ISTAMBUL-ALMATY-MOSCOW-KIIV

 

  12 days trip, already looking forward to get to Catalonia. Whenever you go, you feel that people are not as sure as they used to be about bright future. Conflicts in Ukraine ( Crimea, Donbass ) and Syria have made neighboring countries understand that peace and stability is a scarce resource in this part of the world. I must say that I have not found anybody which convincingly explained me what’s going on. Is it about USA-Russia supremacy in the region ? Is it about control of energy ? Is it about end of ‘oil days’ and shift to new energy paradigm ? Anyway, there’s a general feeling that we are entering a bumpy time which is going to bring changes to world as we used to know it. Our society much dependent on oil is facing a turning point which will modify world’s geopolitics. Are countries which are oil importers be able to balance their national economies by decreasing imports of energy ? Are corporations which control oil/petrol production and distribution going to allow them to go ahead with those plans ?

You have always feeling that all what will happen, will depend on US desire to do so. For the time being, seems that US has decided to become non-foreign oil/gas depending by launching fracking whatever environmental cost it might have. Is US pushing Saudi Arabia to keep a high output of oil to keep prices lower that 60 $/barrel ? Are other countries pushing them to allow price go over 100 $/ barrel ? Which are those countries ? Iran, Russia, Venezuela… what about Azerbaijan, Iraq ?

When war started in Lybia, somebody warned that Gaddafi was not being allowed to shift big contract with western corporations to Chinese ones. If that was the case, that decision had a very high price for Libya’s ruling class as it had before idea to shift contracts from $ to Eur in case of Saddam’s clan. Has this conflict something to do with Syria’s or Ukraine’s one ?

So it seems that western corporations keep on protecting their interest and that this could mean that shift to new energy paradigm is blocked in western world but prices are kept in a sustainable price which allow Europeans to give some oxygen to their starving economies and allows US to avoid potential enemies to use high prices on oil as perfect source of cash to strengthen their economies and jeopardize US supremacy in 21^st century.

What’s China’s role in all this game ? Apparently is not an active player. I am not capable to give a clear answer on this matter. My knowledge of China is limited but I have just a feeling: energy is a huge priority for them and this should clash at some point with Western-US desire to keep control of energy sources and distribution in the world.

In my first stop, I was in Istanbul. A huge amount of people have fled from neighboring Syria and have entered Turkey ( up to 3 millions ). Erdogan’s government has decided to provide them Turkish citizenship which means that he is adding 3 million votes for him in future elections. A key motivation for this swift move from Turkey. Decrease in oil prices has affected seriously economy. Biggest investors were Arab companies looking for a heaven to invest their oil gains once they had realized that US or western countries could not be 100% safe as thought to be before. Also strong export markets as Russia or Azerbaijan are suffering from low oil prices which reduces demand for Turkish goods and services.

Anyway, Turkey is going to keep on track. It has a skillful young population  which gives them capacity to compete at any level and sector with leading countries in the world.

In my next stage, I visited Almaty, business capital of Kazakhstan, where I had time to discuss and comment with local business persons on matters mentioned above. Perception there is that they can’t afford any mistake as Ukraine’s one. Straight political conflict with Russia would cause a similar situation as in Donbass in all northern area which borders with Russia and mainly populated by Russian people. Ethnic tolerance is a great value in Kazakhstan and all parts understand that a bright future is only possible if all ethnics groups live in harmony. President has been reelected for a new mandate which allows country to face next few years with internal political stability till succession will be ‘arranged’. I understand that this might sound not well but democracy is still a scarce value in that region and steps towards it have to be very smooth by convincing all involved parties about benefits of it, but avoid using it as an excuse which covers other purposes because that might end in a very bad way. And we speak about a country surrounded by China, Russia, having also borders with some states that have faced in recent years serious turmoil and are also under risk of being seriously affected by jihadist movement promoted by some Persian Gulf states. During last Muslim Countries Meeting, Kazakhstan pledged Saudi Arabia not to support any group which could be a risk for stability because of its radical approach on Islam issue.

Kazakh economy is 100% dependent on export of energy and mineral resources. That allows a minority of the population to live in a ‘Dubai dream’ while most of country can hardly enjoy any privilege. Unfortunately, we can’t consider it to be a free market economy but it will gradually move towards it during next years.

Next stage was Moscow ( Russia ).  After general panic when ruble depreciated at light speed, economy is coming to terms that RUR will not appreciate or comeback to previous rates. Government is in favor of further depreciation which would allow them to fulfill its annual budget obligations payable in RUR, but markets are holding RUR to its actual level. Some very strong economical groups could not be very happy with Putin’s approach in Ukraine’s crisis. Whatever it happens, it’s obvious that actual oil price will not allow Russia to restore its military potential at pace Putin wants. An interesting process of support of national producers to reduce imports and make Russian economy stronger and not so vulnerable to oil price changes is undergoing but that might takes some years as Russian economy suffers from a not very favorable investment environment due to corruption and in many areas lack of skillful working force and proper infrastructures. I still believe that Russia is condemned to cyclical crisis related to its weaknesses as an economy and society. Aging population could be a problem very soon and as in many European countries, immigrants coming from neighboring countries are a very much required labor force. Russians will have to forget about ‘Russian for the Russians’ , if they want to have a sustainable economy and society in future years.  This crisis has supposed that many Russians which had joined a new middle-class have slipped back and are now struggling to keep an ‘European’ way of life which they got used to ( at least in biggest cities ). That might be a reason to doubt very much about levels of popularity of Putin although state controlled mass-media runs a strong campaign to blame foreign sanctions and triggers a wave of patriotism which might have an opposite effect.

Next stage, Kiev ( Ukraine ). War has had a very strong effect in local economy.  Local currency has fallen dramatically and as a result, most Ukrainians have become part of the lowest income group in Europe , struggling to get minimum required wage to enjoy a decent life.
Particularly, old people is living in a nightmare and without support from relatives can afford themselves food, electricity, gas and medicines that would allow them to have minimum standard of comfort in live. State is held by foreign aid and this situation does not seem to be improving but worsening. Many Ukrainians which have decent skills are trying to escape to other countries to get a decent salary. We are facing a humanitarian crisis in the border of Europe and we are not aware about consequences of it. Country has all ingredients for a confrontation which will only bring more blood and misery. Meanwhile, state employees keep on practices that place Ukraine at the top of most corrupted states in Europe by far.  New Government made of same members that have plundered state budget during  years ,  it is not fulfilling its promises of reforms and no significant foreign investment can be expected in such scenario. Expect more turmoil and social unrest for near future to come.

  It's long time since I wanted to put on paper my thoughts about developments in Ukraine.
As I was afraid of in post dated 2013, things have turned very bloody and situation has dramatically evolved during last year.
  As a result, we have a country which has lost Crimea, risks to loose Donbass and is under a deep economic crisis.
How we got here ?
  A political and business class composed basically from those who ruled and controlled Ukraine during last stages of USSR, used its position and power to build a lawless system which allowed them to take over all assets by privatizing best companies, sectors, land etc... and submit most of Ukranians to its rule not allowing country to transit from a state-economy to a free-economy but to a cleptocracy.
  Most of Ukranians have not seen its situation improved but in many cases worsened during these 20 year of Independence.
  Older generations have struggled to survive in this wild enviroment as pensions kept at very low level ( around 75 $/month !! ) while all utilities ( electricity, gas, water ) became too expensive for them. Food prices rose to levels that keep them away from any other product than those grown at local level. Basically, they have become 'Third World citizens' in the European continent.
  Young people have grown in a wild environment, lacked of any other value than 'steal, cheat and become richer at any cost'. Education has not been a priority to be a prepared professional to succeed in your adult life but just a stage to be passed at any price. As a result, average skills and preparation has dramatically fallen. Most of youngster are hardly prepared to compete in 21st century economy.
  Medical Care System is disastrous. State-runned is poorly equipped and doctors are not providing proper care if not paid additionally by patients. Private one is expensive and only less than 5% of people can have access to it. As a result, life expectancy has dramatically fallen.
  Under these circumstances, you barely can't expect things to evolve positively. And that's what has happened. Once Yanukovich and all his thugs took over power ( democratically , we have to say ), things only worsened for normal average citizens. They plundered economy taking all remaining resources from a already stagnant country. Nobody in West or East really cared that much about it. As it's usually said: 'that was an internal affair'.
 

 That was in my opinion main mistake from Kremlin's side. Instead of trying to build up a prosperous and transparent economy in Ukraine which could be a strong ally for Russia, they just focused on having a 'close ally' in Ukraine ( as they do in Belarus ) without any attention how country was run and how Ukrainians were living under that regime.
  I do not know if Kremlin has never been truly interested about democracy and increase standards of life of citizens in Russia and its neighboring countries, but I am sure that is the main reason for citizens in Ukraine, Georgia, Belarus etc...to shift to West and look for a 'better future' as part of that world. Only a small minority has considered Russia as an enemy. Vast majority of people just want to have a decent life, it doesn't matter if it's under Kremlin's , US or EU's umbrella.
  Once you get to that point of 'disaffection' ( term used in Catalonia to describe feeling of Catalan society in front of Spanish Government ), you can't hardly manage situation. Instead of trying to readdress situation by changing political power in Ukraine and install a decent regime, Kremlin got involved to try to sustain Yanukovich's Government once it was obvious that it has lost most of support of Ukrainians, even in Eastern part of the country where it was massively voted in previous elections. That provoked a more radical response from Ukrainians that started to show its opposition against Russia's involvement in their country affairs.
  We all saw how things developed later. Violence erupted and situation got out of control. I do not want to enter into a discussion about who shot on Maidan or Odessa and why all that happened. That's a result of a disastrous policy run by Kremlin in Ukraine. Of course, US had always interest to strengthen its position in that area, but that would have never happened if Russia had not allowed it to happen by building a democratic and stable environment in Ukraine.
  Once we got to this situation, Russia realizes that it can loose its strategic position in Crimea and decides to use its military power to build up a Referendum in that region to bring it back to Russia as it had been till 60's. Once this has been done, Kremlin realizes that it can hardly handle Crimea if it has not a land border with it and starts to execute 2nd part of its military plan: set up a 'brother state' called 'Novarossiya' which will include Donbass, Zaparoshya, Odessa and will also allow them to join 'Pridnistrove' region to its motherland.
  Meanwhile, a weak state with a very poorly equipped army tries to fight back and show to the world that they are not ready to give away its territory. At this point, everybody realizes that conflict will be bloody and maybe long.
  What about EU ? We know that US is far from Ukraine. It's interested to improve its strategic position there, but anyway its far from there. EU has a common border with Ukraine ( Poland, Slovakia, Hungary, Romania ). EU has very strong energetic and economic ties with Russia and has no interest to spoil this relationship. These are the views from countries as Germany, Italy or even France and Holland , but realizes that has to guarantee Ukraine's territorial integrity as part of its policy of stability in Europe. Public opinion also pushes to press Russia to stop its military aggression and restore previous borders before start of conflict. Finally, countries agree in a list of  economic sanctions to try to persuade Russia to change its policy towards Ukraine.
  It's obvious that till today, Russia has not modified its policy or strategy and continues to give military support to rebels in Eastern Ukraine. Meanwhile Ukraine's army has improved its condition with financial and training support from NATO allies. It's obvious that Ukraine would never be able to stand a full attack by Russia , actually I doubt EU could, but it has improved its capacity to resist and can probably threaten Russia with a long 'city-by-city' war in case Russia decided to invade further.
  During this year US has worked hard to increase its oil, gas production capacity and has persuaded some key partners as Saudi Arabia to increase its oil output. As a result energy prices have fallen and Russia is facing a economic crisis which will jeopardize its growth during next years.
  What can we expect further ? I do not believe that these measure will make Russia change its mind. Any person who knows Russian mentality, will tell you that Russia will not accept 'defeat' in any case. Specially in this case. Russia has always been very sensible about its position in Black Sea. Historically it has been a place of fierce battles, against Turkey even UK, and Russia considers that area part of its nationhood. Strategically and emotionally is considered to be part of itself.
  Bearing in mind this and expecting that nobody wishes to get in a full-scale war which would ruin that area and possibly also EU unity and economy, we need to go for a compromise.
  This means that Ukraine has to remain somehow linked to Russia but we can't ignore that most of Ukrainians, due to past mistakes by Russia, are willing to have closer ties with EU or even US. Besides, we have a dramatic matter: NATO's membership.
  Russia already has a common border with NATO's countries ( Baltic States ), so fact to have an additional border could be a too high stress for Moscow. Anyway, I do believe that main reason behind its frontal opposition about fact that Ukraine becomes NATO's full member are to be found in business: army industry. Ukraine still has very close ties with Russia and military speaking it keeps a quite decent military industry which works under Russia's umbrella and uses its standards. Shifting to NATO would mean full redefinition of business alliances in this important and strategic industry.
   So, what should be done to avoid a bloody conflict for many years and restore peace in that region ?
Everybody should work in allowing Ukraine to have an Status that allows it to be part of the EU and Eurasian association at once. Meanwhile, Ukraine should work as a field for NATO and Russia to build up closer ties. Is everybody interested in this to happen ? I am not sure, but there's no other way to bring back peace to Ukraine and let their citizen enjoy a peaceful and prosperous future. If we do not want to have a ruined country and place for all international criminality to use it as its basecamp in Europe, we are oblied to stop this conflict.
  I want to finish sending my best wishes to all my friends that live in Donbass and other regions in Ukraine. Let their families live in peace and happiness. Happy 2015 to all of you !!