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Better management of the economy has sustained Russian economic growth in past crises such as in 2008 when oil prices collapsed. Russian central bank chief Nabiullina has helped steer the economy holding US dollar reserves to just 11% the rest of $600 billion reserves in renminbi, euros and gold. Yet the war in Ukraine has introduced limits. With labor shortages and the technological isolation the war in Ukraine is setting new limits on economic growth, says the WSJ. Going forward the limit is about 0.9% economic growth a year. Before 2008 the Russian economy growth was at 7% growth a year, it dropped to 3.5% after the invasion of Crimea in 2014. With China facing deflationary trends, little recovery in growth, this shows that geopolitical tensions are changing the prospects of important economies. With globalization dimming the prospects of Singapore and UK have suffered. The US is investing in growth, and Germany is following the US model.

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Germany faces serious problems in its vaccination drive and efforts to control the pandemic in November 2021. The rate at which people are getting vaccinated has slowed to 150,000 a day and the percentage of the population that is vaccinated is stuck at 67%. This percentage of 67% fully vaccinated in Germany as of November 3 is much lower than that in Spain, France and Italy.  Spain is at 78%, France at 69% and Italy at 72%. (Data from NYT) This report in the Guardian points out that most of the remaining one third of the population is not eager to get vaccinated as surveys show that the those who have refused to get a jab are unlikely to change their minds.There is also the problem of booster shots. Germany's 16 regions conduct the vaccination drives and with many of the vaccination centers not active since September staff has to be retrained or rehired. This makes it harder to give booster shots to everyone that was vaccinated early by the start of winter. Why is it that Germany lags behind Spain in vaccination? There is a great deal of trust in Spain and Portugal in the health service and people are 100% behind their health system. The other countries that have a low rate of fully vaccinated are the US at 58%, Brazil 57%, Russia at 33%. Even the UK with its well respected National Health Service remains at 68% fully vaccinated. Today the US, Russia, Brazil, European Union countries and India have many of the 5 million deaths from coronavirus. India's vaccination drive is approaching 1100 million vaccinated, yet there is along way to go in getting most of the population fully vaccinated because of the large population of 1.3 billion. This is why the Indian prime minister on the first day of returning from the COP26 climate summit devoted his time to meeting with leaders of different states and heads of districts with low vaccination rates to press home the idea that the effort had to be taken up vigorously in the coming months. ...

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The difficulties of unwinding war stimulus that has increased jobs and wages in poorer regions of Russia, and the problems with unwinding a war economy, are discussed here by experts from Russia, the US and Germany. Other aspects include what to do with hundreds of thousands of new recruited soldiers who would be unemployed during a period when the economy's growth has slowed and wage growth is slowing. In 2024 new recruits were given 1 years bonus and were being attracted in large numbers. JD Vance mentioned this to the new Pope in discussions, and this report says even Putin does not know how best to unwind this war economy. Vance told Pope Leo XIV -“I’m not sure that Vladimir Putin himself has a strategy for how to unwind the war.” This is the view also from an expert at the Free University of Berlin, as rapidly demobilizing a large army poses its own problems. Russia could export the arms from new arms factories and keep people employed. This option is difficult as many African countries buy on credit and Asian other buyers may seek the latest technologies, others face financial difficulties or like India are diversifying and shifting to local manufacturing. ...

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Former Chinese foreign minister Wang Yi (2012 -2022) and its senior official makes these comments at the Munich Security Conference on US shooting down Chinese spy balloons. Yi says it was "absurd and hysterical." He says China is going to put out a paper on Ukraine that would underline the principles of territorial integrity and sovereignty. For China its crucial relations with Germany, trade with Europe are critical for its economy and growth. Germany's coalition government itself is divided on investment by China in the port of Hamburg, with the Greens not supporting that decision by chancellor Scholz. The issue for Biden is not simply the balloons. As The Guardian points out the US is pushing for China to withdraw or at least make conditional its support of Russia in its invasion of Ukraine that is a clear violation of the UN Charter that China says it supports. 

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Alison Smale describes a perception of German preference for "order" and "peace and quiet" in its response to the Ukraine crisis. He describes how Germans responded first to the news of NSA surveillance of Angela Merkel's phone, and then to the crisis in Ukraine. German public opinion has preferred a policy of diplomacy and engagement with Russia- letting Russia vent its feelings about NATO enlargement to its borders something American respected diplomat Kennan suggested avoiding- to resolve the crisis without disturbing the economic relationships built up over many decades and different administrations, from the time of Willy Brandt and Kohl to the present day.

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U.S. president Obama's chief of staff and former deputy national security advisor, Denis McDonough, meets with Peter Altmaier, Chancellor Merkel's chief of staff, and Gunter Heiss, head of Directorate-General 6 of Germany's Federal Intelligence Service in July 2014. The meeting was part of an effort to improve U.S.-German relations following the problems created by NSA spying in Germany. This meeting took place following the shooting of a Malaysian airline flight over Ukraine and the call for stronger western sanctions on Russia. U.S. president Obama sought to convey to Merkel the importance he placed on German-U.S. relations after Obama failed to make a serious effort to soothe tensions with Germany over spying revelations.

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The US is supplying Europe with liquified natural gas so that Europe can cope with a threatened cutoff or slowdown from Russian gas supplies. Much of the LNG that normally would go to Japan, Taiwan and other Asian countries is being diverted to Europe with a threat of Russian invasion of Ukraine. The US, is with Qatar and Australia a major LNG producer. This WSJ report shows LNG tankers entering and unloading at the Gate Terminal in Netherlands, a key point for sending liquified natural gas to Germany. Italy has its own entry terminals for LNG tankers. This will help Europe deal with its winter needs, even though things will be very tight if a Russian cutoff happens. One aspect of this supply of LNG will cause economic hardship in Germany and this is the price of LNG gas which has soared to five times when delivered in the Netherlands compared to US prices. LNG in gas forms shrinks to one six hundredth its size in volume as a liquid, making it possible for one LNG tanker that is about the size of 4 football fields to hold enough gas to power 70,000 homes for one year. Most LNG tankers can be unloaded in one day and go straight into port because some LNG is lost as ships wait. Most of the bottlenecks are further upstream in the reconversion into gas of the LNG liquid and in connecting to the gas grid.  ...

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German chancellor Scholz is making a 2 day trip to the US to meet president Biden. There is a surge in discussion on looking for a way out of the Ukraine war after meeting between US's Blinken and Russia's Lavrov at the G20 meeting in India. India is pushing for both sides to engage in talks to end the war. Brazil has also offered to mediate to bring an end to the conflict. 

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German industry is finally accepting the government's shift out of cheap Russian energy. Robert Habeck Economy Minister proposed a plan for putting a cap on domestic heating and a gas incentivizing scheme for industry. Under the scheme industrial customers who reduce gas consumption get paid by the government. The head of the Federation of German Industries Siegfried Russwurm, says every kilowatt hour counts, we need to reduce gas consumption as much as possible." The use of coal is temporary, the renewable energy goals are more urgent than ever and phase out of coal by 2030 will still take place says VDMA,  the German mechanical Engineering association.

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Ukraine is running out of parts for its old Russian T-72 tanks and Ukraine is in need of new western tanks to defend itself, says this report in DW.com. German reporters give this report from a tank unit in the Bakhmut and Soledar area in eastern Ukraine. Ukraine withdrew from Soledar.

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Gazprom's Chairman, Alexei Miller, says Ukraine owes $1.89 billion for gas deliveries after missing a March 7 payment deadline for Feb. deliveries. Transit shipments through Ukraine to Europe will continue. Russia provides 30% of Europe's gas needs and 15% of all Europe's gas demand goes through Ukraine, particularly Germany, Italy and Britain's utility companies. Europe's dependence on Russian supplies of natural gas gives a new twist to the crisis in Ukraine. Russia also needs the revenue from the natural gas exports to finance its own development as growth has slowed down sharply in 2013-2014, making this a situation where both sides in Europe need to resolve the standoff in Ukraine wihout escalation.

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Norbert Rottgen, chairman of the foreign affairs committee of the German parliament is realistic about the prospects of Minsk 2, after the failure of Minsk 1, which was negotiated in the Belarus capital Minsk in September 2014. The Russians have the upper hand militarily and the demarcation line moves further to the west in current negotiations in Minsk. The breakdown in Minsk 1 comes as Putin continues to support the separatists in Ukraine, who declared a Donestsk People's Republic with elections held recently, and have now taken territory to make their positions in eastern Ukraine more defensible. The war could end there with a de facto split of eastern Ukraine on the Russian side, or lead to further guessing of Russian president Putin's intentions if the conflict continues. Italy's foreign minister Paolo Gentiloni, points out that arms aid by the U.S. to Ukraine would only fail as Russia could respond, and it gives the Russian president the added advantage of the narrative that the U.S. and NATO are a threat to Russia at its borders. All sides say they respect the territorial sovereignty of Ukraine, but the fact remains that Ukraine is deeply divided with the eastern region bordering Russia having close ties to Russia, and the western region near Poland having strong ties to a newly emergent EU that includes much of Eastern Europe. Prudence and restraint is needed on all sides for a settlement. ...

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The task of getting 20 million tons of foodgrains in Ukrainian silos out of Ukraine is being taken up by the European Union. Ms. Leyen of the EU has emphasized the importance of this mission for poor countries. About 50 countries depend on Ukraine and Russia for over 30% of imports of foodgrains says the WSJ. One way supported in this WSJ Editorial Board opinion is to use naval ships to escort ships carrying grain out of Black Sea ports. This requires Turkey's support and has to be done as a humanitarian move with ships from many countries. Rail would be an option yet Ukraine and the rest of Europe use different railway infrastructure. Steps need to be taken to do this quickly to overcome the rail issues and also use motor transport. The port of Odessa has been mined by Ukraine to prevent a Russian naval assault showing that there are obstacles along the way to be met by land or by sea. Starting now would be the best way to approach this. Both the Eu and the US should work together on this. The baby food crisis in the US was tackled by special flights from Germany. This shows that many options can be combined and problems tackled to get food grains out. What seems insurmountable can be tackled with action taken early, learning along the way. The Berlin Airlift did this in 1947 with another Soviet blockade. This would also lift spirits throughout the world. ...

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A view of the Russian position as seen by German and American foreign policy experts that says that Russia's action in Georgia stems from the background of the last 20 years when Russia felt humiliated by western countries. Putin personally has felt this way as well as his personal dislike for Georgian President Saakashvili who draws a particularly visceral reaction from Putin. The NATO intervention in Serbia and Kosovo has also rubbed into Russia and Putin's sentiments and the reaction can be seen in Georgia. If NATO could intervene on behalf of Kosovo's ethnic Albanians inside Serbia, then Russia could intervene on behalf of ethnic Russians in South Ossetia inside Georgia. This line of thinking gives a different perspective from efforts to see this as a rewrite of a new Cold War atmosphere.

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White provides critical insights to understand Ukraine's situation caught up between Germany and the EU on one side and Russia with its aspirations under Putin to bring together former Soviet bloc states. Russia is a critical energy provider for Ukraine and trade relations. The eastern part of Ukraine around Donetsk has favorable opinion about Russia. The western part of Ukraine looks for closer ties to the EU and favors joining the European Union. It was president Yakunovych's reversal of course in turning down an agreement for closer ties to the EU that led to the current crisis and street protests. Putin offered Ukraine $15 billion in loans to sign a trade and economic agreement with Russia. The language used by Russian prime minister Medvedev that Ukraine should not become "like a doormat that people wipe their feet on," shows the Putin administration's views. This was only a day before Ukraine's parliament voted to set a date for new elections, freed former prime minister Tymoshenko and began talks for opposition leaders to be part of a transitional government....

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VW opens a new plant in Russia to manufacture 150,000 cars in 2009. Russian sales of foreign brands went up by 65% in 2008. The sales there are 2.4 million vehicles. With the number of cars at 180 per 1000 people, compared to 552 in Germany, most cars on the road already 10 years old, and with a population 1.7 times the size of Germany's, the potential for sales in Russia are significant. VW plans to produce the Octavia and Passat models , later adding Polo and Skoda Fabia models. VW hopes to increase sales in Russia from 3.2% to 10% by 2010, to catchup wth Toyota which also opened a new factory near St Petersburg. In 2008 Toyota sold more than twice the number of cars sold by VW. See VW's progress in other areas in the link to Skoda. The Octavia which it will bring to the Russian market is a success story from VW's Skoda operations in Czech Republic.This is a lower cost vehicle compared with VW's other models. VW is one of the fastest growing brands in Europe, ahead of Toyota, and it does very well in Poland and in Eastern Europe. It is the leading brand in China, ahead of GM. ...

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The expected EU turnout in 2024 is at a high of 68 percent. Over the years since its formation the early enthusiasm and vision was replaced by dry directives issued by bureaucrats in Brussels leading to lethargy. 1979's 62 percent voter turnout contrasts with 2014's 48% voter turnout. Boris Johnson, Donald Trump and Vladimir Putin have each in their way created new surge of interest in EU and the parliament in Strasbourg, says Caroline Gruyter from her conversations in France, Switzerland, Netherlands, Czech Republic. Today 74% of EU citizens polled say they support the European Union. Similar numbers even in the UK as Labor party is about to come back in a big way.  What happened? The war in Ukraine, Russia and NATO, US and NATO, the UK drift back to EU in sentiment, Italy's conservative parties called Right wing are supporting the EU under Meloni. Another reason for the sense of EU coming back to life comes from my visit to Germany, where after decades of disinvestment in infrastructure the rail station in Frankfurt is being rebuilt and new infrastructure is being built all over the city. Posters all over Frankfurt for EU parliament elections show a new spirit for Respect for workers, working families, and a sense that the FDP, SPD, CDU and Greens can take the decisions to give new vigor to the German democratic process.    ...

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Now that the euro dollar parity is reached what happens next. This report in WSJ shows there is room for more downside because of the weaker European economy. It says Europe had less of the covid payments to lower income groups and smaller payments than in the US. As a result this shows up in consumer spending. The parity with the dollar does not reflect the event of a shutoff of Russian supplies of gas to Germany. If this happens it will impact the euro further.

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Iraq is an artifical entity, an artificial state created by the British out of the defeated and disintegrated Ottoman Empire. Created from 3 Ottoman Arab provinces- provinces or vilayets of Mosul province which was mostly Sunni, Baghdad province, the city of Baghdad  mostly Sunni and rural areas Shia, and Basra in the south mostly Shia from tribes who converted to Shia Islam extending the reach of Shia religious sites such as Karbala. Note that the Sunni Arabs were closer to the power structures of the Ottoman Empire than Shia in the 18th and 19th century. As a result post war Iraq in 1950's was dominated by Sunni elites and the British imposed Faisal 1 monarchy of 1921 was thrown out by Sunni elites in the army in 1958 by Karim Kassem, followed by the emergence of Saddam Hussein from Pan Arab Baath socialist ideologies of that period.  After the US wars in Iraq and Iraq- Iran war, Iran mobilized Shia into popular militias. In 2026 Iraq is essentially several ministates pulled together in Baghdad, with Shia, Sunni and Kurdish ministates formed into the governing structure, and everyone praying for no outside interference to pull it all apart and maintain a fragile peace. While the British got Iraq Mandate from League of Nations in 1921 French got Syria provinces of the Ottoman Empire. In fact Sykes and Picot are the British and French diplomats who created artificial states of Iraq and Syria to suit their interests in the region for oil and for controlling Suez and territories in India, Indochina, Hong Kong, parts of coastal China (Shanghai). Why is this important? It is important because at the time Britian dealt with weak Sunni populations that were controlled through monarchs they put in place, and the British and French industrial power had no rivals. Today the Sunnis are mobilized and the Shia have with Iranian support mobilized also, and sectarian wars have torn the place apart for 40 years. America's founding fathers and first president George Washington, would if here today consider this the one place US would have nothing to do with in terms of wars and bases. On oil George Washington would advise America to find alternative sources than get dragged into useless sectarian wars and lose the battle for reindustrialization, after America's elites and their economists have essentially deindustrialized America. It is appropriate for the US president to take action only on grounds of not letting the place fall into regimes with ballistic missiles and nuclear weapons that could reach US and Europe. And for that China and Russia, India and Brazil, Germany and France should also do their part and fulfill responsibilities. As for Britain and France it is appropriate for the US president to say to the posturing in Europe and ambivalent posiions, "Go, get you own oil in the Hormuz," as the US is self sufficient in oil and does not need Iranian or Iraqi oil. It is also appropriate knowing that this Iraq and Syria were created by Sykes and Picot and the British and French to build and sustain their Empires that no longer exist because Turkey and India, and China, through the effort of Gandhi and Ataturk, Sun-Yat Sen and Mao, Brazil also, are now strong independent nations. The message is- if Germany can do it to get only 6% of energy imports from Hormuz straits, so can China and Japan. China and Japan get 90% of their imports from the Hormuz straits and there is no reason why China and Japan, Britain, India need to be so dependent on a region where disruptions have happened again and again for 40 years. If they do not want to change they can assume the responsibilities of keeping Hormuz Straits on their own. ...

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Is Norway endorsing the position of a former president of the US to "Drill, Baby Drill.?" It would cost upwards of 1 trillion dollars to fix US inaction on climate change to 2028. Norway is drilling like crazy to help Germany tackle the cutoff from Russian oil and gas supplies. It is also pursuing climate change action and green energy. The result is some confusion about where it is heading. The Guardian comments on this position taken by Norway. It can only be seen as oil and gas meeting a transition period's needs, yet with the severity of cliamte change events in the form of fires and floods in the world in 2024, is this a tenable position? Norwegians will say their cleaner fossil fuel production takes the place of dirty coal plants in Europe. How could Germany manage without Russian oil and gas without Norwegian supplies they ask. Others say Norway gets a quarter of its GDP from oil and gas. It is at the same time the country that is way ahead in renewables, most of its grid runs on renewables. And yet it has cut greenhouse gas emissions only by 11% since 1990 4 times less than Germany. Norway will come up for more criticism considering that its push on fossil fuels in 2023-24 is reducing investment for shift to a fossil free world. It is not an issue that can be talked away or not confronted head on as it is the harbringer of something worse- doing nothing for 4 years to 2028 that is proposed on the back of stuff that is being done by Norway- a US presidential candidate promising to relegate climate change action to zero by denying it exists and by saying "Drill, Baby Drill," at the RNC Convention in Milwaukee. ...

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Speaking at a banking conference, advisors including the head of Russia's largest retail bank Sberbank, German Gref, minister of the economy, Aleksei Ulyukayev, and head of the central bank , Elvira Nabiullina, express deep concern about the economic prospects in 2015. Foreign investment is down from about $90 billion in the 1st quarter of 2013 to a negligible amount in the 3rd quarter of 2014. Capital outflows following the Ukraine crisis are estimated at about $110 billion by former finance minister Alexsei Kudrin. The ruble dropped to its lowest level against the dollar since the 1990's. And the sharp decline in oil prices with Brent crude at about $90 is another risk factor as 50% of the budget comes from oil and gas revenues and 60% of exports are still oil and gas, with no serious or effective effort to diversify under the Putin adminstration. Putin told the banking conference that a deficit free budget and reserves of $460 billion are "fundamental factors supporting stability." Advisors and leading bankers remain unconvinced. The problem is that even at the beginning of 2014 before the Ukraine crisis foreign investment had slowed to a trickle, similiar to what India experienced in 2013. The central bank head says her effort to open up the bond markets in Russia to foreign investors is now in vain because there are few foreign investors. Instead of reversing the situation as is happening in India with the new Modi administration, policy under Putin and the Ukraine conflict may have scared investors away with the increasing western sanctions and stagflation (estimated 8% inflation and about 0.5% growth in 2014). The head of Sberbank Mr. Gref told the banking conference- "The Soviet Union broke apart because of the mind boggling incompetence of the Soviet leadership. They did not respect the laws of economic development." The problem with sovereign reserves is that it can protect a sovereign currency such the Russian ruble or the Brazilian cruzeiro to some extent, but today's vibrant economies need foreign investment and foreign technology for growth. Even a country such as China with a trillion dollars in reserves needs the reserves in its special case because of its billion plus aging population, and is no exception to these laws of economic development about the need for foreign technology and foreign investment. ...

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It is not commonly realized how much of an economic collapse Russia suffered as a result of Mr. Gorbachev's failure to plan a smooth transition out of communism- a 40% drop in  drop in GDP, a peak of 2000% increase in inflation, and drop in life expectancy from 69 years to 65. With lack of safeguards in place for vulnerable sectors such as the elderly and displaced workers, no setup for securing the rule of law, no periods of experimentation with market economy in parts of the country as China had done. Krugman says it was worse than the Great Depression in the US in the 1930's, a particularly traumatic period Americans remember, because the collapse was deeper, and the rogue elements took over parts of the economy leading to a breakdown of the rule of law. One hears too much about the fall of the Berlin Wall, great for West Germany and less about the trauma this was for elderly and vulnerable workers in  East Germany, and for Russia as a whole. Here Paul Krugman describes what happened and how this brought to power another group under Putin. For Putin and many Russians these are the memories that lead them to say it was the "greatest catastrophe" of the twentieth century. Krugman has put this in graphs showing the economic data from multiple sources, including the World Bank and US Bureau of Economic Analysis. The graphs show the Great Depression in the US was about loss of 27% of GDP, inflation was not severe and FDR ensured both rule of law and hope with his election to tackle the problems, including America's vast resources. ...

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Russia's exports to the USA only 3% of total exports, 21% to China, 19% to India, and 16% to Brazil. But does this suggest the Russian economy is insulated It exports natural gas to Germany, its largest trading partner. Are oil exports from Russia to the US so insignificant that they constute only 3% of total exports? This needs to be verified. Russia built the $478 billion reserves based on oil exports. If prices drop this will affect future increases in these reserves and affect foreign investment in the Russian economy, investment it badly needs to modernize. Russia is less affected relative o other countries, but its stock markets dropped 20% after the global markets reacted in cascading effect in January 2008. There is some insulation but not really that much and the case is overstated. Russia is starting out with a smaller manufacturing economy. It badly needs to build this up and the effects of a global slowdown will mean reduced investment than would otherwise occur.

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Chancellor Merkel's now widely quoted words were made in Munich on May 27, 2017, after a NATO summit meeting in Brussels and a Group of 7 meeting in Italy, in which she was disconcerted by U.S. president Trump's positions on NATO, Russia, climate change, and trade. These words "the times in which we could rely fully on others - they are somewhat over." Merkel added "This is what I experienced in the last few days." After the election of Emmanuel Macron in France, Merkel expressed great relief at the outcome of the French election with Macron winning about two thirds of the vote, setting the stage for the election in Germany after several months of difficult watching and waiting. Now there is new confidence in Germany shaping its own future, with France and the rest of the European Union without Britain. Merkel says she "experienced this" meaning that she had undergone a transformation in these few months, and visibly in the last few days. She was also sending a message to Germans and people of the European Union - "we have to know that we must fight for our future on our own, for our destiny as Europeans." This also complements tactically to form the approach of Germany and France at the leadership of the EU, as French president Macron said at the end of the Group of 7 conference that multilateralism was intact, and the U.S. and EU shared many common goals.   ...

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Kramer, McIntire, and Meier of the NYT, provides this indepth account of Trump top campaign aide Paul Manafort's consulting work in Ukraine for Ukraine's president Yakunovych, ousted after protests in Kiev. Ukraine's newly formed National Anti-Corruption Bureau is looking into corruption in Ukraine's system, including corruption in the Yakunovych years. It is this corruption that has hurt Ukraine and other Eastern European countries in their move towards becoming properly functioning democratic states inside the EU or neighboring the EU. Much aid has been sent to Ukraine by Germany and the EU to help Ukraine develop a democratic and economic framework free of cronyism and corruption. Manafort's involvement with interests in Ukraine and Russia during a period of long and persistent protests in Kiev, followed by the ouster of Yakunovych and the war with Russia, when the policy of the U.S. and Europe was to protect Eastern European  member states of the European Union including Poland and the Baltic States, and reach some form of settlement in Ukraine, are controversial. Andrew Kramer of the NYT describes Manafort's consulting company's activities in Ukraine during this tense period, and how it may have have been counterproductive to the constructive efforts of the U.S. and the European Union. ...