Iraq & Iran (which is just been added to the world market)
Kazakhstan
Russia (where the situation is much worse than shown by this map because of their tax system)
Azerbaijan (which just showed up in the news with conflict over Nagorno-Karabakh)
The quote to pull from this article is:
While Nigeria requires an oil price of $85 per barrel to balance its budget in 2016, Kuwait needs only $47 a barrel. If countries used government assets to finance their budget deficits while the oil price was low, Kuwait would hypothetically be able to do this for the next 122 years, while Nigeria could only manage 0.1 years.
Just to reinforce Shawn Woodford’s point below, let me quote from Chapter Twenty-Four, pages 294-295, of my book America’s Modern Wars: Understanding Iraq, Afghanistan and Vietnam:
Many years ago, I had the pleasure of having a series of meetings with Professor Ivo Feierabend. I was taking a graduate course in Econometrics at San Diego State University (SDSU). I decided that for my class paper, I would do something on the causes of revolution. The two leading efforts on this, both done in the 1960s, were by Ted Gurr and the husband and wife team of Feierabend and Feierabend. I reviewed their work, and for a variety of reasons, got interested in the measurements and analyses done by the Feierabends, vice the more known work by Ted Gurr. This eventually led me to Dr. Feierabend, who still happened to be at San Diego State University much to my surprise. This was some 20 years after he had done what I consider to be ground-breaking work on revolutions. I looked him up and had several useful and productive meetings with him.
In the 1960s, he had an entire team doing this work. Several professors were involved, and he had a large number of graduate students coding events of political violence. In addition, he had access to mainframe computers, offices, etc. The entire effort was shut down in the 1960s, and he had not done anything further on this in almost 20 years. I eventually asked him why he didn’t continue his work. His answer, short and succinct was, “I had no budget.”
This was a difficult answer for a college student to understand. But, it is entirely understood by me now. To do these types of analytical projects requires staff, resources, facilities, etc. They cannot be done by one person, and even if they could, that one person usually needs a paycheck. So, the only way one could conduct one of these large analytical projects is to be funded. In the case of the Feierabends, that funding came from the government, as did ours. Their funding ended after a few years, as has ours. Their work could be described as a good start, but there was so much more that needed to be done. Intellectually, one is mystified why someone would not make sure that this work was continued. Yet, in the cases of Ted Gurr and the Feierabends, it did not.
The problem lies in that the government (or at least the parts that I dealt with) sometimes has the attention span of a two-year-old. Not only that, it also has the need for instant gratification, very much like a two-year-old. Practically, what that means is that projects that can answer an immediate question get funding (like the Bosnia and Iraq casualty estimates). Larger research efforts that will produce an answer or a product in two to three years can also get funding. On the other hand, projects that produce a preliminary answer in two to three years and then need several more years of funding to refine, check, correct and develop that work, tend to die. This has happened repeatedly. The analytical community is littered with many clever, well thought-out reports that look to be good starts. What is missing is a complete body of analysis on a subject.
The New York Timespublished a very interesting article addressing the inability of government-sponsored scholars and researchers to provide policymakers with an analytical basis for identifying potential terrorists. For anyone who has worked with U.S. government patrons on basic research, much of this will sound familiar.
“After all this funding and this flurry of publications, with each new terrorist incident we realize that we are no closer to answering our original question about what leads people to turn to political violence,” Marc Sageman, a psychologist and a longtime government consultant, wrote in the journal Terrorism and Political Violence in 2014. “The same worn-out questions are raised over and over again, and we still have no compelling answers.”
Ample government resourcing and plenty of research attention appears to yield little in advanced knowledge and insight. Why is this? For some, the way the government responds to research findings is the problem.
When researchers do come up with possible answers, the government often disregards them. Not long after the attacks of Sept. 11, 2001, for instance, Alan B. Krueger, the Princeton economist, tested the widespread assumption that poverty was a key factor in the making of a terrorist. Mr. Krueger’s analysis of economic figures, polls, and data on suicide bombers and hate groups found no link between economic distress and terrorism.
More than a decade later, law enforcement officials and government-funded community groups still regard money problems as an indicator of radicalization.
There is also the demand for simple, definitive answers to immediately pressing questions (also known as The Church of What’s Happening Now).
Researchers, too, say they have been frustrated by both the Bush and Obama administrations because of what they say is a preoccupation with research that can be distilled into simple checklists… “They want to be able to do things right now,” said Clark R. McCauley Jr., a professor of psychology at Bryn Mawr College who has conducted government-funded terrorism research for years. “Anybody who offers them something right now, like to go around with a checklist — right now — is going to have their attention.
“It’s demand driven,” he continued. “The people with guns and badges are so eager to have something. The fact that they could actually do harm? This doesn’t deter them.”
There is also the problem of research that leads to conclusions that are at odds with the prevailing political sentiment or run contrary to institutional interests.
Mr. McCauley said many of his colleagues and peers conducted smart research and drew narrow conclusions. The problem, he said, is that studies get the most attention when they suggest warning signs. Research linking terrorism to American policies, meanwhile, is ignored.
However, the more honest researchers also admit that their inability to develop effective modes of inquiry into what are certainly complicated problems plays a role as well.
In 2005, Jeff Victoroff, a University of Southern California psychologist, concluded that the leading terrorism research was mostly just political theory and anecdotes. “A lack of systematic scholarly investigation has left policy makers to design counterterrorism strategies without the benefit of facts,” he wrote in The Journal of Conflict Resolution.
This state of affairs would be problematic enough considering it has been a decade-and-a-half since the events of 11 September 2001 made understanding political violence a national imperative. But it is even more perplexing given that the U.S. government began sponsoring basic research on this topic in the 1950s and 60s. The pioneering work of scholars Ted Gurr and Ivo and Rosalind Feierabend started with U.S. government funding. Gurr published his seminal work Why Men Rebel in 1970. Nearly a half century later, why are we still asking the same questions?
“For the first time the researchers found that the greater the development gap….the more likely a country has experienced non-violent and violent mass demonstrations for regime change…”
“Events in the Arab Spring and in the Euro-Maidan demonstrations in the Ukraine, show that the frustrated desire to catch up with the frontier era can extend to the political sphere, particularly with repressive regimes.”
Well, this is probably very interesting work and I probably need to scare up a copy. The “for the first time” claim caught my attention in light of the work by Ted Gurr and Feierabend & Feierabend in the 1960s, which I am familiar with. I have posted on their work before. Of course, what Gurr and the Feierabends’ work showed was that (and this is paraphrasing from my memory):
Poorer countries had more political violence that richer countries.
Really poor countries had less political violence than developing countries (poor countries that are getting richer).
Political violence went up when the economy went down.
The sense I have from the Gurr and Feierabend’s work is that the least stable countries are those that were developing economically and then stalled or went into recession. This, of course, is the scenario with Russia (and others like Venezuela) and possibly may become the scenario in China.
If you watch the international news (probably best done by not watching American news channels) you may have noticed a few protestors in the streets of Rio and Sao Paolo, more than a million actually. This is a very big set of protests against a government that recently won reelection with 51% of the vote in October 2014. What happened?
Well, without going into depth into all the issues, the Brazilian economy is now declining. The Brazilian economy, which grew at annual average of 3.3% to 3.4% a year over the course of 14 years (from 2000-2013), only grew 0.1% in 2014 and then declined 3.8% in 2015. Now it is forecasted to decline 3.5% in 2016 (IMF forecast). This is a big deal and we are seeing the natural backlash.
There are a couple of countries in Eastern Europe with similar large economic declines. The Russian economy declined by at least 3.7% last year (official figures) and will be continuing to decline this year. The Ukrainian economy did even worse, declining by something like 12.5% in 2015.
Holding production at current levels, of course, does not cause the price of oil to go up, but may limit the amount it will decline. Added to that, Iran is still increasing production and Iraq might if it could ever regain control of Mosul and surrounding areas. There is still considerable pressure to further reduce the price of oil.
I am no expert on the oil market, so I will leave making more precise incorrect predictions to those experts. But I gather the price of oil will not be climbing stratospherically upwards for the next year or two. This puts significant economic, budgetary, and of course, political pressure on a number of major oil producers. Russia is not alone in this regard.
Our focus has been on Russia, but there are a number of other countries clearly being impacted by the long-term decline in oil prices. The countries on that list that get my attention are:
Nothing earthshaking other than he has about three years of cash reserves to keep to government budget in check. Of course, this does not really address the declining economy. Keep in mind the next election is in March 2018 (and it is for a six year term).
“But the economic decline in Russia started in the very beginning of 2012. The growth rate was only 1.3 percent in 2013, for example, when oil was well above $100 per barrel”
“The key problem of the economy, and the key reason for the decline, was the decline in investment. The economy cannot grow without investment…In 2012, investment stopped growing. In 2014, investment started to decline. That’s the main reason why the Russian economy is contracting.”
“That means that the only one real chance the Russian economy has is if the government improves the investment climate and boosts investment. But in order to do this, Russia needs to implement the rule of law. Once again, that’s not in the interest of Putin, because implementing the rule of law is the best way for him to lose power” (I put this line in bold)
The increase in military budget by 0.8 percent when inflation in the country is 13 percent actually means shrinking of the military budget. I would not pay big attention to the nominal numbers because inflation in Russia is very high.
“It’s important to note that the Russian economy is not in free fall. It’s not like a landslide, like in Venezuela” (which nicely serves as a lead-in to my next post)
And finally:
“They [poverty and unemployment] may change the political climate, but it won’t happen in a year, or in two years. It may take a decade, maybe, but it’s not a very fast and rapid process.”
This is the date that sticks in my mind. The Russian economy was pretty much in freefall in 2015 with at least a 3.7% drop. In 2016 it is estimated to drop another 1.5%. After that, it really depends on the price of oil, which the government of Russia has a hard time controlling.
If in 2017 the price of oil has not risen above $50 a barrel, then expect the Russian economy to continue to contract. Even if there is a bump in oil prices, the economy would most likely remain in the doldrums, especially with the trade sanctions that are in place. In the U.S. any incumbent coming into an election with three years of a declining economy would be out of office faster than you can say “Herbert Hoover.”
On the other hand, elections may work a little differently in Russia. Both Putin and Medvedev have been elected to office with majority vote. This has been the case for the last four elections. In 2000 Putin had 53.4% of the vote, in 2004 Putin had 71.9%, in 2008 Medvedev had 71.2% of the vote, and in 2012 Putin had 63.6% of the vote. But, in the last election, which Putin won comfortably, there were allegations in some areas of election fraud. Allies of Putin do control all four television stations and most of the press has remained timid. The Russian opposition is often organizing by internet, vice more formal structures.
In March 2018, Putin may face the first truly contested election in his career. In the last election a half-dozen significant candidates were simply ruled ineligible to run by the courts. Part of the application process was that they needed to get two million valid signatures, which was a difficult undertaking (in contrast, it only takes a $1,000 to get on the ballot in the New Hampshire presidential primary, something that was achieved by 58 people in 2016).
Will Putin still be able to win a 2018 election using current methods (control of the television stations and breaking up the opposition) or will they have to consider wide-spread voter fraud (like was done in Georgia in 2003 and was done by Yanokovych in Ukraine during the 2004 election)? It is doubtful that Putin would choose to loose the election and step down. To date, no one in power in Russia has lost an election, and this is the case in several other countries that made up the former Soviet Union. Furthermore, there are the pesky corruption problems among many in high levels in the government. The last thing they need is a hostile regime in power who may choose to vigorously investigate. There does seem to be a tradition that the losers of elections are investigated for corruption. This includes Timoshenko in Ukraine in 2010 (who was jailed but is now released), Yanokovych in 2014 (who decamped to Russia), and Saakashvili of Georgia in 2014 (who decamped to Ukraine). These prosecutions were often with cause.
So, it appears that most people are expecting Putin to win the election regardless. It really depends on how sketchy winning the election “regardless” becomes. Will it be outrageous enough that there is another color revolution (as in the Orange Revolution in Ukraine in 2004 that thwarted Yanokovych the first time). This is the question. We have seen people power in Georgia throw out the regime of Sheverdnadze (Gorbachev’s old foreign minister) in November 2003 with the Rose Revolution. We have seen people power in Ukraine twice take on the Russian backed Yanokovych (thwarted in the 2004 Orange Revolution and thrown out of power in 2014). Is this possible in Moscow in 2018?
It was people power that helped halt the coup in August 1991 as Yeltsin stood in Red Square. This directly led to the end of the Soviet Union. These things are hard to predict and they often quickly take on a life of their own. Yanokovych was legitimately elected to be president of Ukraine in February 2010. Protests started against his rule in November 2013 and he was out of office and left the country in February 2014. Similarly, Gorbachev became the head of the Soviet Union in 1985. The hardline coup against rule occurred in August 1991 and the Soviet Union was dissolved in December 1991. Not sure many “Sovietologists” in July 1991 expected the Soviet Union to cease to exist by the end of the year.
DOCTOR ZHIVAGO…Title: DOCTOR ZHIVAGO Year: 1965 Dir: LEAN, DAVID Ref: DOC037IF Credit: [ MGM / THE KOBAL COLLECTION ]
Russian evokes images of snow, tundra, vast expanses of country, brown bears, head scarf wearing peasant women and balalaikas. Of course, most Russians live in cities. The county is 73% urban (the U.S. is 82% urban). Commies loved concrete and it shows.
Moscow is a very big city, with a population of 12.2 million people in the city limit and 16.8 million in the urban area. This is 12 percent of the population of a country of 144 million people (and 2 million in Crimea). It is the political center of the country, it is the business center of country, and it is the cultural and entertainment center of the country. Even many of their famous hockey players come from Moscow. It is sort of like Washington DC, New York and Los Angeles all rolled up in one. In contrast the expanded Washington DC metropolitan area makes up 2 percent of the U.S. population (6 million out of 322 million) and America’s largest metropolitan area, centered around New York with 20 million people makes up 6 percent of the U.S. population. Moscow is the largest city in Europe.
The second largest city in Russia is the beautiful St. Petersburg at 5.2 million and after that, it is Novosibirsk with 1.6 million. Moscow simply towers over the rest of the country demographically, politically and financially. Russia has a second city (St. Petersburg), but not a clear third or fourth city. Moscow accounts for 22% of the Russian GDP.
This centralization means that most likely any political change, be it a reform movement, a palace coup, or any actual demonstrations are going to be centered in Moscow. Movements are probably not going to start in the provinces and then move to Moscow.
Moscow will be the center of change in the governance of Russia if there is such a change. There is nothing like an Iowa caucus or a New Hampshire primary. In the last election in 2012, Putin won with 63.6 percent of the vote in a campaign that included only one outdoor public speech! The vote for the Moscow Oblast (region) for Putin was 56.6%. Moscow might tire of his regime quicker than the rest of the country, and being the center of burgeoning Russian middle class (which now under assault due to the economic downturn), their allegiance and well-being is critical in the long-run to regime survival. If the Russian electoral system does not allow for them to properly express their displeasure and make governmental changes (and there are many reasons to believe that it will not), then this is where the change will come from.
On the other hand, many people have a strong interest in maintaining the current system in some form (especially considering the degree of corruption). So as they begin feel the pressure to change, they may try to internally reform themselves. There have been several examples of top-down reformers in Russian history. Their track record is not particularly good. Gorbachev lost control of the government five years after he instituted reforms. Khrushchev was sent off to retirement in late 1964, two years after he actually backed away from his reforms.
So the question becomes, does the Russian government attempt reforms before the next elections (which are coming in March 2018), what is their nature, and what is going to be the long-term result of that?
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