Russia and economic war by the west #2

Why are they opposed I wonder?

In the 1970s Nixon also tried to use fixed prices on goods and it only led to shortages.

An unexpected turn: why the Russians began to live better, by Svetlana Orlova for Izvestia. 09.10.2022.

In the context of the sanctions race and the spread of the global crisis, the number of poor in the country continues to decline.

Rosstat published data showing that in the second quarter of 2022 the number of poor people in the country decreased. How, in the midst of the sanctions race and the growing crisis around the world, Russians managed to improve the quality of life - in the material of Izvestia.

How has the standard of living of Russians changed?

In the second quarter of this year, the poverty line in Russia was 13,813 rubles . According to Rosstat, during the specified period, the number of Russians whose incomes were below this indicator amounted to 17.6 million people , which is 12.1% of the country's population. If we compare these figures with the same period last year, the proportion of the poor in the country decreased by 0.4 percentage points - in 2021 there were 18.2 million of those. Compared to the first quarter of this year, the proportion of people living below the poverty line , in April-June decreased by 2.2 percentage points, or by 3.3 million people.

The money income of Russians in the II quarter as a whole increased and amounted to 19.4 trillion rubles. This is 22.5% higher than in the first quarter and 14.7% higher than April-June last year. The value of the average nominal accrued salary also increased - by 10.6% compared to 2021, and by 6% compared to the first quarter of this year. Its amount was 63,784 rubles.

Average per capita nominal incomes also increased — by 15.2% compared to Q2 2021, and by 22.5% compared to the beginning of 2022. This figure amounted to 44,374 rubles. At the same time, a significant increase in income was accompanied by a surge in inflation : compared to the second quarter of 2021, it increased by 17%, and since the beginning of this year - by 7%. Therefore, in real terms, the income of Russians fell by 1.9 percentage points compared to last year.

Why did poverty fall?

How does Russia, which has become the record holder in terms of the number of sanctions imposed against it, manage to reduce the level of poverty of the population? As noted in Rosstat, this was the result of timely introduced measures of state support. In many respects, the growth in the standard of living was influenced by the increase in the wages of employees and the growth of social benefits.

Thus, wages in April-June increased by 1.1 trillion rubles compared to the same period last year, and since the beginning of this year - by half a trillion rubles. Its size in the structure of monetary incomes of the population amounted to 10.94 trillion rubles.

As for social payments, their volume amounted to 4.1 trillion rubles. Compared to last year - then this figure was 3.43 trillion rubles - the growth amounted to 0.7 trillion rubles. The share of state aid in the structure of cash income increased from 20.3% to 21.2%. Compared to the beginning of this year, the share of social payments increased by 948.4 billion rubles - from 20.0 to 21.2% in the structure of household income.

What kind of assistance did the Russians receive from the state

As Russian Prime Minister Mikhail Mishustin, unprecedented sanctions failed to undermine the financial stability of the country, primarily due to prompt decisions of the president and government. In March, shortly after the start of the special operation and the sanctions race, the head of the Russian state announced that in the face of rising prices, the minimum wage and all social payments would be increased in the near future.

The corresponding decree came into force on June 1. After indexation by 10%, the minimum wage increased to 15,279 rubles per month. This led to an increase in the wages of more than 4 million Russians. The average subsistence minimum for the country amounted to 13,919 rubles. For the working-age population, it has grown to 15,172 rubles, for children - up to 13,501 rubles, for pensioners - up to 11,970 rubles.

Thanks to this, payments for the birth of the first or second child, monthly benefits for pregnant women who registered early, and payments for children aged 3 to 17 years have increased. Introduced on April 1, the monthly cash payment for a child aged 8 to 17 additionally covered about 2.5 million low-income families with children.

Thanks to the indexation of the size of the insurance pension of non-working pensioners, the monthly payment as of July 1 increased to an average of 19,395 rubles. This affected almost 35 million people.

What the experts say

Measures taken by the government to support business, experts say, have prevented the growth of unemployment. She, according to the Russian president, "is at a historical minimum" and is only 4%. The state also controls the level of wages, the indexation of the minimum wage has increased the income of millions of Russians. All this had a significant impact on the reduction of poverty in the country.

However, by the end of the year, the poverty level may increase again , Igor Polyakov , an expert at the Center for Macroeconomic Analysis and Short-Term Forecasting , believes . This , in his opinion, may be affected by the ongoing external economic pressure, which may force enterprises to lay off workers and cut the remaining level of wages. The third quarter in this regard will be relatively prosperous - the positive effect associated with the expansion of the number of recipients of benefits and the indexation of salaries of state employees will continue.

To further reduce the level of poverty, the government will soon have to look for new tools , the potential of those used has almost been exhausted, says Vice-Rector of the Higher School of Economics Lilia Ovcharova. If the unemployment rate remains low, the expert believes that the best step is to increase the minimum wage at a “leading pace” to 150%, reduce the number of low-paid jobs and create highly productive ones with the help of state infrastructure projects.

https://iz.ru/1393165/svetlana-orlova/neozhidannyi-povorot-pochemu-rossiiane-stali-zhit-luchshe

They are quite good at manipulating, brainwashing and arm-twisting, but can they produce anything real and of worth?

there is nothing wrong with a price cap, especially since the price is artificially bloated from speculors in Amsterdam.

The issue is that it should be applied to all gas, including LNG from US, not only to russian gas

The only danger I can see here is that US will sanction buyers of Russian oil above cap...that's dangerous game to me. I wonder what kind of remdy Russians will work out

GunshipDemocracy wrote:The only danger I can see here is that US will sanction buyers of Russian oil above cap...that's dangerous game to me. I wonder what kind of remdy Russians will work out

kvs wrote:

GunshipDemocracy wrote:The only danger I can see here is that US will sanction buyers of Russian oil above cap...that's dangerous game to me. I wonder what kind of remdy Russians will work out

That will only create shortages.   NATzO is assuming Russia will not reduce its export volume.   This is like the rest of their assumptions about
Russia, pure anal effluent.  

GunshipDemocracy wrote:
Don't get me wrong this is simply threat to Indians and Chinese not to buy anything from.  Private companies might back off under threat financial terrorism. That's definitely is raising stakes - someone will break this circle...

ALAMO wrote:They are buying Russian oil&gas n numbers.
What do you even talk about?
They are just pretending that it is some-gas-from-outer-space

ALAMO wrote:Molecules of freedom are added to the invoices, and that makes everybody happy!

Peskov denied media reports about oil supplies to India at a lower price

Press Secretary of the President of the Russian Federation Dmitry Peskov denied media reports that the Russian Federation allegedly offered to supply India with oil at a lower price if it does not join the idea of ​​the "cap".

Cheap food, cheap energy and abundant jobs; Western sanctions turn the fortunes around for Russians

Energy prices in Russia are much lower than the world average which is benefiting the local populace as well as the government of Russia

Russia’s special operation in Ukraine has been a game changer for the Kremlin’s economy. Facts show that the west’s aim to disrupt the Russian economy and pull in the gains for themselves has backfired.

Europe and the US came up with a plethora of sanctions that were supposed to initiate a severe crackdown on the Russian finances but they seem to have forgotten that Moscow’s economy, in reality, is not a bubble and is backed by physical valuable resources like oil and natural gas.

The Russians might not have the most sophisticated technology and breakthrough research but the country is blessed with a plethora of resources, which enables it to control the strings of the manufacturing capacity of the continent of Europe.

As a result, the Kremlin, despite being under the stress of multiple sanctions, is doing better than any wartime economy ever could have, while their aggressors in the east struggle as their economic bubbles start bursting at their own whims.

Food costs in the UK, in August, increased at their fastest rate since the financial crisis of 2008, rising by 10.5% since the previous year.

As a result of the war in Ukraine and the ensuing increase in the price of wheat, vegetable oils, animal feed, and fertilizers, food inflation accelerated to 9.3% in July.

On the contrary, the cost of food in Moscow has decreased by 11.3% since the beginning of the year.

Take a look at this excerpt from an article in The Economist:

“Russia’s exports… have held up surprisingly well, including those directed to the West. Sanctions permit the sale of oil and gas to most of the world to continue uninterrupted. And a spike in energy prices has boosted revenues further.”

Moscow, since the beginning of the war, has been offering special discounts on gas to the nations that have not slapped sanctions on it. Many refiners, in nations like India and China, have taken advantage of low prices and exported the surplus to make hefty profits.

Now an energy-producing nation like Russia, which is willing to sell its products at a discount to foreign states, would naturally be able to supply its product at a much-subsidized rate to its own citizens and that is what it has been doing.

Energy prices in Russia are much lower than the world average which is benefiting the local populace as well as the government of Russia. Low energy rates help ramp up manufacturing which supports the government to create more jobs and pump more money into the economy.

The number of people unemployed in Russia slid one percentage point to 3.9% of the workforce in May, its lowest since the statistics service started publishing the figure in 1992, according to the Eikon database.

This decline in unemployment came as a shock as most experts predicted an increase in joblessness, owing to a plethora of businesses leaving Russia post-invasion.

The Russian rouble is stronger than ever while the Euro has taken a generous dip. The US Dollar, on the other hand, is going through a crisis of faith which seems like it is here to stay.

Economic sanctions imposed by the west on Russia coupled with Biden’s reckless weaponization of the USD to curtail Russia’s foreign reserves has in actuality benefited Russia in many areas.

Ironically, the US economy has entered a recession and the UK’s economy is on the brink of entering one. Now, European nations are planning to ration gas with winters approaching while the Russians have a surplus.

It has now come to a point where one might wonder if the west imposed sanctions on Russia or on itself.

As the Federal Statistical Office (Destatis) also reports, exports to Russia fell in the same period as a result of the war in Ukraine and the sanctions imposed on Russia, by 56.8% to EUR 1.0 billion.

Imports from Russia increased in value by 10.2% to EUR 2.9 billion. In terms of volume, however, imports from Russia fell by 45.8% compared to July 2021. The increases in imports are mainly due to higher prices , especially in the energy sector. The most important imported goods from Russia were crude oil and natural gas, with a value increase of 1.6% to 1.4 billion euros. Other important goods were coke oven and petroleum products (+72.5% to 0.5 billion euros) and coal (+108.5% to 0.3 billion euros).

Leaked paper reveals EU is unlikely to cap price of Russian gas

Draft regulation includes windfall tax on ‘surplus’ profits from oil and gas companies

The EU executive is retreating from imposing a price cap on Russian gas, but pushing ahead with windfall taxes on energy company “surplus” profits, according to a leaked document.

A draft regulation on the “electricity emergency tool” seen by the Guardian contains neither a price cap on Russian gas nor on imported gas, after member states were unable to agree on restrictions last week. The EU is expected to levy windfall taxes on the high profits of fossil fuel companies, with a separate cap on revenues of low-carbon electricity producers.

The European Commission president, Ursula von der Leyen, is expected to publish Europe’s plan on dealing with surging electricity prices when she makes her annual state of the union speech on Wednesday.

The final text could still change, but the draft reveals the Commission’s doubts over gaining enough support from EU member states for its preferred option of putting a cap on Russian gas in response to what it has called the Kremlin’s weaponisation of supply.

EU member states that import large amounts of gas from Russia, including Hungary, Slovakia and Austria, have spoken out against a cap on Russian gas because they fear the Kremlin would halt all gas flows, plunging their countries into recession. The Russian president, Vladimir Putin, has already threatened to halt energy exports to Europe if such a plan is agreed.

About a dozen countries, including France and Poland, would like to impose a price cap on all imported gas, which they see as a better way to curb surging prices. The Commission is unenthusiastic about this idea, because it fears the EU would lose out to countries prepared to pay more in the highly competitive market for liquefied natural gas.

The Netherlands and Denmark are wary of any price cap, while Germany fears a price cap on Russian gas would be divisive.

With member states divided, the Commission, which is responsible for drafting EU legal proposals, is pursuing measures that unite the 27-member club. EU governments are largely supportive of capping the price of electricity from low carbon sources, such as renewables or nuclear, and recycling these funds to vulnerable households and businesses.

Oil and gas companies will face a separate windfall tax, described as a “solidarity contribution”. In the leaked paper, the commission estimates that there will be a fivefold increase in oil, gas and coal companies’ profits in 2022. These “surplus” and “unexpected” profits, do not result from any economic or investment choices, states the commission, but “unpredictable developments in the energy markets following the ongoing illegal war in Ukraine”. No rate for the windfall tax is proposed in the text.

Member states are also called on to agree a binding target to reduce electricity use during peak hours, although no number has been proposed.

Europe was grappling with surging gas prices even before the war in Ukraine. Constraints on supply have been compounded by the record-breaking dry summer of 2022 that has pushed up demand for air-conditioning, while reducing hydropower from rivers and reservoirs. Adding to the strain, half of France’s ageing fleet of nuclear reactors have been forced offline because of safety issues, reversing the country’s traditional role as exporter of electricity to its neighbours.

The Netherlands and Denmark are wary of any price cap, while Germany fears a price cap on Russian gas would be divisive.

The central bank says it has not approved use of the Russian currency in the country but is considering the idea.