Saturday, 25 October 2014

Garry Kasparov: "Putin’s bargaining power has been greatly overestimated"

Garry Kasparov´s speech at the Oslo Freedom Forum should be compulsory reading for European and American leaders:

After the fall of the Iron Curtain, it made perfect sense to integrate, to “engage”, with the morally and economically impoverished countries emerging from the Communist Dark Ages. But even after the European Union and NATO were expanded to their logical limits, the West continued to engage with authoritarian nations and leaders who wanted nothing to do with human rights and free markets within their own borders. Countries like Putin’s Russia and China received the economic benefits of engagement with the free world, but never ceased their crackdowns on civil society at home.


Putin in particular has been very successful using the free world’s open borders, open press, and open political systems to his advantage. Just a note, that if not for Putin’s blatant aggression in Ukraine the so-called G-8 Summit would have taken place in Sochi last summer. Putin and his representatives have put many prominent Western politicians on his payroll, held fundraisers for political parties, brought influential western companies and executives into his network, and flooded western banks and markets with the easy cash they love, paid for with their own oil and gas money. However, Putin’s bargaining power has been greatly overestimated.


The free world still has many advantages in this fight, and could have all the leverage it needs, if only it had the courage to use it. The EU, for example, gets only a third of its oil and gas from Russia. Substantial, and in many ways shameful, since it has been clear for years that Putin is not a reliable partner. Russia’s annexation of Crimea took place in March and Europe did nothing for seven months to find an alternative to Russian gas. And of course Norway could be one of the options! Today we still hear that “Europe could freeze” if Putin cuts the gas supply. But Russia exports over 80% of its oil and gas to the EU! Over 80%! Who has the leverage here? By boycotting or taxing those exports, or even making a credible threat to do so, Europe could cripple the cash flow that keeps Putin and his gang in power.
There are other powerful measures that could be employed. Russia’s hundreds of billions of dollars in cash reserves kept in Europe and the US could be frozen, as Iran’s were in 1979; Russian state corporations can be stripped of their cash flow; and Putin’s oligarchs’ assets can be seized to create a rift between the Godfather and his lieutenants. Total isolation is not possible today, but the free world must break all forms of dependency on dictatorships. Engagement with dictators has failed.


This failed engagement policy of the West has given Putin something the Soviet leaders never dreamed of: an open frequency for propaganda and lobbying, and open markets for their natural resources and cash. Russia and China have channels on Western cable TV and teams of influential lobbyists in every capital. But sellers need buyers. Pipelines cannot easily be redirected. Russia’s ruling elite and their families have no desire to live in the country they have so effectively looted and ruined.
So the free world holds the winning cards in this game of geopolitical poker, but keeps folding its hand whenever Putin bluffs – and he does so regularly and successfully. A dictator knows what he must do to stay in power: he must look strong; he fights to survive. Democratically elected leaders are more worried about the next poll, the next election, or passing on tough decisions to their successors. Conflict and sacrifice aren’t winning campaign issues. Western leaders complain about jobs that could be lost from a confrontation, but how many jobs will be lost from global instability when dictators go unchallenged?
But we must fight – now, or later. If we have learned anything about dictators it is that they do not go away on their own. Putin is not a nightmare that goes away when you open your eyes! The longer we wait, the harder it will be. The price keeps going up every day. There is never a safe and easy solution. Sanctions can be effective, but they must be strong enough and fast enough to deter.

Read the entire speech here

Friday, 24 October 2014

The European Union continues on its path to economic self-destruction: Agrees on "World´s most ambitious climate energy policy"

The grim reality for the European Union:

Now that German growth has stumbled, the euro area is on the verge of tipping into its third recession in six years. Its leaders have squandered two years of respite, granted by the pledge of Mario Draghi, the European Central Bank’s president, to do “whatever it takes” to save the single currency. The French and the Italians have dodged structural reforms, while the Germans have insisted on too much austerity. Prices are falling in eight European countries. The zone’s overall inflation rate has slipped to 0.3% and may well go into outright decline next year. A region that makes up almost a fifth of world output is marching towards stagnation and deflation.

Surely the leaders of the European Union should be more than worried. However, instead of taking the necessary measures to create growth, those leaders have chosen to reinforce the only really "succesful" EU project, the self-destruction of the European economy:

in the early hours of Friday, Mr Van Rompuy, wrote in a tweet: "Deal! At least 40% emissions cut by 2030. World's most ambitious, cost-effective, fair #EU2030 climate energy policy agreed ."

The EU Commissioner for Climate Action, Connie Hedegaard, said she was "very proud" that the leaders "were able to get their act together on this pressing climate challenge".

Meanwhile, German Chancellor Angela Merkel said: "We made a decisive step forward."

The EU is already on target to cut its CO2 emissions by 20% by 2020, compared with 1990 emission levels.

EU officials earlier said they wanted the EU to have an "ambitious position" in the run up to the UN climate change conference in Paris in December 2015.

They must be smiling in the US, China and India ...

Friday, 17 October 2014

Alan Greenspan on the never ending euro failure

There is no end to the ongoing euro crisis. Former Fed Chairman Alan Greenspan explains why the euro is - and will stay - a huge failure:

"At the outset of the creation of the euro in 1999, it was expected that the southern eurozone economies would behave like those in the north; the Italians would behave like Germans. They didn’t," Greenspan said. "Instead, northern Europe fell into subsidizing southern Europe’s excess consumption, that is, its current account deficits."
Greenspan predicts that as the south's fiscal crisis deepens, the flow of goods from the north will stop altogether and southern Europe's standard of living will go down.
"The effect of the divergent cultures in the eurozone has been grossly underestimated," he added. "The only way to have several currencies from divergent nations lumped together is if they are culturally close, such as Germany, the Netherlands and Austria. If they aren’t, it simply can’t continue to work."

Tim Worstall also has a good piece on the same subject in Forbes:

While these very different economies are locked into the one currency, one interest rate, system there’s really not a lot anyone can do about it. Some talk of fiscal union, which is in essence the rich areas sending money to the poor ones. But absolutely no one at all thinks that those rich areas have the desire nor capacity to ship enough money: we’re not talking about a few billions here or there, but substantial percentages of GDP being necessary.
All of which is what made me conclude long ago that the failure of the euro is inevitable. Please note, I don’t mean that collapse of it is: political finagling can hold it together for decades if people really try. What I mean is failure in an economic sense. Interest rates will always be set for the core economies, meaning that they will always be wrong for the peripheral ones. Which means that those peripheral economies are condemned to a cycle of huge boom and bust as interest rates are either way too low or way too high for their circumstances.
Yes, I do think it fair to say that wild gyrations are a sign of failure in an economic policy or system. And in this sense, I think it inevitable that the euro will fail. For it already has.

Wednesday, 15 October 2014

Obama is ready for another "reset" with Russia´s criminal dictator Putin

This was to be expected: Suddenly Putin´s aggression against Ukraine is (in reality) forgotten. Barack Obama, one of the weakest US presidents ever, is offering the corrupted and criminal dictator another "reset" (even if his administration is not using the word). It will not take long before the former KGB agent is again welcomed and embraced by the "leader of the Free World":

Secretary of State John Kerry said on Tuesday that the United States and Russia had agreed to share more intelligence on the Islamic State, as he sought to lay the basis for improved cooperation with Moscow.
Just six months ago, Obama administration officials suggested that their goal was to isolate President Vladimir V. Putin following Russia’s decision to annex Crimea and provide military support to separatists in eastern Ukraine.
But Mr. Kerry made it clear that he would welcome expanded cooperation with Mr. Putin after a meeting here with Sergey V. Lavrov, the Russian foreign minister.
While nobody on the American side said the United States was undertaking another “reset” — the term the Obama administration used to describe its early attempt to improve ties with Russia — the tenor of Mr. Kerry’s comments suggested that the State Department was pursuing a new tack.
“It is no secret that the United States and Russia have had our differences over Ukraine,” Mr. Kerry told reporters. “We came together today in order to try to focus on those issues where we can find the capacity to be able to make a difference to other countries, to the world in general, and certainly to the relationship between Russia and the United States.”
Read the entire article here

Wednesday, 8 October 2014

Plummeting oil prices will weaken Putin´s Russia

Oil prices are plummeting. They have gone down as much as 20% since June. This - together with Western sanctions - weaken Vladimir Putin´s chances to continue his policy of aggression in Ukraine and elsewhere:

Lower oil prices could have lots of knock-on effects around the world. Take Russia, which depends on oil sales to bring in foreign currency. The Russian government has set its three-year budget with the expectation that oil prices would stay at $100 per barrel. A sustained fall in prices could cripple the Russian economy and run up deficits.

Indeed, some energy analysts are starting to wonder if an oil crash might even force Russia to pull back in Ukraine and elsewhere. And on Tuesday, the Russian finance minister warned that the country could no longer afford a multibillion-dollar upgrade to its armed forces that had been approved by President Vladimir Putin

Read the entire article here

Tuesday, 30 September 2014

Garri Kasparov on Putin: “the most dangerous man in the world”

Western leaders should listen to what Garry Kasparov has to say about Russian dictator Vladimir Putin:

Garry Kasparov, the world’s most renowned chess master, has branded Vladimir Putin “the most dangerous man in the world” in a passionate interview with Yahoo News, in which he stressed that the Russian President is more dangerous that Islamic State (ISIS) and “all the Al-Qaedas in the world”.
Asked if Islamic State or Putin were a bigger threat to global stability, Kasparov responded with “Of course Putin… Of course Putin!”
“Because Putin cannot be defeated militarily,” he explained. “The war with ISIS can be won on the ground. It is very clear that if America decides to eliminate ISIS, they will turn it into dust in 24 hours!” --
Russia’s nuclear arsenal gives Putin an “ability to create instability - a thousand times bigger than all the Al-Qaedas of the world,” Kasparov also said.
“Putin wants to stay in power at any cost and for him to stay in power he needs to create global instability. I would not be surprised if he starts blackmailing the world with nuclear armageddon because for him there is no life if he loses power.”
Of course Kasparov is right about Putin, and Obama, Merkel and the rest understand how dangerous the man is. But because unstable Putin is in charge of a large nuclear arsenal, they are too scared to take the action needed ...

Monday, 29 September 2014

Walter Russell Mead on EU: "The price for two decades of policy incompetence is goind to be high"

Walter Russell Mead is right:

Putin is dancing on the face of the West, and in Tehran, Beijing and across the world, the message is clear: Western statesmen are not serious, they don’t think before they act and they don’t mean what they say.
Ukraine continues to pay the penalty for standing up to Russia at the instigation of a ditzy, incoherent and vainglorious EU. History’s contempt for this generation of european leaders—authors of the euro disaster, disarmers of Europe as threats grew to the east and the south, creators of the worst mass unemployment in Europe since the depression—will be harsh and deep. The price for two decades of policy incompetence is going to be high, and the bill is already coming due.