Since the fall of the Soviet Union in 1991 and the beginning of democracy, Gazprom has pretty much been the sole source provider of natural gas and petro products to Russia and a major supplier to Western Europe. But since the global economy has been tanking for a while now, what used to be one of Russia's main economic engines has now become a dead weight dragging the russian economy down even further.

Andrew Kramer does a good job in his article pointing out how the Russians (Putin) had banked on a rising petroleum market to sustain the Russian economy and how this strategy is now failing. Russia had basically become a rentier state, depending on Gazprom and other similar industries to fuel its growth through the sale of its commodities to other countries. Where Russia went wrong with it's strategy is the contract it went into with several central asian states that provided the natural gas to Gazprom. According to the article, Gazprom negotiated a fixed price of $340 per 1k cubic meters of natural gas from the central asian states through 2028. The demand for natural gas has fallen so far that the Ukranians are expected to pay on average $230 per 1k cubic meters and Europe $280 per 1k cubic meter for the remainder of this year. That's anywhere between a $60 to $110 loss per 1k cubic meter. And with the global economy still in the doldrums for the next year or so, this does not bode well for Gazprom and Russia as long as gas prices remain depressed.

Now, I'm not an economics guy, but I would figure 3-4 years of sagging gas prices will really put Russia in a bind. They would have to see a significant boost in prices to make up for lost ground, but still not do it too fast that they cause a spike followed by another down turn in prices. They'll have to handle this one with kid gloves.

Maybe they can find a T. Boone Pickenovich?

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Da comrade, ve can play very good shakhmaty!

I'll hand it to the russians, they know how to play shakhmaty (chess) very well. Back in Feb 2009, Russia offered the Kyrgzygs (dammit people, it's called vowels!) some 2.15 Billion dollars in "aid" in exchange for shutting down Manas Air Base in Kyrgzygstan. For the uninitiated, Manas was (still is??) our major airfield for flying stuff into A-Stan. Its capable of handling about four C17s or C5 cargo aircraft, so it was kind of important to us, and we had kind of sunk a s--t load of money into developing the place.

Now, the Russian are playing nice-nice, but this latest move is not unexpected. Somebody, somewhere reading this blog post just went "pfft, whatever dude, we can fly the stuff in from somewhere else" Eh, not quite. Not Uzbekistan, since the Russians did the same thing to us in 2005 with the K2 airbase. Can't go to Tajikistan since the Indians have already built up the airbase at Farkhor and us shacking up with Indians in Tajikistan would just piss off our allies in the Afghan war, the Pakistani's to no end.

Turkmenistan has maintained a policy of neutrality, so a big fat nyet from them. As for Kazakhstan, yes they have airfields we could have used, but after the Russians and the Chinese, especially the Chinese bitched and moaned about an American base, that one died off to. Also keep in mind that Kazakhstan has a major oil pipeline into China ($$ bitches!) and is building a similar natural gas one into China ($$ bitches!) probably a few implied threats about these projects brought the Kazaks into line ricky ticky.

You also just can't fly stuff into A-Stan from Europe or where ever. You actually have to pile the goods somewhat close to the theater so you can quickly organize pallets of items that are in demand and get them on the next cargo plane smokin'. Its alot more efficent logistically and gives the loggies more flexibility in terms of buidling these pallets and gets the stuff into the hands of the people who need it quicker.

So, as the Romans would say, "Cui Bono?" Well the Russians, and not becuase they'll get to throw on taxes and fees and "wet the beak" a little. But you just can't move all this military stuff in a "diplo-pouch" (they don't make them that big) so that means as part of the "customs" inspections they'll get to poke around what ever we ship through Russia. Someone's probably going "hey dummy, we won't be shipping sensitive gear this way!" Yeah, got it, but you can still do alot of open source collecting this way. If this goes through, it'll be a field day for the GRU, FSB and SVR.

Touche, Ivan, touche! Sphere: Related Content