Money as fuel of war. When does the Russian economy fall apart?
Therefore, in addition to the physical victory on the battlefield, it is necessary to pay considerable attention to the economic component, which nourishes the enemy's military car. So let's find out that there is an aggressor with economics and finances. According to official information of the Russian government, the rate of growth of GDP from January to May this year was 5%, with an annual forecast of 2. 8%. In June 2024, inflation reached 8. 6% in the annual dimension.
Both indicators indicate that the Russian economy is far from catastrophe. I do not have 100% confidence in these figures, however, we do not have evaluations from other sources. It is obvious that GDP growth is greater than the forecast, and inflation is not a Turkish 71. 6%. Given that the Russian Federation has lost external credit support (PRC, DPRK, Cuba and RB - bad creditors), it is worth looking at the aggressor economy, understanding how it works and that it can be broken there.
If you delve into the statistics of Russians for internal use, it becomes clear that now the economy of the aggressor is kept in three whales: so let us briefly understand each direction. If you look at the Brent and Urals prices, you can immediately notice the effect of sanctions. Since the beginning of the war, there were at least 6 periods when the correlation between Brent and Urals has been violated, and the discount between them increased significantly.
However, each time the Russians quickly adapted to sanctions in 3-4 months, and in 2024 the market was moving above the price maximum, which was installed for Russian oil by international partners of Ukraine at 60 dollars per barrel (see graph). There are two trends in favor of sanctions. First, a periodic increase in discount is a blow to the Russian budget.
There would be no sanctions - there would be no discount between Brent and Urals and the Russians would receive more money than they received in fact. Secondly, sanctions and attacks on Russian refineries are greatly changing the exports of Russian oil. If in 2022 the Russian Federation exported 4. 78 barrels a day, then in 2023 - 4,59. In 2024, they had an export splash at the beginning of the year and further had a gradual decline. The worst for the Russians in 2024 can be considered June.
Therefore, sanctions work, but not to the extent that could significantly unbalance the financial system of the Russian Federation. Due to the sale of oil, the Russians continue to maintain official reserves in a relatively liquid state and to reform unofficial reserves. Available reserves and subsidies in the oil sector go to public expenses that cause the uplift of the manufacturing industry, mainly at the expense of MIC.
There is nothing new in this recipe, invented it a long time ago, and outlined in his writings, JM Keynes in the 1940s. But the Keynesian eternal engine can only work when there is funding, and funding cannot be made for a long time at the expense of the issue of money by the central bank, otherwise the economy will be chopped by inflationary risks.
For the Russian Federation, this is now a significant problem, since reserves are not enough for everyone who wants to obtain government orders, investments and guarantees. The authorities are actively urging private investors to invest in the economy, as there is already an understanding that their own funds will not be long enough, but the PRC, the DPRK, the Cuba and the RB with Iran are bad creditors.
A short -term economic miracle at the Keynesian engine in the Russian Federation can still feed the oil industry, but its scale is also not enough for everyone. Construction in the Russian Federation is now based not only on the infrastructure project, but also on a relatively developed mortgage market. The industry is experiencing symptoms of a disease as: a lack of staff, an increase in the cost of a square meter and a superheated system of financing the primary market.
However, the mortgage is only a lever in the system of government expenditures, which is again filled with money of state Russian banks. Due to the sanctions and corrupt management system, the Russian economy is now in much worse than in 2019-2021. To start the crisis, it will be sufficient for Aurora's "shot"-a shock that will force economic agents to change the behavior line and cause panic. An example is the reaction of the population and business to the rebellion of Prigogine.
"Aurora shot" may be: a lacking of oil prices (a variant of the breakdown of the USSR), Putin's death, or the outbreak of an open war between his environment, a great man -made disaster, etc. However, I must admit that if you just sit and expect, when the Russians organize a crisis or when it does a collective event, it can take a lot of time we do not have. Therefore, it is worth working on the economic crisis in the Russian Federation.
Active measures should be taken that will become catalysts for negative processes within the Russian Federation. 1. Organization of crisis in the oil industry. The oil industry remains a supplier of resources that support the finance surplus and turn on the multiplicative revival of the economy through manufacturing and construction industry.
The elimination of the leadership positions of the oil sector in the Russian Federation should apply not only to prices, but also its ability to carry out considerable amounts of exports. Sanctions should be killed at prices and volumes of oil exports towards a civilized world, and military operations - mostly in volume. For the Russian Federation, it is not the price of the Urals, but the revenue, that is, the price multiplied by the amount of exports.
The volume can be reduced not only under the pressure of sanctions, but also, for example, under the influence of active measures: failure of oil storage facilities, damage to pipelines, natural catastrophes in production areas, etc. There are many examples of such measures, but they should be larger to reflect on economic statistics on the Russian Federation. Separate sanctions on exported oil payments should be deepened.
The desire of the Russian Federation to conduct settlements in national currencies in order to bypass sanctions has led to a significant slowdown in such payments. An indicative example is the situation in India, where the amount of money that is stuck there is already estimated at $ 50 billion. In fact, it is a clear price of Russian refusal to the US dollar and euro. Therefore, on paper, oil companies report on exports from the Russian Federation, but do not receive funds for exported oil.
Repetition of the Indian example with the PRC and other countries would be an interesting precedent for isolation of the oil industry of the Russian Federation. Unfortunately, unexpectedly slowed the project of a separate trade in Russian oil. Such a special tax on aggression was offered at the very beginning of the war, but then rejected the idea as a long time to be sold in the EU and preferred the price ceiling.
But since the war is delayed, the idea of tax should be resuscitated in a new format. Not only Ukraine but also EU and NATO environmental funds should be attracted to the beneficiaries of this tax. I predict that in the near future tankers with Russian oil will start sinking, which is always high environmental damage. A separate blow can be applied on a shadow tanker fleet. The Russians are actively baptizing from him, but you can not doubt it. At 14/07/2024 the price of Urals was $ 81.
47 per barrel at a price ceiling $ 60. Therefore, oil at a price higher than the permitted price was actively exported by the sea. It is also worth paying attention to the sudden increase in the Brent and Urals discount in May - June 2024, when the United States imposed sanctions against oil carriers, stopping approximately 50 tankers. But this effect lasted exactly 2 weeks, after which the discount began to decrease again.
Therefore, the Russians adapted and, apparently, instead of found ships of the shadow fleet, new ones were filled. In general, shaking all chains of oil industry (from production to exports) can reduce exports of Russian oil from 4-5 million barrels a day up to 2-3 million barrels a day, which will no longer allow the aggressor to replenish reserves and transfer the multiplier effect from Earning on oil in other industries. 2. Cutting reserves.
The freezing of the international reserves of the Russian Federation and the funds of part of Russian state -owned companies is an interesting experience for Russians, which equates them to Iran. However, Russian reserves should now be considered as a collection of such components: with the first component, everything is more understandable: in fact, these funds are no longer owned by the Russian Federation, although it is legally known.
In any case, the Russian Federation can definitely not be disposed of and put on their own needs. But with two other components there are problems. Part of the reserves of the Russian Federation in the PRC in Yuan cannot be immediately removed because it serves trade between the two countries.
And the question arises: these Yuan in the property of the Russian Federation should be transferred to what currency? Because there is no more liquid currency in the world, the issuing country would be friendly to the Russian Federation than Yuan.
On the other hand, the Russian Federation with this war in Ukraine is becoming an increasing problem for the PRC, which tolerates losses from sanctions and for which trade with the US and the EU is 10-12 times more important than trade with the Russian Federation. The cause of losses is the Russian Federation, and recently these losses not only from sanctions, but also reputational ones.
Why should the Communist Party of China be involved in the violent actions of the Russian Federation in the territory of Ukraine? This question is increasingly posed in Beijing, where they understand that Beijing remains a monopoly buyer of the last instance. The losses caused to the Chinese can be offset not only by the equalization of export prices for gas to PRC with internal gas prices in the Russian Federation, but also, for example, the confiscation of Russian reserves in Yuan.
The implementation of this scenario already depends on the effectiveness of Ukrainian and Western diplomacy in the PRC, namely, how accurately the diplomats will be able to convey to the Chinese communists the idea that all the fault for losses through sanctions lies not in the West, but exclusively in the restless Russian.
It is not possible to expect freezing of Russian reserves in the PRC as it happened in the EU and the US, but the Indian modification of "Friendly freezing" is quite possible. Unofficial reserves are a real problem today. The Russians not only use stolen funds for investment in the economy of the Russian Federation, but also for sanctions. From where, according to yours, 100 tankers of the shadow fleet came, or how the Russian Federation bypasses sanctions on MIC and technological equipment.
Our allies (mostly Stanford, Cambridge and Oxford graduates) do not understand that they are, in fact, dealing with the Peter bandits, for which the status of the general is higher than the official CPIs of the central bank of the country, and the region itself is greater. In the future, 3-5 years on the effectiveness of the search and confiscation of Russian unofficial funds will depend on the future not only of Ukraine but also Eastern Europe.
If everything is clear with the Russian ZVR, and our diplomats in the US and Canada can only be proud of, then with unofficial funds we have a complete failure. To begin with, I would advise not to appoint people who participated in the Russian landscape (Russian money laundering) in Ukraine, Moldova and the Baltic States, and the already appointed to release. The identification, accounting and investigation of landscape cases should be accelerated.
The threads from the Russian "Gazprom", "Rosneft" and even Putin's office to HIV in Cyprus, Nice, Monte Carlo and other resorts often passed through Ukrainian, Moldovan and Baltic banks. These threads should be in the hands of investigators and bring us to assets that should be confiscated. I am sorry, but neither we nor our allies here.
In my opinion, the "elaboration" of active measures on unofficial funds of the Russian Federation is now more important than measures for the artificial coagulation of the oil industry of the Russian Federation. Since such funds are a kind of buffer, which allows Putin to mitigate sanctions at the price and volume of oil exports, and this showed all 2022-2023. 3. Weaving from technological progress.
The Putin's animal behavior in Ukraine shows that they still stuck at some initial stage of evolutionary development, and monkey -like - high technologies to nothing. The Russians produce very little products that are designed for final consumption. The temporary uplift of MIC, mechanical engineering and other complex industries does not guarantee them technical leadership.
Moreover, the planes with imported details fall, the ships are sinking, and some of the products they call Russian, 95% are made from smuggling parts. The excommunication of the Russians from progress should continue, and it is better that it is in the production equipment segment, as well as for industrial or commercial transport and communication. The mistake of Ukraine and allies in 2023 was that sanctions were perceived as a sentence to be fulfilled.
However, legal logic does not work in the economy. The ban or restriction causes a reaction, and the enemy adapts quickly. Therefore, the sanction game is reminiscent of a game of chess. There are no 1-2 sanctions that could have released the Russian economy in the world in a month. And by themselves, sanctions without supporting active force measures of influence, as well as without artificially reducing all types of Russian reserves, can not be effective.
The complexity, timeliness, interest of the allies (including material) and continuity are the recipe of victory on the external economic front. I think Ukraine and allies have a good chance to drive the Russian Federation to a deaf economic angle. It is now clear that Putin is in a hurry.
Orban's meaningless visit in the format of Kiev-Moscow-Peckin, animal terrorist attacks in Kiev and other cities of Ukraine, focused on intimidation of Ukrainians, numerous complaints of Russian exporters for calculations with the PRC, unsuccessful Putin's May visit to the PRC, etc. - Too many of these factors, show that the Kremlin needs a resistance. Therefore, the main task for the next three months is to increase active measures for oil, reserves and technologies.