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Monday, February 19, 2018

Notes on the Russia-Trump thing -- it's about OIL.

John Case, Socialist Economics.

Special Counsel Robert Mueller's indictment charges a Russian enterprise,  The Internet Research Agency, and 13 of its employees, with unlawful interference in the US 2016 presidential election. Beginning in mid-2014, the indictment says the agency launched a disinformation campaign , mainly through Facebook, designed to smear and divide Hillary Clinton's presidential candidacy, and elect Trump.

At its peak in the 6 months prior to the election, the indicted Russian agency spent $1.2 million per month on its efforts. . According the celebrated, but not entirely error free FiveThirtyEight statistical blog of Nate Silver, "The Clinton campaign and Clinton-backing super PACs spent a combined $1.2 billion over the course of the campaign. The Trump campaign and pro-Trump super PACs spent $617 million overall. "

The not insignificant, but still relatively small Russian spending, does not really alter the fact that Clinton's losing campaign outspent the combined Russia and Trump campaigns by almost double. Statistically its very hard to blame Russia for Clinton's loss. That is partly due to the difficulty of measuring the impact of non-discrete events like Facebook Bot activity. The Comey last minute "email sever smear", which exposed nothing but the right wing influence of parts of the FBI, shows a stronger, but still not decisive, statistical impact than Russian interference. Other statistical factors of note, although none are by themselves decisive, include a lower African American turnout, a lax campaign effort in key midwestern states like Michigan and Wisconsin, and the Jill Stein vote.  Further, both Donald Trump and Hillary Clinton had very, very low favorability ratings: Trump - 38, Clinton - 43. In terms of headcount, i.e., paid staffers, Clinton had 4200, Trump - 880, Russia -- 'hundreds'.

The bottom line is: there is no high-confidence statistical answer to the question, did Russia give the election to Trump? Nor is there a high-confidence statistical answer to the overall question of why Clinton lost the election. The electoral college imbalance between the rural and urban franchise obviously was important, since Clinton DID win the popular vote. But the electoral college is a fixed entity, not subject to significant influence or modification in the 2016 election.

The other question the statistics do not satisfactorily, answer is: Why is Russia aligning with Trump?  I am not going to delve in to personal or character analysis of Putin, but instead follow Washington's advisory that nations, regardless of the personal inclinations of their leaders, will tend to follow NATIONAL interests, not 'friends'. In that framework, both recent history and economics suggest powerful motivations.

Much of the Trump campaign war chest is disguised by the treasonous curtain on billionaires provided by Citizens United. However the largest donors super PACs are dominated by recognizable hedge fund, energy, real estate. military and right wing entertainment interests (like Murdoch (Fox) and Disney.). The strongest connection to Russia is energy -- in particular natural gas and crude oil production and refining. These are by far Russia's largest exports and its greatest source of cash. Obama and Secretary Clinton's assistance in overthrowing Ukraine's corrupt, but nonetheless elected, government with former fascist elements sparked Russia's antagonism to an intense level. It was not an isolated incident. US policy toward Russia since the collapse of the USSR has persisted many Cold War efforts to destabilize, dismember and undermine the former Warsaw Pact nations, very often using ultra-right cliques and military-compromised 'friends' as proxies.

Not accidentally, the major natural gas and crude oil pipelines from Russia to Europe flowed through Ukraine, where, led by anti-Russian forces, and backed by NATO, it could put Russia's economy at serious risk. The political economy of Russia's largest exporters make the geopolitics of Putin and Exxon Oil nearly, though hardly completely, convergent. According to studies by Chevron, typical crude oil development projects require hundreds of millions of dollars and can take 50 years to deliver a commensurate return. The ten current biggest onshore projects—out of a total of 126 such developments worldwide—are expected to consume $83.1 billion of investment to bring them to production, Oilfield Technology reports, quoting figures by GlobalData. In terms of single project development investment, the Kuyumbinskoye conventional oil development in Russia is the leader, with $12.8 billion expected to be spent over the field's lifetime. Offshore investments are even bigger -- reaching into the billions.

These are sticky investments -- very costly to withdraw from once engaged. Consider the Shell disaster in the gulf: if the penalties are too steep, Shell cuts production and the price of gas takes a steep bite out of US consumers. If the winds of "climate change" reforms blow too strong, those $100 million dollar investment failures become existential threats to the corporation.

Yet here we are. Thesis: Driven primarily by energy companies, their billionaire owners and allies, an all out and well-funded assault (ALEC, Kochs poltroons of billionaire scum) on democracy has been organized on many fronts. Trump is the carnival barker for the assault, not even a Bavarian corporal, portraying it as a reality TV show. Trump's endless gaslighting and misdirections are designed solely to divide the public by any means necessary, especially race, and neutralize united democratic resistance to unchallengeable rule by 'Exxon and Friends'. The scale of inequalities in the US makes this ghastly effort not so difficult. Everyone has grievances, and the wrong enemies are conjured up for every group.

The significance of Russian convergence with Exxon has an additional dimension and lesson. State control, or outright nationalization, of energy interests does NOT guarantee against a comparable anti-democratic capture of the machinery of government and politics by a single, or very narrow, group of resource based interests. The curse of natural resources has ruined progress and democracy for most of the states and nations so 'blessed'. West Virginia is a perfect example. Public dependence on a primary or single resource can also easily result in whatever clique has the most guns or money seizing all the levers of power. 

There is no remedy to this crisis that does not include mandating that too big to fail companies can no longer be run on exclusively profit-maximization incentives. Structural changes in corporate governance reflecting vital public and employee interests in these enterprises MUST be the consequence of any democratic renewal,, even if instituting them will require temporary public takeover of enough to enforce compliance. Failure to reform  these giant corporate prerogatives will only ensure repeated fascist assaults. Remember -- to the biggest corporations escaping democratic constraints and their 'public obligations' is existential -- non-negotiable. Just as the defeat of their prerogatives is existential for the people, and progress. 

Renewal and must also include the complete defeat, indeed repression and re-education, of fascist, authoritarian trends which have seized the US government. There is no time to waste. These forces are steadily consolidating power. The mid-terms in 2018 may be the last opportunity to stop that consolidation. Taking back one house of Congress can derail the Trump train. Wait too long, and there might not be another election. In the latter instance, the ultimate outcomes will be decided by non-civil means..

John Case
Harpers Ferry, WV

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