Posted on 08/20/2022 7:45:40 PM PDT by Mount Athos
Russia’s economy shrank by 4 percent year-on-year over the second quarter, according to data published by Russian federal statistics service Rosstat. The plunge, though significant in absolute terms, was not as drastic as expected by Russian and some Western observers. “June data suggests the contraction in the Russian economy seems to have bottomed out as the situation in some industries is stabilizing,” Sergey Konygin, an economist at Sinara Investment Bank, told Reuters.
Hungarian prime minister Viktor Orban claimed in a speech last month that the European Union’s sanctions strategy against Russia has failed. “A new strategy is needed which should focus on peace talks and drafting a good peace proposal … instead of winning the war,” he said. Orban said the West’s strategy was built on four pillars—that Ukraine can win a war against Russia with NATO backing, that sanctions will hurt Russia more than Europe, that the rest of the world will support Western punitive measures against Russia, and that sanctions will critically weaken Russia. “We are sitting in a car that has a puncture in all four tires. It is absolutely clear that the war cannot be won in this way,” Orban said.
The latter three “tires” have created a constellation of unexpected challenges for the Western sanctions regime.
Russia’s Central Bank took swift measures in the wake of the Ukraine invasion to shield the ruble from a flurry of U.S. and EU financial restrictions. Far from being reduced to “rubble,” as President Joe Biden proclaimed in March, the ruble became one of the world’s strongest performing currencies this year.
Even as Moscow takes unprecedented macroeconomic steps to contain the damage from sanctions, Russian policymakers are honing their tools to evade or otherwise mitigate specific punitive measures. Citing a running list maintained by Yale University’s Chief Executive Leadership Institute (CELI), proponents of the sanctions regime have noted that over 1,000 companies have “curtailed operations” in Russia.
Though the Western-led financial pullout from Russia appears overwhelming in sheer scale, the reality on the ground is rather more complicated. Russian authorities have successfully enabled a wide range of “parallel import” schemes, according to a recent report by DW. From Levi’s jeans to Apple iPhones, numerous common and luxury products continue to be available for purchase in Russia’s metropolitan centers despite the fact that these manufacturers are no longer directly supplying Russian markets. Such goods typically arrive in Russia by way of unauthorized imports from entities based in former Soviet countries including Kazakhstan, Belarus, and Armenia.
Moscow has opened the floodgates to such activities by lifting restrictions on the resale of many types of goods purchased abroad. These transactions, also known as gray market sales, have totaled $6.5 billion since May, and are expected to reach $16 billion by the end of the year, according to Deputy Prime Minister and Minister of Industry and Trade Denis Manturov. Other products and services also continue to be available through rebranding and knockoff ventures. McDonald’s and Starbucks, both of which ceased operations in Russia in the months following the invasion of Ukraine, have been replaced by successor companies that offer nearly-identical products with similar branding. Courts would normally put a swift end to such obvious copycat enterprises, but Russia’s legal system is in no mood to lend a sympathetic ear to the patent and infringement claims of Western companies at a time of unprecedented hostility between Russia and the West.
Perhaps the greatest long-term challenge to the West’s campaign to squeeze Russia over its invasion of Ukraine is the fact that the world’s great economic powers have not only refused to join the Washington-led sanctions regime but continue to deepen their trade and financial ties with Moscow. Both India and China have intensified the pace of their energy imports from Russia over the past half year. There have been credible reports of the former selling refined Russian oil to European and U.S. importers. Russian earnings from energy exports skyrocketed following the West’s sanctions barrage earlier this year.
Experts say the effects of sanctions on Russia could take years to fully manifest. Even then, there is no guarantee that the forecasted economic stagnation will occur on a sufficient scale to starve the Kremlin war machine or otherwise produce meaningful, positive changes in Russia’s foreign policy. Moscow, driven by the conviction that its existential interests hinge on victory in Ukraine, believes it can outlast the West economically and on the battlefield. Russia has so far largely managed to mitigate the pain from sanctions and is shifting its strategy in Ukraine from trying to quickly seize major cities to bleeding Ukrainian forces white in a grinding war of attrition.
European consumers, meanwhile, are reeling from sky-rocketing heating and electricity bills as officials scramble to contain the energy crisis unleashed by what experts have described as the EU’s poorly conceived plan to transition away from Russian energy imports. With Germany reportedly teetering on the verge of a recession, Europe’s mounting economic challenges have reignited concerns that EU states could start peeling away from the Western sanctions regime. Even before Russian energy giant Gazprom formally threatened to cut European customers off from gas supplies, polling showed that a majority of Europeans—including 49 percent of Germans—favored policies aimed at facilitating a negotiated settlement rather than Russia’s clear defeat. As the war drags on with no end in sight, these growing trends risk splintering the West’s united front on Ukraine sooner than the sanctions regime manages to take a decisive toll on Russia’s economy.
Has Russia built any new tanks, aircraft, ships, or artillery?
No. And that’s because the sanctions are working.
IMO the sanctions against Russia have not worked as Russia is selling more energy at higher prices than before. But the sanctions against Russia have punished the West, particularly the USA, in numerous ways. They boomeranged!! The Biden/Obama foreign policy is a fiasco.
Basically, Yes!
Because they never were particularly damaging.
Russia is a large country, banning oligarchs from vacationing abroad was a joke!
Ditto pulling McDonalds out of Russia. That really hurt!
Some of the sanctions hurt the sanctionies a lot more than Russia.
Russia is more-less self-sustaining, sanctions against it do not work too much.
Finally, the sanctions were toothless and full of holes.
But, what can you expect for Biden?!
Have the sanctions against Russia failed? Hmmmm… has ANY Biden initiative ever achieved a positive outcome for the American people?
Failed for who?
Certain people and organizations are getting rich at a rapid pace.
Out of $600 Billion in Foreign Reserves, Russia had about $300 Billion frozen in the West, and has already burned through over $200 Billion of the remaining.
Having defaulted on their foreign debt for the first time since 1917, Russia is effectively cut off from credit, while they run a growing budget deficit.
So they have been printing rubles. Their money supply surged over 50% in less than six months. Serious domestic inflation is baked into the cake over the next year from that, but they are still printing hot.
Gas export volume is already down about 40%, and that is never coming back. When oil prices drop back to their pre-COVID norm of around $60/barrel, Russia’s economy will be in depression, likely worse than the 1990’s.
Kind is sad how much delusion there is on FR. Of course the sanctions have failed miserably. And it should have been very clear they would. Russia isn’t being hurt by them, they are thriving on them and managing to use them to accelerate the West’s self destruction.
Russia’s expected (by Western “experts”) 15-20% reduction in 2022 GDP is now down to 4% and expected to drift slightly lower again before year end.
Inflation also expected to be 20% year over year is now down to 14% and has been falling weekly for about 10 weeks. It is likely that we will come close to matching Russia’s before the year is over as they continue to see reduced inflation and ours increases.
Slayangrad:
Craftsmen fire against Scholz: “We are talking about the death of Germany here!”⚡️
Halle (Saale) - An open letter from the Halle Saale District Craftsmen’s Association to Chancellor Olaf Scholz (64, SPD) is currently causing a stir.
The letter, which has been circulating since Wednesday, was signed by a total of 16 senior master craftsmen from various guilds in Saxony-Anhalt. TAG24 had the authenticity of the letter confirmed.
“We are justifiably worried,” the emotional appeal reads. “Worries about the future of our children and grandchildren, worries about the continued existence of our businesses, worries about our country.”
These worries had been caused by Russia’s war of aggression against Ukraine and had been exacerbated in recent months because of the associated consequences (rising prices in many sectors) for Germany.
The trades had found that “the vast majority” of their customers were not willing to “sacrifice their hard-earned standard of living for Ukraine”. However, this is exactly what is happening in the Federal Republic of Germany. “It’s not our war either!” the senior masters criticise in the letter. Moreover, Ukraine is by no means a “flawless democratic state”.
“And you want to put Germany at risk for this?” the craftsmen turn accusingly to Scholz - and forecast a bleak future: even necessary services in the industry could soon become unaffordable for normal earners, which in turn could lead to closures and layoffs.
The blatant accusation: “Do you want to be the chancellor who brought Germany to ruin? Do you really want to sacrifice your country for Ukraine?”
Kreishandwerkerschaft fires against Olaf Scholz: “We are talking about Germany dying here!”
Besides all these fierce accusations and condemning words, the Kreishandwerkerschaft also formulates some demands to make German policy more “sustainable”: On the one hand, an immediate stop to all sanctions against Russia should be obtained, and on the other hand, diplomatic negotiations to end the war should be started.
The core idea of these demands is summarised in the open letter as follows: “All political decisions are to be checked for the benefit of the German people - just as you have sworn to do.”
“We are not talking about 1 or 2 degrees less room temperature or whether swimming pools have to lower their water temperature. We are talking about Germany dying! Many people in our country realise that, why don’t you?”
*MAGA First/Anti-War/Anti-Globalist Ping*
If you want on or off this list, please let me know.
Right now India is buying oil and gas from Russia
violating the sanctions, India is propping up
Russia by replacing the EU purchases that the
EU no longer makes due to the pipelines being turned
off and EU countries not wanting to reward the
unprovoked war against the Ukrainians.
We expected China to help their fellow Communist
friend Putin, but a huge country like India
buying Russian oil we didn’t expect.
I would demand India follow the sanctions or face
its own sanctions from the west.
No. And that’s because the sanctions are working."
That's an outright lie. Russians are making so much money with oil/gas exports due to the backfiring EU sanctions that they don't know what to do with all of it, but are using a lot of it for arms manufacturing, probably including items which were on the drawing board but previously viewed as too expensive...
"unprovoked war..."
What exactly have you been smokin???
Have not hurt anyone but US.
The russians seem just fine to me.
European consumers, meanwhile, are reeling from sky-rocketing heating and electricity bills as officials scramble to contain the energy crisis unleashed by what experts have described as the EU’s poorly conceived plan to transition away from Russian energy imports
—
And Europe is about 3 months out from an energy catastrophe. Winter is coming.
If the goal was to hurt Western economies then they are working great.
* China and India have been buying oil from Russia at discounts.
* Greater European sanctions against Russian oil will be in effect soon.
* Russia is becoming more economically dependent on China.
And remember what happened to Venezuela.
Russia holding war games in Venezuela, sending alarming signals throughout Latin America
https://www.msn.com/en-us/news/world/russia-holding-war-games-in-venezuela-sending-alarming-signals-throughout-latin-america/ar-AA10Qza7
“India is buying oil and gas from Russia violating the sanctions, India is propping up Russia by replacing the EU purchases”
They have been buying oil that used to go to Europe by tanker ship, but the natural gas from European pipelines can’t physically get to other markets.
They are not violating sanctions at this point. Existing sanctions don’t yet cover third parties - just those countries that chose to cut off/cut back Russian imports. The existing legal sanctions set limits/deadlines for participating countries to stop importing Russian oil, gas and coal, by certain dates. The USA has stopped. The EU stopped coal on 12 August, they will stop accepting any more oil tankers (90% of their pre-war imports) at year’s end, and cut back natural gas 2/3rds by then.
We have been preparing secondary sanctions on other Russian oil customers, to possibly come out in December - waiting until Europe could replace Russian oil first (so as to not drive prices too high).
It is a slow moving process to replace those great quantities - millions of barrels per day. By historical norms, it is happening very quickly, and billions of euros have been invested to build the needed new infrastructure, to develop new production elsewhere, and to sign new long term supply contracts with non-Russian producers. It is a phaseout for Europe first, then secondary sanctions are planned for other customers.
Crude prices have been dropping. One big reason is the Russians have been getting their oil sold internationally in black and gray markets. Also sold at steep discounts to China, India and similar nations/
Just call this Putin’s grand oil dump of 2022. And the profits are abysmal.
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