What's happening with Russian economy? Logistics market is a good indicator. Consider the freight rates. Since late February they fall by 30-40%. For example, according to the freight exchange ATI.SU rates on Moscow-St Petersburg direction fall by 34,3% (not🧵)
Moscow - St Petersburg highway connects the largest city of the country with its main seaport. It is for Russia what Camino Real (Mexico-Veracruz) was for the Colonial Mexico. With the St Petersburg seaport traffic decreasing almost by half, there's much less to deliver
How much did the freight rates fall across Russia? Estimates vary, plus rates on different directions probably fall unevenly. Most common estimates would vary between 30-40%, with some (Oboz company) giving as low estimates as 25% and some (Deliver company) giving as high as 50%
The fall in the freight rate reflects the general decrease in the interregional trade. There's now much less to ship = the rates are falling. And yet, the actual costs of freight are skyrocketing for the shortage of trucks and spare parts. The cost of the latter increased by 70%
The import dependence of Russian truck companies may look surprising considering that on paper Russia import substituted greatly. Theoretically, most Russian trucks are either Russian (Kamaz, GAZ, ZIL, Ural) or Belarusian-produced (MAZ). Consider the figures for December 2021
In practice Russian car industry is fully import dependent. Consider this interview with a leader of a trade union on the AvtoVAZ automobile manufacturer. All the machine tools, all the instruments, all the equipment is imported. And it is imported *not* from China
Many misunderstand the role of China in the world economy. They confuse it being the largest industrial exporter with being the most important exporter of *everything*. For example it exports far less machine tools than one would expect. Germany is more important in this respect
What information can we draw from the Russian freight market data? First of all, we are seeing as the enormous country is gradually losing its cohesion. Consider that all three means of transport: airways, automobiles and even the railways are heavily import dependent
The situation with freight rates falling by 30-40% and the spare parts prices increasing by 70% is unsustainable especially considering that the average truck in Russia is 21 years old. Very soon communicating or trading with faraway provinces will turn into a major problem
Furthermore, the freight data allows us to track the main smuggling channels that Russia is now using. While demand on most directions is falling there is one direction with a skyrocketing demand (more than +100%). It's Georgia. Ergo, it is the major smuggling channel now
I took the figures on the Russia freight market dynamics from here. Overall, I consider the RBC to be a highly reliable source on the Russian economy. End of not a 🧵 rbc.ru/business/06/06…
I cut the fragment with the AvtoVAZ trade union leader talking on his factory's import dependency from here. You can watch the material in full, it presents the position of workers and trade union leadership. I think it's good
PPS To my best knowledge the most astute, informed and unbiased overviews of Russian economy and its dynamics can be found in Russian Central Bank reports. They are amazing and incredibly informative
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Fake jobs are completely normal & totally natural. The reason is: nobody understands what is happening and most certainly does not understand why. Like people, including the upper management have some idea of what is happening in an organisation, and this idea is usually wrong.
As they do not know and cannot know causal relations between the input and output, they just try to increase some sort of input, in a hope for a better output, but they do not really know which input to increase.
Insiders with deep & specific knowledge, on the other hand, may have a more clear & definite idea of what is happening, and even certain, non zero degree of understanding of causal links between the input and output
I have recently read someone comparing Trump’s tariffs with collectivisation in the USSR. I think it is an interesting comparison. I don’t think it is exactly the same thing of course. But I indeed think that Stalin’s collectivisation offers an interesting metaphor, a perspective to think about
But let’s make a crash intro first
1. The thing you need to understand about the 1920s USSR is that it was an oligarchic regime. It was not strictly speaking, an autocracy. It was a power of few grandees, of the roughly equal rank.
2. Although Joseph Stalin established himself as the single most influential grandee by 1925, that did not make him a dictator. He was simply the most important guy out there. Otherwise, he was just one of a few. He was not yet the God Emperor he would become later.
The great delusion about popular revolts is that they are provoked by bad conditions of life, and burst out when they exacerbate. Nothing can be further from truth. For the most part, popular revolts do not happen when things get worse. They occur when things turn for the better
This may sound paradoxical and yet, may be easy to explain. When the things had been really, really, really bad, the masses were too weak, to scared and too depressed to even think of raising their head. If they beared any grudges and grievances, they beared them in silence.
When things turn for the better, that is when the people see a chance to restore their pride and agency, and to take revenge for all the past grudges, and all the past fear. As a result, a turn for the better not so much pacifies the population as emboldens and radicalises it.
The first thing to understand about the Russian-Ukrainian war is that Russia did not plan a war. And it, most certainly, did not plan the protracted hostilities of the kind we are seeing today
This entire war is the regime change gone wrong.
Russia did not want a protracted war (no one does). It wanted to replace the government in Kyiv, put Ukraine under control and closely integrate it with Russia
(Operation Danube style)
One thing to understand is that Russia viewed Ukraine as a considerable asset. From the Russian perspective, it was a large and populous country populated by what was (again, from the Russian perspective) effectively the same people. Assimilatable, integratable, recruitable
In 1991, Moscow faced two disobedient ethnic republics: Chechnya and Tatarstan. Both were the Muslim majority autonomies that refused to sign the Federation Treaty (1992), insisting on full sovereignty. In both cases, Moscow was determined to quell them.
Still, the final outcome could not be more different. Chechnya was invaded, its towns razed to the ground, its leader assassinated. Tatarstan, on the other hand, managed to sign a favourable agreement with Moscow that lasted until Putin’s era.
The question is - why.
Retrospectively, this course of events (obliterate Chechnya, negotiate with Tatarstan) may seem predetermined. But it was not considered as such back then. For many, including many of Yeltsin’s own partisans it came as a surprise, or perhaps even as a betrayal.