The war in Ukraine and the regional divergence in Russia
1. It will be a long war
2. Hostilities can be localised or interrupted with ceasefires. Doesn't matter. The fighting will resume again. And again
3. Contrary to the popular opinion, it will be Russia that breaks first🧵
4. Russian regime is hard and fragile
5. Regime consists of courtiers and barons: central and regional elites
6. Courtiers have the upper hand when the regime is strong, barons - when it's weak
7. Many courtiers have personal interest in the military victory, but barons don't
8. You can't judge official's view by his public stance. That's dumb. Only private stance matters
9. Lots of courtiers over 35 genuinely support the war
10. Almost no regional barons genuinely support the war. But there's a major exception in the South
11. The war led not only to the general economic downturn, but also to the massive regional divergence in Russia
12. Most of the regions lose, but they lose unevenly
13. In the past the center was an arbiter, redistributing resources from winners to losers. Now it won't
Biggest Losers in European Russia:
13. Large industrial & machinery cluster on Volga. Tatarstan, Samara, Ulyanovsk
14. The window to Europe in the Northwest. St Petersburg, Karelia, Pskov
15. The North. Arkhangelsk and the ancient Pomorye country. The old window to Europe
One of the biggest economic losers in Russia is the major machinery cluster on Volga. Tatarstan, Samara, Ulyanovsk are three regions with very similar economic model. They focused on improving the investment climate and attracting the FDIs. Obviously, they are being obliterated
Another loser is the North, which broadly overlaps with the borders of Pomorye land. Until 1703 it was the richest, the most commercially oriented part of Russia and of course the main taxpaying region. Even now Arkhangelsk was one of the most FDI-dependent regions in the country
Finally, it is the modern window to Europe, the Northwest that is especially affected employment-wise. St Petersburg economy was heavily oriented to Europe and those of nearby regions - on Europe and the megapolis of St Petersburg
Winners
14. Agrarian producers. With the food prices increased agrarian barons of Krasnodar or Rostov may have even benefitted. Plus they're involved in plundering Ukraine
15. Cannon fodder suppliers. Dagestan or Astrakhan are doing well, because the extra males went to Ukraine
We see a massive regional divergence in European Russia. Baronial groups that focused on the machinery or the FDI attraction lose massively. However, the barons of the poorest regions may even benefit by selling their surplus population as the cannon fodder to Putin
Interestingly enough, we see the negative correlation between the good unemployment situation of a region and its level of economic complexity. Check this map. The most complex regions are doing the worst, while the least complex - the best researchgate.net/figure/c-RIA-i…
And yet, cannon fodder suppliers don't export anything. The only regional interest group that was interested in prolonging the war were the agrarian barons of the South. First, they obliterated their Ukrainian competitors. Second, they were involved in plundering Ukraine
Third, they benefited from the food prices going into the stratosphere till this month. They had every reason to support the policy of Kremlin. And yet, now food prices are crashing. Which means their export profits will decrease and even worse, expropriated by Kremlin
With prices on almost all commodities dropping Kremlin will be forced to expropriate the export earnings of southern agrarian barons. It could let them cash out when the oil was expensive but now it just can't afford that. Which means agrarian barons will join the ranks of losers
Which leaves Kremlin with the only baronial group having a genuine interest in supporting its policies. The cannon fodder suppliers. But their loyalty is assured only for as long as the Kremlin can pay them. With the commodities going down, this is far from guaranteed. End of 🧵
Sources:
Central Bank and the CSR (Kudrin-led pro-Kremlin think tank) as well as the HH recruitment company statistics are open, anyone can access them. I used one more source, but not gonna name it. Also it's unpublished yet
• • •
Missing some Tweet in this thread? You can try to
force a refresh
We are releasing our investigation on Roscosmos, covering a nearly exhaustive sample of Russian ICBM producing plants. We have investigated both primary ICBM/SLBM producers in Russia, a major producer of launchers, manufacturers of parts and components.
Each material includes an eclectic collection of sources, ranging from the TV propaganda to public tenders, and from the HR listings to academic dissertations. Combined altogether, they provide a holistic picture of Russian ICBM production base that no single type of source can.
Overall, you can expect tech moguls to have much, much higher level of reasoning abilities compared to the political/administrative class. But this comes at a cost. Their capacities for understanding the Other (masses count as the “Other”) are much poorer.
E.g. Putin is much, much less of an outlier in terms of intelligence compared to Thiel. He is much more average. At the same time, I am positively convinced that Putin understands the masses and works with masses much better.
One problem with that is that too much of the supply chain for drone production is located in China. The thing with drones is that they grew out of toys industry. Cheap plastic & electronic crap that all of a sudden got military significance
That is also the major problem I have with "China supports Russia" argument. China could wreck Ukraine easily, simply obstructing & delaying the drone/drone components shipments. That would be an instant military collapse for Ukraine.
Both Russian and Ukrainian drone industries are totally dependent upon the continuous shipments from China. To a very significant degree, their "production" is assembly from the Chinese components which are non alternative and cannot be substituted with anything else (as cheap).
No, Israel being a republic causes it to be more barbaric towards the conquered population than Russia, and with no escape. There is simply no room and no possibility for any sort of integration whatsoever.
Were Israelis slaves to a Big Man, integration would be conceivable.
Crawling on the knees before your Big Man is Lindy
Scaleable, manageable, robust
Every nation on earth will concede to it, after the sufficient amount of sticks (and may be some carrots, but that is optional). Which makes it very, very scaleable
In contrast, crawling on the knees before an other nation is not Lindy. No people on the earth will ever accept it, no matter the degree of violence applied.
That's why republican dominion over the disenfranchised colonial periphery is always so fragile. Not scaleable at all.
Today I will introduce one more concept critical for understanding of how the manufacturing industry has evolved over the last few decades. It is the shift of technological knowledge from esoteric to exoteric
In the pre-digital era, manufacturing used to be mysterious, esoteric
To visualize how the manufacturing worked in the pre-computer/early computer age, imagine the atmosphere of magic, mysticism, enigma. That would be not very far from truth.
To illustrate the idea, I will give you one simple, straightforward example. The train car production.
Train production is a very, very rare example of a Russian machinery industry that survived through the post-Soviet collapse. Of course, it contracted. Of course, it suffered losses. Still, it made it through, while most of the Soviet machinery sector was simply wiped out.
As I have already pointed out, general audience, analysts, strategists & decision makers included holds unrealistic notions of how the global economy is organised. Now that is because they never see the back end of industrial civilisation
So let me show you some
There is a major delusion of seeing Europe as a sort of retired continent that "lags in tech" or even "doesn't produce anything". To some extent, it is just American hubris.
But there is more in there than just hubris. There is also some honest, sincere ignorance. The thing with most people is that they see only facade of industrial civilisation. They never ever had a chance to look behind the curtains