Thursday, August 14, 2008

Lever Falls in Bush's Lap on Russia-Georgia

High level advisers ponder what the West can do to impact the situation in Georgia. Pentagon Chief Bob Gates spoke to this issue in today's press conference (around the 16:30 mark):

"Russia is interested in Russia's superpower status,......What we have seen in the way they've treated Western businesses, and most recently in this, to reassert Russia's international status and do so in a negative way."

Yesterday, The Carlyle Group announced the sale of affiliate John Maneely Co to a Russian steel company. Novolipetsk will pay $3.5 billion, ensuring a potential 500% return in two short years for the politically connected private equity underwriter (PEU).

Supposedly, the Bush administration is scouring for levers to use against the Russians. Well doggie! One giant lever fell into their lap. But my guess is the sale will be treated as hot potato, passed around from one bureaucrat to another, until the review time passes.

Carlyle's nearly $3 billion in profit is patriotic and obviously furthers American democracy. So what if Russia acquires a company making steel tubes. Ask Saddam Hussein how that same product caused him much grief? Since he can't answer, giant steel tubes raised the specter of a Super Gun, while other tubes could be used to build missiles that deliver nuclear weapons.

"Dictatorial" Russia could soon control and American steel tube manufacturer. If only Carlyle could get them to overpay. Then Bush could pull a Chavez and nationalize John Maneely. Now that might hurt!

What's more likely is CFIUS lays down for the boys on Pennsylvania Avenue. They did it with Standard Aero and Landmark Aviation, purchased by Dubai Aerospace. One might expect over 50 domestic airport operations to raise more concern than a handful of ports. But these are Bushies, looking out for their base. The lever, like Chevron's Burmese gas fields, will go unpressed.