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Barack Obama’s choice of Joe Biden as his VP running mate may make good “policy wonk” sense (Biden is supposedly an ace with foreign policy) but strikes me as weak.  (In fact, I found myself hard pressed to find anyone to be an Obama running mate who really struck me as being helpful to his election chances except for Hillary Clinton, but then the risk to Obama would have gone up…)

One reason is stuff like this:

On the day he formally announced his candidacy, a New York Observer story that quoted Biden as calling Obama “articulate and bright and clean and a nice-looking guy” came out, and the resultant uproar effectively undercut any momentum Biden was hoping to build.

That lead to this comment in my story of doing business in China:

Liberal pseudo-sophisticates may sneer at the idea of “dirty” oil men (those of us in the business, like Barack Obama, do take regular baths in places where the plumbing permits…)

Anyone who has lived in the South for a long time knows what a low blow it is to imply that black people don’t take baths.  It used to be a common one, too.  I thought we were past that kind of thing.

Evidently some of us are and some of us aren’t…and some of us don’t care.

And then there’s this…

Many people don’t like big oil, but we’re paying the price…

Oil production has begun falling at all of the major Western oil companies, and they are finding it harder than ever to find new prospects even though they are awash in profits and eager to expand.

Part of the reason is political. From the Caspian Sea to South America, Western oil companies are being squeezed out of resource-rich provinces. They are being forced to renegotiate contracts on less-favorable terms and are fighting losing battles with assertive state-owned oil companies.

We’ll, I guess I’ve been part of the problem.  As I note here, in the history of my family business and offshore oil:

But Vulcan also had a wide variety of customers outside of the U.S. These included some of the major platform contractors, such as Heerema, ETPM, Micoperi (whose assets were purchaed by Saipem,) Uglands, Jardine and Nippon Steel. But these also included state owned (full or partial) oil companies which were doing their own platform installation: Aramco (Saudi Arabia), NPCC (UAE), ENAP (Chile), PDVSA (Venezuela), CMM (PEMEX), Brunei Shell, and CNOOC (China). These latter were interesting because they demonstrated two things:

• Commercial enterprise is possible with the combination of expertise, financing and desire. Although some of these were from major producing countries, others were from countries whose goal was to reduce their dependence on imported oil. Some of the inspiration of this site–to disseminate information that make good foundations possible–has come from the experience of interacting with these customers.
• International business is possible without many of the treaties that we seem to be told we “have to have” for it to be a reality. For many years Vulcan routinely exported a third of its output for one reason: it had a product that people and organisations found essential to fulfil their own purposes.

Although the NYT article assures us that these state-owned companies aren’t as good as the majors in exploiting oil, there’s one more factor to consider: many countries deliberately slow down the development of their oil and gas resources in order to a) stretch out the benefit to the country longer and b) not flood the country with large instantaneous cash flows that would end up being wasted.  The countries surrounding the North Sea adopted this strategy from the start, and others are too.

An “oil major” looks at things from a purely economic standpoint: the sooner they can get the oil out, the sooner they can get their money out.

The biggest downside for everyone in this is that oil, up to now generally available on an open global market, will be sold more on a “country to country” basis.  This will create more conflicts over oil as those cut out of deals attempt to redress their loss.  The current crisis in Georgia is in part fuelled by that, but there are more to come.

For the United States, given that we are blessed with abundant energy resources within our borders, it makes sense to develop those and insulate ourselves from future shortfalls.  The alternative is to constantly engage in foreign adventures (military and otherwise) to secure our supply, and we’ve already seen that this is no fun.

The Russians are back in our news again. Our media is manic-depressive: it careens from supine pacifism to hyperventilating bellicosity, and these days the invasion of Georgia is inspiring the latter. Our government isn’t much better: it can’t seem to know whether to send the troops, send the diplomats, or just hide.

I have a good deal of experience dealing with these people, as those of you who follow this blog well know. I won’t link to all of the places where I deal with the subject here; I will point out one especially memorable moment which actually took place in Washington. But that should be enough to illustrate my central point: the Russians aren’t what they seem to the Americans, that was the case in the Soviet era and remains so today.

To start with, Russian “agression” and an “attack against democracy” are being emphasised these days. But Russia is a nation that has been invaded many times, from the Mongols to the Turks to the French to that most terrible invasion, the Germans during the “Great Patriotic War.” Stalin, never much to export his revolution (as opposed to Trotsky,) developed the “Warsaw Pact” as a strategic buffer to prevent a repeat of what the Germans had put them through. Brutal and inhuman, yes, but it got the job done for almost half a century.

It’s fair to say that the current regime in Moscow is looking for yet another buffer, having lost not only the Warsaw Pact countries but also the other republics of the old Soviet Union. From a strategic standpoint the touchiest of those is the Ukraine. Invading Georgia is one sure way of sending a message to the Ukrainians not to welcome NATO with open arms, which the Russians would interpret as a stab into their heartland (and a look at the map would confirm this.) Wisdom for the Americans would dictate that we, while certainly securing a position in places like Poland (maybe, I’ll take that up later,) should not push too hard in places like Georgia or Ukraine. If we corner the Russians, they have no where else to come out but straight at us, and that’s not a pleasant thought for a country with a large arsenal of nuclear weapons–especially if some of them end up in Cuba.

As far as attacking democracies are concerned, it’s hard to characterise any of the old Soviet republics (with the exception of the Baltic states) as democratic in a real sense. Some are trying harder than others. Georgia for its part is a fairly corrupt state, not unlike the one we set up in Kosovo a little while back (that adventure didn’t do anything for our relations with the Russians either.) Here, as in the Middle East, democracy is a mirage, one we keep looking for but never find except in our imaginations.

While thinking about the Middle East, it’s hard to think of a nation which is more blessed than Russia with sheer territory and natural resources and yet never seems to take full advantage of it. Russia had a golden opportunity to shed its authoritarian past and adopt a working economy and state, yet squandered it in a fashion worthy of the Middle East, first in the “Mafia” years of Boris Yeltsin and then those of Vladimir Putin when the power of organised crime was centralised in the state. The main reason why the Soviet Union lost the cold war was that it never developed a viable economy to match its military arsenal, and both Russian and American history show that, if you want to be a sustaining world power, you have to have both.

Beyond that, American fears centre on Russia’s supposed “allies:” Iran and China. Anyone vaguely familiar with Russian history know that neither of these nations are natural allies of Russia (who is a natural ally of Russia, anyway?) In the case of Iran, Russia sold them nuclear and other military technology for one reason: Russia desperately needed the hard currency in the wake of the Soviet collapse. And, of course, Russia saw Iran as a counterweight to the U.S.. But Russia cannot be pleased with the emergence of a nuclear-capable Iran, which is also capable of making the same kind of power challenges in the old Islamic republics (Uzbekistan, etc.) as the U.S. is making in Georgia.

As far as China is concerned, the two countries are natural enemies. Russia still lives in fear of the “yellow peril,” and they too have competing interests in Central Asia.

Russia’s best hope for friends comes in Western Europe, which is dependent on Russian gas for energy. And that leads to a long running quandary for the U.S. that it never really came to grips with in the Cold War. Europe, especially after the 1956 Suez crisis, never carried its weight in the Cold War. The continent of Napoleon, Julius Caesar and Rommel turned chicken, and is showing the same tendency now. It’s too bad that we cannot flip the continent, having appreciative states such as Poland and the Baltics on the west and leave Germany and France on the east to deal with the Russians the best they can. In fact, I always wondered whether we would have been better off with the whole continent in the Soviet axis and used the Atlantic as our “Iron Curtain.” It would have been easier to defend and would have eliminated a long-term economic rival in the bargain. The whole rationale of NATO is that Europe is worth defending, and if the Europeans don’t act like it is, why should we?

But basic questions like this never get answered in our foreign policy. Boomers, now in control and familiar with a bipolar conflict such as the Cold War, cannot blast themselves out of their comfort zone and come to grips with the new reality, which consists of many old ones that have come back to life in the wake of the end of the Cold War. It’s easier to revive old conflicts than deal with current ones.

And that’s reflected in our political parties’ (and their Presidential candidates’) reaction to all this. They’re taking a “fight or flee” response, one party for each. One would think that, as much money as we put in our government, we could get past this type of response matrix. Foreign policy, sad to say, isn’t like buying car insurance–it takes more than a cave man, and his responses, to do it.

What the U.S. needs to do is to adopt some realistic expectations of the results of this conflict. We also need to build our strengths, and right at the moment that’s primarily our economic ones, such as stabilising our indebtedness, not larding our economy with excessive taxes and wealth transfers, and cultivating the development of military and civilian technology and production at home. All of that in turn is dependent upon a rational energy policy that includes both conservation and production to reduce the cash outflow we experience for foreign oil, but that’s still trapped between utopian dreams on both sides.

But rational policies seem to be beyond our system. It’s been that way for a long time. The Cold War was seriously complicated by American emotionalism, and we nearly lost that conflict in the nervous breakdown we suffered in the early 1970’s in the wake of the Vietnam War. We’ve wasted too much time, money and blood trying to “make up for” that disaster, especially in Iraq, only proving we’ve learned little and forgotten nothing in the intervening two score. I’d like to be optimistic about this, but honestly I’m not. Otto von Bismarck used to say that “God has a special providence for fools, drunks, and the United States of America,” and we can only hope and pray that his providence will be with us one more time.