Some of you may remember the article we published a little over two years ago entitled «Russia's Motives».». At the time the Western media could not (and do not) see beyond their noses and insisted on warning of Putin's demonic will to invade the whole of Ukraine after annexing Crimea. They biasedly ignored the fact that the elected Ukrainian president, Yanukovych, had been overthrown in a coup d'état dubbed Euromaidan, Maidan Square Revolution, Revolution of Dignity and other sweetened euphemisms. The fact is that, apart from the fact that this coup/revolution has, over time, done more harm than good to Ukrainians as a whole, Western public opinion feared that Russia's military response to Crimea was only the beginning of a pan-European war invasion in the purest secular style. We recommend re-reading it before continuing our reflections today, two years later.
In the article quoted at the beginning of this article we warned in March 2014 of Putin's true intentions, that he was not looking west but south. Two years after writing it, with various Western sanctions still in place against Russian interests, it is interesting to see that this has been the case. And it is also interesting to see what has happened in these 25 months with both the price of oil and the price of the Russian stock market. So we have from mid-March 2014 ($106/barrel) to today ($46/barrel) crude oil has plunged by more than 56%, Despite the rapid recovery in recent weeks since bottoming out at 28 dollars a barrel. On the other hand the Russian dollar-denominated stock market (RTS Index) is down only 17% in the same period, and still at ridiculous earnings multiples.
Putin's intentions surely continue to be to exacerbate the Sunni-Shiite conflict. But the desired prices of $200 per barrel are already an unattainable pipe dream, given the self-regulation of supply and demand implied by US fracking and the difficult reconciliation of OPEC with the lifting of sanctions on Iran. But a resurgence of the Sunni-Shiite conflict beyond the Syrian ring, that is, in the flesh of Saudi and Iranian territory, could push prices much higher than many analysts predict. In all this, Daesh, or Islamic State, has become a major player in al-Assad's theatre of operations, with no shortage of other players, such as Erdogan with his nationalist war with Kurdistan and his personal challenge to Putin himself, or the motley multi-ethnic opposition to the Syrian regime, conveniently fed by US interests (NATO). And in all of this, as we all know: jihadists win in troubled waters.
In short, the analysis made more than two years ago is still more than valid, but with adjustments to the crude oil price targets, as Saudi Arabia is playing the chicken game The Russian economy has been desperate in the face of the collapse of crude oil, Iran's resurgence and Putin's pulse in Syria. Incidentally, the Russian stock market remains the cheapest on the planet, and the devaluation of the rouble has substantially reduced the lethal effects of the oil slump on the Russian economy. Saudi Arabia threatens to sell Treasuries en masse to balance their budgets, butchered by their own bid to sink oil. But the US seems unwilling to accept such a move, and in turn threaten mass lawsuits The Saudi Arabian economy and the oasis of well-being of an increasingly critical and potentially conflictive people would be further ruined by the attacks of 11 September 2001. We will keep a close eye on the evolution of sanctions on Russia, the Syrian conflict and Putin's role in the new geostrategic order that is emerging in the Middle East. Remember that crisis also means opportunity.