What are grown-up investors to make of relations between Russia and the West? The rhetoric emanating from politicians and media commentators, in the US and UK at least, seems to be drawn from another era. Mainstream British and American newspapers are full of coverage about the Kremlin’s connections to US President Donald Trump, Secretary of State Rex Tillerson and Trump’s former National Security Advisor Michael Flynn. Some headlines go into full Cold War retro mode, talking of spy swaps and “Soviet agents”.
Russia’s official media has, typically, responded in spades. Against the background of the Ukraine crisis and related sanctions, accusations of “Kremlin meddling” in the US election have been met with more, even harsher, anti-Western rhetoric from Moscow. Such spiralling paranoia makes it seem like we’re through a bizarre re-run of the halcyon days of McCarthyism and Mutually Assured Destruction.
What are we to make of last week’s deal to freeze oil output between Saudi Arabia and Russia – the world’s two leading crude exporters? Is it significant and is the price of oil now likely to rise?
This agreement is remarkable in the sense that there typically isn’t much love lost between Riyadh and Moscow. While Saudi has traditionally been the beating heart of Opec, Russia has always sat staunchly outside the 56-year old oil exporters’ cartel, just like the Soviet Union before it. The fact that the Desert Kingdom has long been a US-ally (albeit to varying degrees) has also helped stoke Russo-Saudi tensions.
For several days in late July and early August, thousands of farmers across North East France used tractors to obstruct roads from Germany. The aim was to prevent trucks carrying agricultural goods from crossing the Rhine. In South West France, too, more Gallic protesters, similarly mounted on tractors, blocked farm produce coming from Spain.
In Russia, meanwhile, customs authorities invited TV cameras to film the destruction of 20 tons of French and Spanish cheese using a bulldozer, while crushing a range of other foods – including bacon, tomatoes and nectarines.
These two bizarre events – French tractors stopping food imports from within the EU, and televised “fromagicide” – are not unrelated. Both stem from Moscow’s decision a year ago to ban farm produce from America, Canada, Norway, Australia and, most significantly, members of the EU.
Russia’s recent “pivot East” has become a geopolitical cliché. It’s now widely understood that one of the most significant consequences of sanctions imposed by America and (less enthusiastically) the European Union has been significantly to strengthen relations between Moscow and Beijing.
Enemies for much of the Cold War, Russia and China have been building serious commercial and diplomatic ties across their 2,700-mile border for well over a decade. Since 2002, their bilateral trade has grown 7-fold, to almost $100bn annually, as both sides recognize the economic synergies between the world’s largest energy exporter and the biggest and most populous manufacturer on the planet.
What was the most significant geo-political event of 2014? It depends on your perspective. The return of American military intervention in the Middle East – including strikes against jihadist insurgents in Iraq, with US and Iranian planes sharing the same airspace – was an important moment. Washington also intervened in Syria’s messy civil war in 2014, an on-going four-year conflict that has so far cost an estimated 250,000 lives.
Those focussed on domestic issues may rightly regard the vote against Scottish independence, the preservation of our now 308-year-old United Kingdom, as the most important event of last year – even if, as seems increasingly likely, we’ll face another independence referendum relatively soon.
Both the ousting of Ukraine’s President Yanukovich last February and Russia’s subsequent annexation of Crimea are up there among the major international developments of the last twelve months. Certainly, the geo-political aftershocks of both moves could be with us for years to come.
“Be careful what you wish for, because you just might get it”. Some say this aphorism has Spanish origins. Others attribute it to Oscar Wilde. Wherever it comes from, as sayings go, this one contains much truth. Getting what you want can indeed have unseen and unpleasant consequences. That’s worth remembering, as we celebrate cheaper oil, while watching the Russian rouble plunge.
Since mid-summer, the rouble has largely tracked the decline in global oil prices. Last week everything changed. Crude remained stable but the Russian currency collapsed, losing a third of its dollar value in a day. Responding to “Black Monday”, Russia’s central bank hiked interest rates from 10.5pc to 17pc.
I’m struggling to identify any agreement of real political or commercial significance that was struck during the 2-day Brisbane G20 summit in mid-November. Yes – a chunky 800-page communiqué was released as the various Heads of Government flew from Australia’s east coast. It consisted, though, of little apart from grand words and vague aspirations, with almost no costings, let alone information on sources of actual finance.
The leaders of the G20 nations – accounting for around four-fifths of the world economy – want an additional 2pc of growth by 2018, we were told. Beyond the simple mention of “investment, trade and competition”, there were few details on how this extra growth would be achieved.