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The notion that a GDP decline not nearly as bad as expected is “pessimistic” shows just how excited the Western media and governments were about the possibility of Russia’s economic demise.
Written by Drago Bosnic, independent geopolitical and military analyst
After the United States and the European Union imposed sanctions on Russia, the most comprehensive and unprecedented economic attack in recent history, Western economists and the media parroted the same talking points of their political elites – the Russian economy was finished. The ruble was in free fall, at least half of Russia’s massive foreign exchange reserves were frozen, estimated at around $300-350 billion in assets now effectively stolen by the West, while Western financial institutions and banking systems were starting to cut Russia off, hampering trade, even with third parties.
Western leaders boasted about how they made it all happen at the push of a button and that Russia was now faced with the prospect of an economic collapse. The Moscow Stock Exchange stopped trading and by early March, it certainly seemed Russia was about to go back to the troublesome 1990s. Self-styled economic experts were making predictions and boastful prognoses of how much the Russian economy would contract by year’s end. The initial number of 30% soon turned into 25, then 22, then 17 and in the end 14 percent. Now, that number is projected to go even lower.
How is it possible that the Russian economy is so resilient? Isn’t the country just “a gas station with nukes”? Isn’t its economy the size of Spain’s? Isn’t Russia a country with no culture, no money, no laws, no future, in a state of perpetual collapse, inhabited by a deeply depressed populace with the sole wish to leave, but prevented by the “evil Kremlin”? This is precisely the image that the mainstream media have been trying to create. The spiteful portrayal of anything even remotely connected to Russia has been the norm for quite some time now.
This has been preventing the establishment of normal relations between Russia and the West for decades, despite Russia’s efforts, oftentimes at its own expense, as we were able to see during decades of NATO’s eastward expansion, made possible only thanks to Moscow’s willingness to dismantle not just its own NATO-like alliance with Eastern European countries, but also the significantly larger and more powerful USSR. All for nothing, as is evident now, since the political West has exposed its true face completely by treating Russia even worse than the USSR during the Cold War.
However, there are still some Western mainstream media decent enough to let occasional slivers of truth out through all the mindless Russophobic clutter. In its May 7th release, the Economist, a somewhat still reputable London-based publication, stated that “Russia’s economy is back on its feet”. In early April, the weekly pointed to preliminary evidence that the Russian economy was defying predictions of collapse, despite unprecedented sanctions. Recent data further support this view. Helped along by capital controls and high interest rates, the ruble is now more valuable than it was before Russia’s special military operation. Russia also continued with payments of its foreign-currency bonds.
“The real economy is surprisingly resilient too. True, Russian consumer prices have risen by more than 10% since the beginning of the year, as the rouble’s initial depreciation made imports more expensive and many Western companies pulled out, reducing supply. The number of firms late on their wage payments seems to be growing,” the report states.
“But ‘real-time’ measures of Russian economic activity are largely holding up. Total electricity consumption has fallen only a smidge. After a lull in March, Russians seem to be spending fairly freely on cafés, bars and restaurants, according to a spending tracker run by Sberbank, Russia’s largest bank. On April 29th the central bank lowered its key interest rate from 17% to 14%, a sign that a financial panic which began in February has eased slightly. The Russian economy is undoubtedly shrinking, but some economists’ predictions of a GDP decline of up to 15% this year are starting to look pessimistic,” the report adds.
The notion that a GDP decline not nearly as bad as expected is “pessimistic” shows just how excited the Western media and governments were about the possibility of Russia’s economic demise, which in turn was supposed to cause a regime-change in Moscow, bringing about the 1990s-style enslavement of the country. The fact that this failed to materialize seems rather frustrating to the political West, but it’s still nothing compared to the absolutely enraging notion that Russia’s economy is holding together with relative ease, while Western economies are suffering significantly more than expected as sanctions backfire.
“Even before the invasion Russia was a fairly closed economy, limiting sanctions’ bite. But the biggest reason for the economy’s resilience relates to fossil fuels. Since the invasion Russia has exported at least $65bn-worth of fossil fuels via shipments and pipelines, suggests the Centre for Research on Energy and Clean Air, a think-tank in Finland. In the first quarter of 2022 the government’s revenues from hydrocarbons rose by over 80% year on year. On May 4th the European Commission proposed a ban on imports of all Russian oil that would come into full force by the end of the year. Until then, expect the Russian economy to continue to trundle along,” the report concludes.
The claim that Russia is doing well only because of the fossil fuels price hike serves as an excuse and a supposed confirmation that Russia is still allegedly “a second-class economy”. However, this notion ignores the fact that the price hikes are a result of multiple factors, one being the Western sanctions which are disrupting financial transactions and supply lines. Still, it’s naive to expect that the problems resulting from the failed economic siege of Russia could be resolved by lifting the sanctions. Russia simply has no reason to trust the West. Even in the case Russia’s stolen foreign exchange reserves are unfrozen, it would take years or even decades to restore the trust in Western financial institutions.
It is not higher interest rates and capital controls that helped the ruble but forcing commodities to be paid in rubles, while expanding their gold reserves at a fixed ruble price, setting a gold-ruble link.
Who do you mean by the word Orcrainians?
You fully know that ukrainians are white ISIS. The original orcs were ISIS terrorists invading Syria.
Orcrainians is just my word of putting the two together.
Russia is issuing 25 rubles in silver this year.
It will be fun to see how the paper dollar reacts to that.
Yes the rouble has done well….. but it’s not just about the rouble. The fact is, and some people find this strange is that Russia had developed economically on a path closer to the US than the EU. The entry point to business in terms of opportunity was more like America (Old days – capitalism – not rotten capitalism – obviously bureaucracy is another matter). This fact has made the economy not only far more resilient, but also ready for any further developmental opportunities. I assure you the comfortable are still enjoying Dubai. Removing all IP rights for western companies, in response to the theft of reserves, would help that free business environment even more. What we are seeing is the creation of a multipolar set up and Russia is capable of exploiting that opportunity, not just through state actions, but individual independent actions of their business community.
THE PETRODOLLAR
This war is about the petrodollar at this point. Lose the petrodollar, lose the war. Lose the war, the US becomes a failed state. A gutted version of its former self. Like 1990s Russia.
It’s payback game…
Indeed. All the US aggressive imperialism of the last decade have been about that exactly: Libya was destroyed because it tried to create a new currency, Iran because it sells oil in other currencies than the USD, Venezuela pretty much the same (petro cryptocurrency particularly), Iraq was about controlling not just Iraqi oil but primarily Saudi and other Arab one (by forcing them to accept the USA as their military and political sole protector), and of course all the NATO eastward expansion (Maidan putsch included) had to do with forcing Russia into submission and eventually butchering the Eurasian country somehow.
The USA could live without an oil-backed currency? They could indeed but they could not import so much from around the world, and their economy and the wealth of their oligarchs would thus collapse, which is something they’re not going to accept unless they have no choice whatsoever, because it would surely lead to a socialist revolution (not just in the USA but in Europe as well). That’s the main difference with the collapse of the USSR: once the Western capitalist oligarchies collapse, can’t deliver even crumbs anymore (and that’s happening as we speak), it can only go the way of the old USSR to some extent (different because the bolshevik model revolutions were of agrarian basis, the West has a fully developed proletariat and almost no peasantry).
https://www.usdebtclock.org/
This is what happens when you are a nation of drug addled crack heads, dumb from birth and weaned on poisoned apple pie hubris run by mutton headed Pentacon ghouls.
Meanwhile….tick tick tick tick until Slumville implode$
Russia just stop diplomatic relations with Israeli NAZIs and then see the effect that the NATO states coming to their knees or not. Russia allies with Israel mean Russia allies with NATO because Israel is a dirty project of Europe.
They appear to be doing more damage the their own and EU economies, let’s see who survives this
Very interesting to see which people will handles these damages in France. And who will not.
But that’s partly intentional, even if extremely decadent and “playing with fire”. The slowly collapsing US Empire needs colonies and, if the former colonies are getting autonomous and often alligning with the rising star China (which is also capitalist and imperialist its own way), Europe and to lesser extent the US working class is going to become its new colony (internal colonialism is a thing, China and India among others do it, the USA also does especially towards minorities).
The West, understood as NATO Empire, won’t survive this: social collapse and (eventually) revolution will ensue, no doubt.
I come here to the comments section just to down vote the loser comments without reading them.
My suggestion to all the righteous people on here: don’t read the drivel, don’t respond and feed the trolls, down vote…….
I only read half your comment, then down voted it.
There are fundamental flaws in “Economic Science” (accountants’ pseudoscience) itself, just for reason of being monetarist: exchange-value is the only thing considered or almost so, while use-value is neglected, when it’s clear it’s not the same a ton of grain or a shipment of oil, which are fundamental commodities hard to prescind of, than a Kandinksy or nominal money in the Cayman Islands, which only have speculative value but may be worth much more in the “free market” (until they don’t).
Ultimately it’s the potatoes and trucks to carry those potatoes from farm to city, which an economy make. The Kandinsky and the posh walls they hang from, money even if not properly managed, are not the economy, only a side effect.
This is what Russia has demonstrated, including that GDP(PPP) is much more relevant than US-centric nominal GDP based on carefully manipulated (by all sides, mind you) currency exchange values. This is particularly true for large countries with a diversified economy.
This conflict and the previous two years of pandemist scare are also dispelling the postmodern belief of the “economy of services” being of any significant worth. What matters is “potatoes” (primary sector) and “trucks” (secondary sector, transport/distribution itself is considered a service, arguably the only one that really matters, but making trucks and other machinery is industry).
A year ago, I considered industrial production (PPP) as a possible more reliable reference for economic might, and Russia stood at the level of Germany and only behind (in this order) of China, the USA, India and Japan… and trailed by a surprisingly mighty Indonesia. Other surprises are that Mexico, Turkey and Iran have similar industrial production in terms of value (PPP) to France, Britain or Italy, while Saudi Arabia is stronger and almost as industrialized as South Korea rather. I digress a bit here but I believe it does illustrate the realignment of real economic power towards what used to be the global periphery in the last decades, not just to China.
In the case of Russia the primary sector is even more massive, I was reading yesterday that it may be producing as much oil as Saudi Arabia, and that’s not considering even its main asset: natural gas. So in a sense fighting Russia is much like fighting against the OPEC in the good old days of this organization, with the difference that Russia (unlike the boot-licking Saudis) is going to assert itself and not bow to what amounts to systematic foreign aggression with the declared goal of destroying and looting it.
Agreed… Purchasing Power Parity is another fraudulent technique used by the Western countries to undermine many other countries.
For example, the IMF loans money to a small country to attract “foreign Investment” under the condition they privatize the energy market and devalue their local currency. THIS IS FORCED ON THE COUNTRY… it is made a condition for the loan.
After the forced devaluation, Purchasing Power Parity comes into play. The whole economy of that small country shrinks by whatever number the IMF decides as the ultimate exchange rate. Hence the economy shrinks. Energy becomes more expensive and the local population become poor.
This method has been used by the International Monetary fund for decades against Latin American countries and Africa.. It is now being used in a few countries like Ukraine.
I don’t understand why you say that PPP is a “fraudulent technique”, much less joined in the same sentence with “agreed”. My point was that PPP seems more real, at least for large countries with a diversified economy, than nominal values of GDP or, in my comment, industrial production.
Agreed that the IMF is a terrorist mafia at the service of neocolonialist oligarchies but PPP is a mere alternative measure of actual value which actually seems to reflect better the real economy. The nominal GDP is like that of Spain but the GDP (PPP) of Russia is much larger, more similar to that of Germany instead. This last is much more in agreement with the actual might of Russia, so PPP seems better, a more accurate measure of actual productive worth.
Another issue that I did not touch is how the GDP is calculated as sum of all transactions, meaning that trading goods or services counts as “production” even if nothing at all is produced. As some old example explained: a doll produced in China with a 3$ price tag and sold in California for 10$, increases the GDP of China by 3$ and that of the USA by 7$. This makes no sense to me but is the official doctrine for the capitalist accountancy called “Economic Science”. Production is production, not sales. We can’t really measure actual production, real economy like that, sales are NOT PRODUCTION (farming, mining, industry and arguably transportation are but definitely no sales).
RU imports from China etc. are crashing.
The economist jew nazi fiat sheizen is going to digitalized is anus for a better world
only if everybody digitalized is anus several times the economist will survived but in a world of stupid robotz…..good luck with that Stupid Parzites !!!!
Nazis jews dont die with covid just with a big bomb in the anus !!!!
“Even in the case Russia’s stolen foreign exchange reserves are unfrozen, it would take years or even decades to restore the trust in Western financial institutions”
Nobody trusts the West now…. watch how nations slowly put their money in other places. The future is not good to the West. Now I understand the reason. Would you put your wealth in a bank that can steal (freeze) your wealth? Is it not better to bury your wealth in your backyard?
Why do people put money in banks? FOR SAFE KEEPING…. now if the bank becomes the bandit, will you save money in the bank?
The West has destroyed their banking system. All China and India need to do now is to allow other countries to save money in Chinese banks with ease.
The digital Yuan will enable a lot of countries save wealth in a country that would outproduce the West in Electric cars, consumer electronics, cloths, food etc.
Why save in England or the USA when they can freeze your funds overnight?
West did great in ruining the standard of living of their own people, while americans are grinning.
Russia is issuing 25 rubles in silver this year.
It will be fun to see how the paper dollar reacts to that.
Was it Sergei Glasiev who promoted it? He works closely with Hugo Salinas Price.
Russia is ranked 2nd in cobalt production,2nd in titanium,4th in silver,2nd in gold,2nd in vandium,2nd in magnesium,7th in copper, 8th in zinc, 1st in palladium, 3rd in nickel, 2nd in platnium, 2nd in tungsten, 1st sometimes 2nd in iridium,2nd in mica, 5th in selenium, 7th in indium, 3rd in soda ash, 6th is peat, 1st in asbestos, 4th in vermiculite,4th in arsenic trioxide,3rd in ammonia,1st in polonium, 2nd in rhodium,6th in uranium,8th in cadnium,4th in boron,6th in graphite,4th in bismuth,5th in crude iodine,5th in chromate,11th in lead,8th in gypsum,7th in bauxite,3rd in antimony,8th in molybdenum,2nd in potash, 2nd in aluminum, 5th sometimes 4th in steel, 3rd largest wheat producer, 2nd sunflower oil,1st diamond mining,1st barley,6th in liquid natural gas exports,3rd largest crude oil,2nd largest exporter of arms(20% world market share)
if US Empire economists believed the sanctions would weaken Russia revative to the Empire, then the Empire’s Economists are rubbish at Economics. The world need do nothing more than ensure the Empire cannot continue thieving resources .. the Empire will then implode due to it’s inability to distinguish between Fantasy Economics and Reality Economics.