Russia-Europe Energy Thread

[Preceptor]

The same logic of dependence is applied every where. This Schroeder went to China almot 10 times and Volkswagen become the largest Auto brand in China beating Japanese/US. He certainly see the big picture where the future properity lies. Large Industrial products are for thos who can afford it.

Re-read the definitions of Influence and Dependence provided above, they have completely different meanings.

Two nations engaging in trade with each other for anything, be it rawmats, finished good, energy, etc have influence over each other. Depending on a variety of factors, one nation may be able to exert more influence over the other. That is a completely different situation to one nation being dependent on another, this sort of situation would exist if two nations were engaging in trade and one nation wanted/needed a product/resource etc that was available only from the other nation. This would mean the nation which wanted the product/resource etc was dependent on its trading partner for that particular product/resource etc.

I will illustrate this with the following analogy.

The Royal Australian Navy (RAN) has chosen to equip their upcoming Hobart-class DDG/AWD with the US Aegis combat system and SPY-1D radar. By making this particular choice, the RAN has become dependent upon the US for spares, upgrades and some support for this particular system. This is because the US is the sole source for this particular combat/radar system.

However, while the decision on which Aegis-like system was pending, the US could only influence the decision, because other sources of similar type systems were available. These systems were the PAAMS/SAMPSON used on the Type 45 Daring-class and the PAAMS/EMPAR for the Horizon-class.

The reason why proof is being required of the claims of dependence is that by virtue of what dependence means, alternatives do not exist. The idea that alternatives for Europe/the EU/the West in terms of energy do not exist is contrary to existing evidence, hence the proof required to support the claim.

For Kato:

Granted, updated information on German imports/exports, energy use & needs, etc exists with latter dates than 2005. It is likely that some members on this forum even have access to some of this priveledged or proprietary information either as a result of governmental or industrial work. The reason why a specific request was made of a poster is due to a claim made by this poster with regards to the information you provided. Namely that the information was out of date and that a different situation existed between Germany and another country. If the statement had just been that the information was not the most up-to-date, as opposed to being the most recent publically available data, there would have been no issue.
-Preceptor

 

[roberto]

Re-read the definitions of Influence and Dependence provided above, they have completely different meanings.

Two nations engaging in trade with each other for anything, be it rawmats, finished good, energy, etc have influence over each other. Depending on a variety of factors, one nation may be able to exert more influence over the other. That is a completely different situation to one nation being dependent on another, this sort of situation would exist if two nations were engaging in trade and one nation wanted/needed a product/resource etc that was available only from the other nation. This would mean the nation which wanted the product/resource etc was dependent on its trading partner for that particular product/resource etc.

German Former Chancellor has clearly said there is no alternative for West but Russia has Alternative. To give some example. Next year China will become largest auto market in world. Russia can potentially accelerate the pipline and train deliveries of Oil. it will bring down further the price of Oil for Chinsese as it will not have to Shipping cost of Oil from Middleast. And with current high prices It is alteast $100B benefit to China. Transportation charges are the key. while West have to pay extra for transporting Middleast crude and LNG. so it is not an option.
Russia has an option because Chinese/Japanese/Koreans/Taiwanese/Turkish are very good in Textiles/Consumer electronics/Autos/Construcition/Ship building etc. and they are much nearer for Rail transportation through transiberian railway. This option was not available in ColdWar. So one side has a choice but the other does not have. It all happened due to globalization and failed policies of previous Coldwar.

http://www.bloomberg.com/apps/news?pid=20601110&sid=at_e8FmDAo40
At the same time, the U.S. declined to push for putting NATO membership for Georgia or Ukraine, another former Soviet republic, on a fast track, and French Foreign Minister Bernard Kouchner said the European Union wouldn't reconsider its support for Russia's bid to join the World Trade Organization. NATO earlier this year offered the two countries the possibility of eventual membership.
Alastair Cameron, head of European security issues at the Royal United Services Institute in London, called the session a ``lowest-common-denominator'' meeting that reflected NATO's limited options for influencing Russian behavior.

I will illustrate this with the following analogy.

The Royal Australian Navy (RAN) has chosen to equip their upcoming Hobart-class DDG/AWD with the US Aegis combat system and SPY-1D radar. By making this particular choice, the RAN has become dependent upon the US for spares, upgrades and some support for this particular system. This is because the US is the sole source for this particular combat/radar system.

However, while the decision on which Aegis-like system was pending, the US could only influence the decision, because other sources of similar type systems were available. These systems were the PAAMS/SAMPSON used on the Type 45 Daring-class and the PAAMS/EMPAR for the Horizon-class.

One combat system does not effect overall economy of a country. So u may be dependent on combat system but u can replace it with another with small penalty to budget.Its a discretionary item But in case of natural resources/food u dont have choice. The cheapest/closest resource is the best option otherwise high price of transporting adds to inflation which cause higher interest rates and considering the debt burden on West it is not desirable. See the UK housing market and its effect on broader economy.

The reason why proof is being required of the claims of dependence is that by virtue of what dependence means, alternatives do not exist. The idea that alternatives for Europe/the EU/the West in terms of energy do not exist is contrary to existing evidence, hence the proof required to support the claim.

I have shown links with high officials of different countries and there behaviour clearly points out that they are completely dependent on Russia. So what kind of government statistics and intelligence available to them may not be available in public domain but there is judgement is completely opposite one can deduce from Kato statistics.

 

[Feanor]

The same logic of dependence is applied every where.

Wrong. You're using a situation in which it's possible that a certain outcome will follow to deduce that it's the only possible outcome. You're using inductive logic, to produce a conclusion which you claim to be deductive (following by necessity). Allow me to illustrate. It's possible that with oil and gas, and international cooperation between Russia, Algeria, Libya, and even Iraq (where Russia received exclusive investment rights on certain projects), as well as Iran and the CAR Russia will come to control the distribution of oil and gas to Europe from all or nearly all sources. However that is by no means a reality today, and will not necessarily happen in the future (though efforts are certainly being made).

 

[swerve]

.. Despite higher per capita income Japanese cannot afford more cars or bigger cars per year than Russia.

On what do you base that claim? Are you saying that car sales are higher in Russia than Japan? If so, on what do you base that claim?

BTW, a major limit on car sales (both numbers & size - one of the reasons, along with price, for the popularity of kei cars) in Japan is the availability of parking. Affordability is not a great problem. My partners mother, for example, who has no car, could easily afford to buy several - but would have to move house, or put up with parking them inconveniently far away.

I note that you haven't provided numbers, or sources, to back up your claims.

 

[kato]

Roberto: Schröder works for Nord Stream. Of course he'll say Europe needs Russian gas.

He's also not exactly well-liked in Germany.

 

[DMG]

Russia

Let's put Russia's power and influence in perspective.

Below you can find a list of the 12 biggest economies in the world:

2007 List by the International Monetary Fund Nominal GDP (millions of USD)
— World 54,311,608
— European Union 16,830,100
1 United States 13,843,825
2 Japan 4,383,762
3 Germany 3,322,147
4 China (PRC) 3,250,827
5 United Kingdom 2,772,570
6 France 2,560,255
7 Italy 2,104,666
8 Spain 1,438,959
9 Canada 1,432,140
10 Brazil 1,313,590
11 Russia 1,289,582
12 India 1,098,945

A quick use of a calculator will tell you that the EU as a whole represents nearly 31% of the world economy. The USA represents 25%. The sum of these 2 economic giants is more than 50%. Russia is not even on the top 10, its GDP represents less than 3% of the world economy.

The EU economy is 13 times larger than Russia's, even though it's population is only 3.5 times larger than Russia's. France, with less than half of Russia's population, has an economy twice as large. Same with the UK. Let's not even get started with Germany.


Regarding military power, it's a widely known fact that the USA is responsible for roughly half of the world's military expenditure. The EU represents about 25%. That comes up to a total of 75%. Even allowing for the Chinese hiding part of their military expenditures, which they probably do, I'd estimate that US+EU spend around 2 thirds of the world's military expenditures. It's relatively easy to win wars against Georgia (a poor country with only 5 million people and a small army), it's a whole different story when you're facing the world's superpower and it's European allies. In conventional military power, Russia can't match the West.


Russia's leadership have realised that they cannot match the West's economic and military power. The only reason why anyone still pays attention to Russia is because they have: 1. Oil and Gas 2. Nuclear Weapons. Remove these two factors from the equation and Russia has little leverage over the West.

Hence the desperate focus on creating a monopoly position as an energy supplier to Europe, ignoring the fact that dependency cuts both ways: more than half of Russia's trade is done with the EU, and Russia needs oil and gas revenues to fund it's own budget. The entire Russia pipeline system is geared towards Europe and the EU is and will continue to be their preferred economic partner. What are they going to do? Refuse to sell gas to Europe? They would be shooting themselves in the foot, losing billions in revenue. As someone once said "You can't eat gas!".

In conclusion, although Russia is emerging from it's messy and humiliating period of the 90's, and is a country to be reckoned with, it's power and status are still diminished when compared to the West.

 

[Feanor]

Hence Russia's desperate attempts to produce successful industrial projects which would expand and diversify the Russian economy. Finally there are several major negative trends in the economy right now, including slow down of industrial growth, and insufficient housing construction.

 

[roberto]

On what do you base that claim? Are you saying that car sales are higher in Russia than Japan? If so, on what do you base that claim?

BTW, a major limit on car sales (both numbers & size - one of the reasons, along with price, for the popularity of kei cars) in Japan is the availability of parking. Affordability is not a great problem. My partners mother, for example, who has no car, could easily afford to buy several - but would have to move house, or put up with parking them inconveniently far away.

I note that you haven't provided numbers, or sources, to back up your claims.

Even this report is understating the Russian consumer market as there is close to 1 million second hand car also imported. Russia car is now easily 5 times of India and much closer to China but with bigger transaction price per car. And there is also globalization factor. there are millions of Russian working in West/Middleast/Asia compare to very smalle percentage of Japanese thats why Russians income are global level and airline passenger traffici is increasing much faster.

http://www.businessweek.com/globalbiz/content/jul2008/gb20080711_765850.htm?chan=search
Russian Auto Market Now Europe's Largest
Things have changed since the Soviet days of Ladas and Volgas—the country now sells more cars than Germany and shows no signs of slowing

When u have $64B of tax revenue per month on 14% Income tax rate. this tell some thing about overall economy size.

http://www.kommersant.com/p1013584/r_528/Tax_collection/
Russia’s Federal Tax Service hit an absolute record in tax collection in July of 2008. The amount exceeded 1.5 trillion ruble (less VAT), having surpassed 1 trillion ruble similar to April of 2008. The greatest achievement of July is the booming growth in profit tax, which collection was over 0.4 trillion ruble. With no big deals clinched on the M&A market in spring and summer, economic analysts see no reasons for this surge in the tax payments.

So Russian has concluded that the control Airline routes and hubs and the EU industrial growth completely depends on Russian Machinery orders which can be given to Chinese.

http://ec.europa.eu/transport/air_portal/international/pillars/common_aviation_area/russia_en.htm

22 March 2007: Council adopts EU-Russia agreement on Siberian overflights

On 22 March 2007, the Council of EU Transport Ministers gave its unanimous approval to the "Agreed Principles" on Siberian overflights. This agreement was initialled by Vice-President Barrot and the Russian Transport Minister Levitin on 24 November 2006 in the margins of the EU-Russia summit. It provides for the abolition of payments for overflights for EC carriers not later than 31.12.2013 and ensures that newly operated overflights by EC carriers in the transition period until 2013 will be free of payments.

 

[kato]

the country now sells more cars than Germany and shows no signs of slowing

Russia has almost twice the population of Germany. Read: the car market is effectively half as big.

And, of course, the gains on the Russian market nowhere near offset the losses carmakers across the board currently incur in the USA.

 

[Grand Danois]

When u have $64B of tax revenue per month on 14% Income tax rate. this tell some thing about overall economy size.

Muahaha! It tells you that the 14% income tax is a very small part of the tax revenue. You could have posted the entire article instead of a select snippet, from it you can learn that:

Tax receipts are stepping up thanks to a number of reasons, ranging from inflation and the economic growth that is accompanied by the growth in individuals’ income to the improved tax compliance and high prices for Russia’s raw. Indeed, the income tax soared 39.3 percent on year to 0.93 trillion ruble in the first seven months.

http://www.kommersant.com/p1013584/r_528/Tax_collection/

I know you need an entire year to be exact, but for the exercise:

12/7*(930 mn Rubles * 0.046 ruble/dollar) = 72.7 bn dollars for a full year.

I also note that:

The budget system of Russia received 6.31 trillion ruble from the Federal Tax Service in the first seven months of this year.

Ibid

Equating to 493.2 bn dollars for a full year.

So Russian has concluded that the control Airline routes and hubs and the EU industrial growth completely depends on Russian Machinery orders which can be given to Chinese.

Airline destinations not affected at all:

North America
South America
Europe (but of course)
Africa
India
Australia
Middle East
Pakistan

Affected:
East China
japan
South Korea.
Taiwan
Mongolia
Kazakhstan

Hardly a hostage situation here.

Anyway, you couldn't stop trolling and you used the magic word, so...

 

[Todjaeger]

Equating to 493.2 bn dollars.

GD, not to be difficult (well okay, maybe a little...)

By my calculation, 6.31 trillion Rubles works out to a figure in the range of ~US$260-290 billion, depending on currency exchange rate, for the first seven months of this year.

Going by the article, that is the total amount collected for various different taxes, which Russia is collecting at a rate of ~US$37-41 billion monthly for everything. That is a bit different than the following...

When u have $64B of tax revenue per month on 14% Income tax rate. this tell some thing about overall economy size.

Hopefully, when people post in the future, they will double check their facts and figures more carefully. Or reconsider what they choose to post.

-Cheers

 

[Grand Danois]

GD, not to be difficult (well okay, maybe a little...)

By my calculation, 6.31 trillion Rubles works out to a figure in the range of ~US$260-290 billion, depending on currency exchange rate, for the first seven months of this year.

-Cheers

Note the "12/7" in my calc - I extrapolated for the entire year, though I know you actually need a complete year as revenues can vary from month to month.

 

[Todjaeger]

Note the "12/7" in my calc - I extrapolated for the entire year, though I know you actually need a complete year as revenues can vary from month to month.

Oh, okay. Your total was for the entire year then. That would explain the difference. Still, the total monthly tax revenue would fall short of the claimed US (presumably) $64 billion, only being around 60-65% of the amount claimed as Income tax.

-Cheers

 

[Jon K]

Let's put Russia's power and influence in perspective.
...
In conclusion, although Russia is emerging from it's messy and humiliating period of the 90's, and is a country to be reckoned with, it's power and status are still diminished when compared to the West.

I do agree. Without doubt, in the future Russia will be a great power like France, UK and Germany and in some respects it may even approach Japan. In other words, it will have similar position as it had before the First World War. The difference is that France, UK and Germany, despite their differences, have decided to combine their power with others...

Many people try to equate Soviet Union with present Russia which is completely wrong and even comical. Without even getting to economic and military aspects which have already been dealt with we have to take a look at the population and ideology. In 1991 Soviet Union had 300 million inhabitants. It also had an Eastern European empire with states like DDR, Poland etc. which made products that in many ways rivalled the Western products. This added almost 100 million more inhabitants for a total of some 400 million people. In contrast the United States in 1990 had 250 million inhabitants and EU of today has just 500 million.

Today, Russia has some 142 million inhabitants.

As for ideology, despite the fact that most sensible people knew in 1980's that communism in it's Soviet form was severely twisted ideology the socialism had still much appeal and many people bent over backwards to understand the Soviet actions. When Gorbachev started his reforms it might be said that most of the people in both East and West had a vision of future where communism would go on, albeit as reformed.

Today, Russia is übercapitalist country with no particular ideological appeal. The United States is a socialist nanny state compared to present day Russia. Russian nationalism naturally appeals to those Russians living abroad, but how about even Russian minorities, such as Russian Moslems, how could they find the Russian nationalism as their ideology?

EDIT:

Personally, I would hope both for sake of Russians, Russia and the rest of the world that Georgia conflict would be for Russia what Suez crisis was for United Kingdom, ie. would place the ambitions on realistic scale.

 

[swerve]

Let's put Russia's power and influence in perspective.

Below you can find a list of the 12 biggest economies in the world:

2007 List by the International Monetary Fund Nominal GDP (millions of USD)
— World 54,311,608
— European Union 16,830,100
1 United States 13,843,825
2 Japan 4,383,762
3 Germany 3,322,147
4 China (PRC) 3,250,827
5 United Kingdom 2,772,570
6 France 2,560,255
7 Italy 2,104,666
8 Spain 1,438,959
9 Canada 1,432,140
10 Brazil 1,313,590
11 Russia 1,289,582
12 India 1,098,945 .

These figures are exchage rate converted. At purchasing power parity, China, India, Russia & Brazil move up the rankings, & it becomes (billion USD) -
1 USA 13811
2 China 7055
3 Japan 4284
4 India 3092
5 Germany 2752
6 Russia 2088
7 UK 2082
8 France 2054
9 Brazil 1834
10 Italy 1780
11 Spain 1373
12 Mexico 1346
13 S. Korea 1199
14 Canada 1178

 

[Grand Danois]

These figures are exchage rate converted. At purchasing power parity, China, India, Russia & Brazil move up the rankings, & it becomes (billion USD) -
1 USA 13811
2 China 7055
3 Japan 4284
4 India 3092
5 Germany 2752
6 Russia 2088
7 UK 2082
8 France 2054
9 Brazil 1834
10 Italy 1780
11 Spain 1373
12 Mexico 1346
13 S. Korea 1199
14 Canada 1178

But it doesn't matter if you use PPP or real GDP - you come out with the same percentage of the world economy for Russia. (although one can't sum PPP GDPs together ).

 

[swerve]

Even this report is understating the Russian consumer market as there is close to 1 million second hand car also imported. Russia car is now easily 5 times of India and much closer to China but with bigger transaction price per car. And there is also globalization factor. there are millions of Russian working in West/Middleast/Asia compare to very smalle percentage of Japanese thats why Russians income are global level and airline passenger traffici is increasing much faster.

But even with a million imported cars (& given your accuracy in statistics I suspect that may be an exaggeration), that's still far fewer cars sold than in Japan, which has a smaller population.

Also, a large market for imported secondhand cars doesn't fit very well with your claim that Russians can afford more & bigger cars than Japanese. Japan exports large numbers of secondhand cars, e.g. to Thailand & Indonesia. Japanese prefer (& can afford to) buy new, & the market for secondhand cars in Japan is very poor. Note the direction of flow of used goods: it is from richer to poorer, as always.

The flow of emigrants goes the same way. Russians are working abroad not as part of a cunning plot to enrich Russia, but because they can earn more & live better abroad than at home. Japanese, on the contrary, usually go abroad to work for personal reasons (my partner), or because their Japanese employer sends them temporarily to a foreign subsidiary (her brother-in-law & uncle).

I'm afraid you're not arguing very well. You've put forward as evidence of Russias wealth two things which are evidence of Russias (relative) poverty.

 

[Sampanviking]

But it doesn't matter if you use PPP or real GDP - you come out with the same percentage of the world economy for Russia. (although one can't sum PPP GDPs together ).

Surely that depends on what you are trying to express? Both PPP and Exchange Rate GDP have their uses, but without additional info like physical units of consumption across key commodities, you have a very incomplete picture.

My apologies if this point has already been made, but I find a lot of this thread so random its quite confusing

 

[Grand Danois]

Surely that depends on what you are trying to express? Both PPP and Exchange Rate GDP have their uses, but without additional info like physical units of consumption across key commodities, you have a very incomplete picture.

My apologies if this point has already been made, but I find a lot of this thread so random its quite confusing

It hasn't been made as directly as you do now. If we take trucks & cars it doesn't add more accuracy, as Russia has unique geographical challenges and is developing (ie construction and infrastructure development is high).

On top of that, you have huge revenues from the primary sector skewing the real exchange rate, and misleadingly suggesting that Russia is much closer to convergence that it actually is. The RER in the "domestic economy" is much higher than the PPP/real GDP relationship suggest.

 

[swerve]

But it doesn't matter if you use PPP or real GDP - you come out with the same percentage of the world economy for Russia. (although one can't sum PPP GDPs together ).

Yes, but its ranking relative to rich western countries changes.

Oh, & you can, in theory, sum PPP GDPs together if you use the right methodology to derive them. Not if you use Fisher-style bilateral comparisons, of course. I can't remember for sure which methodology - maybe EKS (those cunning Hungarians ).