The risks in a galvanized Nato | Business New Europe

From Mark Galeotti, Professor of Global Affairs at New York University:

…Of course, Nato still has a role, not least to ensure there is no temptation for rather more robust pressure from Moscow on Europe. But to think that it can or even should try to respond to the full range of challenges of the new age of conflict is foolish — and even dangerous.

First of all, the task of inoculating bordering states from potential Russian mischief — whether stirring up disgruntled minorities, subtle destabilization or unsubtle economic pressure — is more properly handled by other agencies. National governments, obviously, need to pay more attention to what, in military terms, would be called “target hardening.” Those minorities need to be integrated, due diligence should identify flanking Russian buyouts, political finance regulated. The trouble is that this means not just taking action now that Russia looks problematic, but sustaining it — turning away potential investment, alienating a neighbor and so on — even when things look quieter.

Of course, the EU could also play a positive role here, but to date the EU’s capacity to mobilize and maintain this kind of action is also questionable. But the second serious concern is that the more Nato eases itself comfortably back into its role as the defender of the West from the Russian hordes, the more it consolidates the current dangerous and zero-sum confrontation. It also plays to a nationalist, even xenophobic constituency within the Russian elite, especially strongly represented within the security agencies and the Orthodox Church, who actually appreciate any opportunity to cut themselves off from the West and its dangerously infectious notions of egalitarianism, transparency and rule of law. This faction is currently in the ascendant, but it need not be so, especially given the evident concerns of many within the Russian business community at the prospect of being locked away from the West.

This is the challenge. Nato patently still has a role. But it is far too blunt an instrument to be able to deal with the range of subtle, deniable or downright devious tactics Russia would deploy. Instead, the West will have to develop new, more appropriate defenses — and try to avoid playing into the hands of the ultra-nationalist wing in the Kremlin happy to find excuses to see their country surrounded and beleaguered.

Read more at STOLYPIN: The risks in a galvanized Nato | Business New Europe.

Trouble in the East

Poland, Ukraine and Lithuania plan to form a common brigade:

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.”

Garry Kasparov on Putin

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.

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

Nymex and Brent Crude

But the impact on Russia is cushioned by the falling Rouble.

RUBUSD

In the long-term this will cause inflation. But the immediate deterrent effect is negligible.

Trouble in the East

Poland, Ukraine and Lithuania plan to form a common brigade:

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.”

Garry Kasparov on Putin

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.

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

Nymex and Brent Crude

But the impact on Russia is cushioned by the falling Rouble.

RUBUSD

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!.

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.

Spot Gold

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.

Nymex and Brent Crude

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.