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.
I really recommend this new report on #Russia's economy from CASE Center. The authors argue that the economy is much more resilient than commonly assumed. The conclusions are a bit too fatalistic in my view, but it is definitely worth reading. case-center.org/wp-content/upl…
The authors explain why - in their view - a lot of the earlier predictions for Russia's economy have not come true. It is not just an analysis "in hindsight": Already in March 2022, Dmitry Nekrasov wrote a forecast for Russia's economy that turned out to be very accurate.
Keep in mind that, at the time, even the Russian Central Bank and the Russian government were expecting a huge crisis in the Russian economy. It was the mainstream perspective, and Nekrasov contradicted it: telegra.ph/Ob-apokaliptic…
More Russian voices push back against the idea of a ceasefire in Ukraine. Not surprisingly, Russia has zero interest in ending the war before it has defeated Ukraine. Apparently, ceasefires only existed in some Western dreams.
Similarly, Trenin says Russia is first and foremost interested in "the character of Ukraine's future regime and military potential". kommersant.ru/doc/7283219
Western idea of talks:
1.) ceasefire
2.) negotiations
Russian idea of talks:
1.) no more weapons for Ukraine
2.) negotiations
3.) ceasefire of Russia gets what it wants (regime change etc)
Es gibt keinerlei Anzeichen dafür, dass es in der Ukraine in absehbarer Zeit Frieden geben könnte. Dass hierzulande so viel darüber gesprochen wird, zeigt nur den Realitätsverlust und Anmaßung der deutschen Debatte. Wir können den Krieg nicht von oben "befrieden".
Wir können den Ausgang das Krieges nur durch unsere Ukraine-Unterstützung beeinflussen (und ein stückweit über Sanktionen). Wir können aber nichts dirigieren oder erzwingen, und auch der globale Süden wird uns nicht aushelfen (wollen oder können).
Für viele ist es wohl noch ungewohnt, dass wir nicht die Macht und Mittel besitzen, einen Krieg mitten in Europa einfach zu "befrieden". Dass wir nicht bestimmen können, wie und wann er endet, dass wir keine übermächtigen Schiedsrichter mehr sind. Aber das ist die neue Realität.
For the past two years, it often seemed like sanctions could not hurt Russia. The Russian economy was on a massive sugar high, fueled by booming energy markets. But now things are changing. Russia's struggling coal industry is the best example.
After two crazy years, world market prices for coal have returned to something closer to normal. Suddenly it turns out that Russian coal can no longer break even at these more normal market prices. What happened? tradingeconomics.com/commodity/coal
The main reason is that sanctions have increased the cost of transportation, because some coal has to be redirected from Europe to India. The same thing happened with oil. But there is a difference: Oil margins are so high that it doesn't matter as much. energyandcleanair.org/july-2024-mont…
The average regional signing bonus for Russian soldiers is 596k rubles, it more than tripled from the beginning of the year. The average total bonus increased from 363k to 996k. But can the increase change people's minds about fighting in Ukraine?
When you enlist in the Russian military, your family can expect three different types of payments over the course of your (often literally short-lived) career:
- Signing bonus
- Monthly pay
- Compensation for death/injury.
If you want more men to sign up, increasing the sign-up bonus is the cheapest way to do it. It is the only risk-free payout for the recruits. Monthly pay depends on how long you survive, and compensation depends on whether the Russian bureaucracy deems you eligible.
How do sanctions affect the war in Ukraine? The simplistic explanation that "Russia is running out of money" is not wrong, but it is also not quite right. To understand the impact of sanctions, it helps to think of Russia's trade with the outside world as a big machine. 1/5
On one side of this machine, Russia puts in oil, metals, grain etc, and on the other side, this machine puts out computer chips, cars, and machinery. Sanctions sabotage this "trade machine" in many ways. As a result, Russia has to put in more barrels of oil to make it work. 2/5
If Russia's "trade machine" is not working well, it affects Putin's ability to solve the key economic problems of his war. There are essentially three distinct economic problems he faces (size of GDP, control over income, military production capacity / recruitment success). 3/5