Far and away the biggest story of the week just passed didn’t get much coverage but its repercussions will be felt for years, if not decades, to come. At this point we don’t know exactly what they are and how bad they will be.
On Wednesday OPEC+, which is controlled by Russia and Saudi Arabia – and don’t forget that! – announced that it was slashing oil production by 2 million barrels a day. Despite their rhetoric this decision had everything to do with the war in Ukraine and the American 2022 election and almost nothing to do with world oil prices or projected demand.
Russia has proven it cannot achieve its military objectives in Ukraine as long as the West continues its support of the Ukrainian people and in the process democracy. Therefore, the quickest way to achieve a turnaround in the war is for the Russians to “persuade” the Joe Biden/American-led West to shut off the supply chain and drop the sanctions. The core of this “coalition” is the NATO countries of Europe combined with America.
Europe, much more than America, is facing an energy crisis in both dwindling supply and skyrocketing prices. Too many European countries have been dependent on Russia fossil fuels for too long. Many times, good things come out of bad situations. My hope is that in this situation the free countries finally learn that fossil fuel dependency only enables bullies. While things like the sun and wind are often abundant, they are also much more difficult to manipulate the availability and price of.
In the case of Europe, Russian strategy is simple: they want to make the pain of freezing etc. so intense that the people force their governments to back down. While a transition in energy sources is the obvious answer that is not something that can be achieved overnight. The questions is how much of a price are Europeans willing to pay (I’ll deal with Americans below) for democracy. Make no mistake that is exactly what is at stake in Ukraine.
America has no dependence on Russian natural gas but oil is a global commodity and if prices for crude oil go up, they go up everywhere. Certain sections of the country (especially New England) are very dependent on oil for heating and American love their cars. Especially in mid-terms, persuadable and motivateables voters tend to vote the economy which they perceive mainly at the supermarket checkout and the gas pump. If those prices go up they will blame the party in power which today they perceive as the Democrats. Without getting into an economics lesson, this recent OPEC+ move will translate into higher gas prices.
No surprise to me, the latest polling shows that inflation has replaced the treat to democracy as the voters’ number one issue. The Republicans along with Vladimir Putin and the Saudis are the enemies of democracy. If they can defeat it by manipulation inflation, they are very happy to do so.
Let me deviate into Saudi motivations for a bit. The Saudi rulers are anything but a trusted ally of America! They are basically a bunch of self-serving crooks. They have long been much more closely associated with the Republican Party than the Democratic Party. Remember it was mainly Saudis who perpetrated 9/11 and the George W. Bush administration was extremely accommodating to them in the days thereafter. That was nothing compared to the still ongoing Trump treatment of the Saudi royal family. Again, I’ll be brief and to the point; neither Russia nor Saudi Arabia would be sad to see Trump, or at least “Trump lite” forces, return to power in either or both chambers of Congress and in 2024 add the White House.
A question I often get is: “How will the war in Ukraine end?”. The short answer is I don’t know. However, I have several possible scenarios I’d like to outline below.
The West succumbs to the economic actions and pulls out; the Russians win. It’s really that simple. I hope I’m not being Pollyannaish but I don’t think that is likely but I must admit it is possible. In America I can see a lot of Republicans, particularly those who are Trump aligned, calling for that in the very near future.
Putin goes all in with a nuclear attack. This “result” has a variety of reactions.
The West could just fold but I sincerely doubt that! More likely it would be a game changer that would bring the West (mainly as NATO) all in and effectively we would have World War III. If that war became nuclear, I don’t see any winners, just some countries might lose worse than others. Fortunately, I think this is the least likely outcome, but again, it can’t be taken off the table.
The West could also simply fold and give in to Putin. I just don’t see that happening.
The ensuing war could be conventional in which case Russia loses badly. The only question would be at what point would the NATO forces stop.
The West stays in and Putin is overthrown soon followed by a Russian pullout (probably under a different more domestic propaganda friendly term). I’m not saying that Putin’s removal from office is imminent but that possibility cannot be completely dismissed.
Russia ends up losing and gives back all territory seized except for Crimea in some sort of negotiated settlement. It would take some time and a lot of behind-the-scenes negotiations to get there but I see this as one of the more likely outcomes.
Russia ends up losing and gives back all the territory taken including Crimea in some sort of negotiated settlement. This is a solution I think Ukraine would be placated with. The question is if they can keep the West on board long enough to get Russia to that point.
There you have it: several possible outcomes which are all over the place. This is far from over and much is at play, often somewhat below the surface.
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