Of course it’s all about oil… Putin, Trump, and the campaign to keep the world addicted to fossil fuels

I’ve been struggling since the election to catch even a glimpse of the big picture. Like many of you, despite my best intentions, I tend to get swept up in the horror of the day. I want to look dispassionately at all the moving pieces and see if I can maybe find some logic in it, some semblance of an overarching narrative that makes sense, but then Trump comes out, like he did not too long ago, saying that we need a new nuclear arms race, and I find myself running off on a tangent, writing letters to my elected officials, and trying, as best that I can, to understand all the ways in which this might lead to the untimely death of my family. And, as a result, I rarely find myself making bigger connections. The closest I came was a few weeks ago, when, for whatever reason, a bunch of pieces started falling into place for me about why Putin might have invested so heavily in the prospect of a Trump win. As you may recall, this high level narrative of mine had to do with a desire on the part of Putin to see renewables fail in favor of oil. Well, as I’ve got a little time on my hands tonight, I’ve decided to pick up where and left off and see where it might lead, in hopes that more pieces might start falling into place.

Before we speculate as to the role of oil in all of this, though, let’s go over the things that we know to be true. We know that the nation is divided, and that this was an incredibly tight race. We know that Clinton probably won the popular vote by close to 3 million ballots. [The current tally has her popular vote lead at 2,864,974.] And we know that Trump won the Electoral College thanks to just three states – Michigan, Wisconsin and Pennsylvania – where he won by just 10,704 votes, 22,748 votes, and 44,292 votes respectively. To put that in perspective, this means that, had just 77,744 people in those three states not voted for Trump, Clinton would be our President. [To give you a sense of just how infinitesimal this amount is, in Washtenaw County, Michigan alone, Clinton won by over 77,000 votes.] And we know, given how tight the race was, that even the smallest of factors may have contributed to the Trump victory.

As for what factors may have played a role, there are several. The fact that Obamacare premiums rose right before the election certainly didn’t help. And, as we discussed on the Saturday Six Pack just after the election with former Michigan Democratic Party Chair Mark Brewer, Clinton, it would appear, ignored warning signs in the Midwest, choosing not to visit a single college campus, union hall, or Arab American community center in Michigan, and not so much as stepping foot in Wisconsin once. With all of that said, though, Clinton, as we know now, also faced formidable enemies both foreign and domestic.

Just days before the election, FBI Directory Jame Comey made it public that he’d be reopening an investigation into Clinton’s handling of classified emails, essentially stopping any momentum that was building on the Clinton side. And, as if this weren’t enough, we also know that, in the unanimous opinion of our 17 U.S. intelligence agencies, Russian operatives both disseminated false news stories and illegally hacked into the email accounts of several DNC employees and Clinton campaign staffers, sharing what they found by way of Wikileaks, in hopes of influencing the outcome of the election.

For those of you who are interested, the U.S. intelligence report, which was just declassified yesterday, says the following concerning Putin’s involvement in the election: “Russia’s goals were to undermine public faith in the U.S. democratic process, denigrate Secretary [Hillary] Clinton, and harm her electability and potential presidency. We further assess Putin and the Russian Government developed a clear preference for President-elect Trump.”

And it’s this question of why Russia would back Trump that’s most perplexed me over the past few months, since it became known that they’d been working on Trump’s behalf… I mean, I have a fairly good sense as to why there’s bad blood for the Clintons inside the FBI, but I’ve struggled to understand why it is that the Russians would prefer someone like Trump, who, at least on the surface, seems to be completely unpredictable, to be the President of the United States. [See the link above about how he’d like to bring back the nuclear arms race, which, as you might recall, pretty much bankrupted the Soviet Union.] And that’s what I hope to get at today… Why Russia developed what our intelligence officers refer to as a “clear preference” for Trump.

I should start out by saying that I have little doubt that, when all of this first started, Putin din’t think Trump stood much of a chance against the Clinton machine, which had been gearing up for this race since 2008. I’m sure that Putin, who is no fan of the Clintons, took a great deal of pleasure in sharing false news stories about the Democratic candidate online, and driving wedges between various factions of the Democratic party. [As you’ll recall, most of emails they chose to leak were selected because they validated the perception on the left that Senator Bernie Sanders never had chance against Clinton, given the Party’s alegiance to the former Secretary of State, and the fact that Debbie Wasserman Schultz, the head of the Party, had been Clinton’s campaign director in 2008.] I suspect, as others have suggested, that Putin’s primary intent, at least at first, was just to sow discord in the United States and set the groundwork for an ineffective Clinton administration, besieged by false stories and hamstrung by Republican investigations. But, as the campaign wore on, I imagine the Russians started ramping up their activities in response to candidate Trump’s favorable showings. [Let’s remember that it was apparently Paul Manafort, who has extensive ties to Russia, who told Trump to focus on Michigan in the days prior to the election. More on Manafort, Trump’s initial campaign director, in just a second.]

Trump was a known entity to the Russians.

While, as I said before, Trump can come off as unpredictable to us, the Russians, I’m sure, felt as though they had a pretty decent handle on him. After all, Trump’s campaign manager, Paul Manafort, had worked for many years for Viktor Yanukovych, the Putin-backed former president of Ukraine. And, of course, there are the many business connections that investigative reporters have already uncovered, no thanks to Trump, who still hasn’t released his tax returns.

Following are three points from Talking Points Memo about the financial connections between Trump and Russian oligarchs with ties to Putin.

1. All the other discussions of Trump’s finances aside, his debt load has grown dramatically over the last year, from $350 million to $630 million. This is in just one year while his liquid assets have also decreased. Trump has been blackballed by all major US banks.

2. Post-bankruptcy Trump has been highly reliant on money from Russia, most of which has over the years become increasingly concentrated among oligarchs and sub-garchs close to Vladimir Putin.

3. One example of this is the Trump Soho development in Manhattan, one of Trump’s largest recent endeavors. The project was the hit with a series of lawsuits in response to some typically Trumpian efforts to defraud investors by making fraudulent claims about the financial health of the project. Emerging out of that litigation however was news about secret financing for the project from Russia and Kazakhstan. Most attention about the project has focused on the presence of a twice imprisoned Russian immigrant with extensive ties to the Russian criminal underworld.

Relevant to the second point, here’s an interesting quote from Trump’s son, Donald Jr., as reported by the Washington Post earlier this year. “Russians make up a pretty disproportionate cross-section of a lot of our assets… We see a lot of money pouring in from Russia.” [This, according to the article, was said at a 2008 real estate conference.] And Trump himself said in a 2007 deposition, “Russia is one of the hottest places in the world for investment.”

So, having been turned away by every bank in the United States, where he’s known to be a crook and swindler, Trump apparently cozied up to Russians like Aras Agalarov, who was among those in 2013 to pony up a reported $14 million to bring Trump’s Miss Universe pageant to Moscow. [It’s been reported that Agalarov and Trump have also talked about building a Trump Tower in Moscow.]

And it’s not just that Russia’s oligarchs and the Trump organization are deeply intertwined financially. Trump’s worldview, either by coincidence, or thanks to something more nefarious, aligns with Putin’s.

In an article posted not too long ago by The Atlantic’s titled It’s Official: Hillary Clinton Is Running Against Vladimir Putin, Jeffrey Goldberg put’s it this way. “I am not suggesting that Donald Trump is employed by Putin… I am arguing that Trump’s understanding of America’s role in the world aligns with Russia’s geostrategic interests; that his critique of American democracy is in accord with the Kremlin’s critique of American democracy; and that he shares numerous ideological and dispositional proclivities with Putin—for one thing, an obsession with the sort of ‘strength’ often associated with dictators. Trump is making it clear that, as president, he would allow Russia to advance its hegemonic interests across Europe and the Middle East. His election would immediately trigger a wave of global instability—much worse than anything we are seeing today—because America’s allies understand that Trump would likely dismantle the post-World War II U.S.-created international order. Many of these countries, feeling abandoned, would likely pursue nuclear weapons programs on their own, leading to a nightmare of proliferation.”

And, as we witnessed during the campaign, Trump’s platform increasingly mirrored Putin’s over time. As you may recall, Trump suggested to the New York Times, for instance, that we may have to reduce our military presence in the world. He even went so far as to say that, if he were elected President, he may not automatically honor the security guarantees we have with other NATO nations. “He even called into question whether, as president, he would automatically extend the security guarantees that give the 28 members of NATO the assurance that the full force of the United States military has their back,” wrote the article’s authors. “For example, asked about Russia’s threatening activities that have unnerved the small Baltic States that are the most recent entrants into NATO, Mr. Trump said that if Russia attacked them, he would decide whether to come to their aid only after reviewing whether those nations ‘have fulfilled their obligations to us’.” [Putin hates NATO, and the fact that it’s expanding. He has said, the U.S. and Nato want to “sit on the throne in Europe alone”. He has also threatened to move Russian troops closer to Finland if they join NATO.]

Then, just before the Republican National Convention, the Republican party, as you may also recall, released their new platform for 2016. The New York Times called it “the most extreme Republican platform in memory.” Among other things, according to the Times, this new platform outlined positions “making no exceptions for rape or women’s health in cases of abortion; requiring the Bible to be taught in public high schools; selling coal as a ‘clean’ energy source; demanding a return of federal lands to the states; insisting that legislators use religion as a guide in lawmaking; appointing ‘family values’ judges; barring female soldiers from combat; and rejecting the need for stronger gun controls — despite the mass shootings afflicting the nation every week.” This apparently came to pass largely because Donald Trump, who would go on stage just a few days later to accept the party’s nomination for President, didn’t push back. With one notable exception, Trump and his team accepted everything that was suggested without debate. And that one exception, as you can probably guess, involved Russia.

According to Talking Points Memo, “The Trump Camp was totally indifferent to the platform. So party activists were able to write one of the most conservative platforms in history. Not with Trump’s backing but because he simply didn’t care. With one big exception: Trump’s team mobilized the nominee’s traditional mix of cajoling and strong-arming on one point: changing the party platform on assistance to Ukraine against Russian military operations in eastern Ukraine.” [More on the Ukraine in a moment.] Interesting, to say the least.

And that happened, as I said, just prior to the Republican National Convention, at a time when Paul Manafort was still Trumps campaign director, a position he would hold until August, when it came out in the press that Manafort may have illegally received $12.7 million in off-the-books funds from Viktor Yanukovych’s pro-Russian political party in the Ukraine.

And having a friend in the White House would obviously be important for Russia, a once great world power that, by all objective standards, had fallen into decline over the past several decades.

Since the Soviet Union lost its war in Afghanistan in ’89, things just haven’t been the same for the former superpower. And, with the fall of the USSR in ’91, the once powerful country’s influence on the world stage has been relatively nonexistent. Not only has Russia lost its power, but the west had been creeping closer, with Baltic states joining NATO. And, in 2014, after just four years in power, Putin’s man in the Ukraine, Viktor Yanukovych, was forced to flee the country for southern Russia in order to avoid charges of high treason, a new pro-western regime came to power. [There is a warrant for Yanukovych’s arrest in Ukraine for the “mass killing of civilians.”]

And, while we’re talking about the Ukraine, here’s one more thing… If you have any question as to how dirty Russia is willing to play in order to maintain control over the region, it’s worth remembering that evidence would seem to indicate that they had a hand in poisoning Yanukovych’s pro-Western rival, Viktor Yushchenko, back in 2004.]

To put it simply, Russia, despite the bluster, has been failing under Putin. Here, from The Diplomat, is a clip a 2014 article titled “Russia is Doomed.” This section relates specifically to energy reserves – one of four “pillars of Russian power” the authors describe as “steadily declining.”

…Another source of modern Russian power has been its massive energy reserves. Indeed, high oil prices during the 1970s allowed the Soviet Union to flex its muscles abroad. However, as energy prices stabilized during the 1980s the artifice upon which the Soviet system began to crumble. Far from continuing to expand, the end of the decade saw the Soviet empire disintegrate, with Moscow powerless to stop it.

The so-called resurgence Russia has enjoyed since Putin first assumed power has also been built on high energy prices. And like the Soviet leaders before him, Putin has squandered the temporary respite provided by high energy prices instead of using it to reinvest in the country and its people. As the European Bank of Reconstruction and Development noted gloomily in December 2012, “Not only are Russian exports highly concentrated in natural resources, this concentration has increased over time: the shares of oil, gas and other minerals in Russia’s exports are higher today than they were 15 years ago.”

It went on to reflect: “In 2012 Russia remains highly dependent on its natural resources. Oil and gas now account for nearly 70 percent of total goods exports…. Oil and gas revenues also contribute around half of the federal budget. The non-oil fiscal deficit has averaged more than 11 per cent of GDP since 2009, while the oil price consistent with a balanced budget is now in the region of US$115 per barrel and rising.”

The problem with the Russian Federation’s economic model, much like that of the Soviet Union’s before it, is that it is only sustainable so long as energy prices remain artificially high. But, of course, energy prices are almost certainly going to decline over the coming years as a result of greater energy efficiency in the West, slowing growth in the East, and greater supply as a result of the energy revolutions being enjoyed in the Western Hemisphere and elsewhere around the world. And as goes the price of oil so goes the Russian state…

Be sure to go back and read that last paragraph, in case you missed it… The Russian economic model is only sustainable “so long as energy prices remain artificially high.” And, more importantly, “energy prices are almost certainly going to decline over the coming years as a result of greater energy efficiency in the West.” So, as the world migrates to renewables, the Russian state, having not diversified, is going to suffer.

In March 2014, Republican Senator Lindsey Graham summed it up rather well. Russia, he said, is merely “an oil and gas company masquerading as a country.” Some took offense at the comment. From what I’ve seen, though, most saw some truth in it. The Carnegie organization, for instance, after saying that Graham’s assertion came across as absurd at first blush, essentially acquiesced, detailing in a 2014 report just how “ heavily dependent on oil” Russia’s economy was.

So, as solar and wind are beginning to outperform fossil fuels, we have Russia that has essentially put all of its eggs in the “oil and gas” basket, refusing to either invest in renewables, or, for that matter, diversify their economy in any way. Instead, they continue, as Sarah Palin would say, to “drill, baby, drill,” ignoring the reality of global climate change and the fact that wind and solar are growing more competitive by the day.

OK, so here’s where things get interesting… The Russians helped Trump get elected, and Trump then promptly named Exxon Mobil CEO Rex Tillerson, a close collaborator with the Russians, to be his Secretary of State… Here, from CNN, is a clip about Tillerson’s deep economic ties to Russia.

…In 2013, Vladimir Putin awarded ExxonMobil CEO Rex Tillerson the Order of Friendship, one of the highest honors Russia gives to foreign citizens…

The 64-year-old Tillerson, a lifetime Exxon employee, came up through the ranks by managing the company’s Russia account…

In fact, his close relationship with Russia is one of the major reasons Tillerson was selected to succeed Lee Raymond as CEO of Exxon (XOM) in 2006, according to Steve Coll’s book “Private Empire: ExxonMobil and American Power.”

Once he became CEO, Exxon bet billions on Russia’s vast but notoriously-elusive oil resources through a bold partnership with Russian oil giant Rosneft. Putin himself attended the 2011 signing ceremony for the deal with Rosneft, which is majority owned by Moscow.

Russia has already indicated it would welcome Tillerson being named America’s top diplomat.

“Trump continues to amaze,” Alexey Pushkov, the head of the foreign affairs committee in the lower house of Russian parliament, said on Twitter. He said that selecting Tillerson would be a “sensation” and noted he has “a lot of experience working with Russia”…

Here are Tillerson and Putin together, sharing a laugh. Judging by how happy they look, I’d say it was taken either since Trump won, or prior to 2014, when sanctions levied by the Obama administration killed a $500 billion dollar oil joint exploration venture in the Arctic between Russia and Exxon.

And that’s what I think all of this is really about, when you strip everything else away. This is about not just killing NATO, and allowing Russia to re-exert its dominance in Europe, but ensuring that oil remain our global currency.

Obama, to put it simply, was bad for big oil.

Obama killed a $500 billion dollar oil project in the Artic, so Putin invested in a candidate who would not only give him what he wanted in the Arctic, but also effectively stop research into alternative energy, global climate change, etc. [Relevant recent headlines: “Trump just proposed ending all federal clean energy development,” “Trump transition team for Energy Department seeks names of employees involved in climate meetings“] It’s difficult to imagine that Putin could have dreamed of a better scenario. Not only will Exxon be running the State Department, but the United States – the world’s largest market – will remain on the oil teat for the foreseeable future.

For what it’s worth, though, Obama seems to be fighting back, at least to the extent that he’s able to. Last week, the White House announced a joint resolution with Canada to freeze offshore oil and gas leasing in the Arctic. What’s more, the apparently added language that would make the agreement reviewable every five years on the basis of an assessment to be done by marine and climate scientists. On the face of it, it was done to protect the marine species and ecological resources of the region, which cover some 125 million acres spread between the Chukchi Sea and Beaufort Sea, but, one would imagine, it could also complicate any plans that Trump and Putin might have in the region.

We’ll have to see how it all plays out, but, if I were you, I’d pay special attention to Exxon and the Arctic over the next four years.