Tom Arms’ World Review

Russia and China

It took Vladimir Putin just nine days for Putin to go from his inauguration in the Kremlin to Zhongnanhai – the seat of China’s political power and the home of President Xi Jinping.

At the end of the two-day visit the “partnership without limits” had been elevated to one in which there are now “no forbidden areas of cooperation.”

The two countries – and the two leaders – are united in their common goal of dismantling the liberal Western political order that has dominated the world since 1945. Democracy, they are convinced, has had its day. It is time now for Sino-Russian orchestrated autocracy.

The current pivot of the Beijing-Moscow axis is the Ukraine War. This war presents both problems and opportunities for China. On the one hand, Russian failure would be regarded as a disaster. On the other, Xi Jinping is conscious of the need to prevent Sino-American relations from deteriorating too quickly. China is not ready to step into American shoes.

So, Xi Jinping exploits Russia to poke, needle and goad Washington. He talks of “no forbidden areas of cooperation” but then urges Putin to row back on the nuclear rhetoric. China has yet to recognise the Russian annexation of Luhansk and Donetsk and – so far—has refused to supply Russia with obvious weaponry. It buys more oil from Russia but is playing hardball on the Russian request for a gas pipeline that would replace revenues that Gazprom has lost in Europe.

China, has however, ignored Western sanctions against Russia. In 2022 Russian imports of Chinese machine tools grew by 120 percent and in 2023 they rose another 170 percent.

Machine tools are just one industrial category which Secretary of State Antony Blinken has complained loudly about as helping the Russian war effort. This equipment either has a hidden defense element or it is categorised as dual-use, which means it can be used for civilian or military purposes.

Other similar categories of Chinese exports have grown exponentially since Russian tanks rolled across the Ukrainian border. Semi-conductor exports rose from $230 million in 2021 to £407 million in 2023. The machinery for making computer chips grew from $3.5 million to $180 million over the same period. Computer chips are essential for the conduct of high-tech 21st century warfare.

Russian oil

Russian oil and gas are financing Putin’s Ukraine War. So, this week, the Russian president had good news and bad news about his war coffers.

Oil revenues are up. Gas revenues are down.

Gazprom – the state gas monopoly – lost $6.9 billion in 2023. Its first annual loss since the bad old days of Russian financial chaos 20 years ago. The reason for the drop is Western sanctions and the closure of the gas pipelines Nordstream 1 and 2. Russian gas sales to Europe were down 55.6 percent. They will be even lower next year.

The picture provided by Rosneft – the Russian oil equivalent – is much rosier. Its profits were up a record 13 percent to $14.07 billion. The reason for its financial success were India, Putin’s friends in OPEC and the end of the pandemic.

Indian Prime Minister Narendra Modi has completely ignored Western sanctions and exploited Putin’s difficulties by buying huge quantities of oil at discounted prices, India then reaps a nice profit by selling the processed oil to third countries via the world market.

The OPEC countries meanwhile, have obliged President Putin by keeping oil production down and prices up. At the same time demand for energy has grown as the world economy recovers from the Covid pandemic.

But what about the coming year. Gazprom’s revenues are unlikely to rise. It takes time to build alternative destination pipelines and storage facilities. As for oil prices, demand is starting to fall. India has reached the limits of how much oil it can process and world economic growth is expected to drop to 2.7 percent in 2024 compared to 5.5 percent in 2022.

So, what Putin needs is a first class money manager to ensure that the maximum efficiency is squeezed out of every rouble. That is why he has appointed economist Andre Belousov as his new Minister for Defense.

Putin is his own commander-in-chief. He already has a Chief of Staff in the form of General Valery Gerasimov. What he needs is someone who can organise a defense budget that is now 6.7 percent of the country’s GDP before oil prices start to go the way of gas prices.

United States

In 1923, the US Secretary of the Interior, Albert Fall, was hauled before the courts for accepting a $350,000 bribe that allowed an oil company to drill in protected reserves at Teapot Dome, Wyoming.

This is the crux of the Teapot Dome Scandal which was recognised as America’s biggest political scandal until Watergate and the resignation of Richard Nixon.

Now, we have another potential oil scandal, involving – surprise, surprise – Donald Trump. According to the Washington Post the former president invited a phalanx of top oil executives to Mar-a-Lago and offered to reverse President Biden’s climate change decrees in return for a $1 billion contribution to his campaign finances.

According to the Post, the oil companies are drafting the necessary executive decrees as I type this story.

Trump desperately needs the money. Cash wins votes in America and at the moment Biden’s campaign is outperforming Trump’s in the money-raising stakes two to one. A billion dollar injection could determine the result.

Which is why Democratic Congressman Jamie Raskin, the ranking Democrat on the House Oversight Committee, has written to the oil companies who are alleged to have been at the Florida meeting (Exxon, Chesapeake Energy, Continental Resources, Chevron, Cheniere Energy, EQT Corporation, Occidental Petroleum and Venture Capital).

Raskin wants to know who attended the meeting; copies of materials shared with the attendees; descriptions of the rules of the meeting; policies discussed; and an account of financial contributions to the Trump campaign made at or after the event.

In 1923, Albert Fall, went to prison for a year. In 2024, if the oil companies hand over the $1 billion; and if Donald Trump is elected; and if he reverses President Biden’s climate change legislation and executive decrees, nothing will happen. It is scandalous. In most countries it is illegal. But in the United States – the country which projects itself as a paragon of democratic probity and the rule of law—it is… politics.

Ukraine

To hold elections or not to hold elections. That is the question vexing Ukrainian President Vlodomyr Zelensky. Actually it isn’t. It is too late. According to the Ukrainian constitution, Zelensky’s term of office ends on Monday and he is going nowhere.

Volodomyr Zelensky would not be the first democratic leader not to hold elections in the middle of a war. Winston Churchill delayed elections because of the war. Then held them as soon as the fighting stopped and was booted out of office.

Franklin D. Roosevelt went ahead with elections in the middle of World War Two and was rewarded with an unprecedented third term in the White House. But then World War Two was not fought in the continental United States.

Zelensky has a good reason for postponing elections. Ukraine is in the thick of it. Most of its young men are fighting and over 8 million Ukrainians are refugees. The six month delay in extracting promised American weaponry is taking a heavy toll as Russian troops advance on all fronts.

In the north they are moving towards Kharkiv – Ukraine’s second largest city. In the south Russian forces have flattened Ukrainian villages in the Zaporizhia region and in the centre of the 800-mile front line, the Russians are threatening to capture the hilltop town of Chasiv Yar. This would allow them to place heavy artillery on a strategically located plateau from which they could dominate the countryside for miles in every direction.

The Ukrainians have not built proper defensive lines. The US weaponry has not reached them. The Russians are pouring more and more conscripts into the meat grinder. The Ukrainians are outgunned and outmanned. President Zelensky has described the situation as “very difficult” but “under control.” Election dates are the last thing he is thinking about.

* Tom Arms is foreign editor of Liberal Democrat Voice and author of “The Encyclopaedia of the Cold War” and “America Made in Britain". To subscribe to his email alerts on world affairs click here.

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8 Comments

  • As regards to ignoring Russian sanctions – one of the biggest sanctions busters is fellow NATO member Turkey..The volume of goods reaching the Russian federation from that route has grown hugely…

  • Alex Macfie 19th May '24 - 4:42pm

    John Waller: “start a dialogue between Russia and the West” sure, because that worked so well for Chamberlain in 1938.

  • @ Alex Macfie : “that worked so well for Chamberlain in 1938”.

    Really ? I’m no great fan of Neville Chamberlain, Mr Macfie, but you can’t be aware that most modern British historians now accept that Chamberlain bought time (as Chancellor and as PM) for Britain to re-arm.

    Between 1933 and 1938 the UK’s Defence budget grew from 2.2% to 6.9% of GDP. There was a boost to the capabilities of all the armed forces, but primarily to the Royal Air Force to a level to deter or deal with an attack by Germany.

    In 1934, 42 squadrons existed providing a first line strength of 800 aircraft. By 1939 this had grown to 157 squadrons and 3,700 aircraft. The Hawker Hurricane was introduced in 1937 (just before Munich) and the Spitfire in 1938. In addition, by the outbreak of war a chain of early warning radar stations, had been completed along the south and east coasts of Britain.

    Source : Imperial War Museum

  • Steve Trevethan 20th May '24 - 8:22am
  • Nonconformistradical 20th May '24 - 9:05am

    @Steve Trevethan
    Perhaps as rotten as any other so-called democracy where those with money are able to game the system?

  • Zachary Adam Barker 20th May '24 - 8:38pm

    “In his early career, Rasmussen was a strident critic of the welfare state, writing the book From Social State to Minimal State in 1993.”

    What does this have to do with his foreign policy stance? This looks like shameless character assassination in place of actually dealing with the argument in hand.

    “I agree with Patrick Cockburn when he writes in iNews: ‘My heart sinks when I hear armchair generals and pundits pontificating about how Russia has a brief window of opportunity this summer when all that splendid new equipment arrives.”

    My heart sinks more when I hear those trying to come up with reasons for the West to not act at all, making themselves feel better by calling the rest “armchair generals”.

  • David Garlick 20th May '24 - 9:00pm

    Where is a JFK when you need someone to draw the line.
    No line ,no stopping Putin.
    rearming is essential. Is the current long away target sufficient? I think not.

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