The Wages of War: Oil,
Myths and Airline Leases
THURSDAY, MARCH 3, 2022 -- One week into this and our admiration for the Ukrainian people's seemingly unbreakable determination to resist is giving way to an ugly reality: Even as they screw up, the Russians are grinding Ukraine into dust to achieve their perverted, disgusting goals.

I don't know where we'll be a week, but here is what you should know now and maybe missed as this tragedy unfolds in real time on our TV screens.

I warned you last week that Russia's invasion of Ukraine would increase the price of flying because oil prices would skyrocket. Brent Crude, which most closely tracks jet-fuel prices, this week surged past $110 a barrel for the first time in nearly a decade. It's also double the price of Brent in February, 2020, just before the pandemic hit. Airlines aren't nimble in the best of times. Energy prices doubling in two years is far beyond their capacity to adapt without raising fares and/or adding fuel surcharges.

Just to depress you a little bit more: Even before the invasion, jet-fuel prices were spiking. According to government statistics, a gallon of jet fuel averaged $2.36 in January, the highest price since 2014. Watch your wallets going forward.

Here's the thing about airlines: They hate owning airplanes. Fifty years ago, about 1% of the global fleet was leased. Last year, it was 51%. An entire industry--more than 300 lessors--has been built around the airlines' reluctance to own what they fly.

The Russian invasion threatens to upend that status quo, too.

An agreement you've never heard of--The Cape Town Convention of 2001--binds most of the world's leading aviation nations to a fairly simple idea: The owners of commercial aircraft can repossess their planes without interference from government authorities. Russia has been a signatory to Cape Town since 2011.

The sanctions slapped on Russia means that the lessors of planes operated by Aeroflot, S7, UTAir and others need to repossess them. That would essentially ground Russia's aviation industry since around 750 of its combined fleet of about 1,000 aircraft is leased.

Surprise! Convention be damned. Russia isn't having it. Its Ministry of Transportation is considering nationalizing the leased aircraft to keep Russian airlines flying. If that happens, the lessors are on the hook for billions of dollars of losses and only a tiny portion of it is insured.

Among the bazillion lies that Putin has told in the run-up to and during this invasion has been his repeated claim that Ukrainian leaders are Nazis and his stated goal is to "de-Nazify" the Ukrainian Army and government.

This absurd and ludicrous propaganda may seem peculiar to Western ears, but not to Russians. It is an article of faith in Russia that the Soviet Union's huge sacrifices of blood and treasure in World War II depleted the Nazis and led to Germany's eventual defeat. The brutal Nazi siege of Stalingrad is an open wound even now. No Russian forgets that the Battle of Stalingrad, which lasted for nearly six months, was the deadliest of World War II.

Putin lying about Nazis in Ukraine is transparent bullshit, but the memories and images his lies raise in the Russian psyche are very real.

A comedian who once played an accidental Ukrainian president in a sitcom, Volodymyr Zelensky has already become a folk hero and the face of the resistance and resilience of the Ukrainian people. He's Churchill, standing alone and rallying Britain against the Nazis during the blitz. He's Washington, the father of his nation. And he's the anti-Putin, standing up to the bombs and bullets to protect his nearly helpless nation against the big bully next door.

Memes and myths are standard stuff in wars. But there is one amazing bit of anti-mythmaking you may have missed. The U.S. government's decision to publicly release in real time what we knew about the Russian build-up and invasion plans was a brilliant move. It deprived Putin of the chance to find fertile ground for his lies. The entire world knew in real time that he was planning to invade. Because the U.S. government released everything it knew about what was to come, Putin had no opportunity to build a coalition of gullible both-siders and apologists. No one save his few allies believed Putin's claimd about Nazis, secret Ukrainian attack plans and other bits of propaganda.

Putin's crackdown on anything approximating a free press was largely complete before his invasion of Ukraine. And as his troops slog through his Ukrainian invasion, his police forces back home have shut down the last vestiges of independent media. On television, radio and in print, Russia sees, hears and reads only what Putin wants it to see, hear and read.

Which is why you shouldn't wring your hands over financial or emotional damage done to the average Russian by Western sanctions. Unless they are young and can access social media--and Putin is moving on it, too--the Russian people will only learn about what Putin is doing in their name through sanctions. When they have to line up at an ATM to pull nearly worthless rubles out of a bank or when Apple Pay won't work or when they can't shop at IKEA or can't fly to Italy or France, they will wonder why this is happening. Some will do the work to learn the truth about Putin's war.

When enough Russians learn what's being done in their name, they may find a way to stand up to Putin and force him out or force him to end the carnage.