Obama and Russia: the World Laughs

Barack Obama, the president who was supposed to restore America’s reputation abroad after it was damaged by George W. Bush, has only succeeded in turning the country into an international laughingstock.

Case in point:  A lengthy June 25, 2014 article in the Financial Times which poured scorn on Obama’s policy towards Ukraine.

The article points out that back in March, White House press secretary Jay Carney warned that it was not a good time to invest in the Russian stock market because Obama was planning to impose devastating economic sanctions that would send the market into a tailspin.

What actually happened, the FT says, is that the Russian market rose from 1,250 on the RTS Exchange to 1,450 -- a gain of over 15%. In fact, if you’d invested in the Russian market when Carney told you not to, you’d have made quite a tidy bundle of profit in just three months.

And it gets worse. Not only did the Russia market spring upwards, but the very stocks that were specifically targeted by Obama were the biggest movers. The FT reports:

Among Russia’s best market performers have been those stocks that were believed to be most at risk of sanctions. Gas group  Novatek has added 37 per cent since the US Treasury placed sanctions on its shareholder Gennady Timchenko in March and is up 7 per cent for the year. Rosneft has gained 17 per cent since its chief executive Igor Sechin was placed under sanctions in April and is up for the year

State-owned lender VTB has gained close to 40 per cent since it hit a three-year low in March, even though the bank is seen as a potential target for US sanctions. Other Russian state companies that have performed well include Russia’s largest lender  Sberbank, which has risen 23 per cent since the March trough, and Gazprom, which is up 30 per cent since March and 10 per cent year-to-date.

The world is laughing at the Obama administration, and laughing at the Americans who elected it. Russia has not even slightly relaxed its python-like grip on Crimea after invading and annexing, aping the style of Hitler in the Sudetenland, because Obama’s anemic response hasn’t phased him.

Americans are very well aware of this phenomenon, which explains why approval of Obama’s foreign policy has plummeted so precipitously, rapidly approaching 60% disapproval. Obama’s policy toward Ukraine is typical in giving Americans the worst of all possible worlds. He incurs all the costs associated with imposing sanctions and yet does not impose sufficient sanctions to cause the necessary harm.

What’s particularly sad is that the Russian economy is certainly not doing well and is extremely vulnerable to outside pressure. Because the Russian economy is so heavily dependent on raw materials, the Russian stock market is a minuscule institution whose total market capitalization is rivaled by just one American company like Apple Computer. And as a recent report from Reuters shows, when you look beyond the stock market to the real economy you soon find yourself slack-jawed at the smoking ruin.

Reuters reveals how the Uralmash machine factory in Ekaterinburg, nationalized by Vladimir Putin soon after he came to power, is on the verge of collapse. Reuters states:

Russia's economy, which grew by around 7 percent a year during his early years in power, is officially forecast at 0.5 percent this year, with the threat of stiffer Western sanctions over Ukraine contributing to an unwillingness to invest. The trend is bad news for Uralmash, which no longer makes tanks but still makes everything from mining equipment to metal presses to oil drills, mainly for the Russian market but also for export.

The town where Uralmash is located still has a square called “First Five Year Plan” and locals told Reuters about their plan to save it: “There will be elements of the planned economy. As with the First or Second Five-Year Plans under Stalin, we will plan: each year we should produce this or that much of each product, build this or that enterprise.” This is the legacy of Putin:  rehabilitating Stalin, rationalizing the Soviet dictatorship and helping Russians to return to their failed past.

Stalin to the rescue!

A local economist tosses in a dose of realism, though. He tells Reuters: “The problems of Uralmash are a good illustration of the general problems of the economic model that has existed for the last seven or eight years, when the emphasis has been placed on state companies and on building up national champions. So far, it isn't very successful.”

Anecdotes abound. For example, Russian judges aren’t paid enough to afford their own housing, and now they are complaining that the government isn’t coming close to appropriating enough funds to do the job. Basis demographic facts are grim. One Russian demographer states: “In 2019 there will only be 12.9 million women of the most active maternity age of between 20 to 35, while in 2013 there were 17.2 million, so of course there will be fewer children in the future.”

And the reasons are obvious.

Putin is using ethnicity and nationality as pretext for military aggression, just like Stalin and Hitler once did (that’s not me talking, it’s the President of Lithuania). Putin is bringing back the Soviet star as a national symbol of Russia. Russians still use the melody of the national anthem of the USSR for their hymn.

Only 32 world nations have less press freedom than Putin’s Russia. The number of political prisoners is soaring. The noted Russian writer Boris Akunin says that Putin’s Russia is characterized by “a transition from a plutocratic autocracy to a police state and dictatorship” and doomed to fail as spectacularly as did the USSR.

The U.S. State Department has condemned Putin’s Russia as a world leader in human trafficking. Yet Obama himself is mum.

“Those age-old Russian utopian and imperial instincts are back with a vengeance.”

Soviet paranoia is also back in full swing:  Even Twitter is firmly in Putin’s crosshairs.

Russia has priests in Ukraine telling their flocks the European Union is evil.

Even television understands the evil that is Putin’s Russia. But not Barack Obama. When TV is smarter than the president, it’s time to ring down the curtain.

This all-out neo-Soviet assault can only crush innovation and destroy the fundamentals of the Russian economy. It should be child’s play to wreak havoc on this economy and force Putin out of Crimea, but unfortunately the U.S. doesn’t even have a man with a child’s acumen in the White House at present.

Follow Kim Zigfeld on Twitter @larussophobe+.

Barack Obama, the president who was supposed to restore America’s reputation abroad after it was damaged by George W. Bush, has only succeeded in turning the country into an international laughingstock.

Case in point:  A lengthy June 25, 2014 article in the Financial Times which poured scorn on Obama’s policy towards Ukraine.

The article points out that back in March, White House press secretary Jay Carney warned that it was not a good time to invest in the Russian stock market because Obama was planning to impose devastating economic sanctions that would send the market into a tailspin.

What actually happened, the FT says, is that the Russian market rose from 1,250 on the RTS Exchange to 1,450 -- a gain of over 15%. In fact, if you’d invested in the Russian market when Carney told you not to, you’d have made quite a tidy bundle of profit in just three months.

And it gets worse. Not only did the Russia market spring upwards, but the very stocks that were specifically targeted by Obama were the biggest movers. The FT reports:

Among Russia’s best market performers have been those stocks that were believed to be most at risk of sanctions. Gas group  Novatek has added 37 per cent since the US Treasury placed sanctions on its shareholder Gennady Timchenko in March and is up 7 per cent for the year. Rosneft has gained 17 per cent since its chief executive Igor Sechin was placed under sanctions in April and is up for the year

State-owned lender VTB has gained close to 40 per cent since it hit a three-year low in March, even though the bank is seen as a potential target for US sanctions. Other Russian state companies that have performed well include Russia’s largest lender  Sberbank, which has risen 23 per cent since the March trough, and Gazprom, which is up 30 per cent since March and 10 per cent year-to-date.

The world is laughing at the Obama administration, and laughing at the Americans who elected it. Russia has not even slightly relaxed its python-like grip on Crimea after invading and annexing, aping the style of Hitler in the Sudetenland, because Obama’s anemic response hasn’t phased him.

Americans are very well aware of this phenomenon, which explains why approval of Obama’s foreign policy has plummeted so precipitously, rapidly approaching 60% disapproval. Obama’s policy toward Ukraine is typical in giving Americans the worst of all possible worlds. He incurs all the costs associated with imposing sanctions and yet does not impose sufficient sanctions to cause the necessary harm.

What’s particularly sad is that the Russian economy is certainly not doing well and is extremely vulnerable to outside pressure. Because the Russian economy is so heavily dependent on raw materials, the Russian stock market is a minuscule institution whose total market capitalization is rivaled by just one American company like Apple Computer. And as a recent report from Reuters shows, when you look beyond the stock market to the real economy you soon find yourself slack-jawed at the smoking ruin.

Reuters reveals how the Uralmash machine factory in Ekaterinburg, nationalized by Vladimir Putin soon after he came to power, is on the verge of collapse. Reuters states:

Russia's economy, which grew by around 7 percent a year during his early years in power, is officially forecast at 0.5 percent this year, with the threat of stiffer Western sanctions over Ukraine contributing to an unwillingness to invest. The trend is bad news for Uralmash, which no longer makes tanks but still makes everything from mining equipment to metal presses to oil drills, mainly for the Russian market but also for export.

The town where Uralmash is located still has a square called “First Five Year Plan” and locals told Reuters about their plan to save it: “There will be elements of the planned economy. As with the First or Second Five-Year Plans under Stalin, we will plan: each year we should produce this or that much of each product, build this or that enterprise.” This is the legacy of Putin:  rehabilitating Stalin, rationalizing the Soviet dictatorship and helping Russians to return to their failed past.

Stalin to the rescue!

A local economist tosses in a dose of realism, though. He tells Reuters: “The problems of Uralmash are a good illustration of the general problems of the economic model that has existed for the last seven or eight years, when the emphasis has been placed on state companies and on building up national champions. So far, it isn't very successful.”

Anecdotes abound. For example, Russian judges aren’t paid enough to afford their own housing, and now they are complaining that the government isn’t coming close to appropriating enough funds to do the job. Basis demographic facts are grim. One Russian demographer states: “In 2019 there will only be 12.9 million women of the most active maternity age of between 20 to 35, while in 2013 there were 17.2 million, so of course there will be fewer children in the future.”

And the reasons are obvious.

Putin is using ethnicity and nationality as pretext for military aggression, just like Stalin and Hitler once did (that’s not me talking, it’s the President of Lithuania). Putin is bringing back the Soviet star as a national symbol of Russia. Russians still use the melody of the national anthem of the USSR for their hymn.

Only 32 world nations have less press freedom than Putin’s Russia. The number of political prisoners is soaring. The noted Russian writer Boris Akunin says that Putin’s Russia is characterized by “a transition from a plutocratic autocracy to a police state and dictatorship” and doomed to fail as spectacularly as did the USSR.

The U.S. State Department has condemned Putin’s Russia as a world leader in human trafficking. Yet Obama himself is mum.

“Those age-old Russian utopian and imperial instincts are back with a vengeance.”

Soviet paranoia is also back in full swing:  Even Twitter is firmly in Putin’s crosshairs.

Russia has priests in Ukraine telling their flocks the European Union is evil.

Even television understands the evil that is Putin’s Russia. But not Barack Obama. When TV is smarter than the president, it’s time to ring down the curtain.

This all-out neo-Soviet assault can only crush innovation and destroy the fundamentals of the Russian economy. It should be child’s play to wreak havoc on this economy and force Putin out of Crimea, but unfortunately the U.S. doesn’t even have a man with a child’s acumen in the White House at present.

Follow Kim Zigfeld on Twitter @larussophobe+.