1/ A hot war, a financial war, & nuclear M.A.D...
A question to zoom out: Did high energy prices embolden Putin? Are the commodities markets responsible for Russia’s invasion of Ukraine? @rupert_russell’s timely new book 'Price Wars' says: YES.
penguinrandomhouse.com/books/622647/p…
2/ Moscow’s military interventions have come at times of historically high oil prices. And right now, energy prices are approaching triple digits for the second time in a decade. Previous highs:
1979 - Afghanistan invasion
2008 - Georgia invasion
2014 - Ukraine "
2022 - Ukraine "
3/ The Oil price - Conflict relationship is not unique to Russia. Russell draws on @cullenhendrix’s discovery that as oil prices increase, oil exporting petrostates are more likely to initiate military conflict. sci-hub.se/https://journa…
4/ High oil prices lead to conflicts because
- Petrostates get WINDFALL of $$ to spend on their military & FX to buffer sanctions
- Limited supply acts as SHIELD from sanctions on oil exports
- In Russia’s case, the GAS WEAPON becomes more potent
- Which combine into CHESTINESS
5/ So High oil prices-> Conflicts. But why volatile oil prices?
2000's Commodity Futures Modernization Act. It created over-the-counter derivatives. Allowed WallSt to make "commodity index funds". Oil,Food,Metals-previously uncorrelated- turned into another volatile asset class.
6/ In effect, the West’s financial centres inflated an oil bubble that in turn, inflated Putin’s chestiness.
⇒ Doesn't mean Putin's brinksmanship is rational
But it informs his sense of confidence. Behind Russia's Nuclear WMD are Wall St Financial WMD
willamette.edu/law/resources/…
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