Questions! We have Questions! (Part 2)

Reliable Trading Partner?

Russia spent decades developing its energy industry to become a world trading partner. The result was enormous cash flows into Russia enabling her to buy what she needed on world markets. Luxuries, food stuffs, minerals and manufacturing supply chain participation. Good things happened in Russia. Entrepreneurs (arguably favored oligarchs) became multibillionaires. Household incomes grew throughout the nation fueling a rising standard of living. Russia was on the make and showing signs of international stardom.

Then it all came crashing down. Putin risked it all to play his game of rebuilding the USSR now defunct 30+ years. The war against Ukraine is clearly Putin’s gamble to enlarge Russia’s landscape and borders. It is Putin’s means of threatening NATO countries by moving her borders right next door to NATO nations. The bully at work and without apology.

The pushback from the global community has been swift. Economic sanctions have effectively cut off Russia from her trading partners. The Golden Goose of international trade is drying up. With it, Russia’s ability to fund her dreams goes up in smoke. The only Ace up Putin’s sleeve is energy supply contracts with other nations, supplying them with needed oil, natural gas- and nuclear-powered electricity.

But even those trading nations are finding ways of doing without Russia’s energy supplies. Putin may yet learn that upsetting reliable supply chains destroys customer loyalty. Once a customer is gone, it may take decades to win them back. Putin’s game thus takes on long-term scale. And the loser appears to be Putin and Russia.

Threatening violence, widening military action and nuclear weapons clearly demonstrates how tight a corner Putin has backed himself into. How desperate and embarrassed he is will define his next moves. But a world well prepared for such actions on his part is folly for the Russian people.

Existential threat is a two-bladed sword. Think careful Vladimir. You are not the only nation with options.

May 6, 2022

 

 

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