For those of you who see a renewed Cold War in Vladimir Putin’s annexation of the Crimean region of Ukraine, we direct you to today’s op-ed in the Washington Post, authored by former U.S. senator Sam Nunn and his Republican partner, former secretary of state George Shultz.
The key to Russia’s weakness, the pair states, is its strength: Natural gas. A few paragraphs:
[T]hese assets are also potential liabilities. The Russian economy depends on these trading and financial arrangements and on income from oil and gas sales that are now taking place at historically high prices. Moreover, Russia has a demographic catastrophe looming in its low fertility and astonishingly low longevity rates for men, including men of working age.
Many young Russians are emigrating. There is an open rebellion in the Caucasus. Russia shares a long border with China, with hardly anyone and large resources on one side and a lot of people on the other. Putin also has a restive population, as shown in an odd way by the arrest of members of the band Pussy Riot who sang songs of dissent on street corners.
Nunn and Shultz recommend that the United States ramp up its exports of oil and natural gas to Europe – which might raise prices here, but might also also preserve the strength of European markets for U.S. businesses.