Having just posted two blog articles about the ongoing conflict between the US and Russia, this news article caught my attention. It suggests that President Obama acknowledged in an NPR interview that the US is behind the sharply lower oil prices in order to weaken Russia. While we think this is certainly possible, that is not exactly what the President said in the NPR interview. Below are the relevant news articles. Then a few comments.
-----------------------------------------------------------------------------------------------------Obama Recognizes Oil Price Drop Part of Strategy Against Russia
"The U.S. President acknowledged the hostile policy directed at weakening Russia’s economy.
In an interview with National Public Radio released Monday, U.S. president Barack Obama acknowledged that the sanctions against Russia as well as falling oil prices have been directed at weakening Russia’s economy."
"I said at the time we don't want war with Russia, but we can apply steady (sanctions) pressure working with our European partners," Obama said, referring to the U.S. and EU sanctions applied after Crimea voted to become a Russian territory."
"Obama also noted that the sanctions were aimed at making "the Russian economy vulnerable enough so that in case of oil price shocks ... (the economy would) have enormous difficulties. Part of our rationale in this process was that the only thing keeping that economy afloat was the price of oil," Obama said. The US president recognized the actions of its Western allies were based on "exerting permanent pressure.”
”And today, I'd sense that at least outside of Russia, maybe some people are thinking what Putin did wasn't so smart,” Obama continued."
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Now here is the link to the actual NPR interview and below that the actual direct quote from the President from this interview:
NPR Interview with Steve Inskeep
excerpt from the interview (Inskeep comments in bold)
"But I think that one of the things I've learned over six years, and it doesn't always suit the news cycle, is having some strategic patience. You'll recall that three or four months ago, everybody in Washington was convinced that President Putin was a genius ..."
... for taking Crimea ...
"And he had outmaneuvered all of us and he had, you know, bullied and, you know, strategized his way into expanding Russian power. And I said at the time we don't want war with Russia but we can apply steady pressure working with our European partners, being the backbone of an international coalition to oppose Russia's violation of another country's sovereignty, and that over time, this would be a strategic mistake by Russia."
"And today, you know, I'd sense that at least outside of Russia, maybe some people are thinking what Putin did wasn't so smart."
Are you just lucky that the price of oil went down and therefore their currency collapsed or ...
Well ...
Is it something that you did?
"If you'll recall, their economy was already contracting and capital was fleeing even before oil collapsed. And part of our rationale in this process was that the only thing keeping that economy afloat was the price of oil."
"And if, in fact, we were steady in applying sanction pressure, which we have been, that over time it would make the economy of Russia sufficiently vulnerable that if and when there were disruptions with respect to the price of oil — which, inevitably, there are going to be sometime, if not this year then next year or the year after — that they'd have enormous difficulty managing it."
"I say that, not to suggest that we've solved Ukraine, but I'm saying that to give an indication that when it comes to the international stage, these problems are big, they're difficult, they're messy. But wherever we have been involved over the last several years, I think the outcome has been better because of American leadership."
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My added comments:
This is a good illustration of why it is important to always review the actual information source when you look at news articles. The first article is clearly trying to quote the President as saying the US was directly involved in the oil price drop to add more pressure on Russia.
When you read the actual quote however, it sounds different. The President clearly does not say the US is causing the oil price drop. He says the US felt that sooner or later oil prices would drop making the sanctions more powerful. He leaves the impression that the US did not cause the drop, but just planned to take advantage of it since it was "inevitable" there would be an oil price disruption sooner or later.
Of course, this does not mean the US was not involved in the Saudi decision to let the oil price fall. The US is not going to publicly admit that and we would be naive to think that the US had no influence in this situation. The point here is the difference between what the President actually said and how it was reported in the first article above. It's important to separate news facts from news opinions.
Also, notice how the President makes it clear that the US is in this for the long term. He talks about waiting up to 3 years for oil prices to fall if need be to put more pressure on Russia. This backs up our earlier blog post that both sides seem to be digging in for a long conflict. In the first half of 2015, what happens in the Ukraine will give us an early signal of how things are going. So far, neither side seems ready to back down.
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