Feb. 26, 2022

"The Russian Empire Is Back." by V. Putin.

For Vladimir Putin, last week was the pinnacle of a quarter-century as the head of the Russian State. The invasion of Ukraine has shown to all the world, that the Russian Empire is back. And in a very big way.

These past years have been tough on Russia. As the country transitioned from the mighty Soviet Union to the Russian Federation. A country of only half the population of the former USSR.

But it is clear that Putin has done a masterful job of leading the Russian economy during his time as leader. During his first 8 year stint as President, Putin saw the Russian economy grow by a remarkable 72%.

One of the best economic records worldwide.

And this is key. Putin's development of the Russian economy was driven by oil and gas. As Russia progressively found itself as one of the major oil-producing countries in the world. Today Russia and Saudi Arabia are tied for the number two oil producer in the world.

And here's a little trivia for you. Do you know who the number one oil-producing country is? You're right the USA. But more of that in a moment.

For now, we'll stick with Russia.

So Russia and Saudi Arabia each produce about 11 million barrels a day. Representing together nearly one-quarter of the world's production.

But here's the difference. Saudi Arabia isn't the international player that Russia is. Its population is tiny, only 34 million. It's got a relatively small military. And most of all it doesn't have an international leader like Vladimir Putin.

Russia, of course, has all that. A more than capable military, and perhaps the greatest diplomat of our time in Putin.

Let's look at the recent record.

It all began last August when Russia and Saudi Arabia signed an alliance. This alliance included military aid, as well as economic cooperation.

In one move, Putin set aside the US as the world's largest producer and set up the Russian-Saudi production colossus. A combined entity that now exceeds US production by 10%. Making this group the new price setter in oil for the world.

Next Putin traveled to Beijing and signed a 30-year agreement with China to supply a whopping 10 billion cubic meters of natural gas each year to China. This gave Putin the cash flow that he's always wanted. It also closely aligns the two regimes in their competition with the United States.

But China isn't the only major customer that Russia and Putin are able to secure. In perhaps the biggest irony ever, the United States has become one of Russia's biggest customers. Importing an astonishing 400 thousand barrels per day. Which, with the current rising price of oil, will give Russia $1.2 billion in revenue each year.

And that last move, getting the US dependent on Russian oil, was the move Putin needed to take Ukraine. He had literally removed all the great players from the Chess Board, and now he just needed to complete the invasion. A process that is going on as we speak.

So here's the recap. Secure Russia's own supply of oil. Done, with the Saudi Agreement. Make sure that China is an ally. Done, with the natural gas deal. Neuter America: done. Accomplished by our reliance on Russian oil. I think Anthony Blinken, US Secretary of State put it best: “We're not halting gas and oil purchases from Russia, because we're trying to minimize pain to us.” One of the best messages of surrender ever.

So there it is a real trifecta. A three-part victory.

And one that should put Russia in the catbird seat for years to come.

Finally, the implications from this tour de force go on and on. Not only has he taken down the power and influence of the USA. He has also gone a long way in crippling the Petrodollar.

Now, it remains to be seen whether Saudi Arabia will continue to use the dollar to price their oil. But if they don't, you can kiss the Petrodollar goodbye. And that agreement with China for natural gas? It's already priced in Euros, a major blow to the US Dollar as the reserve currency.

Most pleasing to Putin, I suspect, is the fact that most of this has been achieved without Russia firing a shot. Where shots have been fired, in Ukraine, it was merely the culmination of all that has gone before.

Ukraine is a way for Russia to solidify its borders.

But all these other financial moves set the stage for the ultimate Putin Victory. Displacing the United States as the world's economic power.