Quote (Ironfister @ 27 Aug 2022 08:46)
Ok, so we have an inflation.
But what would happen if we keep buying Russian resources like normal?
Imo there would still be a lot of inflation, although little lower.
This is because energy prices went up even before sanctions, and it was nearly spring already. Putin was already on an economic war with EU, limiting gas flow severely.
So on a bad side, we increased our inflation.
Hovewer on a good side, Russians income halved. That was a huge hit for their war effort. Putin is of course a dictator, but even as a dictator he cant cut social spendings to 0, especially when there is a lot of unemployment as a result of the sanctions.
So we would have loads of money on his disposal, and he could have defeated Ukraine already and be preparing for the next war already.
Putin already demanded a lift of sanctions in exchange for gas, he would simply keep asking more and more until winter.
So although current way is hard, we really need to save energy this winter, this is the only way reliable. Once the war started we had to prepare for worst scenario for winter, as Russia isn't reliable anymore.
1. Russia can just print rubles to pay for social spendings. It will take quite some time until inflation kicks in to the degree that this doesn't work anymore, particularly with hard currency ($/€) still coming in from commodity sales to China/India.
2. The current armaments used by Russia were already paid for in recent years; in the short term, Russia's war effort does NOT depend on buying arms with current revenue. They can easily sustain their war effort for a year or two before revenue becomes a limiting factor. The idea that money earned by Russia in Q2 or Q3 of 2022 would have caused Russia to defeat Ukraine already... is quite frankly laughable.
3. If we hadn't signalled that we want to phase out Russian gas in 1-2 years anyway, it would have been a much harder decision for Putin to close the gas tap because it would have meant risking 10, 15, 20 years of revenue.
4. The current inflation of 7-10% would be bearable for a year or two. But who says that inflation is gonna stay there? The real energy crunch hasn't happened yet, it's coming this winter, and we have no idea how much it will further fuel inflation.
5. Do you have a source for the claim that Russia's income has halved? From everything I've read, Russia's
overall commodity revenue (not just from the West but the entire world, including China/India) has remained roughly the same as before the war because drastically higher prices have counteracted the drastically lower sales volume.