The Price of Oil

L'Ombre de l'Olivier writes of the real reason for the collapse of the Soviet Union and is our first guest blogger: Excellent SF writer Charlie Stross has a post where, inter alia, he links to a fascinating paper by Yegor Gaider (former PM of Russia) on the reasons why the Soviet Union collapsed. It is well worth reading in its entirety but I'll summarize it as: The collectivization of Soviet agriculture meant the Soviet Union could not feed itself To buy food it needed hard currency Hard currency was available by selling oil Unfortunately in the mid 1980s Saudi Arabia decided to drastically increase production and thereby wrecked the sums of the Kremlin and left them in a total mess. The Saudis did this because they perceived that as the best way to stop the Russians gaining more influence on the Arab world and as revenge in part for Afghanistan. The Kremlin tried to borrow money from international banks but in about 1989 the banks decided the Kremlin was a bad credit risk Thereafter the Kremlin got money with lots of strings (e.g. about not using force in E Europe) that led to the collapse of the Soviet Union. This story doesn't mention the "Reagan outspend the military" idea that many Americans are keen on but it doesn't matter directly as indirectly, that idea is true. The Americans made it clear that military attempts to get at more food (or control of oil wells) wouldn't work hence non-military means had to be used. And non-military means meant loans that would be cancelled if the Kremlin did things the bankers didn't like. QED. There are a bunch of lessons that can be drawn from this. One is that if we in the "West" want to kill Islamic fundamentalism, dictatorial totalitarianism and the like probably the best thing we can do is find an alternative energy source that is as cheap as oil and which we can produce ourselves. Another is that a country that can't feed itself is dreadfully vulnerable. (This post also appears at my own blog l'Ombre de l'Olivier )