Must-watch interview with @edwardlucas on Latvian television http://t.co/5XUFXxKUos Well worth 40 minutes of your time
— Brian Whitmore (@PowerVertical) September 24, 2014
What Ukraine needs most now – Evidence from Slovakia Reforms | VoxUkraine
From Ivan Mikloš (former Minister of Finance and deputy Prime Minister of the Slovak Republic):
…Twenty-five years ago Slovakia produced antiquated Soviet tanks and another heavy military equipment but not one car. Today we are the number one producer of cars in the whole world, per capita. The most important reason for that success is reforms. Let me illustrate this by comparing convergence success of the Visegrad countries from 2004 until 2008. Over those four years, GDP per capita in PPP in comparison with the EU average improved in Hungary by 1%, Czech Republic by 3%, Poland by 5% and Slovakia by 16%. These were the first four years of EU membership for all of these countries, therefore the big difference among their convergence progress has to have had different reasons. This reason is reforms.
Slovakia during 2003 prepared, and from the beginning of 2004 implemented, a very bold and complex package of deep structural reforms. In 2004 Slovakia was named the most reformist country globally by the World Bank. I am not writing this in order to praise my country or myself. I am writing this because of two main reasons. Firstly, it shows that reforms work. It shows that if country is able to implement a deep and comprehensive package of reforms it will bring relatively quick results. Secondly, I think that our experience shows Ukraine now has a real chance to achieve similar success and progress if necessary reforms are implemented.
Read more at VoxUkraine.
Trouble in the East
Poland, Ukraine and Lithuania plan to form a common brigade:
Agreement on a joint Ukraine-Poland-Lithuania military brigade signed in Warsaw – v @DefenceU https://t.co/12beNEuXrU pic.twitter.com/20f1x2z800
— Olga Tokariuk (@olgatokariuk) September 19, 2014
Ben Judah, author of Fragile Empire: How Russia Fell In And Out Of Love With Vladimir Putin observes:
“This emerging military alliance between Ukraine and Poland/Lithuania is a sign that the US/EU ability to control it allies decreasing fast.”
Lack of leadership from their Western allies is forcing Eastern NATO states to form their own alliances, which could drag NATO into a conflict with Russia. Garry Kasparov in an interview with Maria Bartiromo sums up the situation:
“If you try to lead from behind no one will follow you….Obama shows unwillingness to engage the challenges that are there.”
Click on image to play video
Obama is no Ronald Reagan and his reluctance to confront Putin is encouraging further risk-taking. As Petro Poroshenko told the House:
We appreciate the blankets and night-vision goggles that you sent us….but we cannot fight a war with blankets.”
The ceasefire in the East is tenuous and likely to collapse at any time.
Picture and video from artillery fire tonight in #Mariupol http://t.co/MZ1NMmSibR @InfoResist |EMPR #Ukraine pic.twitter.com/DyPONpCb5N
— Euromaidan PR (@EuromaidanPR) September 19, 2014
If the ceasefire does collapse, Putin will continue to escalate, destroying Obama’s and NATO credibility with their allies in the East. Sanctions have not worked as a deterrent. Brent crude is falling
But the impact on Russia is cushioned by the falling Rouble.
In the long-term this will cause inflation. But the immediate deterrent effect is negligible.
A Premature Party for Poroshenko
From Leon Aron, Director of Russian studies at the American Enterprise Institute:
…By withholding military assistance to Ukraine — the only thing that could have changed Putin’s mind by giving Kiev a chance to turn the tide on the battlefield — the West has greatly contributed to [Ukrainian President] Poroshenko’s decision to accept a very bad deal. No amount of ovation, not even a standing one, during Poroshenko’s address to the joint session of Congress today can obscure this grim reality.
Read more at A Premature Party for Poroshenko.
Defence With A “C”: The Russian Bear Cometh!
From Chris at Defence with a C:
Russia has spent the last decade talking about programs to upgrade its armed forces and spend more money on things like training, logistics and maintenance. The fruits of this investment, or even just the investment itself, appear to be taking a very long time to actually materialise.
This is not to say that NATO shouldn’t sleep with one eye open, or that NATO should stop investing in its collective defence. Vigilance is the first stage of preparedness after all. But to say that Russia is an imminent threat to NATO is over egging the pudding I feel….
Read more at Defence With A "C": The Russian Bear Cometh!.
Poroshenko: ‘Today Ukraine is bleeding for its independence and territorial integrity’
From Ukrainian President Petro Poroshenko’s speech to the Canadian parliament in Ottawa on September 17:
Today Ukraine pays a very high price for defending what we believe in – democracy and freedom to choose our own future. For more than two decades we proudly stated that Ukraine gained its independence without shedding a single drop of blood.
Today Ukraine is bleeding for its independence and territorial integrity.
Read more at Poroshenko: 'Today Ukraine is bleeding for its independence and territorial integrity' VIDEO.
Putin Attacks the West’s Soft Underbelly | World Affairs Journal
From Arthur Milikh at the Heritage Foundation:
Alexander Hamilton lamented long ago, in Federalist 25, what may become our tendency to act as if “all that kind of policy by which nations anticipate distant danger and meet the gathering storm must be abstained from.” Putin knows we want to be deceived. But what nation would choose, as Hamilton puts it, to “receive the blow before we could even prepare to return it”?
Putin’s new genre of war in part stems from our Western intellectual deficiencies. He knows we cannot countenance full-on conventional warfare in such a critical region—but we can swallow ambiguity. He knows that we will likely intervene only on account of moralism or shame, but we will not act strategically, trusting in our judgment. Putin will provide us with empirical data to sufficiently muddy the waters and thereby destroy our confidence in our own intuition. The incursion of a “humanitarian” convoy of 200-plus trucks into Ukraine last month was a masterful example of this….
Read more at Putin Attacks the West's Soft Underbelly | World Affairs Journal.
Putin’s Playbook | NYTimes.com
From Maxim Trudolyubov, opinion page editor of the business newspaper Vedomosti:
…So what is Mr. Putin up to, my American friends and colleagues keep asking. He is, quite simply, bent on preserving and expanding his personal and Russia’s international power. Some of his methods were inherited from the Soviets, some were developed in the absence of domestic political traditions, and some were borrowed from the West. There is no consistent ideology. Nor is there is anything particularly Russian about his beliefs. But the methodology in his playbook is constant and ruthless. It involves techniques that function when all past checks on power — institutional constraints and traditional values — are gone. If it’s true that much of the world is moving in this same ruthless direction, then, yes, Mr. Putin’s methods are indeed political guidelines for the future.
Read more at Putin's Playbook – NYTimes.com.
Bad Has Never Looked So Good – Russia
Again from Energy Burrito at Oilprice.com:
…the Russian ruble has been gradually depreciating throughout this year amid rising geopolitical tension in Ukraine. It has now dropped 12% versus the US dollar in 2014.
Yet while a falling ruble hurts Russian imports as they become increasingly more expensive to buy, Russia reaps the rewards when it comes to exports. And it is seeing the greatest benefit from its largest export: oil. To the tune of 7 million barrels a day.
Hence, while crude prices in US dollars have dropped 12% in value since the beginning of July, crude oil in rubles has only dropped 3.4%. For Russian coffers, it is good for the ruble to be bad…
Read more at Bad Has Never Looked So Good.
Gold & crude fall
Gold broke support at $1240/ounce to signal a primary down-trend. Declining 13-week Twiggs Momentum, below zero, strengthens the signal. Follow-through below $1200 would confirm. The sell-off is being driven by a rising Dollar.
Crude oil is also falling, with Brent Crude testing its 18-month low. Nymex breach of $92/barrel would also signal a primary down-trend.
From Nick Cunningham at Oilprice.com:
The glut of supplies and weak demand is causing problems for OPEC, according to the cartel’s monthly report. OPEC lowered its demand projection for 2015 by 200,000 and in August, Saudi Arabia cut production by 400,000 bpd in an effort to stem oversupply.
It is probably no coincidence, but lower oil prices will hurt the Russian economy. As Nick points out:
Russia needs between $110 and $117 per barrel to finance its spending, which means the Kremlin can’t be happy as it watches Brent prices continue to drop. Combined with an already weak economy, Russia could see its $19 billion surplus become a deficit by the end of the year.
Falling oil prices will benefit the global economy in the medium-term. Subduing Russia’s territorial ambitions will be an added bonus.