Oil and Military Spending

The New York Times has just reported that Russia has backed off on its threat to expand its missile system provocatively close to the Baltic countries. The original threat was seen as a quick challenge to Obama, although he wasn't yet in office so he couldn't have responded. The withdrawal may be seen as an attempt to be conciliatory to him.

I see it as more likely a realization that it doesn't make political and economic sense. According to the CIA, Russia is still losing population. Its health care system is in tatters and men survive, on average, only to the age of 59.

Twenty-odd years ago, the USSR failed largely, according to myth, because they responded to the buildup of the U.S. military with spending on their own systems which they could not afford. I've always thought it interesting to think that, by ignoring the U.S. challenge and focusing instead on building what communist theory says they should have been building, they would have won the Cold War. That's the logic, but I don't quite believe it.

However, the Russians may be discovering that they have large civilian needs to meet and, what they could afford at $147/barrel of oil, they can't at $58. I expect Iran to ratchet down their pursuit of nuclear weaponry. I don't think this has anything to do with trying to act in harmony with Obama. It's the realization that international posturing won't matter if the mobs at home run you out of office.