Should have seen it coming…

When he’s not abusing Sydney’s nouvelles riches ladies of leisure and snapping photos of Sydney’s sartorial disasters, The New Australian is fond of pointing out two things:

1. Like Brits, Australians have bought into the idea that property is a guaranteed, one-way bet to wealth; and

2. Australia has not experienced a recession in the last two generations, and is therefore going to get a colossal shock when the reality of the current downturn starts to bite.

In support of these positions is a telling article from the BBC:

After 23 years of growth, including one of the biggest mining booms in the nation’s history, tumbling iron ore and coal prices have put a brake on Australia’s economy – and mining towns are paying the price.

Peter Windle is a casualty of the mining slowdown. The New South Wales mining employee has lost a well-paid job, a company car and an annual bonus that in some years was as high as A$60,000 ($48,800; £31,300).

A termination package from the mining company he used to work for has helped soften the blow. But Mr Windle still had to sell his investment property to keep his head above water.

It’s not difficult to see what’s happened here.  Mr Windle failed to recognise that the recent period of high salaries and plenty of work was an anomaly and would not last forever, and so leveraged himself to the hilt buying a property which, in ordinary times, he couldn’t afford.  You can, well, put your house on the “investment property” that he bought was wildly overpriced and unlikely to break even unless the resource boom continued for another decade.  A quote from the article hints at this:

“It’s the worst I’ve seen it in 28 years in the mining industry,” says Mr Windle. “Everyone is getting out. Three hundred houses are for sale in my town, three in my street, and rental prices have collapsed on older weatherboard houses from A$1,000 a week to A$200,” he says.

Ah.  So what’s the betting Mr Windle has bought an “older weatherboard house” for a staggering sum of money and was relying on A$1,000 per week in rent for the next 10 years in order to pay if off?

If he’s been 28 years in the mining industry, he should have known better.  I am incredibly fortunate to have hit mid-career in the oil and gas industry in a period of unprecedented oil prices and salaries.  Several of the industry’s old hands have told me of the lean periods in the 1990s when there was no work, and one of them told me he worked a job for a year which paid less than he was spending: but at least it slowed the debt accumulation.  I remember in Sakhalin some of these same old hands telling us young pups that we should count our lucky stars and invest the money wisely, and know that this might not continue forever.  Few of my generation (and younger) missed this lesson.

Most of us knew that the good times would come to an end, which they did in 2008-9 but thankfully picked up again fairly quickly.  Everyone used the cash to buy property, which makes a sound investment if geographically diverse, a future permanent home, and/or is part of a portfolio of other investments.  But other than perhaps a few weeks after the initial purchase, few were daft enough to mortgage themselves to the point they’d be forced to sell if the prevailing boom came to an end.  For a short time I was a day-rate contractor, and the lesson dinned into me then was always have 6-12 months of salary stashed away in cash.  So if you lose your job, you have a cushion.  It’s a habit I still haven’t gotten out of even as a staff employee, keeping at least one, preferably two, year’s mortgage payments and living expenses in cash should the worst happen.

Obviously this isn’t feasible for most people working PAYE in civilisation in normal jobs, but for those of us who rode the oil and gas wave over the last 5 years or so, we were making hay while the sun shone.  I considered myself (and still do) extraordinarily lucky and privileged to have been able to benefit from it, but not a day goes by without having an eye on the oil price and the appreciation that in 3 months time I could be out of a job with a mortgage to pay, a wife to feed, and no home back in the UK.  I am grateful to those old hands I met in Sakhalin and Nigeria who told me not to squander the money made in the good times and be very aware that someday it will end: I learned to treat it as a bonus, not business as usual.

It appears there were not so many wise heads in the Australian mining sector:

It is poor consolation for Mr Windle, who is now contemplating looking for a job in another state.

“I’m 54 now, and I’ve had a hip replacement. I might get a job at an outback mine in the far north of Queensland but I’d hate to spend another year working away from home. And suppose they lay off workers too?” he asks.

It’s a shame for Mr Windle and others like him, but he should have factored all of this in when he bought his “investment property” and worked out his monthly cashflow.  Tough times, and it’s going to get worse.

Posted in Australia, Oil & Gas | 11 Comments

An Uber New Year

By coincidence, The New Australian has written a post about Uber, the app-based impromptu taxi service, and the outrage it appears to have caused in Australia.  I say coincidence because I used Uber for the first time last night, and I intended to write about why.  That bloke’s always nicking my ideas.

Up to now I have used an app called G7 to call licenced taxis in Paris (and the suburbs, where I live).  It’s remarkably simple, you just order a cab to your address and it selects a “nearby” car (more on that in a moment) and you can track its progress on the app, complete with details of car and registration.  It works very well, except for one detail: every “nearby” car it selects appears to be 6-7 minutes away, which turns into about 10-12 minutes by the time it actually arrives, hence the meter is already showing about 12 or 15 Euros by the time you even get in.  So on several occasions I have done a trip which, on the meter, costs about 10 Euros but I’ve ended up paying over 20 because, apparently, there were no closer cars around.

Yesterday I attended a party at a friend’s house in La Garenne-Colombes, two suburbs over from Puteaux where I live.  When I used the G7 app to call a cab, it selected a car which was in La Garenne-Colombes (my destination).  By the time it arrived the meter was showing 12 Euros.  By the time I got out and paid, it was showing 23 Euros.  So more than half the fare was the driver turning up. When we came to leave, the app selected a car in Puteaux (again my destination).  I followed his progress by GPS on the app, and he took a peculiar route to get to me, drove at a snail’s pace, and stopped for a few minutes for no discernible reason.  By the time he got to me, 20 minutes after I’d made the order, the meter was showing 14 Euros.  So I told him désolé, but this is a fleecing and I sent him on his way.

Unsure of what to do next, I remembered I’d signed up for Uber some time ago, but wasn’t sure quite how it worked.  So I fired it up, ordered a car, it arrived after 10 minutes and took me home, for the sum total of 7 Euros.

I doubt I will bother using the G7 app again.  What I think is happening is this (and this is just an opinion, I cannot prove it, so call the lawyers off).  The licence for a taxi in Paris is rumoured to be around 200k Euros per year.  The regulations prevent taxis from charging high rates, which makes Parisan taxis incredibly cheap compared to (say) London.  You can get from the centre to my suburb at 1am for about 2o Euros.  A London cabbie charges that for starting his engine at 1am.  But the problem is taxis can’t make money at night, with the result being you can’t find one.  It is simply not worth it for most Paris taxi drivers to work at night.

One way of offsetting the low fares is to allow the taxis to charge a fortune for the airport runs, particularly from Charles de Gaulle.  A taxi from CDG to Paris will cost you around 70-80 Euros, and it isn’t very far.  So the system appears to allow taxi drivers to fleece tourists but not charge a market rate for ordinary Parisians.  So far, so French.

What I think is happening now is the G7 app – which is basically a dispatch service – allows the meter to start running from the time the taxi takes the order.  Which is fair enough in theory, but there is no incentive for them to choose the closest car, or for the driver to make any special efforts in getting there as cheaply as possible.  What I suspect is happening is cars are being assigned that are 10 minutes or so away to guarantee a reasonable fare, instead of the closest car resulting in a much smaller fare.  I simply find it hard to believe – incentives what they are – that the nearest car is always 10 minutes away and simply had no choice but to put 12 Euros on the meter by the time it had arrived.  I further suspect that, were the taxis allowed to charge market rates, they would not engage in such practices.

It is little wonder the Parisian taxi drivers are going mental over Uber: they’ve been completely outflanked by a cheaper and more efficient service.  The driver who picked me up came with his name, registration, and review ranking sent to me in advance.  For all the fears of rapists and murderers, it would take a pretty stupid criminal think signing up to Uber as a cabbie will make life easier for him.  This being France, it wouldn’t surprise me if Uber does eventually get banned here, which will not help the country’s slow economic demise one jot.  They’d be better off reducing the licence fee, allowing the cabbies to charge market rates, and doing anything else they need to compete with Uber.  If they had any sense the cabbies would be getting their details into the Uber system and charging the premium for being licenced (in fact, I think some might already be doing this).  Then the customer can make their choice accordingly.

But, as I said, this is France.  Happy New Year!

Posted in France | 9 Comments

Beware of a Man in Search of a Legacy

Historical legacies are interesting things, offering as they do a chicken and egg situation.  Was Napoleon motivated foremost to secure his name in history and his deeds merely the methods he used to do it?  Or did he simply fancy taking charge of France and conquer large swathes of Europe by deploying astonishing military skill, and the legacy simply resulted from his actions?  I’m more inclined to believe the latter.  Not that great historical figures don’t have enormous egos and are unaware of the significance of their actions, but I don’t believe Peter the Great thought “if I want to be remembered in history I’ll have to do something big” and then after weighing up various options decided upon building a new capital and developing a Russian navy as the way to go about it.  No, I think he decided on building a new capital and turning Russia into a European-facing naval power and his legacy resulted from this decision.

Of course, the only people who succeeded in creating a legacy were those whose actions were both successful and significant.  History is littered with those who had grand ideas that never came off, and others whose actions changed little in the grand scheme of things.  What we hear even less of, thankfully, are those who, longing for a place in the history books, decided to create a legacy and then based their actions around this goal.  How do we know such people existed?  Because they’re still with us.

I remember during the New Labour years in the UK, people were always on about Blair’s legacy.  I think that’s the first time I was politically aware enough to see that somebody’s policies are being driven by what he wants people to say about him in the future, rather than what he actually believes.  Education Education Education was one mantra, that came to nothing.  Whatever the state of British education now, Tony Blair isn’t going to be remembered for playing any significant part in it.  Insofar as he has a legacy, it is one of a disastrous war in Iraq.  Those who supported the war don’t think he has a legacy at all.

Barack Obama is another modern politician in desperate search of a legacy, hoping to go down in history for something other than his skin colour.  He may well achieve it with Obamacare when the bills finally start coming in, although not for the reasons he thinks.  But that’s not enough: ill-advised peace talks with Iran and muddled overtures towards Cuba have followed, as Obama seeks a geopolitical issue on which to hang his hat in the history books.  Both are bound to fail.

Those who actively seek a legacy, rather than simply let it follow their actions, are doomed to fail largely because they lack the conviction to see their decisions through.  Historical legacies are not the results of popularity contests, in fact usually they’re the complete opposite.  Just ask Genghis Khan.  Those who succeed in pulling off great historical feats (both good and bad) do so from a position of absolute determination and self-belief in their actions, and will see them through regardless of the setbacks, or die in the attempt.  And the actions themselves are normally bold, brutal, and unprecedented.  This is in contrast to the modern politician seeking a legacy, who will be uncertain even on which path to take to achieve it, let alone the required actions.  At the first sign of trouble – an unkind editorial, an unfavourable opinion poll – most of them will backtrack and seek another way.  Abraham Lincoln didn’t suffer from this.  They also don’t think big enough: legacies are made by actions which affect millions for generations, permanently changing a country or continent, not tinkering with health policies or lobbing a few Tomahawks.

It is probably a good thing that today’s world doesn’t readily allow the actions that bring about the sort of legacies historical figures have left, given that most of them involved death and destruction on an industrial scale.  But the problem of those seeking a legacy, rather than simply doing their job, remains.  This brings me onto the current state of Russia under Vladimir Putin.

There is no doubt that Putin was very good for Russia in the early years: young, fit, and sober he was probably the best leader Russia has ever seen, although I should add that the bar is set extraordinarily low.  Russia in the ’90s was a terrible place, and Putin provided much needed stability and a reining-in of the oligarchs and gangsterism that plagued the country.  How much of this was down to him personally is debatable, but under his reign the currency stabilised, the economy grew, violence declined, and living standards rose as a new middle class of moderately wealthy Russians appeared.  The decade between 2000 and 2010 probably represented the best period Russia has ever seen (although again, the bar is set astonishingly low) and Putin deserves considerable credit for presiding over it.  Given what Russians lived through in the USSR and its aftermath it is not difficult to see why Putin was, and remains, so popular with his people.

Now we can argue that Putin should have done more, but I don’t take that view.  What he had achieved up until around 2006-7 had surpassed all expectations, and I don’t think anything more should have been asked or expected of the man.  That’s not to say there was not an awful lot left to do in Russia: there was.  It is to say that Putin was not the man to do it.

There are limits to what people can do in office, and that is often driven by time.  A two-term president in the US is usually in charge of a very tired administration in the final couple of years, regardless of how good they’ve been beforehand.  Even New Labour’s supporters were glad to see the back of Tony Blair after 10 years as Prime Minister; Margaret Thatcher left Downing Street a tired shadow of the vibrant woman who had entered almost 12 years previously; and despite the economic boom and rise in living standards Australia enjoyed under 11 years of John Howard, the population felt they were in need of a change when they kicked him out.  The optimum period in office for a leader in a modern democracy is approximately 7-8 years, after which their administration is plagued by various scandals, stumbling policies, tired rhetoric, and a population that has gotten tired of seeing the same damned face on the TV every night and could use a change.  Even the Soviet leaders eventually departed, unable to fulfill any more promises or bring about change in the way they could when they first took over.  With the exception of Stalin, few missed them.

By this measure, Putin’s time was up around 2007.  Having taken over as President in 2000, he was required to step down in 2008 when his two-term limit had expired.  This would have been a good time to usher in a protégé and retire from politics, having achieved so much and leaving the country in far better shape than he found it.  He would have been universally admired both at home and abroad, and gone down in history as a truly good, if not great, Russian leader.

But unfortunately, he was having none of it.  With the idea of amending the constitution to allow him to remain President floating around in the final years of his second term, he sidestepped the issue by installing a puppet President in Dmitry Medvedev, and slotted effortlessly into the Prime Minister’s role transferring his previous authority to his new office until it was time to return to his old job four years later.  Starting around 2006, buoyed by high oil prices that had brought enormous wealth to him and his friends and unprecedented wealth to many ordinary Russians, Putin started to strut his stuff at home and abroad.  A new wave of Russian nationalism took hold, taking the form of increased anti-western rhetoric, a re-positioning of Russia as the victim of foreign exploitation, and a desire to get more involved in global affairs in order to protect Russia’s perceived interests.  It was during this era that the Russian government intervened in several major oil and gas projects operated by western oil companies, citing legal or environmental irregularities as justification for bringing them back under state control.  At the same time, Russia decided the operatorship of the giant Shtokman project in the Barents Sea would remain with Gazprom, the state-owned energy giant.  In September 2007 I wrote that the policy of resource nationalism that Russia had pursued the previous summer could one day be seen as a turning point in the country’s development, the time at which the Russian leadership decided that the production of oil and gas by state-owned behemoths in an otherwise unreformed economy was the route to future prosperity.

For a while it was looking good for Russia.  The country was rocked by, but ultimately survived, the global financial crisis thanks to an oil price that quickly rebounded after an initial tumble.  But crucially, once he’d decided to remain in power, Putin failed to reform the economy beyond the Soviet-era export of natural resources, primarily oil and gas.  As I said earlier, given everything Putin had done to stabilise Russia I don’t think the onus was on him personally to reform the economy: such a daunting task would have had to fall to somebody else.  But by staying on, unless he was willing to double-down on his efforts and likely expend whatever energy and political capital he had, such a reform was postponed indefinitely.

It is not just the case that Russia is too dependent on oil and gas exports, it is that it is almost impossible for individuals to develop and grow a profitable business unless they are well connected to a rich and powerful entity in the locality.  For all practical purposes, this means being pals with the mayor or FSB of the local town, or the bigger politicians in the larger cities.  Otherwise, your business simply won’t be allowed to develop.  It is no surprise that most Russian towns feature one giant shopping mall owned by a local bigwig who also owns a nightclub and a few restaurants, with another one or possibly two smaller “empires” making up the bulk of the remaining local business portfolio.  If an enterprising but unconnected person decided to develop a small patch of land beside the river and turn it into a waterside restaurant, and by some miracle obtained the permits to get it up and running, within days of turning a profit (or even before) he would lose his business.  He would be forced out: either by a never-ending stream of regulatory authorities ranging from fire safety to health inspectors, all of whom would demand a cut of the proceeds to “allow” him to stay open; or simply by a gang of thugs working on behalf of a local bigwig who fancies co-opting the business (now that somebody else has done all the hard work) into his own empire.  In my discussions with Russians, this is something which is absolutely beyond dispute: the number of parasites that descend on private, independent businesses makes running a successful enterprise near-impossible.  In Russia, you may run a business only with the approval of the local power chiefs, and tribute must be paid.

This situation is a product of the enormous bureaucracies that govern Russian business life, coupled with the corruption that infests almost every corner of them.  Overhauling this is a mammoth task, and in all likelihood impossible.  But that doesn’t mean it shouldn’t be tried, and the starting point would be to strengthen the country’s institutions – particularly the courts and justice system, and insisting that governmental authorities everywhere follow the rule of law.  However, that would require giving them independence and devolving centralised state power over a much wider area, and neither the Kremlin nor the regional powers were prepared to do this.  Like a lot of leaders who have enjoyed unopposed power a while, Putin began to see himself as indispensable.  Far from state institutions being granted more devolved authority and independence, Putin centralised Russia’s powers further, notably around himself.

Further convinced of his own indispensability, in no small part due to genuine feelings of support for the idea from the Russian population backed by crushing election victories, Putin became yet more assertive in his dealings with the rest of the world, determined to restore what Russians consider to be their rightful place in global affairs, with himself in the role of saviour of the nation.  Somewhere along the way, Putin seems to have sniffed an opportunity of one day being held in the same esteem as Peter the Great, Katherine the Great, and maybe even old Joe Stalin.  Sometime after 2012, the ageing Putin perhaps thought time was running out for him to establish such a legacy, and so stepped up his efforts.  Confused mumbo-jumbo regarding Imperialist Russia and Soviet history underpinned much of his foreign policy, with vague ideas about manifest destiny thrown in for good measure.  Having trampled all potential domestic opposition and removed any dissenting voices from within his own circle, Putin fell into the trap of all long-serving authoritarians: he started believing his own bullshit, hearing nothing but rapturous applause every time he spoke.  So when the opportunity to reclaim Crimea for Russia presented itself, Putin moved quickly to take it.

Now regardless whether you believe the Russian claims that the annexation of Crimea was necessary to prevent the Americans establishing a base there, the fact is that in 2006-7 and again in 2010-12 Putin faced the choice of either reforming the economy by overhauling the state institutions and rooting out corruption, or improving Russia’s position with regards global affairs and its near-abroad with himself as the figurehead of Russia’s resurgence.  It is almost beyond question that doing both was impossible, and completely beyond dispute that he chose the latter.  In my view, he did so for two reasons: it was much easier for him, coming more naturally; and he thought this was the best route to establish himself in the history books alongside other great Russian leaders.

With that choice, any hope that the Russian economy could free itself from local strongmen and the national giants was lost.  The government remained dependent on a high oil price to balance its budget, while the rest of the economy remained unreformed, unreconstructed, and hopelessly inefficient.  As a result, Russia in 2014 found itself still heavily dependent on imports and produced little of value domestically: even the foreign car assembly plants set up in western Russia are dependent on imported parts, for which they must pay in Euros.

So long as the oil price remained high, none of this really mattered.  But with its collapse, and the western-imposed sanctions, the Russian economy has nosedived.  This article by Tim Worstall explains just how grim things are looking for Russia, but does not tell the whole story.  The middle-class consumer boom which took place in Russia over the last decade was driven mainly by personal debt: people borrowing from banks or credit card companies.  With the real prospect of incomes drying up and jobs being lost, a lot of households are going to struggle.  But what makes it worse is that credit in Roubles was being offered at interest rates of around 15-20% but consumers had the option of taking loans in Euros or USD which only attracted interest rates of 5-10%.  Many Russians took the latter option, and now face paying household debts in Euros or USD at a time when their Rouble salaries are worth half what they were.  Even those who borrowed in Roubles haven’t escaped: according to my Russian friends, banks are “renegotiating” the interest rates with their customers, which means higher monthly repayments.  Coupled with the rapidly increasing price of food (not helped one jot by Putin’s ban on imported products), we could see many households going into bankruptcy for the first time since 1998.  And this is before one considers the effect of the Rouble’s decline on the country’s main employers.  The head of Renault-Nissan in Russia recently came out and said manufacturing in the country is facing a bloodbath.

What will happen next is anyone’s guess, but a return to the grinding poverty and economic instability of the 1990s is looking increasingly likely.  Putin remains as popular as ever, having successfully dumped the nation’s economic woes squarely at the feet of the United States and European Union.  But as the economic reality starts to sink in, and increasing numbers of people with no jobs go hungry, issues such as political leadership and the inequality between the elites and the rest are going to become more pronounced.  Even if the Kremlin successfully manages to deflect the questions by piling on the anti-western rhetoric, this will not solve the underlying economic problems.

The trouble now is that it is too late.  The economy cannot be reformed with the sanctions still in place and the Rouble so weak, and so they have no choice but to ride it out until the oil price rises again, which on current forecasts could be a while.  Russians are facing the very realistic possibility of returning to the 1990s: empty shelves already line supermarkets, companies running package holidays abroad are going bankrupt by the dozen leaving local vacations as the only affordable option, and photos on Facebook show mass crowds buying TVs, video cameras, Ikea furniture, and other household items they don’t need in an effort to swap Roubles for something with a chance of retaining some value.  If this keeps up, it may be fair to ask exactly what progress has been made in Russia in the past 20 years.

Putin had the option of stepping down in 2008, his job well done, and handing over to a successor.  He chose not to, and instead opted to pursue what he hoped would become his legacy, which would be underpinned by the self-development of Russia’s vast hydrocarbon reserves.

The worst part is they didn’t even get that right.  The last major oil and gas development in Russia was the Shell-built Sakhalin II LNG project, which started up in 2008.  The Gazprom-led Shtokman development ground to a halt amid spiralling costs and disagreements between the partners.  Rosneft has been in the news mainly for its deals with BP, its appropriation of Yukos and Bashneft, and its staggering corporate debt rather than concrete development plans bearing fruit.  Umpteen grand announcements ranging from Nigerian gas deals and far-east LNG plants to Arctic developments and Chinese pipelines have come to nothing (or remain stuck on such details as pricing).  As of 2014, Russia remains as unpredictable, risky, and dangerous for an oil company – even a Russian one – to do business as it was in the 1990s.  For a country that picked hydrocarbon development as the sole political-economic strategy in lieu of reforming the economy and engaging with the west, this is a shockingly poor performance.

So what of Putin’s legacy?  If Russia hangs onto Crimea, which it probably will, it might warrant a note in a history book somewhere (offered as much prominence as Khrushchev’s transfer of the peninsula in 1954, which few knew about until recently).  But it’s hardly the stuff to warrant a mention alongside Katherine the Great or Ivan the Terrible.  As I said at the beginning of this post, the modern-day politician (of which Putin is one, no matter how much he wishes he belonged to another era) just doesn’t think big enough to create a proper legacy.  In the grand scheme of things, the annexation of Crimea is mere fiddling, and expensively at that.

The irony is that if he had stood down in 2008, he would have left a legacy of quite some merit.  Had he decided to stay and expended his considerable political capital in ramming through the economic and institutional reforms Russia so desperately needs, he would have created a legacy even greater (albeit one that carried a lot more risk of failure).  Instead it is looking increasingly likely that his early work will be completely undone, and his legacy will be one of having progressed Russia precisely nowhere since he took over, having gone the full circle from crisis-ridden poverty to stable wealth and back to crisis-ridden poverty in just 15 years.  Putin’s is a story more suited to Africa than Russia, with a legacy more akin to Robert Mugabe than Peter the Great.  What a terrible waste.  What a terrible shame.

Posted in Economics, Oil & Gas, Politics, Russia | 11 Comments

Never Truer Words Spoken

In August I wrote a post, the central point of which was Russia ought to tread carefully in its dealings with the west because they might not be as forgiving the next time should Russia find itself once again in a very weak position:

By historical standards Russia, as part of a collapsing empire which had been defeated after a long and often bloody struggle against an ideological, military, and political enemy that remained strong, got off awfully lightly.

Russians might do well to appreciate this, and consider that should a similar situation arise again they might get treated somewhat differently.  History is littered with examples of enemies not being finished off when the chance was there; there are not so many examples of an enemy being forgiven twice.

I envisaged a scenario whereby Republican voices in the US and like-minded politicians in Europe take advantage of a crisis in Russia to ensure another showdown with a government in Moscow cannot happen, i.e. by taking steps to severely hobble the country or dismember it.  It’s unlikely, but nevertheless possible.

Today I came across this article reporting Vladimir Putin making a statement in October which I suspect might be interpretted differently from how he meant it:

“The Cold War has ended,” Putin said yesterday. “But it ended without peace being achieved, without clear and transparent agreements on the new rules and standards.”

Indeed.  And the lesson drawn by some will be that next time around peace will be imposed unconditionally and Russia will be left in absolutely no doubt as to the new rules and standards.

In completely unrelated news, the Russian rouble has suffered its biggest fall since 1998.

Posted in Politics, Russia | 9 Comments

RIP Phil Hughes

At the risk of this blog turning into a series of obituaries, I feel I should say something about the tragic death of Australian cricketer Phil Hughes, who has died two days after being struck on the head with a cricket ball during a Sheffield Shield match at the SCG.

That this is a terrible tragedy doesn’t need repeating by me; at 25 years of age and with a talent that the Australian selectors didn’t fully appreciate, it is a dreadful shame.

But there are two things that I would like to say.  Firstly, among the outpourings of sympathy on social media – which is in danger of turning Diana-esque – few people have mentioned that a year ago Australian cricket fans and media were roaring with enthusiasm at Mitchell Johnson when he was bowling extremely fast bouncers at the English batsmen, with many wishing them physical harm and squealing with delight every time a ball thudded into English flesh or bone.  Not that I blame Mitchell Johnson: he did what anyone with that sort of pace would do, but given how the whole country were happy for him to do it to English batsmen I’m finding it a little hollow that the dangers of aiming bouncers at batsmen’s heads is only now being seen as a problem.  Naturally the Sydney Morning Herald chooses to illustrate an article entitled Time to ban the bouncer? with a photo of Stuart Broad hitting Chris Rogers in the last Ashes and not the snarling Mitchell Johnson close-up that dominated the media at the time.  Hypocrisy, much?

Secondly, I was extremely surprised that a batsmen could suffer such an injury, let alone a fatal one.  Broken noses, smashed ribs, rattled jaws yes; but a fatal blow to the head is something I thought was barely possible.  But then I read that Hughes had attempted to play a hook shot and been hit by the ball – a bouncer – as it rose off the pitch.  And then I read that the ball had struck him on the side/back of the head, behind the side guards which cover the ears.  I suspect he went for the hook, swivelled, and was facing away from the bowler when the ball struck him.  Everyone mis-times strokes, but to mis-time this badly is incredible at Sheffield Shield level: I am still wondering if the video of the incident (which I’ve not looked for, but investigators will have a copy) will show he didn’t even see it coming.  The reason the helmet didn’t protect him is that it is not designed with the expectation that the back of the head will be exposed to the ball; it assumes all impacts will come from the front or angled at the side.  I have no idea why Hughes would attempt to play such a clearly unbalanced and mis-timed shot, but the Australian batting style of recent years seems to be to smash anything and everything out of the ground regardless.  Aggressive bowling is probably what everyone will focus on here but fast bouncers have been part of the game for decades.  What is new is the expectation that such deliveries can be smashed with a haymaker that unbalances the batsman and leaves him facing the wrong way when the ball arrives.  Over-aggressive batting, in other words.

Finally, spare a thought for the bowler Sean Abbott.  There is not a soul on the planet who will blame him for this accident, but he will surely blame himself for the rest of his life.  I hope he does okay.


As TNA points out in the comments, the media coverage of this in Australia is turning into a circus.  This article by 9 News is a case in point:

Michael Clarke has often been the man for a crisis but never before has he stood so strong.

The Australian Test captain has earned plaudits for leading like never before, in a situation so removed from his post, while grieving himself for his close friend Phillip Hughes.

Clarke was singled out for praise by Australian team doctor Peter Brukner for being a rock of support for Hughes’ parents – Greg and Virginia – and siblings Megan and Jason in the bedside vigil at St Vincents Hospital.

It was Clarke who read a statement by the devastated family to a packed press conference at the hospital late Thursday, before having to walk away as emotion overcame him.

Dr Brukner then fought back tears as he credited the captain for providing strength and loving support desperately required in a time of need and sadness.

“Phillip has always been a little brother to Michael,” Dr Brukner said.

“Michael’s efforts over the last 48 hours to support the family; the family was obviously going through a difficult time but I’m not sure they would have coped without Michael’s assistance.

“I was just enormously impressed at the work he did and the genuine care and love he gave to the Hughes family.”

Look, Michael Clarke is a good bloke, a great captain, and a fantastic cricketer.  That is well known already, and if his close relationship with Phil Hughes was not already obvious to some and needed to be highlighted, his role in support of Hughes and his family during the last few days is worthy of a solemn mention, not reams of gibbering tripe like that above.  This is little more than an attempt to put Clarke on a pedestal as some sort of guardian angel to the Hughes martyr, driving on this “nation united by grief” meme which has been in vogue since Diana’s death and is peddled by an unattractive combination of a population desperate to show they “care” and a media desperate to shift more copy.  Clarke doesn’t need to be put on a pedestal: he is doing his job well, both on and off the field, as is expected.  Note this by all means, but spare us the soap opera.

Posted in Sport | 9 Comments

RIP Christophe de Margerie

I spent the last week in a somewhat remote village in Kazakhstan, close to the Uzbek border, visiting a friend who was getting married.  The house in which I was staying did not have a fixed line telephone let alone internet, and with roaming charges coming in at a bargain 13 Euros per Mb I was effectively cut off from my normal information channels.  As such, I received the terrible news that Total’s CEO Christophe de Margerie had been killed in a plane crash in Moscow via text message.

As I managed to scrape together more details I realised with some discomfort that the crash had occurred at Moscow’s Vnukovo airport.  I’d never heard of this airport (always using Sheremetyevo and Domodedovo before) until I transferred through there on my flights between Paris and Shimkent – about 24 hours before the accident. By the time I flew back on the return trip a few days later, the wreckage had been cleared.

There are two things I would like to say.  Firstly, the descriptions of de Margerie as being hugely charismatic, unique, outspoken, and held in high regard are absolutely true.  A couple of years ago he visited us in Nigeria to open a new office, and I turned up to the function in the company of my wife, who was over on a visit.  The Big Moustache stood in front of the crowd of about 100-200 people, and because he was pushed for time waved away the bloke who was standing with his pile of notes and spoke off the cuff.  I don’t remember much about what he actually said, but he delivered it well and his presence filled the room.  What happened next I remembered more.  The Total CEO finished speaking, received the applause, walked a few metres across the room to my wife and asked “Are you Russian?” and then proceeded to entertain the two of us with stories of his trips to Russia for about 15 minutes.  To be honest I didn’t say much, I left the talking to my wife who, with her hotel sales background, can charm just about anybody.  But I did invite him to my birthday party on the following weekend, but sadly he was departing that night.  From this experience I can assure you that he was a man of enormous character and charm, and genuinely likeable.  If you were in a business meeting or a barbecue, you would have wanted Christophe de Margerie there at the top of the invitation list.  To have a drink with he would have been one hell of a lot of fun.  I am sure he will be sadly missed by all those who knew him.  It is a terrible shame.

The second thing I want to talk about is the circumstances of the crash.  What cannot be denied is that this is a freak accident: high-speed collisions with ground objects in an airport of this size are extremely rare (Tenerife in 1977 being an obvious exception), and it must be said that de Margerie was desperately unlucky.  The odds of the CEO of a major oil comany dying in a plane crash like this were negligibly low, but it happened nonetheless.  Naturally, this being Russia, conspiracy theories are now circulating (I will not bother linking to them) to the effect that he was knocked off by the CIA or some other nefarious organisation for opposing the sanctions on Russia (which he did) and – it wouldn’t be a proper conspiracy theory without this one being wheeled out – suggesting oil could be sold in Euros (incidentally: the idea that selling oil in anything other than dollars concerning the Americans one jot doesn’t stand up to a basic comparison of the volume of oil sold daily versus dollars traded).  All of this is nonsense on stilts: nobody had anything to gain by murdering de Margerie, and even if they did there are methods of achieving it (ramming his car with a large lorry, for example) than presumably paying an elderly snowplough driver to time his entry onto the runway with such precision that he can clip the wing of a speeding plane.  It does a grave disservice to de Margerie to even entertain this rubbish.

A lot was said early on about the allegedly intoxicated state of the snowplough driver.  Here is where I think I can add some value.  His family were quick to point out that he had a chronic heart problem and hence could not drink, but I doubt anyone was fooled by that.  He may well have a heart problem and he may well not drink, but nobody familiar with Russia would believe that something like a mere heart condition would stop somebody drinking.  There is a good reason why life expectancy among Russian men is so low.  But even supposing he was “drunk”, I think this is a red herring.  Without advocating that we should all go about our daily business under the influence of alcohol (far from it), it is a fact that when Russians drink – even enough to render a westerner unconscious – they can often still function effectively to the point of operating complex machinery.  This is not a desirable state of affairs as the alcohol will certainly impair things like reaction times, but it is not a question of comparing this to a British teenager crashing his car after drinking in the pub.  If machinery operators, drivers, and pilots being drunk in Russia caused crashes the place would not function at all, especially during the Soviet times.  Drinking is so widespread that Russians joke some guys know how to operate the machinery only when drunk.  I don’t know what percentage of Russian pilots are drunk at the yoke, but I am positive it is higher than the percentage of actual crashes to completed flights.  So my guess is the snowplough driver was “drunk” pretty much every day of his working life and never had an incident, yet on this particular day he was unfortunate enough to have an accident and get breathalysed (there is a strong parallel here with the 2012 Denzil Washington film Flight).  But I doubt it was his alcohol consumption which caused or even contributed to the crash.  I feel extremely sorry for the man – on TV he appears to be completely bewildered, and at 60 years old with a heart condition might well be facing the rest of his life in prison.

So if not a drunk snowplough driver, what did cause the crash?  Put simply: Russian managerial and organisational incompetence.  Obviously there was a huge communication and systems failure here.  A snowplough should be nowhere near a working runway, especially at night, and there should be robust controls in place to ensure this sort of accident does not occur.  Most likely such controls were in place – once – but as is so common in Russia a combination of complacency, bad management, laziness, poor incentives, and general incompetence has meant the controls were circumvented and the safeguards failed.  The snowplough driver said he got lost, which I can well believe is true – if the visibility was a bad as he says it is.  Guaranteed the equipment he was operating would have been from the 1980s or before with no system of indicating to the control tower where it is at any time.  And with the speed snowploughs move even if he got lost he should have been nowhere near a working runway.

I am pleased to see the authorities appear to be taking an interest in the air traffic controllers and head of runway cleaning at Vnukovo, and hopefully the rapid resignations of the airport’s CEO and deputy will not put them beyond the reach of the investigation (but being Russia, chances are some poor sod in the lower ranks will be scapegoated whilst the well-connected bosses who presided over it walk away scott-free.  Russia has form in this area).

Like so many deaths in Russia, this is a tragic accident which probably could have been avoided.  It is a terrible shame for Christophe de Margerie, his family, all those that knew him, Total, the oil industry, and France.  May the Big Moustache live long in our memories.

Posted in France, Russia | 12 Comments

Ah, so it was all bullshit?

This is long overdue:

The European Aviation Safety Agency (EASA) says electronic devices such as mobile phones can be left switched on during flights.

EASA says that electronic devices do not pose a safety risk.

The restriction on using mobile phones was almost as stupid as the requirement to turn off “electronic devices” during taxi, take-off, and landing.  If any aircraft, ever, had displayed the slightest sign of inteference from a mobile phone or other device, the whole fleet would have been grounded immediately.  The “because it may interfere with the aircraft’s navigation system” was a lie, pure and simple.

It came about, in my opinion, due to a confluence of several things which can be observed separately elsewhere.  The first is the phenomenon whereby people feel empowered by a uniform and delight in telling other people what to do, even if this means causing them unnecessary inconvenience.  Pilots have always overestimated their own speciality: modern aircraft are not like those of two or three generations ago, and pilots are simply too numerous for the job to be that difficult.  They do an important job, and you’d want a good one to be at the yoke if something went wrong, but the manner in which they like to portray themselves belongs to an era which has long since passed.  And nothing reinforces their sense of authority more than ordering passengers around in the name of “safety”, not even the tedious reminders that “this is a non-smoking flight” (the last of which took place around 16 years ago, at least in the US) and pointless information regarding the aircraft’s speed and altitude.

Then you have the trolley-dollies who, having to put up with shit from passengers for most of the flight, enjoy nothing more than to harangue them during the fleeting moments they have some authority.  I’ve noticed they’ve even taken to ordering passengers to remove headphones during take-off and landing, no doubt citing the importance of passengers being able to hear announcements in the event of an incident.  Although any passenger who is unaware of an announced incident during take-off or landing is almost certainly unconcious or dead, and not merely listening to music.

Coupled with this is the dumbfuck, luddite mentality amongst most people who lack the basic scientific knowledge to laugh in the face of anyone who says an iPod will interfere with the correct functioning of an aircraft.  Aircraft are constantly bombarded by all sorts of electromagnetic waves, particularly during taxi, take-off, and landing when they are near the airport and other aircraft, who are all communicating with one another.  To the degree that any component of the aircraft could be unduly influenced by electromagnetic radiation – and this is doubtful – the device and its cables would be shielded.  An iPod would produce some electromagnetic radiation, but this would be almost undetectable without specialist equipment set up right next to it.  It is simply impossible for an iPod to interfere with a plane’s equipment.  But most people lack any kind of technical knowledge and, in the fashion of Pavlov’s dogs, simply nod dumbly when somebody in a uniform tells them to do something vaguely to do with technology – even if the person in the uniform is employed primarily on looks.  I particularly hate the request to switch off “all electronic devices” because its ludicrously broad criteria makes it impossible to comply with.  My watch is electronic.  How do I turn it off?

It’s bullshit masquerading as safety compliance, and I hear enough of this in my own industry.  Mobile phones are banned on all operational sites where hydrocarbons may be present, yet there is not a single example, anywhere, of a mobile phone causing a spark.  Mythbusters tested this to death and couldn’t get a solitary spark out of a mobile phone; they also couldn’t get aircraft instruments to react to a mobile phone, either.  Of course, most people will say “well, if it makes us safer, even by a little bit, then it is not too much to ask”, and indeed they do say this.  And they know nothing about risk, and even less about people’s actual preferences: if it wasn’t too much to ask, the stewardesses wouldn’t need to check, would they?

I can see why they banned mobile phones: airlines simply didn’t want the hassle and complaints associated with people taking on phones on an aircraft, so they came up with some safety bullshit as a way to enforce compliance.  But now technology has advanced to the point that money can be made from people making calls on flights, the regulations prohibiting phone use have magically disappeared.

This is welcome, but it’s a shame they had to bullshit us for two decades in the first place.

Posted in Engineering, General Observations, Travel | 22 Comments

The Not-So-Strategic Base in Sevastopol

Alex K. – who appears to be providing me with a lot of blogging fodder these days – has written a post about the propaganda being fed to the Russian population which they appear to be swallowing wholesale.  This – coupled with this post of mine – got me thinking about how little the Russian population queries what they are told by their government compared to that of the UK, for example.

Now don’t get me wrong.  We have plenty of gullible idiots in the UK, and a lot of those who query the government are both wrong and blithering idiots at the same time, so I wouldn’t say the quality of public discourse in the UK is high (just look at the level of debate over Scotland’s independence referendum, for example).  But the inquiry is there, the desire to question and argue, even if wrong.

One of the most often repeated mantra over Russia’s annexation of the Crimea – one which I heard expressed by an educated, well-travelled, westernised, and intelligent Russian friend – is that Putin had no choice to intervene because Russia could not afford to lose its strategic base in Sevastopol, because it is “Russia’s only warm water port” on the Black Sea.

Except it isn’t.  Russia has the port of Novorossiysk on the Black Sea, and it is both large and busy.  What happened was that at the breakup of the Soviet Union the Russians inherited the Soviet fleet which was based in Sevastopol, which is part of Ukraine.  And in the chaos and economic collapse, I’m guessing there was no money or will to move the fleet to Russian territory and so Russia and the Ukraine entered an agreement whereby Russia would rent the base for a fee.  So in the 20 odd years that have passed since the Ukraine went its own way, Russia never bothered to invest the money and effort to move its Black Sea fleet to Novorossiysk, or any other Black Sea port.  Yet they had no problem hosing billions on Sochi, also on the Black Sea, to host the Winter Olympics.  And then in 2014 they decided the port was so vital to their strategic interests that they had to invade the Ukraine to secure it.

Seriously, are the Russians really buying this?  Has nobody asked the question why, if the Black Sea base at Sevastopol was deemed so vitally important to Russia’s strategic interests, why Putin – who has held power for 15 years – didn’t see fit to move it to Russian territory?

There’s a parallel with the UK here.  If Scotland goes independent in the next year or so, the status of the Royal Navy base at Faslane – which is home to the submarines used for launching the Trident nuclear missiles – becomes one of the main topics of negotiation.  The most likely scenario is that the submarines will head to the US temporarily while the London government figures out where best to base them in England or Wales.  But there is a possibility, albeit unlikely, that England could simply lease the base from Scotland in the way Russia leased Sevastopol from Ukraine.  In this event, I rather think the English population would be somewhat skeptical if, after 2o years, England invaded Scotland and annexed part of the country in order to protect its strategic interests in Faslane.  Whatever the merits of doing so, there would be a good portion of the country that would be asking what the hell such a strategic base was doing left in a foreign country for so long.

But in Russia?  No such questions.  My take is that most of them know it’s bollocks, but are happy with the land grab anyway.  Gangster rule it is, then.

(Of course, the other elephant in the room is that Sevastopol is a pretty crap strategic location anyway.  Good for a fleet patrolling the Black Sea perhaps, whoopee, but they still have to get through the Bosphoros and Dardanelles to get anywhere else.  As a location from which to base Russia’s global military reach, it is hardly worth going to war over.  Even the Soviets understood this.)

Posted in Politics, Russia | 10 Comments

An Interesting Choice of Leaders

Alex K. has posted a graphic account of the treatment of a woman suspected of being pro-Ukrainian in the city of Donetsk recently.

I made a comment under the post which I’ve decided to turn into a post of my own, because I am genuinely baffled here.  From what I have seen thus far, and the account above can only serve to reinforce this view, the separatists in east Ukraine are a bunch of violent, armed thugs accountable to nobody (anybody remember MH17?) who have taken it upon themselves to dish out arbitrary punishments to anyone suspected of being against them, operating with impunity and the full support of the Russian government.  And these people claim to represent the ethnic Russians who wish to secede from Kiev’s rule.

Is this seriously what Ukraine’s Russians want, these guys in charge?  I can understand why the thugs want it, but where are the middle classes, the educated Russians, in all this?  Do they honestly believe these roaming gangs of bandits, looking like extras from Mad Max 2, have their best interests in mind?  Or are they as horrified by what is going on as everyone else, but too scared to speak out?

I know a lot will turn a blind eye to the separatists’ methods because they will genuinely see the Ukrainian government as bringing war to their neighbourhoods, but I find it hard to believe that all ethnic Russians will apportion the blame in this manner.  And there is not enough of an ethnic, religious, historical, or cultural divide to generate the hatred that would cause thousands of educated, otherwise decent people to support marauding bands of armed thugs shooting their erstwhile friends and neighbours.

I find the whole thing bewildering.  Personally I think the idea of Scottish independence as presented is laughable (but good luck to them, if that’s what they want), but at least they have leaders who appear to be politicians.  What the east Ukrainians are doing is the equivalent of the Scottish independence movement being led by armed gangs of Glasgow football hooligans on a giant rampage.  Was Kievan rule really so bad that the Ukraine’s Russians see this as an improvement?

The closest parallel I can think of is the Catholics/Republicans in Northern Ireland.  Their independence movement was to a large extent led by murderous thugs (albeit better presented than Ukraine’s equivalents), and their lower ranks enjoyed beating the shit out of anyone they suspected of disloyalty along with running protection rackets and other criminal enterprises.  Yet despite their thuggish violence they still enjoyed the support of much of the ordinary Catholic population.

So perhaps it is the same with Ukraine’s Russians, and they are hopeful that these men will secure them a place in the Russian Federation after which Moscow will take over and the local headcases and Ossetian mercenaries will quietly pack up and go home.  But I’m interested to know where are the educated, semi-respectable (at least on camera) leaders of the separatist movement, the Gerry Adams and Martin McGuinness?  Waiting in the wings in Russia?  Who knows?

But for now, I guess they’re happy with a bunch of shitfaced hooligans who 6 months ago were drinking beer in the local park at 10am.

Posted in Politics, Russia, Ukraine | 11 Comments

Leningrad It Ain’t

Nothing unites Russians so much as their agreement that they did a good job in defeating the Nazis in WWII, and hence this achievement has been wheeled out at various times by politicians looking to shore up their popularity or galvanize the citizenry in support of some nationalistic drive or other.

It was therefore not very surprising when the Russian government potrayed the uprising in Kiev as driven by facists, implying that the rebels in the east were doing pretty much what great uncle Ilya did at Stalingrad in 1942.  It was nonsense from the outset of course.  Regardless of any unsavoury elements involved in the overthrow of the government, those who took over were not the Nazis and they were not bent on elminating ethnic Russians.

Now as Russia steps up their military offensive into Ukraine, the WWII rhetoric is being ramped up.  Yesterday Putin likened the Ukrainian army in east Ukraine to the Nazis at the siege of Leningrad:

“Sad as it might seem, this reminds me of the events of World War II, when the German Nazi occupants surrounded our cities, like Leningrad, and directly shelled those cities and their inhabitants,” Putin said on Friday, speaking at the “Seliger-2014” youth forum.

He recalled the signs in St. Petersburg, preserved since World War II, which warned citizens which side of the road was more vulnerable to shelling.

Now “both towns and cities are surrounded by the Ukrainian army, which is directly shelling residential areas with the purpose of destroying infrastructure, and suppressing the will of those in the resistance,” Putin said.

Perhaps Putin has forgotten the siege of Grozny, which took place under his orders in 1999-2000, where the Russian army bombarded the city indiscriminantly, killing thousands of civilians in a manner not dissimilar to the Nazis at Leningrad.

But leaving that aside, I think he’s blundered here.  The siege of Leningrad, like the battle of Stalingrad, occupies a special place in the minds of Russians for the reason that they undeniably represent incredible suffering, sacrifice, and ultimately victory over an enemy that was determined to destroy them.  The siege of Leningrad needs no propaganda, the facts speak for themselves.  Even those who disliked the USSR and everything it stood for regarded the city with a pride which had nothing to do with its namesake, and it was for this reason that even former dissidents objected to the name change back to St. Petersburg in 1991.

I suspect there are more than a few Russians who will find this clumsy attempt to co-opt such a major event into this latest cause somewhat distasteful, and it would not surprise me if he comes in for considerable cricitism over this in later years, when his inevitable decline and fall occurs, even if nobody will dare say anything now.  The whole speech is an insult to the intelligence of those in the audience, and smacks of desperation.  Little wonder that he chose to share it with a bunch of kids.

Posted in Politics, Russia | 2 Comments