## Tuesday, March 04, 2014

### Trade war against Russia would be an insanity

Obama's administration knows that it is not adequate to launch a hot war against Russia just because the two countries disagree about the recent events in Ukraine and what should be done about them to improve the situation. But the White House is apparently thinking about some significant economic sanctions against the Russian Bear and wants the European countries to join. Not too surprisingly, Europe lives in a different world – one that is closer to Russia – so the European leaders mostly disagree.

A car from Marussia Motors. This is what an average car produced in an average Russian village by an average Russian muzhik looks like these days. ;-)

The Guardian mentions that most leaders in Europe, including the German chancellor, consider the trade war against Russia to be a fantasy. Secret documents revealed that the City of London demanded to be exempted from any restrictions to do business with the Russians.

Let me discuss Czechia and Slovakia because they're countries I legitimately and understandably care about. We have a new left-wing government in Czechia. It's led by the social democrats – a 1980s-EU-style social democratic party (ČSSD). It is an annoying gang of lads and gals that often drives me up the wall. But it's ironic enough to see that they at least realize that we just cannot stop trade with Russia. At least the prime minister comrade Sobotka says we can't.

The second major member of the coalition is ANO, a politically unreadable populist party owned by a Slovak-born food industry billionaire Andrej Babiš, now a finance minister (even though his name is found on the list of agents of the communist secret police, something that should disqualify him from similar top political occupations). Many politicians in that party are much more anti-Russian than anyone else in the country, in a way that is often associated with "Havlism". For example, the new defense minister and former actor and diplomat Mr Martin Stropnický has already claimed that he "cannot imagine" that the Russian-Czech consortium will be picked to build the new reactors in our Temelín nuclear plant. Thankfully enough, the prime minister and others immediately began to dilute and mask his words.

During communism, the USSR would represent a majority of the Czechoslovak foreign trade. We would import lots of things, usually less sophisticated things such as fossil fuels, from Russia (and from no other place, in the case of oil and other things). And we would export (usually more sophisticated industrial) products to the USSR. The Soviet markets and their companies' liquidity collapsed with the Soviet Union itself in the early 1990s and the Czech and Slovak companies had to redirect themselves to the West. And indeed, the EU countries are the dominant partners of our trade today – in particular, Germany stands for 1/3 of our exports and 1/3 of our imports.

Just to be sure, the Czech exports and imports are a huge portion (2/3, in some counting) of our economy. Both sides of the equations are something like $135 billion a year; the nominal GDP is around$200 billion a year (the PPP GDP is higher). Where is Russia in it?

Well, the trade with Russia is increasing quickly in recent years ("again") and currently it stands at about 5% of exports and 6% of imports. The imported fossil fuels are probably still coming "mostly" from Russia but thankfully, this Eastern route has no longer a monopoly. Since the 1990s, we also have the alternative Ingolstadt Pipeline that is delivering the Arab oil through Germany to us. For Germany, the Russian oil is also important, about 40% of its oil imports, and so on.

So the business with Russia represents about $5 billion of imports and the same in exports every year.$6 billion is the same thing as the largest budget deficit of the Czech government's budget we have ever made – hopefully it will decrease again. It is a huge entry.

And for some others, the business with Russia is even more important, relatively speaking. I mentioned our Slovak brothers. Their GDP is 1/2 of ours. Only 1/5, not 1/3, of their exports and imports are with Germany. But 10% of their imports are coming from Russia and their exports are probably just slightly smaller than that (I can't find the figure now). You surely don't want to force them to sacrifice this portion of the economy in order to "send signals" to Putin, do you?

It is simply an insane proposal. We really have nothing to do with the tension in Ukraine. A significant portion of our nations sides with Russia and opposes the Kiev demonstrators. Most of us don't think that Ukraine is important for us. And many of us think that even objectively, Ukraine is not that important and the losses created by such a trade war could easily exceed the total price of Ukraine and everything it contains.

Most principally, we are independent countries. We are not Obama's or Barroso's puppets. It doesn't matter whether they want sanctions. We don't want to participate. It is obvious why it's easier to talk about similar extreme measures in Washington D.C.: America's economic relationships with Russia are simply much less important for America, relatively speaking. Russia only accounts for 1% or so of the U.S. exports and it may be similar with the imports. It is not insane for the U.S. to imagine that these whole entries are slashed and America could still end up with a positive GDP growth rate. But if the entries are 10% of the trade and the trade is a majority of the GDP, and it is for some countries, the situation is a bit different. A full-fledged trade war would be a complete economic calamity for such countries. The White House has in no way any right to demand such a thing from others. We were not attacked ourselves. No NATO country was attacked. Something is happening in between two foreign countries that we have no alliances with and the White House prefers to side with one of them, the country with a de facto government appointed by terrorists in the streets. That's surely not a justification for asking others to sacrifice hundreds of billions of dollars, is it?

In total, Russia exports products worth something like $550 billion a year and imports things for$350 billion a year. At least it was so in 2013. The imports are dominated by China (16%), Germany (10%), Ukraine (6%) and the exports are to the Netherlands (15%), China (6%), Italy and Germany etc. (5% each). You must have been stunned by the Dutch leadership. I think that the huge Dutch-Russian trade isn't dominated by any particular type of products. They just love doing business with each other. For Holland, a full-fledged trade war (which would probably have to be imposed from above because they won't start it voluntarily) against Russia would be an economic cataclysm.

I could go on and on and on. It is suicidal for many European countries to consider major restrictions on the trade with Russia.

I think that even for those who want to reduce Russia's military self-confidence, a trade war is also a stupid thing to do. Trade sanctions damage both sides more or less symmetrically, as I tried to argue with numbers. But there are some more psychological reasons, too. Trade is the greatest peacemaker in the world, as Milton Friedman was explaining using the example of a pencil. The less fun and less profit Russia makes with trade, the more it will achieve this wealth and satisfaction using other tools. And make no mistake about it; if Russia is mistreated and ostracized and "discriminated against" (if I can borrow a PC term) by a group of other nations, it really has a natural moral right to compensate the mistreatment in some way.

Well, even some more minor policies directed against Russia seem utterly counterproductive to me. The White House wants to fire Russia from G8 again. No one cares about this thing in Russia. But Angela Merkel opposes this proposal because she probably knows that the less frequently the leaders meet and talk, the further the isolated country is likely to deviate in its way of thinking and acting. And if one imposes any visa-related or personal sanctions against Russia or its officials, they may and probably will respond in the same way, so both sides will lose approximately equally.

The events and threats have already weakened the rouble by a few (two) percent and sent the Russian stocks down 10% on Monday, much of which was returned on Tuesday. But these deliberate attacks on the monetary and related interests of Russia may also be countered. Putin has already revealed his ready-to-do plans to start to liquidate the U.S. dollar as a major reserve currency. Even if he didn't coordinate these steps with China – and China which is often calling for a new de-Americanized global reserve currency easily could – he could just instantly throw almost half a trillion U.S. dollars from Russia's currency reserves to the free markets. The Kremlin is also saying that he could "erase" the Russian debt to the U.S. banks. The rouble drops when the anxiety goes up but that's the only effect because the U.S. don't hold roubles. Russia has more controllable tools to influence the U.S. currency. It is no science-fiction. It is a completely realistic possibility, a plan for a very rainy day, politically speaking. With China's $3 trillion U.S.-dollar-denominated holdings (1/2 is cash, 1/2 are securities), they could satisfy all demands for the U.S. dollars for days. Those$4 trillions that Russia and China could suddenly throw to the market exceeds all the U.S. dollars in regular circulation by a factor of pi. Guess what would happen with the status of the U.S. dollar. I just think that someone needs to explain these basic things to people like Obama or Kerry because they don't seem to have a clue. America is wealthier so it may lose more than Russia in similar exchanges, military or systemic economic or otherwise.

So it would be nice if Obama et al. stopped all these counterproductive, misguided, reckless, and insane fantasies. You can't really do anything sensible now. This game is not about you. You should have thought about this situation earlier, when you were more or less openly supporting the pro-EU terrorists on the streets of Kiev. You should have thought a few moves ahead. What will Putin do? What is his red line? Aren't Putin's red lines somewhat more real and serious than the things called "red lines" by a U.S. politician who was elected for his image in a sea of hypocrisy? If you're not able to do such things, you shouldn't be in top politics.

It's not really a war between two countries. A person whom Russia considers the legitimate president – and for a rather good reason because he's the last properly elected one – just asked Russia for military assistance to avoid a civil war. I am sure that the speech was carefully checked if not fully written by the Russian politicians but Yanukovitch's being in Ukraine now isn't really Russia's fault. He had to flee to save his (and his family's) bare life.

Meanwhile, the Guardian claims that Angela Merkel's office has denied the U.S. reports that she said that Putin was "out of touch with reality". If some Americans just made this up, it's really, really bad on the U.S. side, indeed, and a relief on the German side.

P.S. (Wednesday): At a warp speed, the upper chamber of Russian lawmakers is already readying a law to seize U.S., EU assets on its territory, including the individual ones, in the case of sanctions (against everyone from the countries that participate in the sanctions). If you're not a loser, some fraction of your portfolio depends on Russian stocks. OK, maybe not yours but your relatives'. This would be a devastating event for so many people in the West. One would really have to be stunningly stupid and irresponsible to give Russia an excuse for such an action.

1. You must have been stunned by the Dutch leadership. I think that the huge Dutch-Russian trade isn't dominated by any particular type of products.
.
I don't know who was stunned but I wasn't because this "anomaly" is indeed due to a specific product.
And this product is obvious because it is the main contributor to russian budget - oil.
Netherland has one very particular geographic feature - it is there that the Rhine meets the sea.
From that follows that almost all russian oil trade (both crude oil and products) goes to the so called ARA (Antwerpen-Rottterdam-Amsterdam) area.
ARA is proxy for Belgium and Netherlands oil trade but mostly for Germany - it is there that the Rhine leads after all.
.
If one carefully looks at Netherlands oil statistics, one notices that only about 300 kbl/day (e.g only about 10 G$/year or 1.2% of GDP) of Russian oil is actually consumed in Netherlands. So most of these Russian export figures to Netherlands are a nul sum game - Netherlands is a gateway for Russian oil and most of it is again reexported. However some statistics forget to mention that Netherlands oil EXPORT figures especially to Germany are also huge despite the fact that Netherlands has no oil :) . Of course this doesn't invalidate a much larger point which is that even if Netherlands is a minor partner, many European countries and specifically Germany have a very significant trade with Russia and I consider it highly unrealistic that the German Chancellor would commit hara-kiri only because Obama asks her to do so. 2. I see, thanks, interesting, it makes sense. For the pipelines like Druzhba throught the Ukraine, it is not counted as a "re-export from Ukraine", is it? 3. No, pipelines generally don't have this problem. . The statistics (not only oil) reason by ownership. In Rotterdam a Diesel cargo belonging to Lukoil is sold to a company (may be Lukoil's NL subsidiary) registered in NL. Statistics counts 1 cargo Diesel exported from Russia to NL. This same company puts then this Diesel on barges and sends it to Germany on the Rhine where it is bought by a D company. Statistics count N barges Diesel exported from NL to Germany. So if you look at German statistics you can't know that this amount of N barges was really a Russian export because it looks like NL export. . The oil export by Druzhba to Germany (to keep the German example) generally changes ownership in Adamovo on Polish/UKR border. As there is no further change of ownership (pipe flows go faster than ships), Poland becomes transparent and this oil flow is registered in statistics as export from Russia to Germany. However if Lukoil wanted to sell its oil through UKR for tax reasons it would simply sell to its UKR subsidiary first which would then sell to the German customer. In this case even for pipe oil this transaction would be registered in statistics as oil export from UKR to Germany. 4. Lubos wrote: >It would be interesting to try to quantify how big fraction of the policies etc. is actually being constructed by media people like hers. It certainly has a significant effect. (Incidentally, to any admirers of Amanpour: I know she is a bright and courageous war correspondent, but she also has some real blind spots.) A related question is what the motives of the media are for pushing "narratives" such as the demon Putin or catastrophic global warming. I suppose it is, partly, simple laziness (it takes work to dig into the evidence). And part of it is clearly just a matter of selling stories that will pick up as many viewers/readers as possible: the more spectacular and the more simple-minded a story is, the easier it is to get the attention of tired, distracted, or not very bright viewers/readers. It is.e.g., a lot easier (and more exciting) to grasp the idea that we are melting the polar ice caps than to really try to understand the complexities and uncertainties of climate research and the difficulty of adequately testing a complex scientific theory. And, I am afraid that a lot of media hype is simply a matter of currying favor with the powerful. Incidentally, MSNBC, the left-wing cable news channel in the US, is now pushing the idea that US conservatives are slavish admirers of Vladimir Putin, in some cases ripping quotes completely out of context in cases in which I myself have seen the full discussion: e.g., a conservative pundit may point out that Putin is very bright or decisive but goes on to say that his actions are unfortunate, and MSNBC only runs the statement that Putin is bright or decisive while cutting the criticism. (They did that today with a quote from Rudy Giuliani, where I saw both his full statement on another channel and the out-of-context MSNBC clip) . In reality, the Ukraine crisis has produced a split on both the Left and the Right in the US. Dave 5. Funny games, thanks. Some of these tricks in changed accounting may be beneficial, like the Case of Light Fuel Oils https://cs.wikipedia.org/wiki/Kauza_Lehk%C3%A9_topn%C3%A9_oleje The liquid could be called in two ways making a difference CZK 12 per liter on taxes. ;-) 6. Ah and for your question. Ships are the dominating export means for crude oil and almost exclusive for oil products. Russia exports somethink like 5 Mbbl/day of crude and 2 Mbbl/day of oil products. The pipeline capacity which only leads to small ex-communist countries with the notable exception of Germany because the former DDR is now "Heim ins Reich", is one order of magnitude smaller than these figures. One may add to these oil figures the gaz (about 500 Gm^3/year production out of which about 1/3 sold to Europe) and compare the resulting sum to the Russian GDP to instantaneously understand much about Russia in general and Putin in particular. . It is certainly not a coincidence that G.Schröder serves on the Gazprom board which produces those 500 Gm^3/year mentionned above. For some strange reasons Gazprom and its main shareholder Russia aka Putin choose neither Clinton nor Barroso .... :) 7. Hehe it is a known one. I could write pages about "games" with regulations and stupid bureaucrats. F.ex Russia gives a tax advantage for oil exports to Bielorussia to help the nice gentleman Lukatchenko. Of course it is forbidden that Bielorussians resell these products for obvious reasons and the Russians have the right to audit Bielorussian statistics. Then one day they noticed that Bielorussia's consumption of cheap Russian oil products was steadily increasing while Bielorussia became a large exporter of expensive petrochemical feedstock what was fully authorised but nevertheless puzzling. You have 3 guesses what this petrochemical feedstock was :) 8. A good article, containing many relevant statistics and illuminating the situation from a realpolitik point of view. (Henry Kissinger would love it.) However, it is marred by one misstep at the end. A person whom Russia considers the legitimate president – and for a rather good reason because he's the last properly elected one – just asked Russia for military assistance to avoid a civil war. I am sure that the speech was carefully checked if not fully written by the Russian politicians but Yanukovitch's being in Ukraine now isn't really Russia's fault. He had to flee to save his (and his family's) bare life. Yanukovich is history, he's a nothing, a nobody. There was no imminent risk of civil war. If he were thinking like a Ukrainian president, he would denounce the Russian invasion and demand that the extra troops leave. He is a giga-thief, a kleptomaniac who stole more than a billion dollars from his people and scrambled to save not only his sorry ass but his ill-gotten gains by decamping to Russia, where the price of his asylum is that he signs every paper put in front of him. Holding up that letter in front of the UN security council yesterday was the first bad misstep the Russian government has made. Everything from the first occupation of an airport in the Crimea up to that point was in the nature of faits accomplis planned long in advance that one could gnash one's teeth about but do nothing against. The remarkably bloodless nature so far of the invasion, too, has been another testament to Russian professionalism. But with the laughable letter from Y., they took a big hit to their credibility, as few can take that seriously. 9. The system given up wasn't just Poland but also Czechia, the quoted article rightfully says, which I like to remind you because the radar site was 20 miles from my home and I have visited it about 15 times. 10. Dear Lubos, Without disputing your overall analysis, wouldn't dumping American dollars reduce the value of the dollar around the world, thus making American made goods and services cheaper and imports to America from other countries more expensive? This would stimulate the growth of America's manufacturing sector, both for exports and for internal consumption, as well as manufacturing employment, both of which have been allowed to wither over the past several decades. To the extent that America's prosperity and strength in the world depends on a healthy, strong manufacturing base, more like Germany's for example, wouldn't this be a healthy development for the US? Of course economics is a tricky business. Maybe there are offsetting factors I have not considered which would neutralize these considerations -- or maybe my basic logic is flawed from the start. But even if Europe did not participate in sanctions I wonder if America alone might profit for reasons completely unrelated to Ukraine, the outcome in which we are not going to be able to influence in any case. In other words the law of unintended consequences -- or even intended consequences -- might make this crisis a convenient way to trigger developments we otherwise are too chicken to do. 11. Dear Luke, yes, of course, a weaker domestic currency stimulates exporters and so on, so it helps to reduce the trade deficit and so on. Some administrations were trying to have a weak dollar policy although at least verbally, most U.S. presidents etc. supported a strong dollar. But what you may have missed is that with the dollar as a world reserve currency, you don't really *need* to balance your current account i.e. eliminate the trade gap. You just print dollars and/or treasuries and others horde them, more or less indefinitely. It's pretty convenient. 12. Well, I agree that Yanukovitch has no political future. You don't need two of us for such an insight. Putin said it today at a press conference, too. Yanukovitch is still the last cleanly elected president of Ukraine. I find the luxurious villa/cottage sort of cool. Incidentally, the rebel-led government just named two oligarchs from Ukraine's top ten wealthies list (one of them is #2 or #3) the new governors of some two top-level regions. It's completely silly for you to think that this kind of natural dominance of the rich people and the mixing of politics and wealth will disappear from Ukraine with a new Ukrainian government. It will not. It corresponds to that nations' level of habits and experience. The article you linked to celebrates the since-November mess as a "classic popular revolution". Well, maybe, whatever. As a conservative, I just probably don't like "classic popular revolutions". Sorry for that. In a de iure democratic and capitalist country with a rule of law, people violently trying to overthrow the governments should be treated as criminals regardless of the likable labels someone wants to glue to their foreheads. 13. It isn't silly to state that an economy and a political system do not function well if there are a handful of oligarkhs on top, a thin middle class, and everyone else at or near the bottom. The GDP per capita of Ukraine shows this. Russian GDP p.c. is better but still unsatisfactory. There is an economic argument for this and a principled legal one. Money needs to diffuse throughout the economy and at all levels of society, the faster the better. It is of little use to a society if the super-rich store it in bank vaults or consume/invest it in ways that do not eventually benefit the economy. If a person becomes a billionaire by offering products that the market wants, then fair play to him or her (hello Bill G., again richest man on the planet). However, in Russia and Ukraine most of the multi-billionaires gained their immense riches through sweetheart insider deals that allowed them to exploit monopolistic positions while shielded from competition. A while back, TRF commenter lucretius argued that at the time, this transfer of public wealth to individuals was necessary because otherwise Russia would have reverted to communism. That may be, but after the crisis passed and communism was no longer such a threat, these assets should have been redistributed, in a similar way to how Russians were allowed to buy their (rented) apartments. The simplest scheme would have been to issue one share in the oligarkhs' companies (Yukos, etc. etc.) to every Russian, but there are more sophisticated ways to do it. (Also, some compensation would have been due to the oligarkhs for the value that their management had added to the companies in the meantime.) It's simply an essential part of the rule of law. You may earn as much money as you are able to, but only by lawful means. This is closely linked to the topic of corruption (Putin was quoted by RIA Novosti today as saying that "in Ukraine, corruption was even worse than in Russia" -- ha!) A billionaire oligarkh "buying" government officials demoralizes and corrupts. The sooner Ukraine and Russia take steps to correct this imbalance, counter corruption, and build a civil society with a broader middle class, the better. I am having the same problem posting from the "regular" page. Apparently something wrong with Disqus. Incidentally, regarding your complaint that too few people downvoted a particular comment: Disqus changed its voting system. Before, you could upvote and see the counter go up as well as who (registered commenters or guests) voted. For downvotes, you could not see who downvoted but downvoting yourself would increment the counter by one. Now, upvoting is as before but casting a downvote has no perceptible effect anymore. It makes downvoting rather pointless. (This may look different from your end because as a "blogmaster" you get to see more information.) 14. puh, the Ukraine has financial problems - problems that the IMF would LOVE to "solve" for them, in the form of bailouts and future forced austerity. that's the entire reason EU and USA were meddling in Ukraine to begin with. 15. Re your last paragraph: of course! The transition by way of early elections could have been handled with less disruption if the opposition had held fast to the agreement negotiated under the guidance of the three EU foreign ministers; if the EU foreign ministers had insisted that the opposition stick to that agreement; and most importantly, if Y. had not up and run like a thief in the night: I suppose he had no alternative, as first his eastern-Ukraine constituency had deserted him, then the other oligarkhs, then his Party of Regions, then the military, then the regular police... in the end, he was down to a contingent of his body guards that fit into three cars, and even most of those abandoned him when given the chance. 16. I Putin denies Russian troops have occupied Crimea, but also says he has acted to protect Russians within Crimea. Why the denial? 17. "Those$4 trillions that Russia and China could suddenly throw to the market exceeds all the U.S. dollars in regular circulation by a factor of pi. Guess what would happen with the status of the U.S. dollar." Obamunism would emphatically run out of others' monies. End of empire at a stroke, without even a single social activist urging others to die for the cause (or loudly standing upon a beer hall plank table). The act and its sequelae would be eerily consistent with US social policy toward Inner Cities and its multivariate external costs.

End the madness. Do it. I regret that I have but one Federal Reserve System-ZIRPed checking account to sacrifice for my nation.

18. Financial war aimed at forcing concessions from a major power are fraught with danger because there may be escalation to actual warfare. The classic example is the Japanese attack on Pearl Harbor and the ensuing war in the Pacific, which was triggered by severe and effective sanctions by the US in response to Japanese aggression in China and elsewhere.

The possible Russian response, which is quite doable and would be very effective, would be a submarine war against the long line on oil tankers reaching from the Persian Gulf to Rotterdam and other European ports. If combined with a total shut down of the Gasprom pipeline, Europe's economy would be crippled.

Also, once a tanker is sunk, it's gone. I takes months to years to build a new one. So, even if the economic war stopped, Europe's economy would be crippled for years.

Of course, this might start a fairly large-scale naval war for control of the sea routes. This is very difficult to do. In naval war games, submarines usually win. And a large scale naval war would also interrupt all kinds of shipping until it was decided.

19. By ever popular request...

Set the world to rights, your countrymen free, and gain everlasting happiness:

DO IT NOW!

... testing testing...

And remember: down-voting ist verboten. Sieg Heil!

20. Wow indeed they used it in 1984 to repair a satellite because the other device/tool wasn't working and they had to improvise the repairs using their hands.

Later it is the US Air Force who developed this type of jet pack hoping to use it to inspect other people's satellites ;-). As you said it is unrealistic to think that one can hover from satellite to satellite in space with a jet pack just like... bees on flowers.

However the fact that these guys even thought about it is just cool, fun, bold ;-).

21. Luboš,

There's something wrong here. I can't vote myself up.

If you open this URL and view the page source, you'll see that it contains a .. element with ID disqus-threadData containing the metadata for each post in JSON format. Each comment has two attributes "likes" and "dislikes" that seem to correspond to the number of upvotes and downvotes. For testing I downvoted John Archer comment above 8).

23. Breivik was an amatuer. Planned Parenthood has killed millions of other peoples babies.

24. Yes, if you're talking about abortion.

I want nothing to do with it. The thought of it fills me with revulsion. But I can't decide for others. It's a tough one, right down at the animal level.

25. To what were you refering when you mention Breivik, if not his penchant for murdering defenseless children?

I agree, Planned Parenthood has killed more babies than cholera, and it is revolting.

26. The discussion here seems to about everything else except territorial integrity of Ukraine. If people have already decided it is OK for Russia to deploy forces across its borders, or that annexation of Crimea is OK, then there should probably be a better reason for it than that we don't like Obama's style of politics, or that Europe has trade and hydrocarbon dependency on Russia, or that we don't like the way the US handles itself in the world in general.

Lubos, you also seem to take as given that the anti-Yanuk forces that ousted him are fascists and illegitimate representative of Ukrainian popular will. Can you explain why you think this is the best way to characterize the movement? I don't know that much about it, but I've heard conflicting commentary and don't quite know what to think.

27. I'm not a domestic terrorist. The FBI checked. Heh.
I don't want to do that again so let's not delve further.

28. Odd thing to urge the unloosening of. Implying it as a given there lurks the savage.

"Hey, when did you stop beating your wife?"

He brings up a good point though , and I thank you Archie.

Lately there has been a blending on the internet. A pastuerizing process winnowing out freedom of expression with an emphasis on eliminating the discouraging word.

Have you noticed?

29. Dear Rick,

a violation of the sovereignty of a country is in principle a bad thing. That doesn't mean that such violations don't have any benefits and it doesn't mean that every such a violation, regardless of any circumstances, should be used to a global trade war. If it were so, the U.S. would have started about 30 such global wars in recent decades.

Cheers
LM

30. OK. Neither am I. But there's no law against keeping our fingers crossed. Not yet, anyhow.

On second thoughts I'd much rather see Bliar put on trial for the crime of high treason against Englishmen and stripped of all his assets. But I'm in two minds about the rest of his sentence. A long, drawn out mediaeval execution after plenty of cruel & unusual, or life of hard labour with plenty of cruel & unusual? If it's the latter I guess we'd have to build a Siberian salt mine or a Jap POW camp (never forget, never forgive) specially for him. Hmmm — tough choice. He wouldn't be the only though, not by a long chalk, so industrial efficiency would need to be factored in too.

Incidentally, our own internal security people would be better employed in arresting the bastards in office who are responsible for facilitating the terrorists—and all their filthy alien accompanying humanoid agar—to come into the country in the first place. Lee Rigby — never forget, never forgive.

31. A leaked conversation of the Estonian foreign minister and the EU foreign minister Ashton, see e.g.
http://www.channel4.com/news/ukraine-catherine-ashton-phone-shoot-maidan-bugged-leaked

suggests that according to the Estonian chap's sources, the snipers who killed the cops in Kiev were the same snipers who killed the protesters, too, and they were probably hired by the (then) opposition. So if he's right, and he's not an isolated nobody, the new government is composed of mass killers who are murdering their own people in order to make a "point" and who will probably prevent proper investigation of the shooting.

32. The latest article on the weblog of Amb. Matlock contains yet more incisive analysis, I hope it gets passed around the corridors of Foggy Bottom.

It occurs to me now that an outright annexation of Crimea probably is not in Russia's interest. Why not? Well, until now the "orange" camp (pro-European western Ukrainians) and the "blue" camp (pro-Russian eastern Ukrainians) were balanced, or nearly so. This meant the "oranges" could not just do as they pleased, they had to pay attention to the wishes of their eastern compatriots. (Actually, I think they gave deplorably little thought to them, but the necessity was there.)

In a Ukraine minus Crimea, suddenly the westerners will have a clear majority. Given some of the insane ideas that came from them in the past -- "de-Russification" of the East; a cavalier disregard for how the Donezk steelmills would support themselves when cut off from their Russian markets -- this bodes badly for the future. Easterners will then rightly be very afraid. It could lead to more instability than Putin bargained for. So his best bet is to settle for some sort of autonomy status for Crimea that keeps it nominally part of Ukraine but greatly strengthens Russia's military status and political influence there. (A column in the Kyiv Post that I linked to earlier suggested some sort of Hong Kong-like status, with the Russians in the position of the British when they still ruled there.)

"We" (i.e., the West) still need to think harder about how to deal with the problem of Russia.

The population of Russia is shrinking fast, according to UN projections.
It will have declined from 139 million today to 109 million in 2050.

http://www.standpointmag.co.uk/node/5409/full

Not only is the population of Russia shrinking, its role as a world power is, too. If it's a painful thing to watch from the outside, it must be even more painful on the inside. This partly explains some of their fantasy ideologies such as "Eurasianism". NATO's response to Russian decline seems to be to take advantage by moving into the power vacuum and planting its flags ever closer to Moscow. But is it wise? Why not allow Russia to deal with its "shrinking pains" unmolested and in the meantime humor them by pretending they are still a superpower?

33. Inuit, not Chinese :)

http://www.hollywoodreporter.com/news/gravity-spinoff-watch-side-sandra-657919

34. Thanks Eugene. I love this short scene we didn't see in the main movie... it is so moving. Strange how this dialogue of the deaf is so powerful.
I would even dare making an analogy between this scene and what Quantum Physics is for Classical Physics.