May 17, 2011
Putin as King Midas
By Kim Zigfeld
America and the West are being led into a trap set by Russian dictator Vladimir Putin, mostly because of the craven, benighted “leadership” of Barack Obama and his foolish Russia policy adviser Michael McFaul. If the Republican Party does not act decisively and soon, we will suffer dire consequences.
Between 2005 and 2010, at Putin’s direct order, just as the price of gold was setting new records, the Russian Central Bank more than doubled its holdings of the precious commodity. The Kremlin is now planning to increase those holdings by another 50% even as the price once again strikes a new high ground.
A Moscow Times article recently called Putin’s 2005 decision “extraordinarily farsighted.” That’s because what happened next is that the price of gold tripled: the value of Russia’s holdings rose from $4 billion to $12 billion.
The MT characterization of Putin’s insight is deeply misleading and characteristic of a flawed Western analysis of the Putin regime.
One of the most poorly reported and understood facts about the Putin dictatorship is its fundamental, abiding interest in instability in the Middle East. Every time there is a flare-up in the land of oil, the price of oil rises sharply. When it does, it takes the price of Russian crude right along with it, lining the pockets of the Kremlin oligarchs. Putin himself also reaps enormous personal profits.
That’s why it’s routine to see Russia actively supporting the rogues and scalawags of the region. It has aggressively supported Libya, Iran, and Syria in their struggles against democracy and Western pressure, providing the regimes there with massive financial infusions, military hardware, and nuclear technology. In doing so, Putin the proud KGB spy is merely continuing the line originally adopted by the foreign policy of the USSR.
Calling Putin’s gold move “farsighted” implies that Putin acted on his analysis of world economic trends he could not control but could divine. That implication is totally false.
Putin intended to move aggressively to unsettle and rile the Middle East so as to pressure oil prices as much as he could. He knew this because he knew the basic facts about the Russian economy. He saw its Soviet-like inefficiency and corruption, and knew that the price of oil would become ever more essential to Russian survival. That’s why he moved to seize control of the Arctic seabed and the rich fossil fuel resources to be found there. He also worked feverishly to squeeze more and more production out of Russia’s oil fields, so that today Russia produces more oil than any other nation.
Kremlin insiders have routinely let it slip that their goal is to drive the price of oil into the territory of $200 per barrel. Not only does such a price guarantee limitless wealth for the Kremlin oligarchs, but it also assures a severe weakening of the Western economies and a concomitant rise of Russian power.
And Putin knows that when the world economy gets nervous, the price of gold rises. The less stable the world’s energy supply, the more it craves the security of gold. So it was child’s play for Putin to realize that Russia could reap a windfall not just from oil prices, but also from gold prices. And into the market he went.
When the Bolsheviks seized power in Russia in 1917, most of the world did not take them very seriously. There was a halfhearted military attempt to unseat them, but nobody realized that within half a century Russia would bristle with nuclear fangs and nearly pathological hatred of the United States and her values.
Similarly today, many view Russia’s feeble economy and rusting military as insignificant. These same people then conclude they can ignore the Russian “threat.” Barack Obama is leading this effort. He says not a word about Putin’s efforts to destabilize the Middle East, and he tells us that we can trust Russia to act responsibly. Thus, instead of challenging Russia, we can ink a nuclear arms deal and seek to expand trade ties.
The West’s failure to understand Putin’s gambit is not a failure of journalism in the main, it’s a failure of political leadership. And while the leading role played by Obama is important, probably much more important is the total failure of the Republican Party to challenge Obama’s missteps. Obama is a leftist and a neophyte, and to see him suckered by a career intelligence officer like Putin is not surprising. What is surprising is the inability of the heirs of Reagan to step forward and demand something better.
If they do not do so soon, America and the West will pay dearly for their folly.