In January 2000, Vladimir Putin became the Prime Minister of Russia. WTI crude oil price which had hit a low of ~ $10 a barrel in early 1999, had tripled by the time Putin first assumed office. [When the financial markets froze up in Fall of 2008, oil prices crashed once again, but within a year had staged a remarkable recovery.]
Oil prices continued to rise through 9/11, US intervention in Iraq, and the sanctions on Iran. Russia's recovery under Putin was bankrolled by the sharp rise in the price of oil that accompanied US actions in the Middle East. As the petrodollars flowed in, Russia began an ambitious program of re-exerting influence over its "near abroad" in the Caucasus and Central Asia. From Putin's perspective Russia was reclaiming its historic role in the comity of nations.
Russia took full advantage of US preoccupation with the Middle East. Moves such as NATO's eastward expansion could be fed to the Russian public as clear signs of hostile intent. After all, why was NATO expanding east when the Warsaw Pact had already been dismantled?
Then came the shale revolution in the US. Between 2009 and 2015 US oil production doubled. In addition Iranian sanctions were eased and oil prices started slumping in 2014. This created a sense of urgency in Putin's inner circle that time running out on building back its reputation and place among nations. Hence the the adventurism in the Ukraine and the recapture of the Crimea. These were calculated acts of desperation on the part of a Russian elite.
If Russia was in fact involved in the hacking related to the recent US Presidential elections, then this too is an attempt by Russia to attract attention to its covert capabilities. It is an attempt to reassert attention to its military and nuclear power which backs up its covert and black ops capabilities. In a sense it is blackmailing the US to come to the table and accord Russia the respect that it deserves. Doubling down on its support to Assad in Russia is a signal to (potential) allies that Russia is back and will stand by them even if the US is vehemently opposed.
All this is to signal to the world that the unipolar moment of US hegemony is finally at an end and Russia is a global power and not a has-been regional player.
But through all of this, the real challenge for Putin's Russia is the price of oil. US shale oil production acts as a brake on rising oil prices. As soon as oil prices start inching up, shale producers in the US can crank up supply and cause oil prices to go back down. From the highs of $110 per barrel, oil prices have varied between $30 and $60 in 2015-16. At this price level, Russia is hard pressed to address its budgetary woes. It cannot be guns and butter. Something has to give. Unless of course the US comes back to the bargaining table and sanctions are eased on Russia, and some breathing room is achieved.
The US needs to call Russia's bluff and challenge it by covert and overt means. As also ensure that oil prices stay depressed for the next few years. This will make it much harder for the Russian elites to continue to back Putin. It will be Russia that comes back to the bargaining table.
Unless of course the US under Trump decides that the threat from China far outweighs the damage that Russia can do. In which case, detente with Russia is the price that the US must pay to to focus its energies on containing China. This would be a very calculated gambit since it is very unlikely that Russia is going to abandon its carefully nurtured strategic alliance with China.
In 1971, the US started weaning China away from the Russian orbit. Trump's attempt to wean Russia away from the Chinese embrace is going to be much harder and fraught with many complications.
Oil prices continued to rise through 9/11, US intervention in Iraq, and the sanctions on Iran. Russia's recovery under Putin was bankrolled by the sharp rise in the price of oil that accompanied US actions in the Middle East. As the petrodollars flowed in, Russia began an ambitious program of re-exerting influence over its "near abroad" in the Caucasus and Central Asia. From Putin's perspective Russia was reclaiming its historic role in the comity of nations.
Russia took full advantage of US preoccupation with the Middle East. Moves such as NATO's eastward expansion could be fed to the Russian public as clear signs of hostile intent. After all, why was NATO expanding east when the Warsaw Pact had already been dismantled?
Then came the shale revolution in the US. Between 2009 and 2015 US oil production doubled. In addition Iranian sanctions were eased and oil prices started slumping in 2014. This created a sense of urgency in Putin's inner circle that time running out on building back its reputation and place among nations. Hence the the adventurism in the Ukraine and the recapture of the Crimea. These were calculated acts of desperation on the part of a Russian elite.
If Russia was in fact involved in the hacking related to the recent US Presidential elections, then this too is an attempt by Russia to attract attention to its covert capabilities. It is an attempt to reassert attention to its military and nuclear power which backs up its covert and black ops capabilities. In a sense it is blackmailing the US to come to the table and accord Russia the respect that it deserves. Doubling down on its support to Assad in Russia is a signal to (potential) allies that Russia is back and will stand by them even if the US is vehemently opposed.
All this is to signal to the world that the unipolar moment of US hegemony is finally at an end and Russia is a global power and not a has-been regional player.
But through all of this, the real challenge for Putin's Russia is the price of oil. US shale oil production acts as a brake on rising oil prices. As soon as oil prices start inching up, shale producers in the US can crank up supply and cause oil prices to go back down. From the highs of $110 per barrel, oil prices have varied between $30 and $60 in 2015-16. At this price level, Russia is hard pressed to address its budgetary woes. It cannot be guns and butter. Something has to give. Unless of course the US comes back to the bargaining table and sanctions are eased on Russia, and some breathing room is achieved.
The US needs to call Russia's bluff and challenge it by covert and overt means. As also ensure that oil prices stay depressed for the next few years. This will make it much harder for the Russian elites to continue to back Putin. It will be Russia that comes back to the bargaining table.
Unless of course the US under Trump decides that the threat from China far outweighs the damage that Russia can do. In which case, detente with Russia is the price that the US must pay to to focus its energies on containing China. This would be a very calculated gambit since it is very unlikely that Russia is going to abandon its carefully nurtured strategic alliance with China.
In 1971, the US started weaning China away from the Russian orbit. Trump's attempt to wean Russia away from the Chinese embrace is going to be much harder and fraught with many complications.
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