Russia Heads Into an Economic Abyss

Russia Heads Into an Economic Abyss

150 days since the start of the war, economic sanctions imposed on the Russian Federation are beginning to show their first effects. Special Report.

150 days of War are behind us Russia’s
war with Ukraine the largest military
conflict in Europe since World War II is
just as it was eight years ago a
struggle for the world we will live in
for decades to come will the West
pressured by domestic problems accept a
world in which authoritarian regimes
conquer smaller States or will it stand
firm against the local fog in practice
this dilemma was one of the main reasons
why the invasion happened in the first
place the war in chechnya the invasion
of Georgia the annexation of Crimea and
the creation of puppet republics Russia
was forgiven all of these by the West
what’s more it rewarded the Kremlin with
more hydrocarbon Supply deals thus
making itself dependent on them by
locating its own businesses in Russia or
by strengthening the Russian army with
the export of Western Technologies since
the reaction to moscow’s criminal
actions was so soft should we be
surprised that the full-scale war
eventually ensued this time their
reaction is different and the effects on
the Russian economy are fundamental
nevertheless the Russians are playing
all in Having learned that each time
sooner or later the West forgave Moscow
and returned to talks will the same be
the case now
the Russians are aiming to annihilate
Ukrainian subjectivity missile attacks
on public places such as hospitals
schools and universities serve exactly
this purpose it’s a hedge for the
Kremlin in the case of goals of Total
War and full annexation of Ukraine Don
pan out it makes it so that Ukraine’s
most significant Capital that is its
educated youth will have to seek
knowledge in the west and Western
Capital will be reluctant to invest in a
devastated and unstable Land by
destroying the infrastructural fabric of
the country Russia is preemptively
destroying any potential future
competition indicates that some kind of
truce is reached it will be years before
a devastated Ukraine even in peacetime
can manage to reach an adequate level of
development this scheme is quite simple
Russia attacks a civilian Target inside
Ukraine people are killed and the
Kremlin concludes that there was a
Ukrainian Command Center weapons or
ammunition on the side and so it goes on
and on recently there were missile
attacks on Vinita Micah wife denipro
kharkif or Odessa
in Odessa the target of the attack was
the local Seaport of course the time and
place of the attack were no coincidence
the day before an agreement was
announced in Istanbul on the supply of
Ukrainian Grime from Ukrainian ports
toward the markets the deal was
concluded in the presence of Ukrainian
Russian and Turkish Representatives as
well as the UN with Secretary General
Antonio Gutierrez calling the talks a
quote critical step forward roughly 12
hours later Rockets struck Odessa the
Russian explanation was predictable the
target was a Ukrainian warship and
Harpoon missiles in addition to the
effort to annihilate Ukrainian statehood
the cramming also continues to torpedo
the solution to the world food problem
and there are strong indication that
these attempts will continue
meanwhile the Ukrainian president has
stated that Kiev has 10 billion dollars
worth of grain which it can sell now
in the meantime attempts are being made
to exported bypassing Russia a 130 ship
traffic jam has formed at the mouth of
the Danube River in Romania at The
Bistro and zulina canals the situation
shows well that there is no reason to
believe that any attempts at the
ceasefire or even a truce will be
respected by the Kremlin it is in
moscow’s interest to permanently
destabilize Ukraine and thus destabilize
the European continent which will have a
profound effect on All European Union
countries
the only remedy for this problem is to
deprive Russia of the possibility of
making such an impact and this is both
so little and yet so much but this can
be achieved by equipping Ukraine with
the appropriate preventive measures
which first and foremost are military
technology that is unattainable for
Russia as well as increasingly strong
economic pressure and it is to this
subject that will now devote a closer
look
many consider the Western sanctions
imposed on Russia to be ineffective amid
the continuation of The kremlin’s Bold
and arrogant rhetoric which is
reinforced by The Narrative of Russian
policy makers that it is the west and in
particular Europe not Russia that
suffers from the economic restrictions
imposed there is no doubt that Russia
gains from Europe’s dependence on its
hydrocarbons which it sells to Western
governments in the face of the coming
winter at record prices but it is only
part of the picture that moscow’s is
portraying as its tremendous success
a recent report by the Yale School of
Management which presents the state of
the Russian economy in a broader context
in fact shows that the Russian economy
is in Dire Straits
the report’s authors stressed that
Western perception is deeply affected by
reports released by the Russians which
are primarily propaganda statistics are
selectively chosen to fit the overall
narrative in contrast the Yale team took
unconventional data sources high
frequency consumer data reports from
Russia’s main training partners and the
Deep analysis of shipping data and these
show that 60 of the Russian government’s
income comes from the sale of energy
resources this is a dreadful dependency
and a major weakness in the Russian
economy for example in terms of natural
gas which steals the headlines of many
European dailies Russia is far more
dependent on Europe than Europe is on
Russia 83 percent of its exports go to
Europe which is already diversifying in
droves Moscow sells just two percent of
its gas to China all this is taking a
toll on the Russian budget because in a
conditioning the Kremlin playing all in
is cutting supplies to Europe and thus
receiving less Revenue so much so that
in June U.S gas supplies of natural gas
to Europe were greater than Russian
supplies there is a lot of hype about
recalibrating Russian exports to Asia
but Asian gas pipelines have only a
fraction of the capacity of the European
pipeline Network in the long run Russia
faces losing the Lions share of its
profits in the face of European energy
diversification and it is already
putting 60 percent of its National
revenue on the line by threatening
Europe with a cut in Supply as it turns
out Russian Roulette did not just come
from anywhere
another area in which Moscow is
experiencing a deep slump is Imports
which make up 20 percent of the
country’s GDP quote despite some
lingering clickness Russian Imports have
largely collapsed and the country faces
Stark challenges securing crucial inputs
parts and Technology from hesitant trade
Partners leading to widespread supply
shortages within its domestic economy
unquote says the Yale report
looking at data from the kremlin’s main
trading partners and let’s recall that
the Russians have no desire to share the
economic success of their quote Special
Operation and do not release their own
reports one can see that Russian Imports
collapsed by a whopping 50 in the first
months after the invasion Russian
domestic production despite the illusion
of self-sufficiency stagnated due to a
shortage of basic components meanwhile
the sectors most dependent on
International Supply chains are
experiencing 40 to 60 percent inflation
for example Car Sales have fallen from
an average of 100 000 units sold per
month to 27 000 in June and these are
mostly primitive Russian automobiles
while the sales of foreign cars have
fallen by a massive 90 percent
and this is compounded by a massive Hull
caused by the mass Exodus of foreign
investment more than 1 000 foreign
companies that suspended or terminated
their operations in Russia had made up
about 40 percent of the country’s GDP or
600 billion dollars in addition these
companies employed about 1 million
people in Russia the investment value of
these companies accounts for the vast
majority of total foreign investment in
Russia since the collapse of the Soviet
Union
and thus in three months Putin managed
to destroy Capital that had been built
up for more than 30 years of course this
does not mean that Russia’s GDP will
shrink by 40 percent overnight some
entities have been sold to Russians some
are in the process of leaving the market
and some are on hold but the loss of
know-how Specialists or the inflows of
new capital means that the most
devastating effects will be felt within
a few years the Yale analysts predict
all the best educated young Russians
were associated with these companies
that’s why the Russian Federation is now
experiencing the biggest brain drain in
decades it is impossible to estimate the
scale of emigration Russia is facing
accurately say the reports otters but
most estimates point to a number of no
less than 500 000 people
this pool includes 15 000 people who are
among the richest Russians accounting
for 20 percent of the total rich people
group
these Russians with significant wealth
are seeking the stability security and
freedom of Western markets especially as
Russia loses access to them these people
are taking their Capital with them the
Russian Central Bank itself admits in
its report that 70 billion dollars
flowed out of Russia in the first
quarter of the year a major
underestimate according to the Yale
experts and this is in spite of the
stringent Capital controls imposed by
the Kremlin other Capital transfers
which certainly took place were
therefore not captured by the Central
Bank of Russia a frequent destination
for the fleeing Russian upper class is
the Middle East and cities such as Dubai
which has caused real estate prices in
the area to Skyrocket real estate sales
to Russians in Dubai had a year-on-year
increase of up to 200 percent
going forward the kremlin’s foreign
exchange reserves which were one of the
Russians main safeguards before the war
are shrinking at the remarkable rate
before the war they amounted to some 640
billion dollars of this 300 billion
dollars was frozen by Allied countries
of the remaining 340 billion dollars the
Kremlin has already used some 75 billion
dollars since the start of the war which
would mean that they are falling at a
rate of 180 billion dollars a year in
two years therefore Russia will have
drained all of its available Reserves
later in the report the authors
punctuated the artificial bailout of the
ruble exchange rate and conclude quote
Putin is resorting to patently
unsustainable dramatic fiscal and
monetary intervention to smooth over
this structural economic weaknesses
which has already sent his government
budget into deficit for the first time
in years and dried his foreign Reserve
even with high energy prices and Kremlin
finances are in much much more Dire
Straits than conventionally understood
the reports authors conclude that quote
looking ahead there is no path of an
economic Oblivion for Russia as long as
the Allied countries remain unified in
maintaining and increasing sanctions
pressure against Russia defeatist
headlines arguing that Russia’s economy
has bounced back are simply not factual
the facts are that by any metric and on
any level the Russian economy is reeling
and now it is not the time to step on
the brakes unquote
it doesn’t look like this will happen as
the European Union has agreed on the
seventh round of sanctions against
Russia this time targeting gold exports
as well as new individuals and entities
for example the assets of Russia’s
largest bank is Burbank are said to be
frozen
the picture that the Yale report paints
out is quite clear each successive month
is one step closer to the economic
collapse of the Russian economy whose
problems contrary to General perception
are of unprecedented magnitude
nevertheless the Kremlin is playing all
in putting a good face on a bad game it
is betting everything on the victory
with Ukraine this strategy is not
entirely without logic as kiev’s economy
for obvious reasons is in an even
tougher position than moscow’s the
difference is that Kiev has behind it an
economic Powerhouse 40 times the size of
the Russian Federation if Ukraine
receives constant economic and Military
Support from the West Russia will not
win this war nevertheless on the front
line the situation remains difficult all
the time but there will be more on that
in the next episode of the mapped series
that’s coming soon

 

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