Russia’s stock market has lost 46% of its value since May, with most of the loss coming on the heels of its war in Georgia, sez the New York Times. Russian officials are forecasting an anemic growth rate of 1.8% for next year, down from 13.8% forecast for this year.

In the midst of this, the Russian government is contemplating some heretofore unnecessary interventions in their domestic economy:

The finance minister, Aleksei L. Kudrin, who had opposed investing any of Russia’s $573 billion in hard currency reserves in the domestic market during a milder correction a year ago, this week approved of the idea. Mr. Kudrin added Thursday that the government might also tap money in the state pension fund to invest in equities.

Now it could be that the Russian finance minister thinks equities are currently undervalued due to geopolitical shocks and hence a good buy for the state pension fund. Or it could be that powerful business interests are leaning on their buddies inside government to bail them out using the public’s money.

If it’s the latter and the Russian people wake up one morning to find themselves de-pantsed yet again, it might mean the end of the Putin era. One hopes it is not replaced by something worse.

Daniel Yergin, chairman of Cambridge Energy Research Associates and author of the seminal history of oil, writes a thought-provoking piece in yesterday’s FT. It’s not that prices are soaring due to an increase in the demand, he argues, as much as that the oil companies are facing steeply increasing costs for bringing oil to market. He reasons, therefore, that

the impact of rising oilfield costs and the importance of encouraging investment need to be taken into account when considering a “windfall profits” tax or other new taxes. However attractive politically, the effect would be to constrain investment and to lead to lower production levels than would otherwise be the case.

Crude and blunt measures to help out the little guy at the expense of the big guy often bring more pain on for everybody. It’s an important lesson that never gets learned thoroughly enough.

Anatol Lieven has an important (yet in my view flawed) take on the significance of Kosovo in the Financial Times (via Steve Clemons). I don’t feel particularly great right now so I won’t delve into it too deeply, but my disagreement with Lieven comes down to this:

Kosovo’s independence will inevitably have repercussions for the Georgian separatist regions and Nagorno- Karabakh and Trans Dnestr. For the west to say Kosovo is a unique case is empty, given the obvious parallels.

To resolve these issues and restore elementary consistency to its own position, the west does not need to recognise Abkhaz and South Ossetian independence - something for which Moscow is in any case not asking, given the obvious lessons for some of Russia’s own restive minorities.

Russia’s backing of Serbia’s claims to Kosovo doesn’t have anything to do with them feeling that the rules of the international system are being applied arbitrarily—Russians couldn’t care less about fairness or the international system. They are establishing spheres of influence in Serbia through the purchase of a majority stake in the Serbian oil monopoly (Naftna Industrija Srbije - NIS). There are also plans afoot for gas pipelines to Serbia which could end up serving most of Central Europe, thereby pre-empting the Western-backed Nabucco Pipeline project.

This is pure power politics, and should not be mistaken for anything else. It’s about regional influence and energy dependency. Restoring “elementary consistency” to our positions doesn’t matter one whit. Richard Holbrooke had the right idea back in November of last year—Russia needs to be confronted on this.

From the Post’s headline piece this morning on the possible repercussions of an American strike on Iran:

Asked whether the companies he worked with had contingency plans, he said, “The oil industry does not have contingency plans. We are not military people.”

Fair enough in this scenario, I suppose. Screwed up oil markets due to an attack on Iran is not something one should have had to plan for until earlier this year, when it became distinctly possible that the U.S. was keen on escalation.

But one gets the sense that this kind of mentality runs rampant at oil companies and governments alike. It makes articles such as this one in the Guardian (via Sullivan) far more unsettling.

Jeremy Leggett, one of Britain’s leading environmentalists and the author of *Half Gone*, a book about “peak oil” - defined as the moment when maximum production is reached, said that both the UK government and the energy industry were in “institutionalised denial” and that action should have been taken sooner.

Peak oil is a notoriously controversial subject mostly because it’s so opaque. Are the oil companies withholding information to soothe markets? Are they spreading panic to drive up prices? Or are they just asleep at the wheel?