Russia and economic war by the west #2

Iran has announced the completion of the first shipment of Russian cargo to India via the North-South transport corridor.

Very good news.

Boosts trade between Russia and India, and Iran benefits from the trade, but the west does not.

Traditionally the west acts as a mediator... oil and gas and commodity sales go through western trading systems along with payments in western currencies... this direct trade bypassing the western middle man who did nothing except collect fees on the transactions they otherwise played no part in will be good for Russia and India and Iran.

It also bypasses western ability to impose their sanctions on trade that has nothing to do with them.

There is no such thing as a universal morality, different nations and different cultures that will lead to what "we" would consider to be sinful/degenerate, to be the norm or to be morally upright thing in these places.

So you are saying that it is the 11-12% of the worlds population living in the west that upholds the worlds christian morals... tell that to Epstein... and the powerful people who murdered him to stop him talking in court...

According to most religions we are all sinners anyway, and sins like not believing in god seem to not so much be sins or morality, but with not joining in with the religion racket.

And yes, America may be allies with certain places counter to their morality, but we know that the U.S still tries to push their universal delusions into these countries just at a much slower pace, when compared to their Blitz in Iraq and Afghanistan.

What if US morals and ethics are wrong and indoctrinating these other countries by force and deception is actually not something they should be doing.

That is the appeal of trading with Russia or China... they don't demand changes in culture and law for their trade.

Star Trek used to be about exploration but also not interfering in the cultures of other planets... have you watched The Orville? currently imposing US woke culture to the universe... we accept all cultures and religions and beliefs... but then we demand you change them to match our morals and ethics... yeah... and such morality creates utopias like the Ukraine where pro Russian forces are openly murdered for being pro Russian an nothing from the west except support.

Your morals and ethics are more flexible and bendable than molasses... which makes them rather toxic.

Collapse??... well there will be a major economic shake-up to say the least, but that's not my point, without the West or should i say "The International Community",

When the US dollar reaches its true value of **** all then the US wont have an economy... they will have an enormous debt and little means to pay it back.

Confusing the west with the international community is pure western propaganda... the west is white and european and as international as my left testicle.

the push to turn to world in a more western direction will cease, all these Western funded NGOs and their numerous affiliates around the world will be no more, allowing nations to go their own way, more so than ever.

The problem is that when the money no longer works, they still have those big military forces they spent all that money on... I suspect they wont go down without a few costly and stupidly pointless conflicts, which I am sure Russia and China will be happy to contribute assistance to the other sides in those conflicts...

Before we had the British influence, then the American one, soon we will have neither, what do you think is going to happen?
Especially given that Russia nor China intend to build empire.

America is not going to give up its empire that easy... I suspect an internal civil war in the US is probably the best solution for the rest of the world so that the military capacity of the country is burned up in internal conflict instead of destroying third world countries and stealing their resources.

They have been acting as international pirates for a very long time now, but wearing the uniforms and pretending to be police... if self appointed police at that... which makes them more of a lynch mob but they call it police and call it justice rather than the revenge and theft that it is.

when they fully develop import replacement then Jean Reno will be renamed to Jean Moskvitch

Most Russians want a revival of Soviet brands, poll shows

"Synergy": more than 80 percent of Russians support the idea of ​​reviving Soviet brands

MOSCOW, July 10 - RIA Novosti. Most Russians support the idea of ​​reviving Soviet brands, the most appropriate is the return of brands for the production of cars, food and drinks, clothes and shoes, as well as perfumes and household chemicals, according to a study by the analytical center of the Synergy University, which is available to RIA Novosti.
After the introduction of Western sanctions against the country, the Russian authorities announced plans to revive some Russian car brands - Moskvich, Volga and Pobeda.
"83% of Russian citizens consider it necessary to revive Soviet brands against the backdrop of the departure of foreign companies from Russia . This includes such brands as Moskvich, Volga and Pobeda (cars), as well as Orsk" (refrigerators ) and "Kama" (bicycles). About 12% of citizens hold the opposite point of view, the remaining 5% found it difficult to answer, "says the study, which was conducted in July among five thousand residents of all regions of the country.

The participants of the study consider it most expedient to reanimate brands for the production of cars (as answered by 26% of respondents), food and beverages (21%), clothing and footwear (15%), perfumes and household chemicals (8%), household appliances and electronics (6% ), aircraft (3%). Another 12% chose the answer option "Other". At the same time, 9% are sure that Soviet brands need to be revived in all possible industries.
Critics of this trend believe that reanimated brands will not be able to compete with modern brands in terms of the quality of their products - this answer was given by 48% of the skeptics surveyed. According to 24% of respondents, it is better to create new brands than to revive those that have not stood the test of time. Another 17% do not support this trend, because they have had an unpleasant experience of using Soviet brands, and every eleventh Russian (11%) does not believe in the possibility of a full-fledged revival of Soviet brands: there is a risk that this will happen in words, not in practice .
Soviet things cause positive associations in 62% of the study participants. According to them, in the USSR they made mostly reliable (this definition was given by 84% of respondents) and affordable things (87%) that served several generations (91%). 30% of respondents have neutral associations when they remember things made in the USSR, and 8% have negative associations.

https://ria.ru/20220710/sssr-1801493676.html

Reliable stuff for generations... Greta Dumbberg must love soviet producers. 


3rd record in a row. Sanctions work great. 

Hole wrote:Reliable stuff for generations... Greta Dumbberg must love soviet producers. 


3rd record in a row. Sanctions work great. 

There's two sides of the coin. There are two reasons for record surpluses. Still strong commodity markets and big drop in Russian imports. It's not all positive. It is good that Russia is managing to find export markets for own products.Too strong surpluses point to structural problems in the economy. These are still very early days in economic stand off. It will take few years down the road to see if Russia will be successful in overcoming problems caused by sanctions. For now surplus is good, because they need to finance the war.

caveat emptor wrote:

Hole wrote:Reliable stuff for generations... Greta Dumbberg must love soviet producers. 


3rd record in a row. Sanctions work great. 

There's two sides of the coin. There are two reasons for record surpluses. Still strong commodity markets and big drop in Russian imports. It's not all positive. It is good that Russia is managing to find export markets for own products.Too strong surpluses point to structural problems in the economy. These are still very early days in economic stand off. It will take few years down the road to see if Russia will be successful in  overcoming problems caused by sanctions. For now surplus is good, because they need to finance the war.

That isn't necessarily true. Strong surplus indeed due to having to switch to imports from elsewhere causing delays but also because of import substitution which is still in full swing. 2/3rds of its economy is still taxation and domestic consumption so I wouldn't worry much of its structure. As lancelot pointed out majority of the drop of domestic production due to sanctions have been the automotive market and not much else beyond that.

Strong surplus will guarantee Russia has additional income to fund many projects including import substitution which is key to its development.

sepheronx wrote:
That isn't necessarily true.  Strong surplus indeed due to having to switch to imports from elsewhere causing delays but also because of import substitution which is still in full swing. 2/3rds of its economy is still taxation and domestic consumption so I wouldn't worry much of its structure.  As lancelot pointed out majority of the drop of domestic production due to sanctions have been the automotive market and not much else beyond that.

Strong surplus will guarantee Russia has additional income to fund many projects including import substitution which is key to its development.

No way import substitution would make a dent in current account in 4 months. That process takes years.
When private sector imports less merchandise, government gets less revenues due to lower custom duty charges amd VAT revenues.
I've posted numbers few weeks ago, from Rosstat, which clearly show that weakness goes far beyond automotive sectors.
As i said, strong surplus is a good thing now, with increased military spending, due to war.
These macro trends can not be looked in context of last 4-5 months. Real uphill battle with repairing supply chains and import substitution will take years rather than months.

caveat emptor wrote:

sepheronx wrote:
That isn't necessarily true.  Strong surplus indeed due to having to switch to imports from elsewhere causing delays but also because of import substitution which is still in full swing. 2/3rds of its economy is still taxation and domestic consumption so I wouldn't worry much of its structure.  As lancelot pointed out majority of the drop of domestic production due to sanctions have been the automotive market and not much else beyond that.

Strong surplus will guarantee Russia has additional income to fund many projects including import substitution which is key to its development.

No way import substitution would make a dent in current account in 4 months. That process takes years.
When private sector imports less merchandise, government gets less revenues due to lower custom duty charges amd VAT revenues.
I've posted numbers few weeks ago, from Rosstat, which clearly show that weakness goes far beyond automotive sectors.
As i said, strong surplus is a good thing now, with increased military spending, due to war.
These macro trends can not be looked in context of last 4-5 months. Real uphill battle with repairing supply chains and import substitution will take years rather than months.

What you posted was actually all tied to the same industry as Lancelot pointed out - commonality of parts and mostly to do with actually the chip shortage for Russia for the most part (and a lot of parts used came from Ukraine for locomotives and motors).  This in turn has been requested a huge portion of what Roscosmos was saying about nationalizing into one group for semiconductor production.  There is a rush to have local development of RISC-V on 90nm or higher for entirely automotive or locomotive or such industry - same goes for machine tooling as they too will face a shortage.

Much like composite production that others stated Russia cannot do, they managed to roll out within a year through Rosatom subsidiary.  Actually, taxation has a huge roll in current account surplus especially since it now relies entirely on own development for the time being till they find an alternative route.  Biggest contributor of course is lack of purchases combined with higher energy costs that allows the budget to stay high.

Import substitution wont take years.  First hand accounts even mentioned on sdelanounas seen within a year.  If they speed up acceptance process rather than taking time with testing and this may happen due to urgency unless they find an alternative.

Of course it is big, already well established enterprises that can do it and not so much smaller.  But they will come in time along with the larger players.  Seen this not just composites but also with drilling equipment and now processing equipment and catalysts used in processing.

https://www.russiadefence.net/t8801p150-russia-and-economic-war-by-the-west-2#386967

I kind of expected it. Most of these categories are exact same thing basically. Motor vehicles. Lack of access to automotive electronics, and in some cases, like rail wagons, certain bearings which used to be imported from Europe. You can't get common rail injectors, or direct injection electronics for engines, and in some cases even certain engine parts were imported or whole engines. And you have the issue with bearings. The vehicle electronics will likely be imported from China instead, eventually the Russian industry will develop their own, most of these electronics are out of patent and can be easily duplicated, it is a matter of having a ready supply rather being something hard to design. I expect half of that production to recover until end of year as suppliers switch to China and India. Longer term, in 2-5 years, Russia will have its own internal supplies.

With regards to electric motors, China is a huge manufacturer, and they can make basically everything. They have everything including their own winding machine tools for mechanically winding electric motors. Many decades ago used to be made by hand in countries with cheap labor. Just buy their damned tools and make Russian engines out of Russian copper wire.

With regards to appliances, a lot of this is likely foreign manufacturers leaving, but Turkey and China are major makers of appliances so they will likely replace the ones which left.

A lot of those products haven't switched suppliers before due to institutional innertia. But a lot of them have already switched to Asian suppliers and more will do so as a short term solution until Russian industry makes its own products.

Edit: Also, here is the quick comment from sdelanounas:

https://sdelanounas.ru/blogs/146740/

The consolidated budget of the Russian Federation in January-April was executed with a surplus of 2.7 trillion rubles.

At the same time, budget expenditures at this time also increased significantly due to the decisions taken to advance financing of development projects and advance procurement.

So there has been an increase in spending as well for development. So they aren't sitting on the money not knowing what to do entirely. Although, the finance ministry did state that it was a problem on where to spend the money.

constantly having to edit to adjust or add pointers is kinda troublesome so I will just make a new post: I agree with what you are saying Caveat emptor for most part, but the timeline to fix certain issues I disagree with. There is a rather very strong push to get local development out along with importing alternatives. Hence why there is constant meetings with Chinese and Indian officials over it. With local production things may stay a bit low for a bit and slightly increase but as they say - if there is a demand there will be a supplier. Russia is in a far better position this time to make adjustments quick than previously.

I agree they are better positioned than few years ago for import substitution. Also, i expect that majority of imported equipment in automotive and some other consumer product industries will not be localized, but imported from other countries. In many cases, localization will not make sense and such product will be too expensive.
My point is that import substitution couldn't make a dent to CA surplus in such a short time ( from March).
Nobody said that they are sitting on the money. My point is that as some posters are all doom amd gloom, others are overly optimistic. Developing and mastering production of a new, not too complicated product, usually takes anywhere between 2-4 years, especially if new production capacity has to be built.

caveat emptor wrote:I agree they are better positioned than few years ago for import substitution. Also, i expect that majority of imported equipment in automotive and some other consumer product industries will not be localized, but imported from other countries. In many cases, localization will not make sense and such product will be too expensive.
My point is that import substitution couldn't make a dent to CA surplus in such a short time ( from March).
Nobody said that they are sitting on the money. My point is that as some posters are all doom amd gloom, others are overly optimistic. Developing and mastering production of a new, not too complicated product, usually takes anywhere between 2-4 years, especially if new production capacity has to be built.

Agreed. But it also depends on said product. While Russia did import a lot of specific goods from Ukraine and others, there was actually competitive industries in Russia themselves that made similar equipment in lower numbers. Example was the turbines used for helicopters. Thus it didn't take long for Russia to import substitute. Same thing with bearings as an example of recently where there are indeed smaller companies that make various bearings for all types of industries in Russia. Its just that mass production was elsewhere. They have now turned to local. And of course they wont import substitute everything but I think after the events happened now, they will start to import substitute everything in smaller quantities and supplement with imports to subsidize both sides of the industries and also get stuff out a lot quicker. I have read that they are now fast tracking various projects like jet turbines of different calibers because of the need for it. While its dangerous, I can also see the other reasoning too. Many industries that worked only 1 - 2 shifts in Russia has now opened a third shift - I believe Aqua(whatever) that makes various electronics for households and industrial is now working around the clock to meet production - they recently purchased also an American company that operated in Russia, to increase production. This is just 1 example mind you. It would be a long list all day.

Import substitution not for last 4 months made big dent but it was actually the last 8 years that made a major dent in Russia's needs + added benefit to the overall surplus. Taxes have increased for certain individuals mixed in with industrial taxation too. With that, major industries and various small ones have opened up left right and center in last 8 years, especially last 4 years, in meeting all kinds of demands. It is just in the last 4 months many of these import substitution industries have actually started to pump out more and expand production - as well bigger industries like Rosatom and Rostec have also expanded existing lines for more production of other goods. Microelectronics is going to be the biggest one for Russia in the next couple of years starting with new chips on older lithography and when they can get their own equipment going for newer lithography mixed in with working with China, there will be a big boom.

This is the time for industrial production growth and new opportunities.

BTW, I think automotive will be the one solved the quickest. I am excited to see Moscvitch vehicles.

Russia should use the cash to lend money to the economy. Even though it is much better now, there is a shortage of bank lending
in Russia. Nabiullina and the monetarist clowns have made sure that borrowing costs are lethal. This is why Russian companies have
engaged in offshore borrowing and other rackets to compensate for lack of domestic lending or bank capacity. Russia can fully steralize
all of this money by lending it to the domestic market. Of course at rates of around 1%. Inflation has never been a problem for Russia
in the last 20 years. If it was a problem, then the annual 50% money supply growth during the 2000s and into the 2010s would have
precipitated hyperinflation. But we saw in 2014/15 and 2022 that inflationary spikes are damped super fast. Nabiullina is undermining
the Russian economy with her BS about inflationary risk. She has produce no shred of evidence to back her claims and justify her policies.

sepheronx wrote:

BTW, I think automotive will be the one solved the quickest.  I am excited to see Moscvitch vehicles.

I agree. They will just find new part suppliers. Automotive industry is not ones where import substitution should be implemented. Margins are atrocious.

Wait until the reconstruction of the old/new regions starts. They will need trains full of construction machines. Furniture. Dishwashers. There will be new factories build for that boom because the old ones won´t be able to produce all the goods, even when working 24/7.

kvs wrote: Nabiullina and the monetarist clowns have made sure that borrowing costs are lethal.   This is why Russian companies have
engaged in offshore borrowing and other rackets to compensate for lack of domestic lending or bank capacity.   Russia can fully steralize
all of this money by lending it to the domestic market.   Of course at rates of around 1%.    Nabiullina is undermining
the Russian economy with her BS about inflationary risk.   She has produce no shred of evidence to back her claims and justify her policies.

I wouldn't solely blame Nabiulina. She has strong political backing. Finance ministry is also fiscally very conservative, as is Putin. If it was only her, that would be solved years ago.

What Russia really needed before the war, was a stronger growth of medium salary and minimum wage. It had record low unemployment, corporate profits were high and still wages didn't grow fast enough. Lower and lower middle class didn't have enough disposable income and payday loans were showing high growth rates over last 7-8 years.

caveat emptor wrote:What Russia really needed before the war, was a stronger growth of medium salary and  minimum wage. It had record low unemployment, corporate profits were high and still wages didn't grow fast enough. Lower and lower middle class didn't have enough disposable income and payday loans were showing  high growth rates over last 7-8 years.

i would say talking about internal economic relations you cannot treat it as separate issue with power struggle (internally - oligarchs vs gosudartvenniki) and external intl situation for Russia. Now Russia after being attacked by ze west has more freedom related to internal policy imho. Oligarchs stay low and have nowhere to transfer usd/eur capital out of Russia. All PACE or EU political levers are being denounced.

There us also yet another challenge - middle management. That's very dangerous one, much much more then any Vth column. Incompetence/ass covering local /regional state administration and managers can do lots of harm. Just by doing nothing or doing pseudo import substitution - where most of "innards" in product in in fact made in western countries.

The anti-corruption committee proposed to return the article on sabotage

Senator Klishas: the anti-corruption committee proposed to return the article on sabotage to the Criminal Code

https://ria.ru/20220708/zakon-1801112415.html

[]
The letter notes that today in Russian legislation "there is no concept of harm and material damage that is difficult to determine" in relation to both national and economic security. "In fact, officials responsible for the dishonest performance of their duties, which led to a decrease in the country's defense capability, a negative impact on domestic industrial and financial markets, disruption of the state order, and so on and so forth, cannot be held accountable in the absence of direct material damage" , the appeal says.

As an example, the committee cites a "practical situation" in which "due to the inefficient implementation of the import substitution program and the sanctions imposed against our country, due to the lack of specific components, the Russian defense industry has lost the ability to produce strategic weapons that could have a direct impact on the situation" with a special operation in Ukraine . At the same time, the persons responsible for the implementation of a specific task did not commit theft or abuse, but their "administrative position caused significant harm to the country's defense capability."

[]


"The essence of the proposal in the letter to N.A.K. is that the incompetence of officials, which leads to threats to the country, is also grounds for bringing these persons to criminal liability. The proposal at least deserves serious discussion. When you look at the" successes "of our departments in import substitution and other areas, I would very much like to return the article on sabotage to the Criminal Code, it is so," Klishas wrote, commenting on the proposal.


[]

GunshipDemocracy wrote:

i would say talking about internal economic relations you cannot treat it as separate issue with power struggle (internally - oligarchs vs gosudartvenniki)  and external intl situation for Russia. Now Russia after being attacked by ze west has more freedom related to internal policy imho.  Oligarchs stay low and have nowhere to transfer usd/eur capital out of Russia. All PACE or EU political levers are being denounced.  

There us also yet another challenge - middle management. That's very dangerous one, much much more then any Vth column.  Incompetence/ass covering local /regional state administration and managers can do lots of harm. Just by doing nothing or doing pseudo import substitution - where most of "innards" in product in in fact made in western countries.

I completely agree. That's why i called Russian middle management- " deep state" of Russia. These bureaucrats are masters of survival, mostly without being effective in solvimg problems.
Unfortunately, Russian economic and political ellites were very neoliberal in their thinking and that didn't help either.
We will see if this shock will change anything and make them move their ass.

Everytime i think about middle management and local power holders, i can't not to remember a movie Durak, which, pretty credibly, describes these people.

GunshipDemocracy wrote:

caveat emptor wrote:What Russia really needed before the war, was a stronger growth of medium salary and  minimum wage. It had record low unemployment, corporate profits were high and still wages didn't grow fast enough. Lower and lower middle class didn't have enough disposable income and payday loans were showing  high growth rates over last 7-8 years.

i would say talking about internal economic relations you cannot treat it as separate issue with power struggle (internally - oligarchs vs gosudartvenniki)  and external intl situation for Russia. Now Russia after being attacked by ze west has more freedom related to internal policy imho.  Oligarchs stay low and have nowhere to transfer usd/eur capital out of Russia. All PACE or EU political levers are being denounced.  

There us also yet another challenge - middle management. That's very dangerous one, much much more then any Vth column.  Incompetence/ass covering local /regional state administration and managers can do lots of harm. Just by doing nothing or doing pseudo import substitution - where most of "innards" in product in in fact made in western countries.

The anti-corruption committee proposed to return the article on sabotage

Senator Klishas: the anti-corruption committee proposed to return the article on sabotage to the Criminal Code

https://ria.ru/20220708/zakon-1801112415.html

[]
The letter notes that today in Russian legislation "there is no concept of harm and material damage that is difficult to determine" in relation to both national and economic security. "In fact, officials responsible for the dishonest performance of their duties, which led to a decrease in the country's defense capability, a negative impact on domestic industrial and financial markets, disruption of the state order, and so on and so forth, cannot be held accountable in the absence of direct material damage" , the appeal says.

As an example, the committee cites a "practical situation" in which "due to the inefficient implementation of the import substitution program and the sanctions imposed against our country, due to the lack of specific components, the Russian defense industry has lost the ability to produce strategic weapons that could have a direct impact on the situation" with a special operation in Ukraine . At the same time, the persons responsible for the implementation of a specific task did not commit theft or abuse, but their "administrative position caused significant harm to the country's defense capability."

[]


"The essence of the proposal in the letter to N.A.K. is that the incompetence of officials, which leads to threats to the country, is also grounds for bringing these persons to criminal liability. The proposal at least deserves serious discussion. When you look at the" successes "of our departments in import substitution and other areas, I would very much like to return the article on sabotage to the Criminal Code, it is so," Klishas wrote, commenting on the proposal.


[]

I wonder what those strategic weapons are.

caveat emptor wrote:I completely agree. That's why i called Russian middle management- " deep state" of Russia. These bureaucrats are masters of survival, mostly without being effective in solvimg problems.
Unfortunately, Russian economic and political ellites were very neoliberal in their thinking and that didn't help either.
We will see if this shock will change anything and make them move their ass.

and old saying : nobody was fired form a large corporation for doing nothing. For decisions you might be obliged to take responsibility and survivalists are not happy to be responsible. Just to be... Seems that Stalin's approach was the best so far