To me, Russia’s current crisis comes from dictatorial leadership; whose work was it got foreign investors to stay away? Even when compared against Soviet leadership, to me, Putin’s been worse, because the Soviets mostly had checks and balances in their autocracy. We can only hope that the PM/President thing works better for Russia.

Also, I gotta shake my head at using Stratfor as a source. Not only are they often wrong, but in that article particularly led you astray. Think any of those waterway connections came for free????!!?? Of course not! It look $b$s of canal investment to hook that stuff up;. But good roads, then canals, then RRs, then Interstates did come to win elections. Our CA Imperial Valley, our I-10 are both also particularly tough infrastructure we’ve chosen to invest in, and have seen returns from.

The US has never been stragegically isolated. The US started out with it’s enemy the UK just next door and has always been a trading nation. It started off with enemies on every border as well; though, deliberately ethnically cleansing a slice of continent’s previous owners, sigh, will do that. It’s true that we had certain possibilities of long-term conquest that not so many other countries’ve had; but Russia also conquered alot of turf.

Surely this contributes to Russia’s suicide rate, alcoholism and general bad health? Is there any reason why Russia would not, in future, fund more constructions in the south? (incidentally, it does seem that from what I’ve read of Tartarstan, Anatoly’s views on secularism of Russia’s Muslims is correct: it is far from being the Kosovo of the East)

Obviously when Yeltsin put the dated Soviet infrastructure on the free market it resulted in vast depopulation of rural Russia because oil revenue was concentrated in Moscow and St Petersburg. But now that the economy has become recentralised it may change. In Britain, there is an urban exodus. In the country there are large housing developments, even on flood plains.

Interesting comments re Israel and Russia. It demonstrates why I distrust neo-liberalism: it is based on the idea that one political ideology can be applied to different people with different histories. Personally, I lean somewhat towards social libetrarianism and dislike being told what to do. Yet I realised that Russia does not have our history and if a future President provided incentives for people to live healthier lifestyles, it could have a lot of positive features. If Medvedev reintroduced the concept of ‘the pioneers’, it may have long term health benefits for modern children?

Of course I am totally ignorant, and maybe the irrigation/ polution is a major factor (as it is in Central Asia) but would be interested if anyone knows?

(Extra bonus question: I recently read The Possessed by Dostoyevsky; does anyone know roughly where it was set? I don’t think it says but there may have been hints through toponyms)

Peak Oil: “Da” Say Russian Oil Execs

Hoping more investment might halt or reverse the decline, Russia plans to cut taxes in the oil sector. Says the WSJ:

It may not be enough. Lukoil’s Mr. Fedun says Russia’s oil industry needs $1 trillion of investment during the next 20 years just to maintain production of 10 million barrels a day. Analysts worry the tax cut is inadequate to achieve that. “We still do not see it generating enough free cash flow to the industry…to support higher investment levels,” Citigroup said in its report.

While the Russian government is still loath to throw in the towel, Mr. Fedun, 52, told the Financial Times that Russia has already peaked: “He believed last year’s Russian oil production of about 10m barrels a day was the highest he would see ‘in his lifetime’.”

Instead of running hard just to slip back slower, the far more rational thing from Russia’s perspective is to start decreasing oil production now, artificially, at 10% a year until production is in line with domestic consumption (or slightly higher to take advantage of the huge oil prices said reduction will create).

This would be much cheaper than spending hundreds of billions of dollars, it will save resources for the future (leaving oil in the ground is a form of saving), it will automatically wean Russia from its (budget’s) oil dependency and will provide a stimulus to domestic manufacturing and hi-tech. It may even help it become a more liberal and accountable society.

Hundreds of billions of dollars needed in investment? Says it all. In other words, the energy return on energy invested (EROEI) is going to be shrinking fast for Siberian oil, meaning that the utility derived from investing into Siberian oil production expansion is going to shrink relative to other economic sectors (though granted higher oil prices will cancel this out). But then again, higher oil prices hurt the general economy and shrink the stock of capital available for any investment.

Even barring all that, even if the Chinese and Indians do provide these hundreds of billions of dollars, they’ll do that only if they could be sure that their property rights are enforced. Russia is not well-known for its respect for sanctity of contracts, so they’ll have to discount the risks of disappropriation. If anything in an energy-constrained world Russia’s desire to reassert control over its own resources, fair or foul, will rise further.

This engineer told me he laughs at Peak Oil enthusiasts because Russia’s Far East and Siberia have bigger fields than what have been found so far, and that the USSR and Russia only exploited the easiest to get to fields, aside from the Caspian and Kazahkstan. I also talked with a Canadian engineer who says Baffin Bay is another Persian Gulf, if only the ice melts. On the other hand, Karlin is right to emphasis Russian assertiveness over the Arctic since the real motherload is probably all within five hundred miles north or south of the Arctic Circle. Another reason to root for global warming even if more recent evidence suggests a fresh cooling trend after the warming since the 1970s.