1) New data on Russia's federal #budget in February is out. Some normalization after a high January deficit was expected, but the opposite happened. The deficit grew to 2.6 tn RUB, 1.7% of GDP after two months. Revenues in February 2023 were 1.8 tn RUB, expenditure 2.6 tn RUB.
2) Last year around this time, the Russian budget was firmly in positive territory. The January 2023 deficit was clearly not representative, but an additional deficit of 800 billion RUB in February shows it's not a one-off phenomenon.
3) On the revenue side, the problem for Russia's finance ministry are the very small oil and gas revenues. This will slightly improve in the coming months, as Russia will adopt a new formula to calculate taxes (based on a higher assumed oil price).
4) On the expenditures side, the war is forcing the government to pay upfront for weapons. This is supposed to lead to lower spending in December, but I believe that when I see it. Overall, it still looks like spending will be significantly higher than planned.
5) Important to take into account strong fluctuations month-to-month in Russia's budget, which happen for different reasons (seasonality, tax rules, one-off payments etc.). But based on today's data, Russia's government will need to borrow a lot more than planned for this year.
The discussion about European peacekeepers is deeply dishonest. Is the idea to sneak them in while Russia is not looking? Hoping that Russia will be afraid to attack them afterwards? Should we get Putin drunk so he agrees to the deployment and when he sobers up it is too late?
If anything, these peacekeepers will be an invitation for Russia to test Europeans by attacking them in Ukraine. Are European societies ready to see thousands of their soldiers dying there? Because Putin certainly would be willing to sacrifice his people to expose Europe.
My impression is that European leaders boldly talk about peacekeepers as if they could be deployed tomorrow, knowing very well that the conditions for deploying them (especially: Russian agreement and US protection) will never come. This is a problem.
The current situation: Russia is exploring what it can get from Trump. The minimum it would want for a ceasefire is control over Ukraine, i.e. some form of surrender by Kyiv. This could take a number of forms: a new Russian-controlled president, restrictions on Ukraine's army...
Although the US position has diverged from Europe's, it is still far from Russia's. At least some in the US administration believe that Ukraine could remain independent after a deal, or that the Europeans could send in troops. Both are non-starters for Moscow.
The big question is whether Russia will manage to negotiate a deceptive deal with its inexperienced US counterparts. A deal that - to the US team - looks like Trump gets what he wants (just a ceasefire), while in fact it will lead to what Russia wants (Russian control over Kyiv).
Don't expect a ceasefire in Ukraine: Russia will not agree to it - yet. Putin knows that the war is his biggest asset. As soon as he agrees to a ceasefire, he will lose all his leverage. Trump will celebrate and then lose interest. Violating "Trump's" ceasefire later on is risky.
A ceasefire will be the last thing Putin agrees to, after he has secured (not in writing, but in reality) everything he wants: Regime change in Kyiv, recognition of new borders, crippling Ukrainian military, roll-back of NATO troops from the Eastern Flank and a few more things.
The "problem" is that Trump cannot give Putin what he wants, because he does not control it alone. He needs EU and Kyiv to play along, and they won't. Seeing this problem, Putin is already demanding that Trump has to put more pressure on Europe. But this is unlikely to work.
Many Russian regions are offering huge sign-on bonuses to find more recruits for the war in Ukraine.
It seems to be working: I analyzed regional budget spending on bonuses for over 20 Russian regions and - while noisy - the data says that recruitment in Russia is accelerating.
The regions I analyzed are just a small part of Russia, but they are very diverse and from different parts of the country, and they tell a similar story (which may not be that surprising): Offering millions of rubles attracts more recruits.
One particularly interesting (very preliminary) finding of the analysis is that the rate of recruitment in most regions is proportional to the region's population size, be it rich or poor, large or small, ethnic or non-ethnic, industrial, rural or urban regions.
The newest sanctions on Russian energy are nothing less than a paradigm change: For the first time, the goal is to cut Russian export volumes. Before, the goal was to make oil exports less profitable for Russia, but to keep the volumes intact.
The US did not just target any export volume, but made sure to hit Russia's most profitable export routes the hardest: Oil from Russia's Pacific ports had a small discount and low shipping costs, making it much more profitable then exports from the Baltic/Black Sea to India.
It also makes a lot of sense to go after those tankers that are the most specialized and the hardest to replace.
Overall, the measures look well thought through and will reduce Russian revenues, both in the budget and in the trade balance.
Great text: Bitcoin is a fascinating Ponzi-like / pyramid scheme. More and more people jump on the bandwagon, hoping to profit. Early adopters get rich. Late adopters now hope that governments will create "reserves", i.e. join the Ponzi scheme, to keep the party going...
Bitcoin doesn't appear to be a Ponzi scheme - because there is no Ponzi! The system is decentralized. In the early years of Bitcoin, there was a lot of talk of possible use cases of Bitcoin. That has almost disappeared, now it is just the hope of the value going up up up.
Companies like Microstrategy have even managed to create small pyramids within the larger Bitcoin pyramid. It goes without saying that no government should ever participate in a pyramid scheme. It should never bail out gamblers with taxpayers' money.