Where do you find free cheese?

In what may be the biggest auction since Moscow and Washington vied for influence in various third world countries during the Cold War, Ukraine (pop: 45 million) is attracting some hefty bids.  Russian President Vladimir Putin yesterday upped the ante:  he plunked down $15 billion to buy potentially worthless Ukrainian government bonds and cut the price of Russian natural gas (by what I figure is one third).  At the same time, he said he wasn’t insisting on Ukraine joining his Eurasian customs union.  He figures the European Union won’t be willing to match that.

That does not mean “game over,” because the demonstrators are still in Maidan calling for President Yanukovich to sign an association agreement with the EU, one that Catherine Ashton is claiming will not hurt Russia’s interests in Ukraine.  It would open Ukrainian markets and force its producers to adjust, which is why Yanukovich is asking for another 20 billion euros (per year!) from Brussels.  I suppose he may still get some substantial fraction of that, provided he didn’t make the mistake of promising Putin he would not sign with the EU.  The parliamentary opposition is threatening to block the Russian deal, prompting the choicist comment I’ve heard on the situation:

I know of only one place where you can find free cheese – and that’s in a mouse-trap

A cartoon sent to me yesterday portrays two demonstrators, one with a sign saying no to Moscow’s orders and the other saying he prefers Europe’s diktats.  I would too, but the irony is still appropriate.

There is a bubble in international relations elsewhere too.  Saudi Arabia is pledging to match and raise Moscow’s bid for Syria, which includes weapons, cash and diplomatic support.  Iran and Hizbollah are pouring resources into that fight as well.  The Gulf states have plunked down more than $10 billion for Egypt, countering American and Turkish hesitation about the coup that ended President Morsi’s year in office. China’s establishment of an air defense identification zone in the East China Sea has Secretary of State John Kerry careening through the Pacific dropping admittedly small morsels of military, humanitarian and economic assistance everywhere he goes.  Turkey is enjoying the spectacle as Erbil–the capital of Iraqi Kurdistan–and Baghdad vie to supply their northern neighbor with oil.

I suppose it is natural that in a period of upheaval and shifting power relations that those with cash try to buy as many friends they can.  But I don’t remember a stronger bull market in international relations.  Is it a bubble that might burst soon, or are we still just at the beginning of a secular rise in the price of international friends?