…and these are the official figures. The real ones are probably much worse:
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A different viewpoint.
In March 2022, the Institute of International Finance forecast that the Russian economy would contract by 15 percent by year’s end. Yet, over the last year, the Russian economy appears to have shrunk by a considerably lower amount, slightly more than 3 percent.
By the end of 2022, most Western states had substantially reduced or entirely stopped imports of Russian oil, gas and coal. An additional shock to Moscow has come from the corporate exodus of Western firms from Russia. Hundreds of multinationals have left the Russian market, wound up local subsidiaries, or abandoned investment projects altogether.
Certainly, 2022 was a bad year for ordinary Russians. But both the financial crises of 1998 and 2008 and the 2020 pandemic recession caused worse contractions in real GDP growth than the sanctions imposed over the past year — measures once touted as an economic “nuclear option.”
The economic damage is not yet over. The lack of foreign capital, technology and know-how will substantially hamper the country’s future development.
Perhaps most crippling in the long run has been the departure of a vast pool of talented and educated professionals. Hundreds of thousands of Russian I.T. specialists, teachers, academics, engineers and scientists now live in exile in Istanbul; Yerevan, Armenia; and Tashkent, Uzbekistan.
A global “dark fleet” of uninsured and hard-to-trace tankers roams the oceans to deliver Russian oil to buyers everywhere.
Perhaps the most urgent lesson of the sanctions’ limited effects is what they make us miss: the dire economic position of Ukraine and what the West can do to shore it up.
Which is in more acute trouble, a $1.8 trillion economy that has contracted by 3 percent, or a $200-billion economy that has lost one third of its G.D.P.? What the West needs to focus on above all is lasting assistance to Ukraine. While military aid has understandably been paramount in recent debates, the long-term challenge is to move the Ukrainian economy onto a path of full integration with the West. In the meantime, it must be shored up to prevent collapse. This task cannot wait until the war is over.
Some Americans are already complaining about the Ukraine military assistance cost.
What happens when they realize the cost of rebuilding war damaged Ukraine? Our nation will not just walk away.
Now a paper on the disinvestment in Russia:
Simon J. Evenett2
2 Professor of International Trade & Economic Development, Department of Economics, University of
St. Gallen; Founder, the St. Gallen Endowment for Prosperity Through Trade; and Co-Chair of the World
Economic Forum’s Global Future Council on the Future of Trade for the 2023-24 term.
Niccolò Pisani3
3 Professor of Strategy and International Business, IMD Business School.
What’s true? I don’t know.
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It is hypocrisy. If some else is a hero they hate it. If they get to be the hero they love. It is a form of hatred towards the American public. Constantly willing to lie to the American public. I call that hatred.
Not too sure why this is happening
I suspect it is a lie, not that Putin would ever engage in such tactics.
Let’s see, oil price goes up on announcement, good for Russia. He gets to thumb his nose at western sanctions, good for Russia. He continues to sell all available oil in the dark markets, good for Russia.
What’s not to like?
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Probably not true. We control Russia’s price in the market.
Only part of the market.
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Mish about US Russia sanction debate.
https://mishtalk.com/economics/sanction-debate-are-us-sanctions-on-russia-and-china-working-or-backfiring
The debate is between Agathe Demarais, author of Backfire: How Sanctions Reshape the World Against U.S. Interests; and Nicholas Mulder, author of The Economic Weapon: The Rise of Sanctions as a Tool of Modern War
Mulder points out that Russia would not be passive but would adjust to the sanctions That Russia is a big commodity exporter that “gave it a certain amount of leverage over other countries. It’s been able to readjust. It’s had more trade than we expected,
and it’s found backchannels for that trade.”
" The sanctions were never about Russia’s economic collapse. Russia is the ninth-largest economy in the world. I don’t think it was about regime change."
I believe Demarais is moving the goal posts. Most everything I read in the Main Street Media claimed that the sanction would crush the Russian economy.
Neither mention an unintended consequence of the sanctions upon Russia:
https://www.industryweek.com/the-economy/competitiveness/article/21255394/will-bidens-chip-sanctions-work-on-china
Just look at the U.S. sanctions imposed on Russia for Putin’s invasion of Ukraine. India, Spain, Germany and Japan—democratic nations all—have actually increased Russian imports since the invasion began in February.
Anyway Demarais claimed the sanctions were 2 fold. First, a diplomatic message of solidarity with the Ukraine. Yep. And second, the sanction were to be a slow gradual effect the Russian finances & economy. That fact certainly wasn’t report by the MSM. Though apparently that is what the result of the Russian sanctions have obtained so far.
Demarais agreed but claimed that there is a “lot of confusion about the effectiveness of sanctions against Russia because the West’s objectives haven’t been stated very clearly.”
So both are agreement that the Russia capacity to wage war has been degraded by sanctions but the results will be cumulative & gradual. And the pain of the sanction may not be enough to stop a Russian spring offensive.
The Ukrainians are killing more Russian soldiers than they lose. But not in the multiples they need to win a war of attrition.
The American military have advised a strike through Zaporizhzhia to cut off the Crimea from supply to rock the Russians. Such a move could cause the Russians to divert troops from the planned offensive.
The United States military now estimates that 180,000 Russian soldiers and more than 100,000 Ukrainian troops have been killed or wounded in the invasion of Ukraine.
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Why is anyone that wrong and unknowledgeable writing books and blogs? The western cartel is setting the price for Russian oil. The Chinese and Indians sure as heck are not paying a penny more. The price is just under $34 bbl.
It is interesting how little research and following of the news goes into these things. Probably neither author have ever read a public finance book and have never heard of the concept of a western cartel. So such news went way over their heads. It matters. It matters. It matters.
As far as ideas we have not crushed the Russian economy, the Kremlin has just cut its budget in the middle of a war and a domestic agenda both of which it can not afford.
I guess if you want a hardboiled egg in 4.5 minutes you wont be satisfied. If you want the demise of Putin his clock is ticking. The Russian people will do him in later.
What part of the market does the western cartel declaring the price of Russian oil do we not control?
Just because the tankers get through from Russia does not mean the Indians and Chinese along with other parties are paying more than $34 bbl. Why would they?
Tell me of one person who pays EXTRA ON PURPOSE for crude? There is no buyer or nation going to pay more to tell their consumers their citizens the price has to be higher. That does not exist in the marketplace. Russia has zero leverage to get it.
You can now not say the Europeans. That is over with.
There are a couple of tiny exceptions. Hungary is paying more because of pure moronics.
The part that doesn’t move by ship to western ports.
Huh? Which countries?
I get there are a few like Hungary. But which western ports? The Europeans overall are not taking the oil. North Korea? Probably not because I doubt there are pipelines out there.
India, China, and Turkey, according to most reports. India’s imports from Russia are up a metric boatload, for example.
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I know, I know, I know, I know, I know, I know, I know…@$34 bbl.
The western cartel is setting the price for Russian oil. No one other than perhaps the Hungarians are paying more for Russian oil. The Chinese and Indians about 2/3 now of the market for Russian oil are not paying more than $34 bbl. There is no way for Russia to change that. The Chinese and Indians wont pay any more. There is no economic or political reason to pay more. There is no way for the Chinese or Indian powers to tell their buyers to pay a penny more. That is impossible. There are no favors to do for Russian oil.
Calculations by the news agency showed discounts for Urals oil at Russia’s western ports for sale to India under some deals have widened to USD32-35 per barrel when freight is not included in the price.Dec 15, 2022
I did find some Chinese independent refiners would pay more but the evidence in the article was one shipment. The Chinese state is the main buyer of Russian oil not the independents.
It is looking like the $34 is the western cartel price but the numbers in China are bouncing around endlessly. My mistake.
In addition, Russian sellers have also paid $15-$20 per barrel to shipping companies to take crude from Russia to China or India, according to the 10 traders and the invoice.
As a result, Russian companies received only $49.48 per barrel of Urals at Russian ports in January, down 42% year-on-year and just 60% of the European Brent benchmark price, according to the Russian Finance Ministry.
By comparison, a U.S exporter of Mars crude - a grade similar to Urals - would pay about $5-$7 per barrel for shipping a cargo to India. Given a discount of $1.6 per barrel versus the U.S. benchmark WTI, a U.S. exporter would collect some $66 per barrel at a U.S. port, or 90% of the benchmark price.
As the price of oil in general drops the western cartel will lower the caps on Russian oil. This only gets worse…and worse…for the Russian economy.
The trend appears to be persisting. The Russian government’s revenue from oil and gas production and exports fell in January by 46 percent from the same month last year, the Finance Ministry said on Monday.
The difference between the prices of Brent, a global oil benchmark, and Urals, the main type of exported Russian crude, widened to about $40 per barrel in January, according to the energy data company Argus Media. That gap was just a few dollars before the war.
second snippet
Using customs data from India, Mr. Vakulenko, the Russian oil expert, showed that local importers of Russian crude paid almost the same price as Brent crude. A New York Times analysis of the same data produced similar results.
The explanation, Mr. Vakulenko suggested, is that at least part of the large discount on the quoted Urals price had been pocketed by Russian exporters and intermediaries, who then charged a higher price to the buyers in India.
How delightful for the Chinese and Indian economies to be paying less than half of what western countries are paying for energy. Should help their competitive position … as long as it lasts.
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The Indians and Chinese are eyeing higher value added production. Cheap gasoline is not enough for either of them to hang their hats. Both economies have problems right now. The Indians have less infrastructure to make it work and their markets short term are taking a beating over the fraud allegations. The Chinese need to reshuffle their resources to make higher value added production work. That means going without something else.
The staying power of Russia is an emotional subject with cold factual underpinnings.
Linked is a fascinating knowledgble interview of a Russian economist in exile in Uzbekistan by a Russian speaking English scholar. The gist is that the Russian economy was less vulnerable than many of us hoped, and has kept alive despite sanctions, BUT, the grinding of the war has shaken the perceived legitimacy and strength of both the government and the economy, and consequences are coming. Mr Samoilov says Russia will collapse more from internal decay and collapse than from Ukrainian victories.
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