Hi Tosha

Russian fascist the worst

Vladimir Putin isn’t just losing in Ukraine — he’s set Russia’s economy back 40 years

Ukraine has both the will and the means to win its fight against Russia

To win a war you need will and means. I am cautiously optimistic that Ukraine has both in its fight against Russia.

Ukrainian will increases with every mass grave of murdered civilians uncovered and with every liberated Ukrainian village. For Ukrainians this war is no longer about territory but about survival as a nation — its invader believes Ukraine doesn’t have the right to exist (I wrote about that here).

The means of the Ukrainian army has increased substantially over the past few months. In addition to receiving more modern equipment from NATO, the Ukrainians enjoyed a larger weapon transfer from the Russian side to the Ukrainian than NATO had provided when they pushed Russian army out of Kharkiv Oblast. Ukrainians know how to use this equipment and can start using it immediately.

Russian President Vladimir Putin’s potential strategies are weak:

First, win the war by force – this one is not working out so well.

Second, scare the West economically. So far this has not worked. Europe filled up its gas reserves and through economizing is confident that it can get through the winter.

The last card Putin has left is the threat of nuclear war. From what I’ve read, tactical nuclear weapons will accomplish little from a military perspective, but they do have a significant psychological impact. The West has drawn a red line, telling Putin that if he uses nuclear weapons, the Russian army will face conventional forces. The Russian army is not a match for NATO’s.
The mobilization

The troop mobilization Putin has enacted may destabilize his regime. As I was growing up in Russia, my parents were terrified of my brothers and I turning 17 and being drafted into the Russian army. The Afghan war was over; my and other parents of boys did not fear for our lives but for our sanity. Being drafted into the Russian army then was like serving a three-year prison sentence. Older soldiers constantly abused younger ones.

I can only imagine the agony Russian parents go through, fearing that their sons will be drafted and, without proper training or equipment, sent to the front line within two weeks to become cannon fodder for Ukrainian artillery.

With every grieving parent, the Russian political system becomes a little bit less stable. Large-scale protests in Russia could happen tomorrow or years from now, but the chances of it happening are exponentially higher with parents living in fear for their sons’ future.

The Russian economy

This war has set the Russian economy back 40 years. On the surface Russia today looks very different from the Russia of the 1980s that I remember. This Russia has beautiful, modern supermarkets which still, to my surprise, are full of food.

Yet due to sanctions and the voluntary withdrawal from Russia of Western firms, Russia will eventually be frozen in time. I’m thinking of Cuba when I say this. Cuba looks today the same way it did in 1959 when Castro came to power and the West imposed a trade embargo.

Yes, Russians will miss McDonald’s and Coca Cola, but that is not such a great loss. More painful is the loss of advanced technology — semiconductors, software, complex manufacturing. Russia has little of this. Today you cannot build a car or washing machine without semiconductors. This is why Russian auto production is down by half since the war started and washing machine production has dropped from 600,000 units a month to 100,000.

A wild card here is China. China has some technologies that Russia needs, such as oil drilling equipment and spare parts for planes. Will China risk sanctions from the U.S. and Europe by exporting such things to Russia? I don’t know. After Visa and Mastercard cut off Russia from their networks, basically preventing Russians from using rubles outside of Russia, China stopped onboarding Russians to their own credit card network.

Sanctions have crippled Russia’s ability to produce enough weapons to fight its war. Moreover, Russia needs every weapon it can get to replace what it has lost. Russia has already resorted to using tanks from the 1970s. Finally, this war has been a sad infomercial for Russian weapons. India used to import half of its weapons from Russia. Now, the U.S. and Europe will likely become the sole providers of weapons to India – another tailwind for defense contractors. After the war is over, Russia will be selling its weapons to rogue regimes such as Iran and North Korea, but the market for its weapons has shrunk considerably since February.

Until the war the Russian economy was doing fairly well. Russians shouldn’t thank their leaders for this but give a warm hug to their neighbor to the East. China’s insane growth (by any modern standard) drove demand for all commodities (China is a commodity-poor nation). Prices of most commodities have gone up a lot, and Russia benefited. Putin jumped right aboard and took credit for the economic rebirth of Russia.

Yet other than mastering the production of commodities and food with the help of Western technologies, Russia has achieved little on its own. Russia even imported from Germany the steel used to manufacture its tanks.

A crucial consequence of the war is that Western oil companies have left Russia. In addition to providing capital, they brought technology and knowhow. Both are now gone. Russia is the world’s third-largest producer of oil, behind the U.S. and Saudi Arabia, producing 11 million barrels a day. The recession that we are going to find ourselves in will reduce demand for petrochemicals, though not by much. (Historically, recessions have reduced the rate of growth of demand for petrochemicals but did not lead to declines.) The supply oil and natural gas from Russia will not be growing and likely will be shrinking. Europe will have a challenging winter, but it appears that the Russian economy will be challenged just to survive.

Unlike Palasan, I'll provide links: https://www.economist.com/finance-and-economics/2022/10/11/as-europe-falls-into-recession-russia-climbs-out

As Europe falls into recession, Russia climbs out

Real-time data show a subdued but strengthening economy

These days Russians do not have much to boast about, so they take what they can get. Social-media trolls are posting videos, intended for European audiences, showing gas stoves left on full blast. What might cost hundreds of euros in Berlin comes to a few roubles in Moscow. The taunting is childish, but it hints at a deeper truth: the economic war between Russia and the West is at a delicate moment. While Europe teeters on the brink of recession, Russia is emerging from one.

Western sanctions, launched in response to Vladimir Putin’s invasion of Ukraine, have wounded Russia’s long-term prospects. Blocking the world’s ninth-largest economy from accessing foreign tech and expertise has cut its growth potential by as much as half, forecasts suggest. Output of oil and gas, the lifeblood of Russia’s economy, is about 3% lower than before the invasion and may fall further once European embargoes come into effect at the turn of the year. In the first six months of the war between 250,000 and 500,000 Russians fled the country, reckons Liam Peach of Capital Economics, a consultancy. Lots were highly educated and well paid.

Mr Putin’s recent decision to launch a partial mobilisation has dealt a further economic blow. It provoked a small bank run as people again worried about the future of the country. By our estimates Russians pulled out $14bn-worth of rouble deposits in September, about a third as much as in February. Another 300,000 or so Russians have probably fled. A further reduction in the labour force is worsening shortages, and thus compounding inflation. Headline inflation is sharply down from its peak, but price pressure in the labour-intensive services sector is worsening.



Despite these problems, the recession has probably now come to an end. Many doubt official gdp data, but it is possible to get a sense of activity from a range of sources. Goldman Sachs, a bank, produces a “current-activity indicator”, which follows how economies are doing month to month. The data suggest Russian activity is livelier than in other big European countries (see chart). A spending measure produced by Sberbank, another bank, wobbled following the mobilisation decree but has since edged up. Output in the car industry, which a few months ago had practically fallen to zero, has also bounced back, suggesting producers have obtained supplies from outside the West. In dollar terms Russia’s monthly goods imports now almost certainly exceed last year’s average.

In its recent forecasts, the imf upgraded Russia’s prospects for 2022. In April it thought that Russian gdp would fall by 8.5%. It now expects a decline of 3.4%. This is nothing to gloat about, but it is manageable. Indeed, the data suggest Russia will be able to maintain its military spending. In September the government put out a draft budget for 2023-25. According to Elina Ribakova of the Institute of International Finance, an industry group, it implies large increases in war-related spending in the coming years, particularly on internal “security”. Having avoided economic collapse, Mr Putin expects to double down, both abroad and at home.

Russia's economy was saved by the soaring world market prices of oil and natural gas. If the American fracking industry had been strong like from 2014 through 2019, it could have mitigated the upward pressure on these prices and Russia would have been fucked. Thanks Biden, thanks green agenda.

This post was edited by Black XistenZ on Nov 19 2022 12:17pm

We've been over this. Europe buying gas at LNG prices destroys European business. It's not possible to make it cheap enough to be competitive because it requires more of everything - time, labour, capital investment, transport. Europe is hosed, the only way out was to resolve the war and turn NS back on and America is making sure neither of those things happen.

And in something I am sure you will interpret as being entirely unrelated, America is targeting Euro businesses for capture: https://www.ft.com/content/0a78d7e8-c148-41a2-ba9e-6fedd89d2e04

Europe's at war, for sure. It just confused who it was at war with.

There is a reason that happened and it isn't because of a green agenda.

This post was edited by ownyaah on Nov 19 2022 12:25pm

Also, the 'green agenda' isn't at odds with any of this. Europe just needed to build a bunch of nuclear plants. Problem is that the only way to do that in a timely manner is through state-led industrial policy, and decades of neoliberalization have withered both the state's existing power to do these things as well as the political climate to retake that power.

France used to be able to go from site selection to turning the reactors on in just 5-7 years. Now it takes decades and struggles through PPP nightmares.

Very large part of nuclear fuels (enrichment) is done in Russia, and nuclear facilities around the world are owned or built by them as well.

There is a reason they have completely avoided sanctions on nuclear sector of Russia. They don't even talk about this.

This post was edited by ownyaah on Nov 19 2022 12:34pm

Ah, I did know this but forgot about it.

Doesn't France just steal all it's Uranium from Africa? They could have built their own enrichment systems, surely.

But we're multiple layers of retconning the situation deep, now. If Europe had a strong enough state to do these things, it would have been due to resisting the neoliberal trend that mostly favours Washington and thus perhaps they wouldn't be in this war in the first place, making the whole thing moot.

Europe played the game wrong and now it is going to be turned into one big Portugal.