Thread by @RussellSieg

Update on Sanctions Hell in Putin's Russia due to the Ukraine Invasion...

Russia is starting to devolve into a secondhand economy dependent on poor substitutes, where shortages are stirring memories of the consumer wasteland that was the Soviet Union.
washingtonpost.com/world/2022/05/…

"Unable to secure spare parts from Western manufacturers, Russian aviation sector is facing a crisis. ~80% of Russia’s commercial fleet consists of foreign-made planes, predominantly from Airbus & Boeing, both of which have stopped doing business w/Moscow"

Ural Airlines, which has over 50 Airbus planes, has projected that it can safely fly them for only a few months before it will need to start “cannibalizing” from other aircraft — permanently grounding some planes to strip them for parts.

"The decision by Ericsson and Nokia to freeze business with Russia, meantime, has left cellular providers there suddenly scouring the world for used towers and parts to maintain and expand a network that had more or less kept pace with the United States and Europe."

"Even China’s Huawei appears reluctant to fill the gap, indefinitely delaying a Russian rollout of next-generation 5G technology, a service that providers had been testing before the Ukraine invasion."

“Within five years, there will be a huge gap between Russia and in the rest of the world” on cellular service, said Grigory Bakunov, an expert on Russian technology.

Following the recent exit of French automaker Renault, Russia is moving to restart production of the Moskvich — a Soviet-era make that went bankrupt 2 decades ago after failing to achieve foreign quality standards.

Following an initial wave of Western sanctions in 2014,

Russia found some success in food production, reducing reliance on imports. But a 2021 report from the Russian Central Bank found that 65% of domestic companies still required imports for manufacturing

For Russians, the prospect of diminished consumer choice & poorer quality harks back to a tragicomic era lampooned in 1980s Wendy’s ad depicting a Soviet fashion show in which Russian “daywear,” “evening wear” & “swimwear” were all the same dull gray smock

“Especially for anything more sophisticated, they will have to rely on what they can produce, and they will use designs or templates that are maybe 10 or 20 years old,” said Tomas Malmlöf, a senior scientist at the Swedish Defense Research Agency.

“The technological gap [with the West] will become larger, and they will not be able to breach it.”

Those industries requiring microchips and other difficult-to-acquire advanced technology are being hit the hardest.

“Automobiles, tanks, hygiene products, even print paper. This is where you need microchips, but also specialized chemicals and other imports that Russia is having problems getting,” said Anders Aslund, an economist who has long studied Russia.

In the aviation sector, even Russian-manufactured planes rely on critical Western-made components. Several Russian airlines operating Russia’s Sukhoi Superjet 100s have informed the government that they can no longer ensure proper maintenance of its French-Russian SaM146 engine.

If a solution is not found quickly, the airlines have warned, most of their Russian-made fleets could be grounded by fall, the Russian business daily publication RBC reported.

Russia even outsources its airplane maintenance!

Even the most optimistic analysts say it could take at least A COUPLE OF YEARS for Russia to develop assembly lines for commercial planes made almost exclusively with local components. Other analysts project it could take FAR LONGER, IF IT HAPPENS AT ALL.

“We DON'T think on the commercial front it is particularly VIABLE for them to, in the NEAR or MEDIUM TERM, MAINTAIN or START the MANUFACTURE of competitive domestic civil aviation AIRCRAFT,” said a senior Biden Admin official

Before the invasion, most of Russia’s commercial fleet was leased from foreign companies: planes that Moscow seized in the aftermath of sanctions. Most of the planes had been registered in Bermuda and Ireland, where local inspectors certified their airworthiness.

European aviation authorities have expressed alarm that Russian airlines have limited engineering and technical support to maintain the planes and that Russian inspectors lack necessary expertise.

if you fly on Russian Airlines, do you have your affairs in order?

“Russia’s safety record was not stellar before, maybe at the level of Indonesia,” said aviation analyst Volodymyr Bilotkach. “But now, flying a Russian carrier is turning into a game of Russian roulette.”

#MoscowAmericanBoozeShortage

In Moscow, business remains brisk at restaurants that feared just months ago that sanctions would force them to close. Several establishments have sought to adapt by sticking to locally sourced foods. A bigger problem, though, is booze.

Russian distributors estimated that the United States exported about 7 million liters of whisky, rum, gin, and bourbon to Russia each year. To make up the shortfall, they are turning to smaller, lesser-known brands.

“Look, I’ll be honest, if we need to sew a high-quality garment, we normally would go and buy a nice Italian fabric,” said the owner of a textile factory in the Moscow region, who spoke on the condition of anonymity out of fear of government reprisals.

The company, she said, was still working with existing inventory of high-end fabric but was now weighing whether to switch to making cheaper clothing, or just shut down after stocks run out. “The quality of what’s available in Russia is just not on par,” she said.

The ban on E.U. trucks entering Russia or Belarus means that goods traveling by land must now be offloaded at the border, then onloaded to new trucks that can travel into and across Russia. Meanwhile, flight bans had shut down a legion of air routes.

Many Russian assembly lines were designed using European or other Western technologies or materials in mind. “The assembly lines are sometimes dependent on French conveyor belts or bearings from the US and Germany,” Natalia said. “That’s not as easy to change as you think”

#ExportDeclarations

Essential parts for even run-of-the-mill businesses, including furniture & coffin makers, have been affected b/c their foreign suppliers are reluctant or unwilling to provide export declarations certifying those parts would not be used for military purposes

#DualUseTechnology

In the best cases, that means delays; what used to ship in 2 weeks now takes 6 weeks. But some parts, such as industrial fan propellers & rubber seals used by Russian furniture makers as well as Russian defense industries — were being indefinitely held up

“Production won’t stop for shoes, clothing, sausages, those kinds of things, but we will go back to what Russia was like in the ’60s, ’70s, ’80s, where the quality is worse and the price is higher, when you can actually get the product,” she said.

“I remember how, if you wanted a kitchen, you would have to go to the shop and get a number and stay in a queue,” she continued. “But not for hours or days. You’d sometimes wait half a year for a kitchen. I’m afraid those days are coming back.”