I CAME close on Tuesday morning to throwing my radio at the wall. The once informative BBC Today programme – I was a fan of the late Brian Redhead – had reached a new low.
I listened incredulously as one of the current Today presenters and some Beeb correspondent in Moscow were bemoaning the failure of the Russian media to lead on the collapse of the rouble. Instead, the top story in Moscow was a Russian military exercise in someplace called Kaliningrad. The Today duo joked about a subservient Russian media playing down bad economic news while leading on a ridiculous military parade.
Fact: Kaliningrad, previously the Prussian Baltic city of Koningsberg, is an enclave lying entirely within the borders of the European Union. Fact: the Kremlin was not parading a few tanks as a photo opportunity. It was deploying for the first time behind Nato lines units equipped with the nuclear-capable Iskander ballistic missile system. I’d say that was a top news story, myself. They certainly think so in Poland, where it was on the front-page of the morning papers: “Russia Aims at Poland”.
The crisis in Russia’s economy and the deployment of nuclear missile systems in Kaliningrad are not unrelated. Russia and the West (including its dubious allies in the Middle East) are sleepwalking into a new Cold War. I take no political sides in this daft adventure. But the very fact the BBC’s flagship news programme can’t join the dots for those still abed in the UK is frankly shocking.
CONNECT WITH THE SCOTSMAN
• Subscribe to our daily newsletter (requires registration) and get the latest news, sport and business headlines delivered to your inbox every morning
Let’s untangle some of the knots. The Russians, even in the post-Soviet era, are seriously paranoid. But they have a justification – we keep invading them. Even during the 1950s, the RAF used to fly groups of Canberra bombers right across European Russia to take reconnaissance photographs. In the 1960s, big US B-47s flying out of English bases used to deliberately fly across western Russia – coming back with cannon shells holes from MiG fighters to prove it. The Russians never knew if those flights were mere provocations or a first strike designed to take out Moscow’s power to retaliate.
This fear lies behind president Vladimir Putin’s obsession with Nato trying to encircle Russian in the present period. Certainly, Poland and the Baltic states have a legitimate right to fear the embrace of the Russian Bear. Putin’s reckless annexation of both Chechnya (which had been given de facto independence) and Crimea shows such worries are justified. But it behoves sensible democrats to grasp the fact that the West is pushing Putin over the brink with no plan regarding the consequences.
This is where oil comes in. Putin’s Russia is an oil state dependent on fossil fuel exports for its economic survival. The Saudis are deliberately pumping more oil than the world needs, partly in order to punish Moscow and Tehran for keeping the Assad regime in Syria alive. With oil prices in freefall, foreign investors and Russian oligarchs are moving their money, collapsing a rouble already made shaky by Putin’s adventure in Ukraine. Russia’s central bank admits that $130 billion (£78bn) will flee the country this year – not including the stuff going out in private jets or diplomatic bags.
On top, the West has imposed economic sanctions on Russia, as a punishment for seizing Crimea and extending its suzerainty over eastern Ukraine. Actually, these sanctions are more limited than the US Republican ultras would like – the restraint comes from Berlin, which does not wish to burn its economic boats with Russia. Nevertheless, the net result is that western investment in Russia has been sealed off. Add in the oil price collapse and Russia’s economy is now a basket case.
That is not anything the West should crow about. For starters, the Russians are likely to default on their vast £450bn of debts owed to western banks and companies. In August, the Bank of International Settlements reported that UK banks had a £9.3bn debt exposure to Russia. At that point, RBS had the biggest exposure, circa £2.1bn. Another major headache for the West is that the collapse of the rouble is contagious. Panic in the markets is spreading to Brazil and other emerging economies. The end result could well be a fresh global economic downturn. Throw in Tuesday’s news that deflation is spreading to the UK, and George Osborne (or Ed Balls) can say goodbye to curing the UK deficit without a massive tax hike.
The western political response to this morass has been selfish, weak and dangerously short-sighted. On top of imposing sanctions on the weak Russian mono-economy, Nato has rushed to turn the Baltic into a vast military camp. The Pentagon has started to “pre-position” large numbers of Abrams tanks in Poland and outside Riga, just up the road from Kaliningrad. Nothing is more calculated to rile the Kremlin – hence the nuclear rockets being deployed in retaliation. The air forces of both sides are now engaged in a massive game of chicken over the Baltic which could easily end in a dogfight – or tragedy for a civilian airliner.
In the last Cold War, the folk in the Kremlin were ideologues with a long-term view that history was on their side. As a result, even the mercurial Nikita Khrushchev was willing to compromise with John Kennedy and take his missiles out of Cuba, rather than turn the world into cinders. Vladimir Putin is another matter. His hold on power, and of his former KGB cronies, is threatened by the collapse in oil prices. His guaranteed response – seen in Ukraine – is to play the ethnic nationalist card. As we saw with Slobodan Milosevic in Serbia, that way spells disaster for Europe.
Europe needs to stop the Americans playing John Wayne in the Baltic – no-one seriously thinks Russia is going to invade Sweden. It needs to defuse Russian paranoia by offering new security guarantees, including an end to the expansion of Nato eastwards.
Meanwhile, the White House has to make it plain to the Saudis that sabotaging the global economy is in nobody’s interests.
SCOTSMAN TABLET AND IPHONE APPS