Natural gas exports are a vital resource for the Russian economy. According to the EIA, Russia exported net 7.4 million bbl/d equivalents in 2012. Among this 7.4 million, 5.0 million was crude and 2.4 included other petroleum products. The EIA reports that Germany is the top recipient of crude (approx. 700,000), followed by the Netherlands (approx. 550,000), China (approx. 480,000) and Poland (approx. 470,000). The UK receives over 100,000 barrels per day.
Russia's support for the economy of EU, represents a dominant position in the market, and the Middle East, in particular. This economic clout is vital to the region's interest and represents a strong counterweight to US policy in Berlin. The EU stance on the Russian invasion is heavily influenced by the energy economy. Russia undoubtedly supplies the regimes of Bashar al-Assad and the Alawite regime in Damascus. The supply of arms is widely reported through US and British newspapers. This political clout represents an economic interest that is much stronger than the US in the region. Germany has been slow to move against Russia, given its vulnerability as the top recipient of Russian gas exports. Pipeline networks throughout the EU and Eastern Europe are vast natural resource of infrastructure development. This economic leverage ought to be diversified to support a market system that is independent of unstable Middle East and Easter European policital economies.
During the Civil War, Europe was forced to move supply routes for cotton to Egypt because Union blockades prevented the sale of cotton from southern ports. The effect was devastating, crippling the war efforts demand for financing from European economies. The payment networks and flow of goods across the globe are a key component of Russian chess moves. This includes energy supplies in Europe, which are dominated by Russia and payment processing networks by US companies such as Visa and Mastercard.
The payment networks in the developed world represent a significant and influential policy tool. They represent behavior of participants in a market, whether in Washington or Moscow. Payment networks represent an economic base, from tourism to trading of commodities and natural resources, the networks process transactions efficiently. The monies generated by the networks are real, the participants using the networks are rational and facilitation of the market system is an integral piece of the infrastructure that exists. The connection of buyers and sellers to the network creates a market system governed by the laws of the country which the transactions take place.
Eastern Europe is notorious for their utilization of the black market. This is analogous to "by any means necessary" as black markets represent an efficient form of a functioning economy and fill the void left by governments, institutions and infrastructure. The efficient use of the black market may trump legitimate corporations and crowd out market participants. The laws in much of the undeveloped world are local, the rules are local and appropriate obedience must be followed to gain access to these markets. If the costs of obtaining access are prohibitively expensive and returns not high enough to justify taking risk, the market entrenches locally, cutting off access to the global economy.
The extent which the US and EU control this infrastructure can have important influence over decisions made by countries such as Russia. The Russian elite are widely known to utilize the bailed out banking system in Cyprus. The Treasury has limited influence if the transaction payment networks are held outside of US corporations.
Mr. Putin may have already grabbed the natural resources he needed and expanded his market system. One could argue that the risk-reward decision was tilted in favor of Mr. Putin and that he acted completely rational in terms of maximizing return on political capital. The opportunity cost was huge and deterrence by the international community was weak. Mr. Putin simply repeats the pattern of Georgia in 2008, albeit without the precursor of a cyber attack and with a different US President.
(1) Ref: http://www.theguardian.com/world/bashar-al-assad.
(2) Ref: http://www.eia.gov/countries/cab.cfm?fips=rs.
(3) Ref: http://www.bbc.com/news/business-26724081.
Russia's support for the economy of EU, represents a dominant position in the market, and the Middle East, in particular. This economic clout is vital to the region's interest and represents a strong counterweight to US policy in Berlin. The EU stance on the Russian invasion is heavily influenced by the energy economy. Russia undoubtedly supplies the regimes of Bashar al-Assad and the Alawite regime in Damascus. The supply of arms is widely reported through US and British newspapers. This political clout represents an economic interest that is much stronger than the US in the region. Germany has been slow to move against Russia, given its vulnerability as the top recipient of Russian gas exports. Pipeline networks throughout the EU and Eastern Europe are vast natural resource of infrastructure development. This economic leverage ought to be diversified to support a market system that is independent of unstable Middle East and Easter European policital economies.
During the Civil War, Europe was forced to move supply routes for cotton to Egypt because Union blockades prevented the sale of cotton from southern ports. The effect was devastating, crippling the war efforts demand for financing from European economies. The payment networks and flow of goods across the globe are a key component of Russian chess moves. This includes energy supplies in Europe, which are dominated by Russia and payment processing networks by US companies such as Visa and Mastercard.
The payment networks in the developed world represent a significant and influential policy tool. They represent behavior of participants in a market, whether in Washington or Moscow. Payment networks represent an economic base, from tourism to trading of commodities and natural resources, the networks process transactions efficiently. The monies generated by the networks are real, the participants using the networks are rational and facilitation of the market system is an integral piece of the infrastructure that exists. The connection of buyers and sellers to the network creates a market system governed by the laws of the country which the transactions take place.
Eastern Europe is notorious for their utilization of the black market. This is analogous to "by any means necessary" as black markets represent an efficient form of a functioning economy and fill the void left by governments, institutions and infrastructure. The efficient use of the black market may trump legitimate corporations and crowd out market participants. The laws in much of the undeveloped world are local, the rules are local and appropriate obedience must be followed to gain access to these markets. If the costs of obtaining access are prohibitively expensive and returns not high enough to justify taking risk, the market entrenches locally, cutting off access to the global economy.
The extent which the US and EU control this infrastructure can have important influence over decisions made by countries such as Russia. The Russian elite are widely known to utilize the bailed out banking system in Cyprus. The Treasury has limited influence if the transaction payment networks are held outside of US corporations.
Mr. Putin may have already grabbed the natural resources he needed and expanded his market system. One could argue that the risk-reward decision was tilted in favor of Mr. Putin and that he acted completely rational in terms of maximizing return on political capital. The opportunity cost was huge and deterrence by the international community was weak. Mr. Putin simply repeats the pattern of Georgia in 2008, albeit without the precursor of a cyber attack and with a different US President.
(1) Ref: http://www.theguardian.com/world/bashar-al-assad.
(2) Ref: http://www.eia.gov/countries/cab.cfm?fips=rs.
(3) Ref: http://www.bbc.com/news/business-26724081.
