So, who's the big shot now? Russia, that's who.
It seemed like just yesterday that old women were sweeping the streets of Moscow for food handouts and spare change, or that you could by a MiG-29 for like a dollar, and let's not forget then that President George W. looked into Vladimir Putin's dreamy eyes and saw into his heart.
Now-a-days, things have changed and have changed a lot. That's what happens when you're one of the world's largest oil producers and exporters. Russia produces about 5 million barrels a day which accounts for about 12% of the worlds output. Currently, oil makes up about 40% of Russia's government budget revenue and nearly half of her export dollars.
While Russia is swimming in its black gold, the west is seeing green.
GM has announced that they are set to pour a billion dollars in Russia over the next five years. Volkswagen, who is finding it a lot easier to get into Russia than they did 70 years ago, is putting up a billion and a half. Automotive part manufacturers, whiskey and beer brewing firms, electronics and consumer parts manufacturers and retail- lots and lots of retail- are all starting to invest heavily in Russia as well.
On top of all this, at the end of 2012, the U.S. granted 'Permanent Normal Trade Relations' which, when you put all these factors together, have a lot of companies looking to Russia- backed by oil- as a potential huge sales market. Well, hopefully....
There are some dark clouds over this cheery spend and play atmosphere.
While Russia and Saudi Arabia share top billing as the world's biggest producers, Saudi Arabia has vast reserves and could increase capacity whenever they choose. Russia's main producing area, the West Siberian oil fields, has been viewed as in decline. Up until now, Russia hasn't had a need to look for different areas to pick up the slack. When they do, they are looking at areas in the Arctic and other of the most inhospitable areas on the planet.
Economists are eyeing on the horizon a glut in oil production and reserves- mainly with U.S. new drilling tech, including fracking.
Also, Russia makes a lot of money off natural gas sales to Europe. However, a couple winters ago, Russia, in a dispute with the Ukraine, cut off gas shipments (via pipelines). Unfortunately, those are the same pipelines that carry gas beyond the borders of the Ukraine, so the byproduct of this dispute was that fuel was also being shut off, more or less, from the whole of Europe that depends on Russian gas.
Recently, Israel discovered a vast natural gas field and plans to develop and ship the gas through Cyprus to the less then satisfied users of Russian natural-gas in Europe.
There's also a kind of 'elephant in the room' element within this discussion. Sure, you don't want to speak ill of anyone, or be judgmental towards certain government leaders or policies, but one does get the feeling that the days of glasnost and perestroika have kind of fallen...possibly beaten down (I wasn't there...I can't say) by the wayside.
Dictatorship ... Nobody said dictatorship! Who said anything about a dictatorship?
Well, maybe not the kind with a funny hat or bushy mustache or a weirdo Nero suite, but I think everybody--maybe just in whispers and thoughts only--knows that there is a sort of iron grip on the country and things don't get done unless approved by he who can't be named (please see second paragraph).
At the end of January, the international rights monitoring group, Human Rights Watch, issued a report stating that the past year has seen unprecedented crackdowns that haven't occurred since the old Soviet era. Furthermore, actions such as the continued and ongoing arrests of business and political critics of Putin; the deaths of journalists at home and overseas; the recent passing of legislation that requires foreign business people to register as 'agents' AND the registration of Russian citizens who work with the decadent Westerners only add to the belief that Russia is in a rapid political regression.
Yet, we still manage to approve and pass 'Permanent Normal Trade Relations' for their troubles. This legislation, approved by both the U.S. Congress and President Obama, removes some trade restrictions left over from the Cold War. You'd think the Russians would be happy; you'd think they would be pleased. Well, not exactly.
Because the bill was tied to legislation that prevents Russian human rights violators from entering the country and allows for the freezing of the violators assets here, the Russians are angry, SUPER angry. Putin, during a lengthy press conference, describes the addition of the human rights language as "poison" to the Russian-US relationship.
Human rights violators. Oh, we mustn't punish them. In a way of thanks for this legislation, Russia decides to ban all adoptions to the U.S., even those far along in the process.
Nobody is looking for enemies here. Maybe with the influx of Western business and money, things will settle down a bit. Still, is it wise for American and European companies to be investing so heavily in Russia with these sorts of question marks hovering over them, no matter what the market potential is? Should the question of morals become part of the argument or discussion on trading with countries that have this sort of track record? For example, China's economy has done nothing but screamed forward in the last couple of decades, and has done so while quashing political dissent, sometimes literally with tanks, yet nobody is turning their backs to them; in fact, probably just the opposite.
Is this reality of the world economy? Where money is to be made, made with the guise of legitimacy, let's not ask too many unpleasant questions and just kind of go with it?
Sure, Russia is a big shot now and companies are taking notice and want to get a piece of the action. But think about this: people tolerate the loud fat rich guy who bullies himself to the front of a line at a restaurant. There's no great respect there. They tolerate them because they're rich and they might be able to make a buck off them. That's it! But once that money goes, they're just another loud fat guy who will one day look around to find all those 'friends' are gone.
Worst yet, if things get really dicey, say another 'justified' invasion of a breakaway republic or a few more deaths of journalists or even the arrest of a few Western businessman- I mean agents, people are going to start pointing fingers at who is supporting this jack-boot style of business.
If this trend continues, somewhere along the line the term 'bloodmoney' is going to come up. When that happens, I'm sure the exodus to get out will be just as fast as the one to get in.
That is, if they are allowed....
, black gold
, Permanent Normal Trade Relations
, Vladimir Putin