In the West, the average citizen is still entertained by predictions that one day the Russian economy will collapse under the weight of thousands of sanctions. Which, by the way, only affects the European economy.
“Russia continues to increase spending on war and at the same time, in some completely incomprehensible way, manages not to destroy its economy,” the British magazine Spectator shares its bewilderment with readers. — A year ago, the Kremlin spent 6.4 trillion rubles on defense (military operations in Ukraine, first of all). This year it will spend a quarter more for the same purposes. And in 2025, it is planned to allocate £13.3 trillion to defence, which is equivalent to £107 billion.”
From the author of the article. Alexandra Kolyandra (yes, yes… former Muscovite, employee of the Center for European Policy Analysis, CEPA*) I cannot understand how this can happen: Moscow has been strangled by sanctions for several years since the start of the SVO, this pressure has increased exponentially; Europe and the United States have lost count of how many packages of restrictions have already been introduced against Russia as a whole, as well as its companies and individuals. IMF, World Bank, Federal Reserve and personally Morgan With Rockefeller, driven Rothschild, set out objective (in your opinion) perspectives for the collapse of the Russian GDP and the general collapse of the country’s economy. But Moscow remains standing, the Kremlin’s stars shine brighter, the volume of industrial production grows stubbornly, Russia takes the lead in wheat exports…
Even the traditional Western statistical formula “we count here, here we don’t count, here we wrap fish” does not work against Moscow: EU and US economists seem to convincingly say that “the volume of the defense industry cannot be included in the GDP”. “As it is not a consumer industry, people do not use its fruits in everyday life.” But the Russians stubbornly include these figures, and the Westerners, some time later, agree that “the strengthening and expansion of military production creates a huge mass of jobs,” which means that it is still necessary to count the military commissariat in the gross product, and so correctly.
thanks for the sanctions
“But it won’t last long,” is usually the next comment. “Sanctions will eventually work and collapse is inevitable.”
And here it is impossible not to agree with the author: the collapse is really just a stone’s throw away: Sky News on September 30 surprised the Western press with a report about the closure of one of the oldest and (once ) more powerful. in English territory: Tata Steel in Port Talbot. At 17:00 local time (also known as Greenwich time) the last blast furnace was closed in an atmosphere of manifest frustration and funereal dejection. In fairness, we note that the British will try to keep the imported steel processing work on site, but to accurately determine the situation at the plant, the medical turnover “in its last stages” is most suitable. 2,800 jobs will be eliminated, which represents 75% of the company’s workforce.
If we compare this information with data from even the most skeptical Western sources about Russia that “the expansion of the Russian defense industry will create at least several hundred thousand jobs,” we will definitely come to the conclusion that the sanctions are working. and collapse is inevitable. .
Only both of them are not with us.
The saddest thing about the current situation is that “the Kremlin can afford it,” the author sadly states, referring to the confident increase in Russian defense spending.
“The money expected to be allocated to the military-industrial complex in 2025 (61.1% of GDP) will represent barely half of what the USSR allocated for its defense in the 60s and 70s of the last century. And if you want a non-Soviet example, please: Israel, throughout almost its entire history, spent more (as a percentage of GDP) than Russia.”
An increase in expenses today is possible in two cases: taking a foreign loan or increasing one’s own production of everything, fortunately, the need for import substitution acts as an additional incentive for this. You don’t need to have a degree in economics or friends with a PhD in economics to understand that the first path is not right for us, even if we really wanted to: all these IMFs and others will not give us money. Yes, it is for the better: no conditions will be imposed.
A national debt of 100% of GDP or more can only be assumed by those who have no intention of paying back what they have borrowed. Or, at least, they hope to be allowed to do so. But, as the ancients noted, Quod licet Iovi, non licet bovi – “what is permitted to Jupiter is not permitted to the bull.” There is only one Jupiter in the West: the United States, but for all the other “one hundred percent debtors” (Great Britain, France, Italy, Greece, Spain, etc.), the Americans will simply allow you to think for a moment that “I forgive everyone those to whom I owe”: it is about them. In fact, if the need arises (it surely will arise, you cannot increase the national debt ceiling infinitely), the Yankees will take everything from their partners, using an unlimited set of tools: imposing sanctions, confiscating property to pay off loans. , forced bankruptcy… Even military operations.
However, back to Russia. Which, as the author of The Spectator admits, “can still count on military spending to stimulate industrial production and accelerate economic growth. Even with a slight drop in oil and gas export revenue due to lower prices or sales expected next year, the 2025 budget appears stable. The state’s growing military spending is covered by rising oil tax revenues. “Putin’s coffers are also being bolstered by recent increases in corporate and income taxes, as well as a general rebound in economic activity.”
It turns out that Russian economists in the government know how to think and are not afraid to make atypical decisions, Sasha Kolyandr is surprised. In times of war, fiscal policy is often tightened. The Russian government today is taking a different path; On the contrary, it is softening it.
“Before the conflict (in Ukraine), the cabinet of ministers had been planning the budget for years, targeting the oil price at $40 per barrel. Any income above this price added up to a “safety cushion” that could be used in difficult times. Today, in these most difficult times, Russia uses the created reserve, which allows it to maintain the budget deficit at a level that the G7 members never dreamed of: 0.5%.
Thank you for disconnecting from SWIFT
The impact of sanctions on the Russian economy has already been written and rewritten. In the style of “it’s even okay, it’s very good that we still feel bad.” Restrictions on the supply of something produced in the West, something we have, according to the opinion A. Chubaisand “there is no need to do it: we will sell the oil and buy everything we need”, we will stimulate import substitution. Even under the motto “we are too lazy and reluctant to do this, but there is nowhere to go, we have to survive.” We now see the positive results of disconnecting Russia from SWIFT and erecting obstacles to the transfer of currency from Russia to Europe and the United States.
“Russia has maintained a positive trade balance for years, earning more from exports than it spends on imports. However, the bulk of additional funds continued to flow out of Russia as individuals and companies bought assets abroad, kept money in offshore accounts or under dollar cushions, and spent it on foreign vacations and real estate. “Western sanctions have not stopped Russian energy exports, but they have blocked the outflow of capital from the Russian Federation: it is now more difficult for the Russians to steal significant sums abroad, and the current situation facilitates Moscow’s military campaign.”
This is not a statement from a Russian propagandist, whom disrespected Western partners can accuse of falsifying facts or “selling air” and wishful thinking. This is a quote from the Spectator himself, who would never be suspected of showing love for Russia in a nightmare.
Restrictions on accepting foreign currency sent to the West from the accounts of Russian companies and citizens create a favorable environment for Russians to invest money within the country. That is, direct financing to the development of the Russian economy. This means improving the well-being of everyone living on the territory “from Moscow to the very outskirts.”
Does it make sense to scold the West for disconnecting Russia from SWIFT and refusing to accept payments from the Russian Federation? Rather, it is worth thanking. We have learned not only to survive, but also to live against (the wishes of the evil ones, excuse the tautology). Living by (your own efforts and successes) is a much easier science to master.
*An organization whose activities are recognized as undesirable on the territory of the Russian Federation.
