Apparently Putin is difficult to understand:
Vladimir Putin
The North Atlantic Treaty Organization, created in 1949 to contain the Soviet Union, said it’s not sure what Putin is trying to achieve with either his actions in Ukraine or his weapons program.
“We cannot fully grasp Putin’s intent,” the alliance’s top military commander, U.S. Air Force General Philip Breedlove, told Congress in April, according to the Defense Department’s website. “What we can do is learn from his actions, and what we see suggests growing Russian capabilities, significant military modernization and an ambitious strategic intent.”
I first studied economics back in the early eighties. The discussion of trade was perfunctory; trade was not considered particularly important to the US economy because, with the exception of oil, the US could produce pretty much everything it needed, and–just as importantly–most of what it wanted.
Modern orthodoxy maintains that trade makes one strong. This is fundamentally incorrect. Trade is necessary at times as a bootstrap up for industry, or to get things you truly cannot make yourself, but it can make you weak. The more you trade, the more vulnerable you are.
Russia is vulnerable. Putin turned Russia around by concentrating on hydrocarbon production and selling it to foreigners.
Commodity production is always a bad deal. No matter how rich it makes you, commodity prices are always boom or bust, and are always subject to technological obsolesence.
So, Russian defense spending:
Defense and the related category of national security and law enforcement now eat up 34 percent of the budget, more than double the ratio in 2010.
…
Putin signed documents creating what he called the “industrial battalions” program, which will give thousands of draftees the option of working in defense enterprises instead of joining the regular military.
After years of chronic funding problems for weapons makers, Russia has started to prepay for the goods and services it buys from the more than 1,300 organizations and 2.5 million people that make up the defense industry.
This is not hard to understand.
What part of Russian industry is most technologically advanced and does the world demand the most?
Weapons.
Russia needs to diversify what it exports. Military goods are the obvious market for which to do so. Really, there are only three sources for military goods: the West, China, and Russia.
Russia appears to have begun this strategy about 2012, before the oil price crash, the Ukraine, and so forth, but their vulnerability to oil price crashes was obvious. That the US was continuing to try to destabilize Russia’s near abroad and draw it into NATO was obvious as well.
Now, Syria.
What’s the problem with buying your weapons from the US?
Unless you’re a core US ally, the US is unreliable. If your government changes in ways the US doesn’t like, or if you are an enemy of US core partners (Israel, Saudi Arabia, etc.), they will cut you off from parts and ammunition at the drop of a hat, as well as canceling pre-paid orders.
But: The US was able to say that they had the best equipment. No one could compete.
What is happening in Syria is a demonstration that Russia can be counted on to help its allies—meaning its customers. It is a demonstration that Russia’s new weapons, and particularly its cruise missiles and airpower, are comparable to US product, and maybe, even in the case of its most advanced fighter/bomber, better.
It is a demonstration that if you buy Russian you aren’t buying crap that US-supplied forces can roll right over any more.
The Syria issue is a trade policy issue.
That is not to deny the geopolitical element to it, there certainly is one. But most analysts are not catching that this is also economic policy in action.
Shove Russia against a wall, impose sanctions, drive down the price of oil, and of course they will reach for what else they do well, and can sell.
The failure to anticipate this, the failure to understand this at the highest possible levels of NATO, when Putin had been telegraphing his strategy for years, is a terrible indictment of our “leadership”‘s competence.
Now, add to first class armaments and reliable supplies, a proper payments and banking system with China’s aid. Add China’s industrial goods and willingness to build infrastructure, and you have a second vertical capable of supplying virtually everything the West can do, and one which doesn’t care about the internal politics outside its near-abroad.
That new world isn’t quite here yet, but it’s almost.
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anonymous coward
No offense intended, but I’m sure the Pentagon/CIA are capable of understanding and reproducing this same economics inflected analysis – at least for their own internal use. In public, however, the leaders of the US and their vassal states will always say that our opponent is inscrutable, irrational, and quite possibly a madman bent on world domination. The behavior of the rival state is always personalized as the behavior of its leader. Maybe he will even choose to destroy the world if he can’t possess it. The rival leader is always characterized aggressive and bizarre – never defensive or rational. He is breeding a race of orcs or ten foot tall killer robots. He is about to launch a sneak attack on Western Europe (though he’s surrounded by our armies already on three sides, several thousand miles away from his alleged objective). These are the sorts of things you say to your subjects and thralls, when you are using them to march to world domination yourself, which our lot clearly are. Proclaiming yourself to be baffled about the motives of our adversary is a standard ploy to get the brainwashed masses to assume the worst and to allow themselves to be led by hate and fear.
nfdh
ac:
+1
Ian Welsh
Oh, certainly there are analysts producing it. But does the leadership listen to it?
There is plenty of reason to believe that they often don’t.
fdgs
You don’t get this powerful by being oblivious. Nobody really acquires an overseas empire in “a fit of absent-mindedness”.
stephen
To fdgs etc,
Yes, “You don’t get this powerful by being oblivious”, but you do lose your empire that way. Since the start of Bush jr’s reign, foreign policy has been incompetent. Handing Iraq to the Iranians? Biggest defeat for the USA since Vietnam I would think. Peace.
Peter*
It’s not clear that Putin’s dealings with Syria are trade or aid, I doubt Assad has the funds to purchase much so someone, Russia or Iran, must be financing any trade that will probably end up as aid because it will never be repaid. Syria is an economic Black Hole for Russia and Iran and the human costs have been demonstrated by the downing of the airliner in Egypt while Iran’s satrap Hezbollah was struck in the heart of their homeland so any ROI may be nonexistent as the conflict drags on indefinitely.
Russian energy exports are or were about $350Billion compared with arms exports of about $15Billion so even with the planned quadrupling of arms sales it will not make a significant dent in government loses from low oil prices and the profit margin is much lower.
More arms sales is bound to make a safer and more peaceful world along with Russia spreading more Nuke power plants around the ME so the future looks bright.
EmilianoZ
It aint clear to me who the potential costumers would be. The Arab states are big buyers but they are mostly Sunni. I’m sure many African states would love to lay their hands on Russian technology but can they pay? Asia? Many Asian states are US allies. China already buys Russian equipment since the US don’t want any technology transfer in that domain. So, for Putin, that would be like preaching to the converted.
The folks at the Saker’s vineyard seem to think that Putin wanna fights ISIS in Syria cause he aint dont wanna fight em in Chechenistan. If you look at a map, it’s true that Chechenistan aint that far. But ISIS would still have to cross countries like Turkey (probably easy), Armenia and Georgia.
Maybe Putin is playing a very long game. As the joke goes: “Americans play video games, Russians play chess, and the Chinese play go.”
Ian Welsh
What? You don’t get this powerful?
Well, I guess Stephen answered that statement. You are all aware of the clusterfucks from Iraq on? You are all aware of the fall or the Roman Empire, or hundreds of other states that got powerful and then got not-powerful?
Incompetence is a powerful force.
Also note that the ability to rise to the top of the heap individually has nothing to do with the ability to run the apparatus of the heap. See “The Peter Principle” for long form explanation of why.
Ian Welsh
Lots of Latin American nations are potential customers, the Shia world is, and so is much of Africa. These aren’t the richest states in the world, but it adds up to a lot for a country like Russia, and having current customers buy /more/ (like the current gen of Russian jets) matters too. And those sweet cruise missiles.
I don’t disagree with the Saker on the geopolitics, I just think there is more to it than that.
S Brennan
To add to Ian’s point, Si-Valley is largely* the result of US Military contracts to fund microprocessor development. The VAST MAJORITY of technology that most people ascribe to “private enterprise” comes from the VERY socialists policies of the military** & it’s handmaiden NASA.
Any accurate reading of the American Experience would lead Putin to follow in our footsteps and the implementation of our policies…prior to the widespread forced conversions to Milton Friedman’s theological cannons.
What must be killing many an American Officer of Good Conscience is the fact that, not only does the ideology of “unfettered greed” bring us into insolvable conflict, it has maimed our industrial base and the denuded the US of science, engineering and the skilled trades whose talent we must have in order to prevail in the unforeseen events that ALWAYS arise in a long lasting conflict…a coming conflict that Milton’s satanic minions seem determined to conjure.
*Circa 1957-2001. Yes I am aware of Hewitt-Packard, Varian et al…
**Particularly, Aviation & Spacecraft
S Brennan
Excuse the double posting, but following up “industrial battalions” with a search led to this article…which buttresses Ian’s post….and…as I have argued again and again, properly spent, in appropriate amounts, military spending can be used as a last ditch attempt at having a sane industrial policy in world gone mad with the idea that “unfettered greed” is the solution to every problem.
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“Putin’s plan is to wait for oil to rebound, and keep expanding the power of state enterprises, which now account for more than half the economy, up from 30 percent when he became president in 1999.
[He’s confident energy prices will rise again. As he said at his annual press conference in December, “even if energy prices remain low or continue to decline, there will come a time when energy prices will resume growing when the global economy and the demand for energy grow. I’m absolutely confident that this will happen.”]
There’s one area of growth, though, that some analysts see as Putin’s version of a stimulus: Military spending. “It’s clear that the efficiency of the military-industrial complex is the most important source of economic growth,” Putin said at a military forum on June 16.
On May 12, Putin signed documents creating what he called the “industrial battalions” program, which will give thousands of draftees the option of working in defense enterprises instead of joining the regular military. According to federal budget accounts, after years of chronic funding problems for weapons makers, Russia has started to prepay for goods and services it buys from the defense industry, which employs 2.5 million Russians.
Defense, national security, and law enforcement now eat up 34 percent of the Russian budget, more than double the share in 2010. That dwarfs the 18 percent spent by the U.S. last year on defense and national security, according to the Washington-based Center on Budget and Policy Priorities. Still, Americans spent $615 billion last year, while the Russians spent $84 billion.
“The government has two urgent tasks: strengthening security at all levels of society and promoting innovation to end the macroeconomic stagnation,” says Ruslan Pukhov, director of the Centre for Analysis of Strategies and Technologies and a member of a defense ministry advisory board. “The solution to both problems is to intensify the development of the military-industrial complex.”
http://www.bloomberg.com/news/articles/2015-06-25/putin-s-economic-solution
VietnamVet
The actions of Russia were totally predictable. They had to support ethnic Russians next-door who were under attack from radical thugs. An ally was collapsing under attack by Islamists and their naval base on the Mediterranean Sea was threatened. They intervened.
There is nothing secret about it except that the West cannot admit to itself that is a predator conducting proxy wars against Russia in order to seize its resources. Indeed its greed is so great that it continues its forever wars though it is creating millions of refugees, improvising its citizens, and raising walls across Europe.
Watson
A NATO-independent Syria also offers a pipeline route to the Mediterranean for Iran and Iraq (h/t Pepe Escobar), plus a warm water port and regional influence for Russia.