Would love to be a fly on the wall when Bush and Putin get together. Here are a few of the things on my mind regarding US/Russia relations.
1. The Reagan/Volcker commodity deflation/disinflation, more than Star Wars, is what bankrupted the USSR. Their biggest sources of cash were and are oil, gas, gold, other metals. China’s return to growth has pushed commodity prices higher again which has given Russia a new grab at wealth and influence. They still own a lot of warheads. How will they use this power?
2. World will need +10 MBD of oil in next ten years to grow China and India. After Saudi Arabia and Iraq, Russia will supply that oil. Russian Minister visiting Saudi this month talking about closer cooperation. Russian pipeline to China. Russian technical advisors (nuclear physicists) in Iran helping their nuclear missile program. Don’t like the prospect of Russia, Iran, China becoming bosom buddies again; don’t like to see Saudi Arabie separated from the US camp. That separation, not the Sept 11 attacks, has been Al Queda’s biggest victory. That was their objective in the first place.
3. Putin replacing democracy in Russia is, ironically, good for business. It is much easier for a CEO to deal with a dictator than a fragile, i.e., unpredictable, democratic government; capital flows into Russia to develop their oil fields and other assets are increasing.
4. President Bush’s job. We blew the opportunity under father Bush to trade food for warheads when the Russians were hungry. When I recommended doing so to the White House at the time they said they couldn’t afford it; the budget deficit would have been too high. Another example of budget deficit myopia. The Russians aren’t hungry any more. President Bush needs to be very tough on the issue of Russian aid to Iran’s nuclear program.
5. I would think the Europeans are much more sensitive than we are to the resurgence of thug-Russia. Could this be the catalyst to mend fences with the Germans? French?
John
