I’ve visited Russia and its former Republics several times. Yet it never ceases to amaze me how often those of us in the West think we can influence politics in a place like that.
Here’s a region that cares little about its own rule of law, never mind global law and order.
Recent events in Ukraine and Crimea underline that perfectly. Despite the 1994 treaty in place that protects Ukrainian sovereignty, it didn’t stop Russia from annexing Crimea in an audacious, “blink and you’ll miss it” land grab.
The European Union, United Kingdom and United States all signed the treaty… but have done nothing hard-hitting of note to sanction Russia’s actions.
Why is that?
The reason is simple: energy.
Don’t Mess With the King
In a world reliant on energy for its survival, Russia is in the enviable position of being the energy kingpin in the region. And he who has the oil makes the rules.
So it’s absolutely in Russia’s best interests to cause havoc and unrest at every opportunity for one end and one end only…
To keep energy prices higher, so the oligarchs who report to the Kremlin can continue to line their pockets.
Everything else is just noise.
What Russia is doing is neither new, nor unpredictable.
Here’s an excerpt of what I wrote in my bestselling book, Where in the World Should I Invest?, in the chapter about Russia:
“There’s a huge divide between the mega rich and the poor. Oligarchs and government operatives in the Russian bloc thrive on chaos. As a nuclear superpower, Russia will always possess a bigger bark than bite, impeding global progress in the Middle East and Asia, where Russia holds significant interests. Russia and the former Soviet Republics have never recovered from the collapse of the USSR. There are questions about rule of law, distribution of equity and transparency of markets. Until those are resolved, the region, minus the Baltics, will face significant problems for years, if not decades, to come.
For Europe, the situation couldn’t be more delicate…
Europe: Stuck Between a Rock and a Russian Place
Two former German chancellors – Messrs. Schroeder and Schmidt – are on record as saying that the Russia/Crimea issue was nothing for Germany to be concerned about.
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Well, they’re concerned now!
Germany is Russia’s largest European Union trading partner and the biggest consumer of Russian energy exports. In other words, it needs Russia onside.
That goes for the rest of Europe, too.
- The European Union is Russia’s largest trading partner by far, with more than $270 billion in annual trade. That’s almost 15 times more than Russian-U.S. trade.
- Fully 84% of Russia’s oil exports and 76% of natural gas exports are to European countries.
Europe knows that the despotic Russian regime has the capability to annihilate any and all non-European enemies with its nuclear arsenal, and all of Europe with its conventional forces.
And if the EU isn’t feeling the urge to do anything, it’s unlikely that the Americans will have any effect on Russia’s economy.
So for all the rhetoric, any military option is off the table and will remain off the table, even if Russia invades Ukraine or any former Republic.
In the meantime, Russia sits firmly in the box seat, happy to let tensions simmer…
Russia Wants to Stir the Pot
Take a recent headline, for example: “Russia Warns of Possible Civil War in Ukraine.”
Warns? Nothing would suit Russia’s agenda better than more geopolitical strife…
Ukraine is a major conduit for Russian natural gas to Europe, with pipelines crisscrossing the country. Yet, in an ironic twist, the Ukrainians can’t afford the sky-high prices that Russian energy giant, Gazprom, charges for domestic natural gas consumption. And Russia has threatened to cut off supplies completely if Ukraine doesn’t pay $2 billion in arrears.
Understand that what we’re seeing play out today isn’t unscripted. And before this chapter is concluded, Ukraine may once again become a vassal of the Russian Republic.
In short, Russia isn’t warning of a possible civil war in Ukraine; it’s encouraging it by all means possible.
And “the chase” continues,