Military Forum for Russian and Global Defence Issues
miketheterrible wrote:While we appreciate the pointing out of the anti Russian hysteria, this is still an economic thread.
GunshipDemocracy likes this post
miketheterrible wrote:
Well, the main reason why it will work is because Russia already has experience of near self isolation during ussr era, and fact China will buy anything from anyone. So China is kind of that western replacement. If this was the 90's, then Russia would have been screwed.
lancelot likes this post
Autodestruct wrote:miketheterrible wrote:
Well, the main reason why it will work is because Russia already has experience of near self isolation during ussr era, and fact China will buy anything from anyone. So China is kind of that western replacement. If this was the 90's, then Russia would have been screwed.
Russians and other peoples in the USSR were so happy with that arrangement that they dissolved the USSR. Russia and China could work together to mitigate economic attack from the West. But there are two obstacles. 1) The Chinese and Russians frequently disagree, leading to substantial delays. Look at the CR929 program - delayed and they still haven't picked an engine for it. 2) Neither country is in good shape for gaining acceptance of their currency as a globe trade vehicle. And this is because neither yet has deep capital markets. When you sell a good or service, what do you get? Money. What if you don't want to buy something right away? You need a good place to park it - capital markets.
This is why the West rules the roost there. I mean the most basic fundamentals of the dollar, yen, and euro are absolutely horrendous. They are as addicted to debt as a crack fiend to his next fix. But all that is long term. A trader is just looking for parking places short term.
Economic substitution is hard not to say impossible.
It can be done in some areas in some products, but not in more advance products or services, and for sure not at all products/services at the same time.
Otherwise everybody would be doing it. Even trying it would come with a major cost. To be honest I don't think is even worth trying it.
And please, dont use Venezuela as an example. Visited the place already, no way, and I say it again, no way Russian people will endure that type of economy.
Well, the main reason why it will work is because Russia already has experience of near self isolation during ussr era, and fact China will buy anything from anyone. So China is kind of that western replacement. If this was the 90's, then Russia would have been screwed.
It is still early days to call anything. One thing that is sure, is that Russia didn't expect so harsh sanctions from EU, especially on RCB.
Yes I know, I just wanted to share it since I posted it in the Nonsense about Russia thread and didn't get any responses.
Russians and other peoples in the USSR were so happy with that arrangement that they dissolved the USSR. Russia and China could work together to mitigate economic attack from the West.
Look at the CR929 program - delayed and they still haven't picked an engine for it.
magnumcromagnon, kvs and miketheterrible like this post
Autodestruct wrote:miketheterrible wrote:
Well, the main reason why it will work is because Russia already has experience of near self isolation during ussr era, and fact China will buy anything from anyone. So China is kind of that western replacement. If this was the 90's, then Russia would have been screwed.
Russians and other peoples in the USSR were so happy with that arrangement that they dissolved the USSR. Russia and China could work together to mitigate economic attack from the West. But there are two obstacles. 1) The Chinese and Russians frequently disagree, leading to substantial delays. Look at the CR929 program - delayed and they still haven't picked an engine for it. 2) Neither country is in good shape for gaining acceptance of their currency as a globe trade vehicle. And this is because neither yet has deep capital markets. When you sell a good or service, what do you get? Money. What if you don't want to buy something right away? You need a good place to park it - capital markets.
This is why the West rules the roost there. I mean the most basic fundamentals of the dollar, yen, and euro are absolutely horrendous. They are as addicted to debt as a crack fiend to his next fix. But all that is long term. A trader is just looking for parking places short term.
magnumcromagnon, GunshipDemocracy and lancelot like this post
lancelot wrote:
Like they will ever know where the chips went... The Chinese are professionals at relabeling chips. All it takes is sanding the product codes down and you will never know where they came from even if you inspect them. This is also a big chance for Zhaoxin to sell chips in Russia.They will stop cracking down on Russian software piracy sites like they used to do. Unofficially of course. Guess who will lose more money.Vann7 wrote:Even Russian software and games will be banned by the west.
So what is putin going to do now? imports substitution ?
andalusia wrote:Why do politicians and people with a lot of money put their money in Swiss banks? Why don't they put their money in their own country's banks? What is the reason for it? The Swiss just abandoned neutrality an froze Russian bank accounts of oligarchs.
https://www.nytimes.com/2022/02/28/world/europe/switzerland-russian-assets-freeze.html
magnumcromagnon, miketheterrible and lancelot like this post
Those with IQs over 50 in the European Union (EU) must have understood that Russia simply could not be totally excluded from SWIFT, but maybe only a few of its banks: after all, European traders depend on Russian energy.
From Moscow’s point of view, that’s a minor issue. A number of Russian banks are already connected to China’s CIPS system. For instance, if someone wants to buy Russian oil and gas with CIPS, payment must be in the Chinese yuan currency. CIPS is independent of SWIFT.
Additionally, Moscow already linked its SPFS payment system not only to China but also to India and member nations of the Eurasia Economic Union (EAEU). SPFS already links to approximately 400 banks.
With more Russian companies using SPFS and CIPS, even before they merge, and other maneuvers to bypass SWIFT, such as barter trade – largely used by sanctioned Iran – and agent banks, Russia could make up for at least 50 percent in trade losses.
The key fact is that the flight from the US-dominated western financial system is now irreversible across Eurasia – and that will proceed in tandem with the internationalization of the yuan.
......................
Let’s confiscate some technology
Now compare all of the above with the perspective of a central European business tycoon with vast interests, east and west, and who treasures his discretion.
In an email exchange, the business tycoon posed serious questions about the Russian Central Bank support for its national currency, the ruble, “which according to US planning is being destroyed by the west through sanctions and currency wolf packs who are exposing themselves by selling rubles short. There is really almost no amount of money that can beat the dollar manipulators against the ruble. A 20 percent interest rate will kill the Russian economy unnecessarily.”
The businessman argues that the chief effect of the rate hike “would be to support imports that should not be imported. The fall of the ruble is thus favorable to Russia in terms of self-sufficiency. As import prices rise, these goods should start to be produced domestically. I would just let the ruble fall to find its own level which will for a while be lower than natural forces would permit as the US will be driving it lower through sanctions and short selling manipulation in this form of economic war against Russia.”
But that seems to tell only part of the story. Arguably, the lethal weapon in Russia’s arsenal of responses has been identified by the head of the Center for Economic Research of the Institute of Globalization and Social Movements (IGSO), Vasily Koltashov: the key is to confiscate technology – as in Russia ceasing to recognize US rights to patents.
In what he qualifies as “liberating American intellectual property,” Koltashov calls for passing a Russian law on “friendly and unfriendly states. If a country turns out to be on the unfriendly list, then we can start copying its technologies in pharmaceuticals, industry, manufacturing, electronics, medicine. It can be anything – from simple details to chemical compositions.” This would require amendments to the Russian constitution.
Koltashov maintains that “one of the foundations of success of American industry was copying of foreign patents for inventions.” Now, Russia could use “China’s extensive know-how with its latest technological production processes for copying western products: the release of American intellectual property will cause damage to the United States to the amount of $10 trillion, only in the first stage. It will be a disaster for them.”
GarryB and lancelot like this post
What Russia's economic response scares the West, by Olga Samofalova for VZGLYAD. 02.03.2022.
A tough sanctions war between the West and Russia could lead to an equally tough economic response from Moscow. And such an answer, which six days ago seemed fantastic. However, now Russia's refusal to pay Western debts and sell oil and gas to Europe look like quite working scenarios. At the moment, gas transit through Ukraine continues to go on and has even doubled.
So far, Russia has responded to only part of the Western sanctions, where it is easiest to do so. For example, in response to the EU's ban on Russian flights, Moscow immediately banned European carriers from flying and added a ban on flying over Russian territory. This will make flights from Europe to Asia longer and more expensive.
Moscow is in no hurry to impose retaliatory sanctions where it is more difficult to do so, because they are unpleasantly hitting Russian business as well. It is better to once again calculate all the consequences.
For example, it is difficult to respond symmetrically to the ban on selling to Russia and servicing Airbus aircraft. “This actually deprives the Russian market of about 40% of passenger traffic. In response, it is possible to ban the supply of titanium to Europe, since two-thirds of the titanium that is needed in the production of "airbuses" is of Russian origin," says EXANTE analyst Vladimir Ananiev.
So far, there has been no response to sanctions against Russia's largest banks and Russian reserves. Here, Moscow has thrown all its efforts into mitigating the consequences on the economy and the ruble from the economic restrictions of the West. It's hard to answer here without hurting yourself.
Russia may refuse to pay its foreign debts, Oxford Economics admits. They estimate that payments by Russian borrowers on hard-currency debt this year are about $55 billion, and sovereign bonds are $2.6 billion. If Russia is denied access to its $640 billion in foreign exchange reserves and SWIFT payment systems, then Russia may well become unwilling to pay its debts.
“The logic is this: why send money abroad if our assets have been frozen there? Formally, this will mean the defaults of our issuers. Although in market conditions, without sanctions, nothing of the kind would have happened. But in such conflicts, economic logic no longer works. The confrontation can grow to a rupture of all economic ties with the West: the arrest of everything Russian abroad and the arrest of everything foreign in Russia,” says Ananiev.
However, instead of a cardinal response, you can use the tactics of a gradual increase in blows. For example, in Russia's arsenal there are export goods, without which the economy of Europe and the life of Europeans can seriously deteriorate. A relatively strong response could include Russia's ban on fertilizer exports to the EU.
“In the world prices for fertilizers are rising. Therefore, the ban on their export will be a real gift for farmers and local consumers. It will keep domestic prices down, and on the other hand, it will sharply increase the costs of European agricultural companies. This will result in even greater food inflation in European countries", Ananiev says.
Europe also appreciates Russian metals very much. And this means that it is possible step by step to introduce a ban on the export of a particular metal. “The export ban on palladium will hit the European automotive industry, as the metal is used in catalysts to clean exhaust gases. At the same time, the ban on the export of nickel and cobalt will have a negative impact on the already expensive production of electric vehicles,” Ananiev notes.
Probably, in this logic, the authorities can come up with a number of similar bans on the export of goods important for Europeans from Russia.
Russia's refusal to supply oil and gas
Russia's toughest response to Western sanctions could be a refusal to supply Russian hydrocarbons - oil, gas and coal. This is a serious trump card in the sleeve of Moscow, which, in fact, helps to deter European politicians from total economic sanctions. Not all Russian banks fall under the restrictions, and not all of them are also disconnected from SWIFT. Export operations are becoming more difficult, but even with tough sanctions, Brussels leaves a window of opportunity for quite normal mutual trade.
Russian hydrocarbons have generally gone beyond the brackets of this entire geopolitical situation. Brussels limited itself, in fact, to the formal withdrawal of the Nord Stream 2 certification on the very first day of Russia's special operation, and that's it. But this gas pipeline has not yet been launched, so “stopping” it is the easiest thing for Europe.
Other gas pipelines continue to operate and pump gas to Europe. Moreover, Russian gas continues to flow through the Ukrainian gas transmission system without interruption, as the Ukrainian GTS operator itself reports.
“Supplies of Russian Urals oil are also going on as if nothing had happened. Publications by foreign media that they are allegedly afraid to buy Russian oil (in particular, China) do not correspond to reality. It was speculation, they were just afraid that the money for the goods would get stuck due to sanctions. But the fears quickly passed. Statistics show that both yesterday and today purchases of Russian oil even increased. Oil is shipped in a normal schedule both through the ESPO, and through the port of Kozmino, and through Novorossiysk, and through Ust-Luga, ”says Igor Yushkov, an expert at the Financial University under the Government of the Russian Federation and the National Energy Security Fund.
Gas deliveries to Europe are not just going through the Ukrainian pipeline, they have also increased. The Europeans increased their requests for supplies, and Gazprom began to pump through the Ukrainian pipe instead of 50 million cubic meters of gas per day, as it was before the start of Russia's special operation in Ukraine, all 109 million cubic meters of gas per day, a double increase, the expert notes. This is the mandatory maximum that is fixed in the contract.
“Europe has started to buy more imported gas for economic reasons. Their underground storage facilities have run out, there is almost nothing there. Therefore, Europeans are switching to current imports. The Europeans are trying to bring the supply of hydrocarbons out of the brackets of sanctions,” the FNEB expert believes.
But Russia can stop the supply of hydrocarbons as a response if it considers Western sanctions for the Russian economy catastrophic, Yushkov said. “If earlier this measure looked fantastic and crazy, now this option can be considered as a working one, but still as a last resort,” the expert says.
“The game is already going without rules. The most pessimistic scenario of the conflict is the seizure by the West of all accounts and property of all Russian residents. Then the answer can be absolutely anything, up to the refusal to supply energy resources. The logic is this: why sell oil and gas if the currency earned for them is frozen in the accounts? Ananiev says.
This is certainly the most extreme step that Moscow will take. Because it seriously affects not only Europe and the world economy, but also Russia itself.
After Western sanctions against Russian reserves, the Central Bank of Russia partially loses its role as a supplier of currency to the domestic market. Instead, now export companies must saturate the Russian market with foreign currency and, in fact, be responsible for the ruble exchange rate. To do this, they were required to sell 80% of their foreign exchange earnings.
“Hydrocarbon exporters are becoming foreign currency donors to the Russian market. This currency will then be bought up by companies that will purchase imported goods. This fact also indicates that the scenario of stopping the export of hydrocarbons is not considered as the main one,” Yushkov said.
If it works, Armageddon will happen. Not only Russia and Europe will suffer, but the entire world economy. And as in any confrontation, there will be those who make good money on this.
“Stopping oil supplies to the US and the EU at the first stage will cause a global shortage of black gold. Then the global restructuring of the market will begin. Russia will direct all of its oil to Asian markets in order to maintain export volumes. And those suppliers who were in the Asian market will send their oil to the European and American markets to replace Russian raw materials.
But until this redistribution of oil supplies takes place, there will be a shock on the world market and prices will soar to $150-200 per thousand cubic meters,” Yushkov says.
This will hit not only the global energy sector, but the entire global economy. “With such oil prices, it will become generally unprofitable to transport many goods by sea or over long distances, because the cost of delivery will seriously increase, the freight of tankers will rise in price,” the FNEB expert notes.
The supply disruptions and rising food prices that the world has faced during the pandemic may not seem like much of a problem compared to what the world is about to experience.
Stopping gas supplies to Europe is even more catastrophic in terms of consequences for both sides. Russia will not be able to transfer West Siberian gas, which goes through pipes to Europe, to other markets. There is no gas pipeline for such a volume to China or other Asian countries. To send gas by tankers by sea, it must be liquefied, but Russia does not have so many LNG plants for this, and gas carriers too. This means that Russia will have to stop production. “In the western direction, if without Turkey, there are about 150 billion cubic meters of gas from Russia. Where will we put so much gas if we don't supply it to Europe? Nowhere. We'll have to stop mining. This means that the world market will lose these volumes, and immediately there will be a gas gap in the EU balance,” says Yushkov.
“No matter what anyone says, Europe will have nowhere to get such volumes of gas from. The world is unable to increase production by 150 billion cubic meters. Europeans will try to switch to other sources of energy. An attempt to switch to coal will fail, since Russia is also the largest coal supplier for the EU. They will try to start everything that is possible: all stopped nuclear power plants, closed coal deposits in Germany and Poland.
But this will not save: Europe will plunge into darkness. Electricity will be supplied by the hour in portions and only to individual consumers. If this happens during the heating season, the Europeans will still be left without heating. The global energy crisis in 1973 will seem like flowers, says Igor Yushkov.
As for LNG, Asia will not just give up the gas it needs and contracted. A price war will begin for suppliers who will make good money on this. But consumers will definitely feel the withdrawal of 150 billion cubic meters of Russian gas from the market. More risks that European, not Asian.
Europe accounts for about 70% of Russian gas supplies and 50% of oil. Hydrocarbons bring almost half of the budget revenues. This will be a serious blow to Russia.
“But when there is an economic war, cars, flights abroad are no longer needed, basic needs like food, light in houses and fuel come to the fore. And Russia is provided with all this, unlike most countries of the world and Europe. The presence of a resource base allows you to set up any production, this will take time and organization, but this is at least realistic, while without raw materials any industry becomes useless", concludes Ananiev.
https://vz.ru/economy/2022/3/2/1146457.html
kvs likes this post
rigoletto wrote:I suppose the most sane thing Russia could with Europe, in regards to gas, is to suspend all long contracts (cheap gas), and just sell at spot markets where they can manipulate the price controlling the offer.
In this scenario they could squeeze a lot of money from EU while keeping their industries in life support. Yet, still having their nuclear option of cutting the supplies completely.
magnumcromagnon, kvs, Hole and rigoletto like this post
GarryB, dino00, magnumcromagnon, kvs, miketheterrible, Hole, lyle6 and like this post
full report... interesting indeed , recommend russia to start hardware piracy and don't recognize
US intelectual property and use and sell american products reversed engineered american products.
for a cheaper price. they can start selling copies of iphone and with help of china ,they can do that
magnumcromagnon, GunshipDemocracy and Hole like this post
magnumcromagnon, kvs and Hole like this post
Big_Gazza, GunshipDemocracy, miketheterrible and lancelot like this post
kvs wrote:There is talk that Russia should move to sales of energy in gold and silver. This is a bad idea. Those metals will
jump in price and then go back down possibly in waves. So Russia would be getting less for its energy over periods
of time. It is better to sell for yuan and foreign currency because that currency can be used for imports and also
sold for rubles putting downward pressure on the ruble forex rate.
GarryB, Werewolf, Big_Gazza, kvs, miketheterrible and Hole like this post
and neither the IRS is.GarryB and Yugo90 like this post
Gas deliveries to Europe are not just going through the Ukrainian pipeline, they have also increased. The Europeans increased their requests for supplies, and Gazprom began to pump through the Ukrainian pipe instead of 50 million cubic meters of gas per day, as it was before the start of Russia's special operation in Ukraine, all 109 million cubic meters of gas per day, a double increase, the expert notes. This is the mandatory maximum that is fixed in the contract.
Secretary of the General Council of United Russia Andrey Turchak called the decision of some Western companies to close their business in the Russian Federation premeditated bankruptcy
MOSCOW, 7 March. /TASS/. The decision of some Western companies to close their business in the Russian Federation is a premeditated bankruptcy, United Russia proposes to nationalize their production. This was stated by the Secretary of the General Council of United Russia Andrey Turchak.
The West unleashed a sanctions war against Russia, which included not only governments, but also private companies. Some of them announce their withdrawal from business in Russia and the closure of their enterprises. Of the latter, Finnish Valio and Paulig announced this, and Fazer the day before" , - quotes the words of Turchak, the press service of United Russia on Monday.
According to him, in all cases it is a purely political decision. "Such actions by Western companies [is] nothing more than deliberate bankruptcy. United Russia proposes to nationalize the production of those companies that announce their withdrawal and closure of production in Russia during a special operation in Ukraine," Turchak said.
rigoletto wrote:I suppose the most sane thing Russia could with Europe, in regards to gas, is to suspend all long contracts (cheap gas), and just sell at spot markets where they can manipulate the price controlling the offer.
In this scenario they could squeeze a lot of money from EU while keeping their industries in life support. Yet, still having their nuclear option of cutting the supplies completely.
magnumcromagnon, kvs and Hole like this post
GunshipDemocracy wrote:"United Russia" proposed to nationalize the production of companies that left Russia
Secretary of the General Council of United Russia Andrey Turchak called the decision of some Western companies to close their business in the Russian Federation premeditated bankruptcy
MOSCOW, 7 March. /TASS/. The decision of some Western companies to close their business in the Russian Federation is a premeditated bankruptcy, United Russia proposes to nationalize their production. This was stated by the Secretary of the General Council of United Russia Andrey Turchak.
The West unleashed a sanctions war against Russia, which included not only governments, but also private companies. Some of them announce their withdrawal from business in Russia and the closure of their enterprises. Of the latter, Finnish Valio and Paulig announced this, and Fazer the day before" , - quotes the words of Turchak, the press service of United Russia on Monday.
According to him, in all cases it is a purely political decision. "Such actions by Western companies [is] nothing more than deliberate bankruptcy. United Russia proposes to nationalize the production of those companies that announce their withdrawal and closure of production in Russia during a special operation in Ukraine," Turchak said.
https://tass.ru/ekonomika/13994877rigoletto wrote:I suppose the most sane thing Russia could with Europe, in regards to gas, is to suspend all long contracts (cheap gas), and just sell at spot markets where they can manipulate the price controlling the offer.
In this scenario they could squeeze a lot of money from EU while keeping their industries in life support. Yet, still having their nuclear option of cutting the supplies completely.
and to switch gas/oil contracts to ruble/yuan. Why yuan? it is already worlds reserve currency this would help in negotiation with china regarding important areas like industry cooperation.
GunshipDemocracy and owais.usmani like this post
Home
Latest images
Register
Log in
Kiko