In international circles, President Vladimir Putin of Russia has begun to make his moves toward entering the WTO (World Trade Organization). The long standing gas subsidies issue for domestic use in Russia and the higher charges for gas to the Europeans appear to be coming to an end.

Russia has agreed to raise its domestic gas prices over several years while the Europeans then will throw in their support for Russian membership in the WTO. Russia’s state owned gas monopoly is far from being free market economics. The Europeans love the deal because they have forced Russia to use their own money for development of gas infrastructure instead of borrowing from the Europeans who have always been at high risk in the Russian culture. The key is that inflation is under some control in Russia now, so Putin feels comfortable raising prices without engendering a riot in the streets. Gas costs will rise from $28 dollars per 1000 cubic feet to $57 by 2010 in the domestic Russian markets according to Stratfor.

What is even more interesting is that Putin has agreed to speed up, by not conclude, the ratification of the Kyoto Treaty on the environment to appease the Europeans. If Putin is wise he will not conclude the ratification process on Kyoto because it will not make the U.S. and other nations who oppose Kyoto very happy. None of this, of course, ensures that China, Japan and the U.S. will vote to allow Russia into the WTO any time soon. Japan is still at war technically with Russia since WWII and China’s cheap goods will eat Russia alive economically if those goods are infused into the Russian economy. Putin fears all this and WTO membership is still in doubt at the moment.

What should interest all of us in the U.S. are the moves the Europeans keep making with respect to long term economics. They are going to need a lot of help from other countries to prop up their socialist economies over the coming years. NMIRI sees many challenges for the Europeans over the next few years economically. The Russian deal is but one of many more issues that Europe will have to resolve. Not unlike the U.S., the Europeans are going to be faced with a political split over time between those countries that favor free market economics over those that want to sustain their socialist economic traditions. Fault lines of economic discontent in Europe have already begun to show their ugly head politically.

Notes on Venezuela

Some weeks ago NMIRI called attention to the cozy relationship that Castro and Chavez from Venezuela were having over oil and other consulting relationships. Castro in the last few weeks has made Mexico very angry and called attention to himself in the U.S. with his 100,000 barrels a day oil deal with Chavez who continues to prop up the Castro Economy in Cuba. Now, it seems that Chavez has expelled the U.S. from the group of “Friends of Venezuela” (Brazil, Chile, Portugal, Mexico and Spain) because the U.S. announced that there were enough signatures to hold a referendum vote in Venezuela. Chavez was furious over this announcement because he is trying to beat off the referendum which might unseat him Basically Chavez is taking consultation advice from Castro and playing a stalling game in order to garner power with the military and create an authoritarian government that might be very hard to unseat over time. NMIRI believes that the U.S. cannot afford to allow this fluid situation to become fixed in anyway. The U.S. must divide Castro from his sycophant neighbor Chavez while ensuring that the strategic and tactical interests of the U.S. are kept in play for the trade programs in Latin America. Castro owes over $1 billion for oil from Chavez at the moment and the financing is favorable for the long term. Notice how socialists have to be propped up each time by everyone else in order to survive. In the case of Castro, it is his brand of communism, not socialism, that is preventing the majority of Cubans from enjoying a really good life. Now it appears that Chavez, supported also by de Silva in Brazil is trying to fend off the 70 percent of the people of Venezuela who want to have a referendum and the U.S. is right to force the referendum on or before August 19, 2004 or else Chavez could lose the referendum and still appoint someone else according to the Constitution of Venezuela.

Politics, in the U.S., also play strongly here because President Bush has been burned by one Senator Dodd over the claim by Dodd that the U.S. supported a coup against Chavez in the past. President Bush does not want even the appearance of this issue during his election year. Nonetheless, eventually the U.S. is going to have to be tough in the trenches in Latin America. The U.S. and Mexico should put pressure on Chavez to hold the referendum and make sure that monitors are in place to observe the referendum in Venezuela. We cannot afford the continuing relationship with Cuba and Venezuela to become fixed in anyway nor can we afford to allow our trade national interests in Latin America to be derailed. The U.S. must stand firm on free market issues in Latin America or lose our hemisphere to the socialists.

Both of these cases demonstrate that international relations is entering a new phase in U.S. history. Interventionist polices based upon “real politik” are going to be needed and applied. We don’t need anymore of the softball international relations like that being proposed by liberal candidates, nor do we need anymore pretend “lob a bomb” policies like Clinton offered us. The U.N. has demonstrated that its corruption and its inability to manage a crisis like Iraq are intolerable. Previous approaches will not work in a world that is embracing socialism more and more as a matter of convenience politically. Economics is playing “tough” in world politics and the U.S. is going to need intelligent State Department officials who fully understand both the politics and economic hard ball that is being played out in international circles. Russia has become a special case for U.S. attention and now Venezuela and Latin America also. It is a complex world out there. For New Mexicans, we must ask, can we, for that matter, tolerate much longer the socialism that is rampant in this state either?

Professor M. Gene Aldridge
New Mexico Independence Research Institute, Inc.
galdridge@zianet.com
505 640 3447 or 505 523 8700

©Copyright NMIRI 2003
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e-mail is galdridge@zianet.com.