2017/01/06

Stating the obvious about Russia's economy and military

.
Russia's economic and thus fiscal strength of the past years was ludicrously based on the oil price. A look at their exports shows that Russia's economy is competitive in exports of natural resources, refined natural resources and, apparently, gas turbines. This infographic shows the composition of Russian exports in 2014:

source: oec
A low oil price means a weak Russia, thus a tight Russian government budget and thus not enough money for ambitious military modernisation or expansion plans. Russia is in a recession right now and both the crude oil price and the Western reactions to the Crimea aggression are the most likely reasons for this recession.

The oil price is rising again (for now), but it's still at a somewhat normal level as opposed to the unusually high levels of 2014.

source: trading economics

The fiscal effects are delayed, of course. Russia has annual budgets like all countries, so there's about one of lag from that interval + many expenses are for orders that are to be fulfilled over several years, which smooths military spending over time. There's also the option of using deficit spending. The effect of the recent moderate oil prices have certainly not yet had their full impact on the Russian military.

The dependence on the oil price does have an irresistible effect on the Russian military in the long term, though. Putin's economic policy incompetence (or outright preference for kleptocracy over a strong economy) maintains a ceiling beyond which Russian military power cannot grow without some form of mobilisation.

This is on the one hand reassuring, for it means that Russia stands no chance against the EU in terms of military spending capability, and on the other hand it points at a possible grand strategy for containment of Russia: Keep their power small by keeping the oil price low. This is nothing like the map-painting nonsense of classical geostrategy, but it's bound to be effective if pulled off.

The problem - and ultimately the reason why Russia had a military power spring recently - is that despite all our other, even move pressing, reasons that make us Westerners prefer low oil prices (well, maybe save for Norwegians,  Scotsmen and Texans), we still experienced the recent crude oil price high.

We truly could reap many parallel benefits if only we get the crude oil issue under control. 
Now how very much tree-hugging do all the electrical car fans look again?*

S O
defence_and_freedom@gmx.de

*: I'm not really a big electric car proponent. Personally I hope for a mix of battery- and hydrogen internal combustion engine-powered motor vehicles in 2030's motor vehicle production. What matters in the context of this blog post is that all those counter-climate change and counter-fossil fuel burning emissions activists may actually do more for Western defence on the really grand scale than for example marines.
.

4 comments:

  1. This is in fact narrative of Czech Greenpeace for several years: "Don`t finance Russian tanks by consuming oil and gas."

    However, there is counter-argument against simple comparation of budgets: http://mwi.usma.edu/russian-razor-blade-explains-american-strategic-culture/

    There are difficulties concerning PPP recounts, too. Plus Western bureaucratic inertia still equipping forces for occupational warfare.

    Inefficiency of Western procurement process is in fact much worse today than in times of American Movement for Military Reform.

    ReplyDelete
  2. It's indeed stating the obvious which is still very necessary, perhaps more so in times as these.

    Still higher resource prices, principally oil, are still very much possible but the rise of shale and the bright future of renewables and electric mobility will increasingly put them under pressure by additional supply and substitution. Phases of high prices do perhaps more damage in the long run for ill-run countries then low ones do good in the short term as they undermine institutions and reforms by having hope as an excuse.

    Pushing that particular green will benefit the collective defence in the long run and harm countries like Russia and Saudi Arabia more per euro then most. Germany and Norway have in recent years done arguably more per capita then any other Western nation to support those policies in their respective fields.

    Firn




    ReplyDelete
  3. How Eastern Europe blew up the West: https://www.aspistrategist.org.au/eastern-europe-blew-west/

    ReplyDelete
    Replies
    1. There are reports about when and when not a mix of men and women in military units works well. Supposedly, it works well whenever their share is 20-50%. IIRC the reasoning given was that too many and the former majority (men) become demotivated if the women's share is above 50% and at less than 20% the men are too supportive, leading to suboptimal behaviour and too low expectations for the women's performances.

      I suppose such minimum and maximum limits for a well-performing coexistence exist in many areas. It's thus not surprising that racism is the worst where the discriminated-against people are very few (almost non-existent) such as in Eastern Germany or very many (such as Alabamaa).

      The article is quite thoughtful, and quite different from my take on dangerous idiots. I presupposed a lot, notably that a government should serve the people objectively, not just emotionally.
      The article combined with a summary of "Why Nations Fail" (read the blog of the same name if you don't want to afford the book - you get the message there as well) would provide quite a political horror story.

      Delete