In meetings between European and American officials, figures and tables are being circulated about the “medium-term” stability of the Russian economy. We’ve seen a few. In the last year (January 22 – January 23) gas export has almost halved: -46%. In Moscow, the Ministry of Finance recently reported that at the beginning of 2023, revenues from oil sales decreased by 60% compared to March 2022. As we know, Gas and oil are the two vital resources, the material basis of Putin’s power.
The war is wearing them down, despite the Kremlin’s efforts to replace neighboring European markets with Chinese and Indian ones. On December 5, 2022, the European Union banned the import of crude oil by ship and on February 5, 2023 the purchase of petroleum products. Obviously, two measures are beginning to bear fruit, as Vladimir Putin admitted yesterday. In February, the price of Russian crude was $52.5 a barrel, $30 below the global market average. Objectively speaking, the 27 EU countries could not immediately cancel gas supplies; But they agreed on a price ceiling that affected the Russians’ revenues.
Another couple of numbers to complete the picture. There has been a lot of discussion about semiconductors in recent monthsand is a critical component for assembling countless electronic products for both civilian and military use. Before the aggression against Ukraine, 90% of Russia’s needs were covered by Western supplies. The sanctions forced the Moscow government to look elsewhere, especially in China. However, according to data circulating in Washington and Brussels, semiconductor imports fell by 74% in one year.
The last element: the monetary reserves, that is, the resources of the state to be made available to deal with economic or financial crises. By February 24, it amounted to 640 billion dollars. Today it has decreased to 580 billion, but 300 of them have been “frozen” by foreign authorities. Therefore, 280 remain: a third in gold, a third in Chinese currency and only the last part, about 100 billion, that can be easily spent on world markets.
Summarizing the above, A picture emerges of a country with somewhat bleak economic prospects. So far, Putin has managed to hide the difficulties that are now looming on the horizon. Trade relations with China, India and other countries outside the American and European periphery have limited GDP’s decline to 2.1% in 2022, compared to forecasts of -15%. the Wall Street Journal He writes that the war industry has supported GDP, however Government spending on arms caused a government deficit of $34 billion (1.5% of GDP). Only in the first two months of 2023.
Beware, though: The West has not yet won the sanctions war. In recent weeks, the accusations against him have multiplied Countries that agree to buy goods from US and European companies and then deliver them to Moscow. The “usual suspects” list includes: China, of course, then Türkiye, Armenia, Kazakhstan, Kyrgyzstan, the United Arab Emirates and others. The governments of these countries deny these allegations. But the EU’s special envoy for sanctions, David O’Sullivan, notes that the Ukrainians have recovered 770 European-made parts in Russian military vehicles. It is a political minefield. The leaders of the United States and the European Union do not want to offend those countries that view the conflict with increasing impatience. Ukrainian Volodymyr Zelensky calls for greater controls on Western companies that do everything not to abandon Russian customers.
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