Damascus and be assured of security from a ‘jihadi’ backlash.
The Kremlin apparently spurned the overture in a huff. At any rate, by the beginning of 2014, symptoms of a new Cold War began appearing in Russia’s relations with the West following the regime change in Ukraine. The year 2015 also saw a ‘transition’ in Saudi Arabia with the death of King Abdullah. Of course, the year ended with Russia’s military intervention in Syria.
However, the seeds left behind by Bandar began sprouting and with the Russian economy feeling the crunch from Western sanctions, the fall in oil prices on the world market assumed an existential overtone for the Kremlin. The challenge of the US oil shale industry also meant that Saudi-Russian cooperation became a practical necessity. The rest is history.
Agreement to cut oil production
Indeed, the hallmark of Salman’s visit to Moscow has been the pledge by the two countries to carry forward their agreement to cut oil production. Putin disclosed that the deal to cut oil output to boost prices could be extended till the end of 2018, instead of expiring in March 2018.
Putin described his talks with the Saudi king as “very substantive, informative and very trusting”. And Russian commentators have hyped up that Saudi Arabia is “leaning toward Moscow in solving the Syrian crisis”. The Russian reports mentioned that Moscow and Riyadh are eyeing cooperation on nuclear energy, space exploration, plus infrastructure and arms deals.
However, Bandar’s proposal on oil production still remains the leitmotif of Saudi-Russian cooperation, as apparent from the rise in oil prices this week – as word came that Saudi Arabia and Russia would limit oil production through next year. (Brent crude was up 70 cents at $56.50 per barrel on Thursday.)
The point is, how do the Saudis view their ties with Russia? Are they aiming at a geopolitical shift in the Middle East? Evidently, Salman’s visit underscores that the Saudi and Russian leaders have decided to shift their focus toward common interests rather than let disagreements crowd the centre stage of relations. But then, the THAAD deal signals that Saudi Arabia also has a ‘big picture’ of itself being a major regional and international player.
Suffice to say, the Saudis are shifting away from their special relations with the West to a balanced foreign policy by opening up with Russia and creating multiple options for pursuing national interests. To be sure, the Saudis hope to diversify their partnerships based on common interests. While disagreements remain with Moscow over Syria – and notwithstanding the close ties between Moscow and Tehran – the Saudis have adopted a realistic policy toward the Kremlin.
Most certainly, the Saudi expectation is that at some point, the prospect of lucrative business opportunities would encourage the Kremlin to balance Russia’s relations with Iran. Basically, Bandar’s overture to Putin remains the bottom line.
Red star over Nepal
By M K Bhadrakumar | Indian Punchline | October 8, 2017
The Communist Party of Nepal-UML led by KP Oli, Communist Party of Nepal (Maoist Centre) led by Prachanda and the breakaway Naya Shakti Nepal led by Baburam Bhattarai have announced on October 3 the formation of a grand leftist alliance for the forthcoming provincial and federal elections in Nepal on November 26 and December 7 under the new constitution. The polarization of Nepal’s fragmented political spectrum on ideological lines makes the forthcoming elections a watershed event.
In reaction to the unexpected development, the Nepali Congress is reportedly planning to assemble a motley coalition of right-wing forces with some smaller parties to counter the grand leftist alliance. Interestingly, the constituents of the right-wing alliance may include the Rastriya Janata Party Nepal, which was formed in April with the merger of six “pro-India” Madhesi parties on the advice of their mentors in India. Even more interesting is the prospect of the Hindu right-wing, cultural conservative and royalist Rastriya Prajatantra Party Democratic – a veritable clone of India’s Bharatiya Janata Party – joining the Nepali Congress-led alliance.
It doesn’t require much ingenuity to figure out that the leitmotif of the polarization into two grand alliances lies in their respective disposition toward India. The announcement of the formation of the leftist alliance on October 3 seems to have taken not only the Nepali Congress but Delhi also by surprise. The Nepali Congress is scrambling to come up with a credible contestation – conceivably, with some encouragement from Delhi.
The polarization in Nepali politics is a good thing to happen since it presents a clear-cut choice to the electorate. The blurring of the ideological divide through the period of democratization in Nepal had been a major factor breeding the politics of expediency resulting in instability in the past. The big question is whether political stability as such guarantees good governance and can deliver on growth and development. India’s current experience speaks otherwise.
To be sure, the Leftist alliance is ideologically motivated and can be trusted to be far more cohesive and capable of offering a stable government. It will be campaigning on the plank of social justice, egalitarianism and Nepali nationalism. The alliance hopes to secure a two-thirds majority in the new Parliament which will strengthen their hands to steer future amendments to the Constitution smoothly, unlike in the past. During the general election, 165 members of the National Parliament will be elected by simple vote, while another 110 will be appointed through a system of proportional representation.
Based on the performance of the two main communist parties in the elections for the constituent assembly in 2013 and this year’s local polls, the leftist alliance has a distinct chance of winning a majority in the forthcoming elections. (The communists also have a strong party machinery all over the country.) If so, Nepal will be coming under communist rule – an unprecedented political feat not only for Nepal’s fledgling democracy but for the South Asian region as a whole. Importantly, based on the leftist alliance’s performance in the November elections, they intend to form a united Nepal Communist Party. It will be a big rebuff to the Indian establishment, which succeeded so far in splintering the Left in Nepal by fuelling internecine feuds and personality clashes.
These are early days but a communist government in Nepal will profoundly impact the geopolitics of South Asia. It is useful to factor in that Nepal took a neutral stance on the India-China standoff in Doklam. India’s capacity to influence Nepal’s foreign policies under a communist government will be even more limited. Equally, it remains to be seen how Nepal’s ‘defection’ from the Indian orbit might have a domino effect on Bhutan.
A ‘tilt’ toward China may well ensue under a communist government in Nepal. The country may embrace China’s Belt and Road Initiative unequivocally. Chinese investments can phenomenally transform Nepal. And comparisons will be inevitably drawn with the neighboring impoverished regions of Bihar and UP, which are run by India’s ruling party.
The forthcoming elections in Nepal assume great importance for India’s neighbourhood policies under the Modi government. The right-wing Hindu nationalist forces mentoring the Modi government will have a hard time in accepting the prospect of a communist government ruling the abode of the god Shiva. Will they attempt to interfere in the elections? Any overt Indian interference risks a furious backlash, given the pervasive anti-India sentiments in the country.
On the other hand, while the BJP is unable to tolerate a communist government even in the tiny southern state of Kerala, ironically, the Modi government may have to drink from the chalice of poison by doing business with a sovereign communist government in next-door Nepal. Read, here, an interview by Baburam Bhattarai, the well-known Marxist ideologue of Nepal, on the dramatic political developments in the country.
Vladimir Putin’s 17 years in power: the scorecard
By Alex Krainer | The Naked Hedgie | June 7, 2017
Mr. Putin can’t seem to get a break in the western media. I watched his recent interview with CBS’s Megyn Kelly with her tiresome, boring questions like, “did Russia interfere in our election,” “did your ambassador meet with Trump’s election officials,” “isn’t it true that you’re a corrupt murderous thug,” etc. Only in response to Kelly’s last question did Mr. Putin get to name a handful of his achievements in Russia. But someone ought to better prepare his talking points on this score. The below excerpt from my upcoming book summarizes how Russia has changed during the 17 years since Mr. Putin has been at helm.
On 26th July 2014 British magazine “The Economist” published an article titled “A web of lies,” opening with the following two sentences: “In 1991, when Soviet Communism collapsed, it seemed as if the Russian people might at last have the chance to become citizens of a normal Western democracy. Vladimir Putin’s disastrous contribution to Russia’s history has been to set his country on a different path.” Well, we have already seen how Russia fared in the 1990s after Soviet communism collapsed. For some reason, the bright minds at The Economist thought this path was so promising, it was a real shame – a disaster, no less – that Vladimir Putin took Russia on a different one. Let’s take a closer look, shall we, at Mr. Putin’s “disastrous contribution.”
To start with, Putin played the pivotal role in keeping the country from disintegrating. When he came to power, Russia’s regional governors were writing their own laws, disregarded presidential instructions and were not even returning their republics’ tax receipts to the Federation’s purse. Mikhail Gorbachev stated that Putin “saved Russia from the beginning of a collapse. A lot of the regions did not recognize our constitution.” [1] But this historical feat was only the starting point of the subsequent renaissance of the nation. Its economy returned to growth and became more vibrant and diverse than it had been perhaps since the reforms of Pyotr Stolypin of the early 1900s.
Economic reforms
In 2000, Russia was one of the most corrupt countries in the world. Without instituting draconian purges Putin took on the oligarchs and steadily curtailed their power, gradually returning Russia to the rule of law. By 2016 his government reduced corruption to about the same level as that of the United States. That was the empirical result of the annual study on corruption published in 2016 by Ernst & Young.[2] The global auditing consultancy asked respondents around the world whether in their experience, corruption is widespread in the business sector. Their survey, which was conducted in 2014, indicated that only 34% of their Russian respondents thought so, the same proportion as in the United States, and below the world average of 39%. Things have probably improved further since then as Vladimir Putin stepped up a high-profile anti-corruption campaign that led to investigations and prosecution of a number of high level politicians around Russia. Even highly ranked members of Putin’s own political party were not spared.[3] The unmistakable message of such campaigns was that corruption would not be tolerated and that it would be aggressively investigated and prosecuted. Some of the best evidence that Putin’s various anti-corruption measures have had effect can be found in World Bank’s Enterprise Surveys which ask businessmen the question, “was a gift or informal payment expected or requested during a meeting with tax officials?” In 2005, nearly 60% of respondents answered affirmatively. By 2009 this number was 17.4% and by 2012 it had dropped to only 7.3%.
Putin’s government also made impressive advances in making it easier for entrepreneurs and small businesses to set up shop, raise capital and operate in Russia. According to World Bank’s annual “Doing Business” report, which ranks 190 world economies on a set of attributes such as the ease of starting a business, obtaining construction permits, obtaining electricity, raising credit, and enforcing contracts. On all the metrics combined, Russia managed to climb from 124th place in the world in 2012 to 40th in 2017.[4] Thus, within only five years, Russia had vaulted an impressive 84 positions in World Bank’s ranking. This was not a random achievement but the result of President Putin’s explicit 2012 directive that by 2018 Russia should be among the top 20 nations in the world for ease of doing business.
One of the strategically important sectors where Russia has made striking progress is its agricultural industry. After the disastrous 1990s when she found herself dependent on food imports, Russia again became self-sufficient in food production and a net food exporter. By 2014, Russian exports of agricultural products reached nearly $20 billion, almost a full third of her revenues from oil and gas exports. Not only is Russia now producing abundant food for its own needs, the government is explicitly favoring production of healthy foods, a strategy which includes a ban on the cultivation of genetically modified (GMO) crops, introduced by the State Duma in February of 2014. According to official Russian statistics, the share of GMO foods sold in Russia declined from 12% in 2004 to just 0.1% by 2014.
These and many other constructive reforms have had a very substantial impact on Russia’s economic aggregates as the following examples show:
- Between 1999 and 2013, Russia’s gross domestic product (GDP) leaped nearly 12-fold from $1,330 per capita to more than $15,560 in 2013, outpacing even China’s remarkable economic growth.
- Russia reduced its debt as a percentage of GDP by over 90%, from 144% in 1998 to less than 14% in 2015!
- Gross national income per capita rose from $1,710 in 2000 to $14,810 in 2013.
- Unemployment fell from 13% in 1999 to below 5% in 2014. Among the working population (those aged 15-64), 69% have a paid job (74% of men).
- Only 0.2% of Russians work very long hours, compared to 13% OECD average
- Poverty rate fell from 40% in the 1990s to 12.5% in 2013 – better than U.S. or German poverty rates (15.6% and 15.7%, respectively)
- Average monthly income rose from around 1,500 rubles in 1999 to nearly 30,000 rubles in 2013.
- Average monthly pensions rose from less than 500 rubles to 10,000 rubles.
Social and demographic improvements
Putin’s economic reforms included also a more equitable distribution of wealth. As hopelessness faded and standard of living improved, Russian society started to heal: suicides, homicides, and alcohol poisonings declined dramatically. Over the twenty-year period between 1994 and 2014, suicides declined by 56%, homicide rate by 73%, and alcohol poisonings by 83%!
The chart below shows the evolution of these improvements over time:
As we can see, these misery statistics rapidly deteriorated with the introduction of shock therapy in 1992, but the trend sharply reversed soon after Putin took charge. By 2014, these figures reached their lowest values since even before 1992. Along with these improvements, the nation’s demographic trends also experienced a dramatic turnaround. Russian life expectancy, which sunk to an average of barely 64 years (57 for men), rose steadily from the early 2000s to reach almost 72 in 2016, the highest it has ever been in Russia’s history.
Looking at the way life expectancy in Russia changed over time, we see again that it had collapsed in the early 1990s but the trend turned around sharply under Vladimir Putin’s leadership of the country. Similarly fertility rate, which dropped to 1.16 babies per woman in 1999, increased by almost 50% to 1.7 babies by 2012, comparing favorably to European Union’s average of 1.55 babies per woman of childbearing age. Abortions declined 88% from a harrowing 250% of live births in 1993 to 31% in 2013.
Not only are Russians living longer than ever before and enjoying much better quality of life, they also feel freer and happier. In 2014, Gallup Analytics reported that 65% of Russians, more than ever before, answered “Yes” when asked, “are you satisfied … with your freedom to choose what you do with your life?” Meanwhile, Russia’s happiness index rose more than tenfold, from 6 in 1992 to 70 in 2015. Happiness index, compiled by VCIOM[5] adds the proportion of the respondents reporting that they feel decidedly happy or generally happy and deducts those that report feeling generally unhappy or decidedly unhappy.
The next chart further corroborates the idea that under Putin’s leadership, Russia has been developing as a sane and prosperous society, not only for the benefit of a narrow ruling class and at everyone else’s expense, but for the vast majority of ordinary Russians.
By 2014, the great majority of Russians felt satisfied with their lives and believed that things in Russia were moving in the right direction. These figures only tapered off after the 2014 western-sponsored coup in Ukraine and the subsequent economic sanctions imposed on Russia. At the same time, the price of oil – still one of Russia’s largest export – collapsed from over $100 per barrel to under $40. Economic sanctions and the oil price collapse triggered a significant crisis in Russia’s economy. However, in spite of the continuing sanctions regime imposed on the country, its economy started improving again in 2016, thanks to its diverse industrial base that includes a developed commercial and consumer automotive industry, advanced aircraft and helicopter construction based largely on domestic technologies, world’s leading aerospace industry building satellites and top class rocket engines, and advanced industries in pharmaceutical, food processing, optical device, machine tools, tractors, software and numerous other branches. Indeed, Russia is far from being just the “Nigeria with missiles,” or a “gas station with an army,” as many western leaders like to characterize it.
Insofar as a population’s sentiment is a valid measure of its leadership’s performance, Russia’s development under Vladimir Putin stands in sharp contrast with the weak performance of most other developed nations, including those that most vehemently criticize Russia and its president. According to polls conducted by Ipsos Public Affairs in 25 different countries in November 2016 and published by the World Economic Forum, almost two thirds of the people in the world believed that their countries were moving in the wrong direction. The leading western nations scored just as badly, while some among them did flat out dismally.
Evidently, Russians feel much better about the way their nation is shaping up than do constituents of many western nations[6] whose sanctimonious leaders like to lecture their Russian counterparts about prosperity, freedom, democracy and other exalted values they purport to cherish.[7] It may thus only surprise the most credulous consumers of western propaganda that a high proportion of Russian people trust Vladimir Putin and approve his job performance. In the early 2017, Putin’s job approval stood between 80% and 90% and has averaged 74% over the eleven years from 2006. During this period, no western leader has come even close to measuring up with Vladimir Putin.
Over the years, I’ve heard depressingly many intellectuals attempt to dismiss Putin’s achievements and Russian people’s contentment as the product of Russian government propaganda. Putin the autocrat, you see, keeps such tight control over the media that he can deceive his people into believing that things in the country are much better than they really are. But the idea that government propaganda can influence public opinion in this way is just silly. If the majority of people thought their lives were miserable, state propaganda could not persuade them that everything is great. On the contrary, most people would conclude that the media is deceiving them and might feel even less positive about things as a result.[8] It is sillier still to think that western intellectuals should have a better appreciation of what it is like to live in Russia than the Russian people themselves. Rather than buying the truth from their media, such intellectuals would do well to take a trip and visit Russia, speak to ordinary people there, and reach their own conclusions. My own travels in Russia, as well as reports from other visitors largely agree with the positive picture that emerges from the statistics we’ve just examined.
Notes:
[1] (Gorbachev: Putin saved Russia from disintegration 2014)
[2] (Stulb 2016)
[3] Some of the names arrested in 2016 surprised even the Russian public as they included such high caliber individual as the Mayor of Vladivostok, Igor Pushkarev; Governor of the Kirov region, Nikita Belykh; Governor of the Sakhalin region, Alexander Khoroshavin, Deputy Minister of Culture Grigory Pirumov and Minister for Economic Development, Aleksey Ulyukaev.
[4] (Romer 2016)
[5] ВЦИОМ – Russian Center for Research on Public Opinion
[6] A different, Associated Press – GfK poll in July of 2016 uncovered an even darker public sentiment in the United States: “A stunning 79 percent of Americans now believe the country is heading in the wrong direction, a 15-point spike in the past year…” (J. Pace 2016)
[7] VCIOM’s figures for November 2016 are somewhat higher than those of Ipsos (62% vs. 58%).
[8] This, for instance, was the situation in the late 1990s when only 5 to 10 percent of Russians thought that the country was heading in the right direction in spite of the ruling elite’s nearly total control of the media.
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Millions of people suffer and die from the effects of radiation exposure from decades of nuclear weapons testing. Their experience should give serious pause to those who continue to embrace the viability of a nuclear deterrent. … continue
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