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'admin' pid='39738' datel Wrote:Well, thanks for the tip, Art. Cigar Lake, I like that one.
Cigar is an absolute tour de force of mining technology, 500 meters below grade, handling 19% uranium ore. What a story, especially the efforts to recover from the two floods. Amazing.
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Banks including state-run VTB Capital say the world’s ninth-biggest economy will shrink for at least two quarters as penalties for annexing Crimea rattle markets, curb investment and raise the cost of borrowing.
Russia Facing Recession as Sanctions Likely to Intensify - Bloomberg
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Evans-Pritchard strikes again. Putin is no strategic genious, far from it..
Mr Putin is discovering that global finance is more frightened of the US Securities and Exchange Commission than Russian T90 tanks
Russia's Vladimir Putin has committed a grave strategic blunder by tearing up the international rule book without a green light from China. Any hope of recruiting Beijing as an ally to blunt Western sanctions looks doomed, and with it the Kremlin's chances of a painless victory, or any worthwhile victory at all.
Mr Putin was careful to thank China's Politburo for its alleged support in his victory speech on Crimea. Foreign minister Sergei Lavrov has been claiming with his usual elasticity that “Russia and China have coinciding views on the situation in Ukraine.”
This is of course a desperate lie. China did not stand behind Russia in the UN Security Council vote on Crimea, as it had over Syria. It pointedly abstained. Its foreign ministry stated that “China always sticks to the principle of non-interference in any country’s internal affairs and respects the independence, sovereignty, and territorial integrity of Ukraine.”
We don't know exactly what China's Xi Jinping told President Barack Obama at The Hague this week it clearly had nothing in common with the deranged assertions of the Kremlin. The US deputy national security adviser Ben Rhodes appeared delighted by the talks, claiming afterwards that Russia could no longer count on backing from its "traditional ally".
If so, Mr Putin is snookered. He cannot hope to escape financial suffocation by US regulatory muscle, should he send troops into Eastern Ukraine or even if he tries to stir up chaos in the Russian-speaking Donbass by means of agents provocateurs.
Nor can he hope to turn the tables on the West by joining forces with China to create a Eurasian bloc, a league of authoritarian powers in control of vast resources. Such an outcome is the obsession of the 'Spenglerites', the West's self-haters convinced that the US is finished and that dollar will soon be displaced by the Eurasian Gold Ducat -- odd though that may seem at a time of surging oil and gas output in the US, and an American manufacturing revival.
The reality is that China is breaking Russia's control over the gas basins of Central Asia systematically and ruthlessly. Turkmenistan's gas used to flow North, hostage to prices set by Gazprom. It now flows East. President Xi went in person last September to open the new 1,800 km pipeline to China from the Galkynysh field, the world's second largest with 26 trillion cubic meters.
It will ultimately supply 65 BCM, equal to half Gazprom's exports to Europe. Much the same is going on in Kazakhstan, where Chinese companies have taken over much of the energy industry. The politics are poignantly exposed in Wikileaks cables from Central Asia. A British diplomat is cited in a 2010 dispatch describing the "Chinese commercial colonization" of the region, saying Russia was "painfully" watching its energy domination in Central Asia slip away.
Yet more revealing is a cable quoting Cheng Guoping, China's ambassador to Kazakhstan, warning that Russia and China are on a collision course, and China will not be the one to yield. "In the future, great power relations in Central Asia will be complicated, delicate. The new oil and gas pipelines are breaking Russia's monopoly in energy exports."
Mr Cheng not only expressed "a positive view of the US role in the region" but also suggested that NATO should take part as a guest at talks on the Shanghai Cooperation group -- allegedly the Sino-Russian answer to EU/NATO -- in order to "break the Russian monopoly in the region." That word "break" again. So there we have it in the raw, what really goes on behind closed doors, so far removed from the pieties of a Moscow-Beijing axis.
There was much anguish about such an axis in the 1960s, then based on Communist fraternity. Henry Kissinger saw through it, suspecting that the two hostile cultures were at daggers drawn along their vast borders -- "Four Thousand Kilometres of Problems" to cite the title of a 2006 opus by Moscow writer Akihero Ivasita.
George Walden exposes deep roots of this mistrust in his superb little book "China: A Wolf in the World?". As a diplomat in Russia and then in China -- one of the tiny handful of Westerners in Beijing through the Cultural Revolution -- he saw first-hand how the Marxist brotherhood had come to loathe each other. Indeed, they came close to nuclear war. The CIA and State Department were dumbfounded by his accounts at a debriefing in Washington. They had no sources on the ground in Mao's era.
Mr Walden says the Chinese have never forgiven Russia for seizing East Siberia under the Tsars, the "lost territories". They want their property back, and they are getting it back by ethnic resettlement across the Amur and the frontier regions, much as Mexico is retaking California and Texas by the Reconquista of migration.
The population of far Eastern Siberia has collapsed to 6.3m from over 8 million twenty years ago, leaving ghost towns along the Trans-Siberian Railway. Russia has failed to make a go of its Eastern venture. With a national fertility rate of 1.4, chronic alcoholism, and a population expected to shrink by 30m to barely more than 110m by 2050 -- according to UN demographers, not Mr Putin's officials -- the nation must inexorably recede towards its European bastion of Old Muscovy. The question is how fast, and how peacefully.
Jonathan Fenby, a China expert at Trusted Sources, said there is a faction within China's National Security Council that wishes to "line up with Russia" over Ukraine, hoping to exploit the crisis to gain better terms on gas, food, and raw materials. These voices have been overruled by Xi Jinping. He plays on a more sophisticated strategic stage.
China is likely to walk a tightrope, "hiding its brilliance and biding its time" as the saying goes. This will becomes a harder if the Ukraine crisis escalates. Beijing may have to choose. It is surely unlikely that imperious Xi Jinping will throw away the great prize of G2 Sino-American condominium to rescue a squalid and incompetent regime in Moscow from its own folly.
Mr Putin must realize by now how fatally isolated he has become, and how dangerous it would be to go a step further. Even Germany's ever-forgiving Angela Merkel has lost patience, lamenting an "unbelievable breakdown of trust." Enough of Europe's gas pipelines have been switched to two-way flows since 2009 to help at least some of the vulnerable frontline states, if he tries to pick off the minnows one by one. Eight EU countries have liquefied natural gas terminals. Two more will join the club this year, in Poland and Lithuania.
The EU summit text last week was a call to arms. Officials have been ordered to draft plans within 90 days to break dependence on Gazprom. Even if this crisis blows over, Europe will take radical steps to find other sources of energy. Imports of Russian may be slashed by half within a decade.
Capital flight from Russia reached $70bn in the first quarter. Russia's central bank cannot defend the rouble without tightening monetary policy, driving the economy deeper into recession in the process. Russian banks and companies must roll over $155bn of foreign debts over the next twelve months in a hostile market, at a premium already over 200 basis points.
Mr Putin is discovering that global finance is more frightened of the US Securities and Exchange Commission than Russian T90 tanks. Any sanction against any oligarch linked to any Russian company could shut it out of global capital markets, potentially forcing default. Creditors in the West would be burned. But nobody cares about them once national security is at stake, something markets have been slow to grasp.
Nor has he chosen a good moment for his gamble. Europe's gas tanks are unusually full. The price of oil is poised to fall -- ceteris paribus -- as Iraq's output reaches a 35-year high, the US adds a million barrels b/d a day this year from shale, and Libya cranks up exports again. The International Energy Agency says global supply jumped by 600,000 b/d last month. Deutsche Bank predicts a glut. So does China's Sinopec. Mr Putin needs prices near $110 to fund his budget. He may face $80 before long.
At the end of the day he has condemned Russia to the middle income trap. The windfall from the great oil boom has been wasted. Russia's engineering skills have atrophied. Industry has been hollowed out by the Dutch Disease: the curse of over-valued currency, and reliance on commodities.
He jumped the gun in Ukraine, striking before the interim government had committed any serious abuses or lost global goodwill, a remarkably sloppy and impatient Putsch for a KGB man. He took Germany for a patsy, and took China for granted. He has gained Crimea but turned the Kremlin into a pariah for another decade, if not a generation, and probably lost Ukraine forever. It is a remarkably poor trade.
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Assuming Russian expansion remains limited to Crimea, the Institute of International Finance estimates that the cumulative loss in output from trade disruption and higher financing costs could be around 1.2 percent of gross domestic product over two years. A further escalation in the crisis would bring more sanctions, sovereign downgrades — rating agencies have placed Russia’s BBB/Baa1 ratings on a negative outlook — and more damage to the economy. Intensified sanctions would further restrict access to financing for the private and public sectors, reduce export market access, and trigger more capital flight. The World Bank estimates that if the crisis escalates further, Russia's economy will contract 1.8 percent this year.
Russia's Economic Outlook Is Bleak - Business Insider
Hardly catastrophic, but for a country used to significant growth the last decade or so its not good either.
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By David Ignatius - April 16, 2014
WASHINGTON -- As President Obama looks at the Ukraine crisis, he sees an asymmetry of interests: Simply put, the future of Ukraine means more to Vladimir Putin's Russia than it does to the U.S. or Europe. For Putin, this is an existential crisis; for the West, so far, it isn't -- as the limited U.S. and European response has demonstrated.
Putin has exploited this imbalance, seizing Crimea and now fomenting unrest in eastern Ukraine, perhaps as a prelude to invasion. But in the process, Putin may be tipping the asymmetry in the other direction. For Obama, this is now becoming an existential crisis, too, about maintaining a rules-based international order.
Here's the risk for Putin: If he doesn't move to de-escalate the crisis soon, by negotiating with the Ukrainians at a meeting in Geneva Thursday, he could begin to suffer significant long-term consequences. German Chancellor Angela Merkel will oppose Russia's use of force, and even the Chinese (who normally don't mind bullying of neighbors) are uneasy.
As Russian agents infiltrate eastern Ukraine, backed by about 40,000 troops just across the border, the White House sees Putin weighing three options, all bad for the West:
-- A federal Ukraine that would lean toward Moscow. The acting government in Kiev signaled this week it might move in this direction, following the turmoil in eastern Ukraine. Putin wants a decentralization plan that grants so much power to the Russian-speaking east that Russia would have an effective veto on Ukraine's policies.
-- Annexation of eastern Ukraine, along the model of Crimea. The pro-Russian "demonstrators" who have seized buildings in Donetsk, Kharkiv and other eastern cities have already demanded a referendum on joining Russia, which was the prelude in Crimea. The State Department says the protesters' moves are orchestrated by the Russian intelligence service.
-- Invasion, using the pretext of civil war in eastern Ukraine. If the acting government in Kiev (which on Tuesday reclaimed an airport in the East) tries to crack down hard, Putin might use this as a rationale for Russian military intervention. (U.S. intelligence analysts think Russian troops would have invaded several weeks ago if the West hadn't threatened serious sanctions.)
U.S. analysts believe that Putin would rather not invade. He prefers the veneer of legitimacy, and his instincts as a former intelligence officer push him toward paramilitary covert action, rather than rolling tanks across an international border. But Russian troops are provisioned for a long stay -- a warning sign that Putin will keep the threat of force alive until his demands are met.
Obama had regarded Putin as the ultimate transactional politician, so the White House has been flummoxed by Putin's unbending stance on Ukraine. In phone conversations with Obama, most recently Monday, Putin hasn't used strident rhetoric. Instead, he offers his narrative of anti-Russian activities in Ukraine. Putin is now so locked in this combative version of events that space for diplomacy has almost disappeared.
Obama's critics will argue that he has always misread Putin by failing to recognize the bullying side of his nature. Even now, Obama is wary of making Ukraine a test of wills. He appears ready to endorse a Cold War-style "Finlandization" for Ukraine, in which membership of the European Union would be a distant prospect and NATO membership would be off the table.
This in-between role for Ukraine would probably be fine with Europeans. They've had such trouble absorbing the current 28 EU members that they don't want another headache. Like Obama, the Europeans stumbled into this crisis, overpromising and underdelivering.
Obama doesn't want to turn Ukraine into a proxy war with Russia. For this reason, he is resisting proposals to arm the Ukrainians. The White House thinks arming Kiev at this late stage would invite Russian intervention without affecting the outcome. The U.S. is providing limited intelligence support for Kiev, but nothing that would tilt the balance.
Obama's strategy is to make Putin pay for his adventurism, long term. Unless the Russian leader moves quickly to de-escalate the crisis, the U.S. will push for measures that could make Russia significantly weaker over the next few years. Those moves could include sanctions on Russian energy and arms exports, deployment of U.S. NATO troops in the Baltic states, and aggressive efforts to reduce European dependence on Russian gas.
Obama's task now is to convince allies and adversaries alike that maintaining international order is something he's ready to stand up for. Unless he shows that resolve, Putin will keep rolling.
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US financial showdown with Russia is more dangerous than it looks, for both sides
The US Treasury faces a more formidable prey with Russia, the world's biggest producer of energy with a $2 trillion economy, superb scientists and a first-strike nuclear arsenal
Evans-Pritchard, The Telegraph
The United States has constructed a financial neutron bomb. For the past 12 years an elite cell at the US Treasury has been sharpening the tools of economic warfare, designing ways to bring almost any country to its knees without firing a shot.
The strategy relies on hegemonic control over the global banking system, buttressed by a network of allies and the reluctant acquiescence of neutral states. Let us call this the Manhattan Project of the early 21st century.
"It is a new kind of war, like a creeping financial insurgency, intended to constrict our enemies' financial lifeblood, unprecedented in its reach and effectiveness," says Juan Zarate, the Treasury and White House official who helped spearhead policy after 9/11.
“The new geo-economic game may be more efficient and subtle than past geopolitical competitions, but it is no less ruthless and destructive,” he writes in his book Treasury's War: the Unleashing of a New Era of Financial Warfare.
Bear this in mind as Washington tightens the noose on Vladimir Putin's Russia, slowly shutting off market access for Russian banks, companies and state bodies with $714bn of dollar debt (Sberbank data).
The stealth weapon is a "scarlet letter", devised under Section 311 of the US Patriot Act. Once a bank is tainted in this way - accused of money-laundering or underwriting terrorist activities, a suitably loose offence - it becomes radioactive, caught in the "boa constrictor's lethal embrace", as Mr Zarate puts it.
This can be a death sentence even if the lender has no operations in the US. European banks do not dare to defy US regulators. They sever all dealings with the victim.
So do the Chinese, as became clear in 2005 when the US hit Banco Delta Asia (BDA) in Macao for serving as a conduit for North Korean commercial piracy. China pulled the plug. BDA collapsed within two weeks. China also tipped off Washington when Mr Putin proposed a joint Sino-Russian attack on Fannie Mae and Freddie Mac bonds in 2008, aiming to precipitate a dollar crash.
Mr Zarate told me that the US can "go it alone" with sanctions if necessary. It therefore hardly matters whether or not the EU drags its feet over Ukraine, opting for the lowest common denominator to keep Bulgaria, Cyprus, Hungary and Luxembourg on board. Washington has the power to dictate the pace for them.
The new arsenal was first deployed against Ukraine - of all places - in December 2002. Its banks were accused of laundering funds from Russia's organised crime rings. Kiev capitulated in short order.
Nairu, Burma, North Cyprus, Belarus and Latvia were felled one by one, all forced to comply with US demands. North Korea was then paralysed. The biggest prize yet has been Iran, finally brought to the table. "A hidden war is under way, on a very far-reaching global scale. This is a kind of war through which the enemy assumes it can defeat the Iranian nation," said then-president Mahmoud Ahmadinejad to Iran's Majlis. He meant it defiantly. Instead it was prescient.
The US Treasury faces a more formidable prey with Russia, the world's biggest producer of energy with a $2 trillion economy, superb scientists and a first-strike nuclear arsenal. It is also tightly linked to the German and east European economies. The US risks endangering its own alliance system if it runs roughshod over friends. It is in much the same situation as Britain in the mid-19th century when it enforced naval supremacy, boarding alleged slave ships anywhere in the world, under any flag, ruffling everybody's feathers.
President Putin knows exactly what the US can do with its financial weapons. Russia was brought into the loop when the two countries were for a while "allies" in the fight against Jihadi terrorism. Mr Putin appointed loyalist Viktor Zubkov - later prime minister - to handle dealings with the US Treasury.
Mr Zarate said the Obama White House has waited too long to strike in earnest, clinging to the hope that Putin would stop short of tearing up the global rule book. "They should take the gloves off. The longer the wait, the more maximalist they may have to be," he said.
This would be a calibrated escalation, issuing the scarlet letter to Russian banks that help Syria's regime.
He thinks it may already too late to stop Eastern Ukraine spinning out of control, but not too late to inflict a high cost. "If the US Treasury says three Russian banks are "primary money-laundering concerns", do you think that UBS, or Standard Chartered will have anything to do with them?"
This will graduate to sanctions on Russian defence firms, mineral exports and energy - trying not to hurt BP assets in Russia too much, he adds tactfully - culminating in a squeeze on Gazprom should all else fail. Whether you are for or against such action, be under no illusion as to what it means. We would be living in a different world, and Wall Street's S&P 500 would not be trading anywhere near 1,850.
It is true that Russia is not the power it once was, as you can see from these Sberbank charts showing relative economic size against China and Europe.
This is not a repeat of the Cold War. There is no plausible equivalence between Russia and the West, and no ideological mystique.
It has $470bn of foreign reserves but these have already fallen by $35bn since the crisis began as the central bank fights capital flight and defends the rouble. Moscow cannot easily deploy the reserves in a slump without causing the money supply to shrink, deepening a recession that is almost certainly under way. Finance minister Anton Siluanov says growth may be zero this year. The World Bank fears -1.8pc, while Danske Banks says it could be -4pc.
Putin cannot count on global allies to carry him through. Only Venezuela, Bolivia, Cuba, Nicaragua, Belarus, North Korean, Syria, Sudan, Zimbabwe and Armenia lined up behind Mr Putin at the United Nations over Crimea, a roll-call of the irrelevant.
Yet as the old proverb goes: "Russia is never as strong as she looks; Russia is never as weak as she looks."
Princeton professor Harold James sees echoes of events before the First World War when Britain and France imagined they could use financial warfare to check German power.
He says the world's interlocking nexus means this cannot be contained. Sanctions risk setting off a chain-reaction to match the 2008 shock. "Lehman was a small institution compared with the Austrian, French and German banks that have become highly exposed to Russia’s financial system. A Russian asset freeze could be catastrophic for European – indeed, global – financial markets," he wrote on Project Syndicate.
Chancellor George Osborne must have been let into the secret of US plans by now. Perhaps that is why he issued last week's alert in Washington, warning City bankers to prepare for a sanctions fall-out. The City is precious, he said, "but that doesn't mean its interests will come above the national security interests of our country".
The greatest risk is surely an "asymmetric" riposte by the Kremlin. Russia's cyber-warfare experts are among the best, and they had their own trial run on Estonia in 2007. A cyber shutdown of an Illinois water system was tracked to Russian sources in 2011. We don't know whether US Homeland Security can counter a full-blown "denial-of-service" attack on electricity grids, water systems, air traffic control, or indeed the New York Stock Exchange, and nor does Washington.
"If we were in a cyberwar today, the US would lose. We're simply the most dependent and most vulnerable," said US spy chief Mike McConnell in 2010.
The US defence secretary Leon Panetta warned of a cyber-Pearl Harbour in 2012. "They could shut down the power grid across large parts of the country. They could derail passenger trains or, even more dangerous, derail passenger trains loaded with lethal chemicals. They could contaminate the water supply in major cities, or shut down the power grid across large parts of the country,” he said. Slapstick exaggeration to extract more funds from Congress? We may find out.
Sanctions are as old as time. So are the salutary lessons. Pericles tried to cow the city state of Megara in 432 BC by cutting off trade access to markets of the Athenian Empire. He set off the Pelopennesian Wars, bringing Sparta's hoplite infantry crashing down on Athens. Greece's economic system was left in ruins, at the mercy of Persia. That was a taste of asymmetry.
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Vladimir Putin's pointless conflict with Europe leaves it a vassal of China
Russian president Vladimir Putin has been obsessed with an imaginary threat from an ageing, pacifist Europe in slow decline, while throwing his country at the feet of a greater threat - China
Ambrose Evans-Pritchard, The Telegraph
Vladimir Putin has been clear from the outset that he will deploy any means necessary to bring Ukraine back into Russia's orbit Photo: Getty Images
The world faces a moment of maximum danger in Ukraine. Vladimir Putin has perhaps 72 hours to decide whether to launch a full invasion of the Donbass, or accept defeat and let the Ukrainian military crush his proxy forces.
Nato officials say Russia has massed 20,000 troops in battle-readiness near the border, backed by Spetsnaz commandos, tanks and aircraft. Vehicles have been marked with peace-keeper labels already. Nato sees every sign that the Kremlin intends to disguise an attack as a "humanitarian mission".
This is more serious than the Russian invasion of Afghanistan in 1980. That was a "colonial war". The Soviet Union was a careful, status quo power in its final decades. It held captive nations but did not overrun new borders in Europe. Mr Putin is expansionist, and far less predictable. He is, in any case, captive to the chauvinist fever that he has so successfully stoked.
He has been clear from the outset that he will deploy any means necessary to bring Ukraine back into Russia's orbit. Only war can now achieve this, since all else has failed, and since he has turned a friendly Ukraine into an enemy by his actions. The awful implications of this are at last starting to hit the markets.
"People thought that Russia was just playing a game of brinkmanship,and that pragmatism would prevail in the end. There is real fear now that this will spin out of control. Nothing cannot be excluded at this point, even a cut-off in oil and gas," said Chris Weafer, from Macro Advisory in Moscow.
Yields on 10-year rouble bonds have jumped to 9.7pc, up 130 basis points since June. The sanctioned bank VTB is up 180 points in a month. A liquidity crunch is rapidly taking hold across the financial system. "The market is shut. Not a single Russian entity has been able to borrow anything in dollars, euro or yen since early July," said Mr Weafer.
The Kremlin's gamble has gone horribly wrong. The eastern regions of Ukraine have failed to rise in mass support for Putin's front organisations, led by political operatives from Moscow, and patently run by the Russian security apparatus (FSB/GRU) as even Russian newspapers admit. The latest report by the United Nations accuses these units of "eggregious abuses", carrying out systematic intimidation through torture and execution.
Mr Putin has failed equally to drive a wedge between America and Europe, or to paralyse the EU by playing off one country against another. Germany has not cut a special deal, though its 6,000 companies in Russia are on the frontline. It has gone beyond the EU measures, blocking a €100m export of combat training kit by Rheinmetall.
Cyprus, Bulgaria, Hungary and Austria quietly toed the EU line on "Tier 3" sanctions. None dared to veto measures that shut Russia's banks out of global finance, and that block technology needed to open up Russia's oil and gas fields in the Arctic or the shale reserves of the Bazhenov Basin.
President Barack Obama's slow, methodical escalation suits the complicated chemistry of Europe, the region that will pay the economic price. There would have been a trans-Atlantic crisis if the hotheads in Washington had prevailed.
Mr Putin now faces draconian sanctions from the US, EU, Japan, Canada and Australia together. He can strike back by asymmetric means - perhaps a cyberattack - but tit-for-tat retaliation can achieve nothing. There is no equivalence. Russia's economy is no bigger than California's. This is an economic showdown between a $40 trillion power structure, and a $2 trillion producer of raw materials that has hollowed out its industrial core.
The new arsenal of sanctions refined by a cell at the US Treasury - already used with crisp effect against nine countries - is nothing like the blunt toolkit of the 1980s or 1990s. Nor can Russia retreat into Soviet autarky. It is locked into global finance. The International Energy Agency says Russia needs to invest $100bn a year for two decades just to stop its oil and gas output declining.
Russian companies and state bodies owe $610bn in foreign currencies. They must repay $84bn by the end of the year, and $10bn a month thereafter. There is no immediate crisis. Russian companies have $130bn of cash holdings. The central bank has promised to deploy its $470bn of foreign reserves as second line of defence. Russia can muddle through for a while, depending on the pace of capital flight. At best it is slow suffocation.
European officials calculate that Mr Putin will not dare to cut off energy supplies, since to do so would bring the Russian state to its knees within months. But even if he tried - as a shock tactic - it would not achieve much. Oil can be obtained anywhere.
Europe's gas inventories have risen to 81pc of capacity, up from 46pc in March. Britain is at 94pc. There is a sudden glut of liquefied natural gas in Asia that has caused prices to fall from more than $20 per million BTU earlier this year to $10.50. The LNG is being diverted to Europe, landing in Britain at just $6.50.
Japan has just given the go-ahead for two nuclear reactors to restart in October, with seven likely by the end of the year. Koreans are also firing up closed nuclear reactors. All this frees up LNG.
Whether this is fruit of a co-ordinated strategy, the net effect is that inventories and spare LNG could cover a Russian cut-off for a long time, probably through the winter with rationing. Areas of eastern Europe have no pipeline supply from the West, but "regas" ships could plug some gaps in an emergency. The gas weapon is not what it seems.
The Kremlin is counting on acquiescence from the BRICS quintet as it confronts the West, and counting on capital from China to offset the loss of Western money. This is a pipedream. China's Xi Jinping drove a brutal bargain in May on a future Gazprom pipeline, securing a price near $350 per 1,000 cubic metres that is barely above Russia's production costs.
Pieties aside, the two countries are rivals in central Asia, where China is systematically building pipelines that break Russia's stranglehold. China has large territorial claims on Far Eastern Russia, land seized from the Qing Dynasty in the 19th century.
Even if Mr Putin's strategy of a Euro-Asia alliance with China succeeds, it will reduce Russia to a vassal state of China, a supplier of commodities with a development model that dooms it to backwardness. "It is a dangerous illusion. We are witnessing the funeral of Russia,” said Aleksandr Kokh, a former top Kremlin official.
Mr Putin is stuck in a Cold War timewarp, deaf to the shifts in world power. He has been obsessed with an imaginary threat from an ageing, pacifist Europe in slow decline, turning manageable differences into needless conflict.
Yet at the same time he is throwing his country at the feet of a rising power that poses a far greater threat in the end, and that will not hesitate to extract the maximum advantage from Russia's self-inflicted weakness.
Mr Putin has misjudged everything. He has decisive force only on the east Europe's battlefield. Ukraine is not a member of Nato, and has no Article V protection. The West has already stated that it will not deploy forces if it is invaded. Novorossiya is his for the taking. It is his last lethal card.
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