Russia and economic war by the west #3

GarryB wrote:Russian billionaires who thought they could make good money building factories in western countries and sending cheap Russian raw materials to these factories for processing and sales on foreign markets have been burned by the current situation...

Russian companies that thought a good business model would be to use Russian resources and Russian money to invest in the west to sell in western markets have ended up taking huge losses...

You are describing basically the German model.
Whole "economic miracle of Germany" was driven by two factors nobody dares to call open.
The first one was a fact that already in the 60s, all the golden teeth ripped from the Jewish corpses, melted, and legalized by both Swiss and Swede banking system started to flow back from South America to Germany.
The second was Druzhba pipeline, which started to operate back in 1964, providing inexpensive oil to the west, supported by the 80s agreements covering gas supplies via Brotherhood.
Both secured the west - especially Germany and Austria - with inexpensive resources and fuel supplies, while opening wide the Soviet economy for supply of expensive, high added value industrial production.
The power of BASF was created on resources that allowed the creation of chemical giant.
All the polymer branch of Germany was set on Soviet, and Russian later gas that was never cleaned of valuable rare elements.
All the metallurgy business in Germany, was powered by Russkie gas, and a giant sell of products to the Russian market.
All the pipes for Nord Stream were made in Europe, and most of the NS2 pipes - too.
On top of that, EU based automotive business enjoyed almost half of the 30+ bln E Russkie market, with a decent share of profits on the remaining half, enjoying joint venture in the Russian largest brands.

Cutting off the German economy from that bidirectional connection simply murdered it.
And EU along.

This is why EU officials are sliding into the politically driven madness, as the one way ticket has already been supplied to them. They simply don't know what to do, while making a step back would hurt the ego of the people of the mental condition in pair with Micron.

5:45
Switch on English captions if you need them



Talk about pissing in the pool. Dutch PM Mark Rutte arrives to Kazakhstan and makes all these plans for grand European investments into Kazakhstan (which mostly use the country to enter the Russian market), the furthering of the Trans-Caspian logistics corridor and so on

They can't be be up to anything but no good

Bribes. BIG Bribes.

Russia has become the fourth largest economy in the world, 05.30.2024.

The Russian Federation has become the fourth economy in the world in terms of purchasing power parity.

MOSCOW, May 31 - RIA Novosti. The Russian economy, in terms of purchasing power parity, became the fourth economy in the world back in 2021, and in the next two years it retained these positions, according to RIA Novosti calculations based on World Bank data.

The organization on Thursday updated data on purchasing power parity indicators: it follows that Russia has already become the fourth economy in the world in 2021 with a share of 3.8% of global GDP, displacing Japan (3.7%) and Germany (3.4%).

Russia's GDP at purchasing power parity in 2021 was $5.7 trillion, Japan's was $5.6 trillion, and Germany's was $5.2 trillion.

Over the next two years, the situation continued, RIA Novosti calculated. The Russian economy grew to $6 trillion in 2022 and $6.45 trillion last year. At the same time, Japanese GDP increased to $5.9 trillion and $6.3 trillion, and German GDP increased to $5.5 and $5.9 trillion, respectively.

China remains the absolute leader in terms of economic size, calculated at purchasing power parity, in 2021-2023 - its GDP reached 35 trillion at the end of last year. The United States ranks second with 27.4 trillion last year. India closes the top three with $14.6 trillion.

At the end of 2022, the World Bank reported that Russia had become the fifth largest economy in the world, displacing Germany into sixth place. However, the purchasing power parity calculations were based on 2017 data and were updated Thursday to include 2021 data.

Russian President Vladimir Putin previously set the goal of becoming the fourth largest economy in the world and instructed the Cabinet of Ministers to prepare measures to achieve this goal by March 31, 2025.

https://ria.ru/20240531/ekonomika-1949535403.html

Multinational companies are tired of anti-Russian sanctions, by Gleb Prostakov for VZGLYAD. 05.30.2024.

Transnational business is demonstrating in every possible way its readiness to cooperate with Russia, while the political establishment of the West, on the contrary, is radicalizing. Power and money began to diverge in interests, which is not typical for the United States.

How differently the Western political and business establishment views the confrontation with Russia demonstrates the limits of risk acceptable to the conflicting parties. The other day, the Financial Times published an alarmist article entitled “Western business has backed down its plans to leave Russia.” More than two years after the start of the conflict in Ukraine, it turned out that a little more than 10% of transnational companies that did business in Russia left the country.

According to the Kyiv School of Economics, which maintains this register, only 387 companies have completely left the Russian market, 1,223 companies have reduced their activities, and another 2,100 continue to operate. At the same time, at the political and diplomatic level, the West has already introduced almost all possible sanctions, and to come up with something new, you need to try very hard. The difference in approaches at these two levels lies in costs.

The costs associated with exiting the Russian market have been constantly growing over the two-year period. The lucky ones were the most timid transnational companies - they sold their business quickly, when the costs of this process were minimal. But now the only way out is at a loss, and the loss is colossal. Transactions on the sale of assets of residents of unfriendly countries require the approval of a special government commission. Among the significant conditions are a 50% discount to the real market value of the asset and a 15% exit tax. It is almost impossible to transfer company shares to management, as was the case at the very beginning. It is increasingly difficult to stipulate the possibility of repurchase in the terms of the contract. Those who leave are gone forever.

Most Western companies waited until the last minute in the hope of ending or at least freezing the conflict. But when they realized that the conflict was systemic in nature, it was too late to leave. Moreover, companies with European roots and a sales market in the EU, taking into account the crisis state of the European economy itself, could not compensate for losses incurred in Russia at the expense of their native markets. The exodus of European business to the United States and China, along with the loss of the Russian market, promised a bleak future for many multinationals.

In addition, production facilities organized in Russia were often oriented not only to the local sales market, but also to the markets of the EAEU countries. The sale or confiscation of these production facilities largely meant the loss of the markets of Kazakhstan, Kyrgyzstan and Armenia (if we do not take into account Belarus, which, like Russia, was under sanctions).

Leaving would not have been so offensive if the Russian market for industrial and consumer goods itself had collapsed following the collapse of the economy. But this did not happen either: the Russian economy not only did not collapse, but is also growing, albeit not without significant government injections. And the consumer boom is restrained largely artificially - by the key rate of the Central Bank, which fears that excess money in the system will result in uncontrolled inflation.

Fatigue and irritation of Western business from the actions of their politicians reached its climax in 2024. Many companies - such as Auchan - openly say that they do not intend to leave the Russian market. Allegorical language, references to the impossibility of selling a business, etc. are becoming a thing of the past. Western companies are ready to hold on to the Russian market even despite the threat of being scolded by regulators in their own countries. Simply because the regulators themselves cannot punish their own businesses for trying to survive and make money in the current economic realities.

They also reined in Ukraine, which, taking advantage of the euphoria of support, pursued foreign businesses operating in Russia. Unexpectedly, in March of this year, the Ukrainian government refused to maintain a register of so-called international sponsors of the war, which included companies such as Nestle, PepsiCo, Raiffeisen bank and many other famous brands. On the other hand, Western companies that showed particular vigilance were pointedly and pointedly punished by Moscow. Thus, the assets of Danone and Carlsberg were confiscated and transferred to the management of the Federal Property Management Agency. Subsequently, however, the decision regarding Danone was changed, and the French factories were sold to a company from Tatarstan.

Yes, the notorious Ermak-McFaul commission (named after the head of the presidential administration of Ukraine and the former US ambassador to Russia) is still working, inventing new sanctions and pressure schemes on Russia. There is talk about maintaining and even lowering the price ceiling for Russian oil, and about a ban on pipeline Russian gas, uranium, aluminum and much more. But all this is more about pleasant gatherings in the offices of American think tanks. In reality, when Kyiv initiated attacks on Russian refineries and oil prices went up, the Biden administration, which still has to go to the polls this year, gave Ukraine a slap on the wrist. This is the true cost of sanctions.

Transnational business is demonstrating in every possible way its readiness to end the conflict, while the political establishment, on the contrary, is radicalizing. Power and money began to diverge in interests, which is not typical for the United States. Which means the end is indeed near. If we are already talking about strikes by Western weapons on the deep territory of Russia and a possible nuclear response from Moscow, it means that right now that impenetrable darkness has arrived, which, as we know, happens just before dawn.

https://vz.ru/opinions/2024/5/30/1270533.html

Russia Has Become ‘Economic Role Model’ to Rest of the World – Analyst, by John Miles for Sputnikglobe.com. 06.06.2024.

Russia’s ability to achieve impressive growth under Western coercive measures has led countries around the globe to seek guidance and partnership with the country.

In recent decades, sanctions have become a policy tool of choice for Western leaders seeking to undermine global adversaries. With anti-war sentiment on the rise among conflict weary Americans, the United States, in particular, has relied on economic restrictions and penalties to leverage its influence internationally.

Two-thirds of global sanctions since the 1990s have been imposed by the US, estimates academic Manu Karuka, and one-third of that number have been imposed by President Joe Biden alone. Some one-fourth of the world’s nations are now sanctioned by the UN or Western countries, claims economist Francisco Rodríguez.

Although sanctions are frequently proposed as an alternative to armed conflict, the policy is not without controversy. “Sanctions may significantly worsen the situation of the civilian population,” writes researcher Joy Gordon, preventing access to food, medicines, and other essentials. While scholars question the degree to which these measures effectively force political change, their often dire consequences for ordinary people are difficult to deny.

The emergence of the Russian Federation from a recent set of severe US-led sanctions largely unscathed, then, is seen as a landmark moment by Global South nations seeking to resist a tactic often employed by the West.

Moscow has not only survived the economic aggression but has thrived, surpassing Germany and Japan to become the world’s fourth-largest economy, notes security analyst Mark Sleboda. The international relations expert joined Sputnik’s The Critical Hour program Wednesday to discuss why countries around the world increasingly see Russia as an economic model and partner.

“I don't think we're quite at a multipolar world yet, but we definitely see it envisioned and it's birth taking place, even if the US-led Western global hegemon is trying to strangle that birth and prevent it from taking place,” said Sleboda, agreeing with the premise of analysis on the website Orinoco Tribute that examined participation in this year’s St. Petersburg International Economic Forum.

The article posits the creation of “new growth centers” as a building block for such an order, with Global South countries strengthening bilateral relations to build power independent from the Western-led economic system. The article notes efforts to strengthen ties in areas such as pharmaceuticals, energy production, education, security, and space programs.

“Isolation” was “the buzz word of 2022,” Sleboda noted, with observers predicting Russia’s economic demise in the face of denunciations from the West over its special military operation in the Donbass. But “out of 192 countries, plus or minus, in the world, 136 of them are going to have participants at the St. Petersburg International Economic Forum,” the analyst noted, “including several heads of state.”

“In terms of GDP adjusted for purchasing power parity, during this time period of the existential economic war of sanctions on Russia by the West, Russia's economy has leapfrogged from sixth place to jump Germany for fifth place,” he added. “And now, in recent months – the World Bank has announced the new numbers – Russia has jumped Japan as well to reach the fourth-largest economy in the world… despite the West's best and most heated efforts to destroy Russia's economy.”

“Boom. That is the sound of the US-led Western global hegemony cracking. That is amazing,” the analyst added.

“Everyone wants to know how did Russia become the Teflon Don of global geoeconomics,” Sleboda explained. “Because they don't know when they might be put in the same position. Now there's a train coming and Russia is directing that train.”

The international relations expert noted that African countries, in particular, are seeking cooperation with Russia as they look to break away from patterns of dependency established after their independence from Western colonial rule in the 20th century.

“[Sergey Lavrov] is being welcomed by the Africans and there are a number of Africans that he is visiting who also have representatives, of course, at the St. Petersburg International Economic Forum,” he reported. “And all of those countries right now are seeing the performance of Russian weapons on the battlefield against the vaunted wonder weapons of the West. And, let me tell you, there is a queue right now for when this special military operation ends.”

“And that's why Lavrov is being greeted as almost a conquering hero as a representative of the Russian government and the foreign minister of Russian President Vladimir Putin. Russia is an inspiration because the countries of Africa have long been very much suffering under the heel of US-led Western global hegemony… They've suffered enough that they're looking for an inspiration and a model that works. And a partner in how to get out from under that jackboot.”

https://sputnikglobe.com/20240606/russia-has-become-economic-role-model-to-rest-of-the-world--analyst-1118799634.html

The Kremlin assures that the Russian Central Bank is able to guarantee stability in the markets, 06.13.2024.

MOSCOW (Sputnik) — The Central Bank of Russia is capable of ensuring stability in all markets, Kremlin spokesman Dmitry Peskov said.

"The Central bank is a mega-regulator and is able to ensure stability in all markets, which is what it is doing," Peskov told reporters commenting on the corresponding Yanqui sanctions

As for the response to new US sanctions, Peskov noted that Russia is examining "actions that best serve the interests" of the country.

On June 12, the Yanqui Treasury Department announced new anti-Russian sanctions that affect the scientific, energy, financial, defence and even social spheres. In particular, Washington banned the provision of services in the software and IT sector to anyone on the territory of Russia.

The new US anti-Russian sanctions affect more than 300 natural and legal persons in Russia, as well as in Asia, the Middle East, Europe and Africa.

According to the database Castellum.AI , more than 18,000 individual and sectoral sanctions were activated against Russia since the beginning of Ukraine's special military operation.

Russian President Vladimir Putin maintains that the policy of containment towards Russia is part of the West's long-term strategy, and that the sanctions are a strong blow to the world economy.

Yandex Translate from Spanish.

https://latamnews.lat/20240613/el-kremlin-asegura-que-banco-central-ruso-es-capaz-de-garantizar-estabilidad-en-mercados-1155427013.html

British MSM not reporting on this.

Surprised? 

Russian assets are destroying Western economies, by Sergey Savchuk for RiaNovosti. 06.18.2024.

While all the attention of the world press was focused on the empty transfusion of water at the Swiss get-together called the “peace summit,” much more profound events were taking place along the way. US Treasury Secretary Janet Yellen, speaking on ABC television, said that the United States would not consider the use of proceeds from Russia's frozen assets to be theft. Naturally, in favor of Kyiv.

Before moving on to further conversation, we will immediately outline two key points. First, to dismiss accusations of pro-Russian bias out of hand, all the numbers and values ​​below are taken from Western sources. Secondly, all financial processes are deliberately simplified so that they are understandable to the widest possible range of people, especially those without specialized education and experience.

Let's start with the concept of Russian assets abroad. In the two years since the beginning of the SVO, everyone has heard about them, but not everyone understands what we are talking about.

First. The State Development Corporation of Russia VEB.RF (Vnesheconombank) defines them as credit obligations of foreign borrowers for loans issued by the Soviet Union and the Russian Federation. To put it simply, these are loans that our government issues to foreign buyers to purchase a wide range of domestic goods, killing several birds with one stone. State money supports the real sector of our economy, financial and banking structures receive interest on it, and since we are talking about the foreign trade of a large state, the interest is not at all funny. This concept also includes gold and foreign exchange reserves, buildings of our diplomatic missions and other objects that one way or another belong to the Russian state, but the main part is loans.

According to American financial institutions, a total of about $300 billion is blocked abroad, but it requires clarification that the term “about” means “less.” The lion's share of assets is frozen within the Belgian financial network Euroclear . It specializes in clearing (non-cash transactions) and ensuring settlements for securities transactions. The exact volume of Russian assets here is unknown, but it is known that in the United States their volume is five to six billion dollars. Some more are locked inside financial organizations in Canada and Japan , but their share in the total is insignificant.

Second. In the philistine environment, there is a popular indignant opinion that the freezing of state assets is unacceptable carelessness and almost criminal negligence on the part of Russian authorities. Like, how did they even allow this to happen and why wasn’t everything taken out in advance. This assessment is as primitive as it is far from reality.

To begin with, there were no such precedents in world history. Yes, state assets were frozen, but these were shares of a disproportionately smaller scale. Among other things, you need to keep in mind that these financial market processes are directly related to purely military events. Let us recall that the beginning of the Northern Military District was an absolute shock for the whole world, that is, our enemies actually slept through the enormous military training, accumulation of forces and equipment, and their deployment to deployment lines, which made it possible to immediately take huge areas, which have now become new regions of the country.

If Moscow began to actively sell off its reserves, currency and securities, this would arouse keen interest and far-reaching conclusions, because only a very naive person could think that Western intelligence services do not monitor market news and they do not have specialized consultants. Well, it also needs to be said that over the past two-plus years, our currency basket has been reformed, and part of the assets have already returned to Russia or been transferred under the jurisdiction of friendly countries.

Third, and here we get to the point.

Discussions about the need to seize Russian assets have been going on almost since the first day of full-scale hostilities and are more reminiscent of ritual dances with a tambourine. This topic is most actively discussed in American financial and political circles, by default shifting the dubious honor to the European Union - they say, you have the main reserves, it’s up to you to act. If you trace similar reasoning in the Old World, it will be very noticeable that even politicians touch this topic only with their fingertips, and European financial institutions think through every word on the topic with manic scrupulousness. And there is a reason.

Pay attention to Janet Yellen's statement that began our conversation today. She emphasizes that the United States will not punish the European Union if it tries to withdraw interest accumulated on Russian foreign loans. We are talking, among other things, about the amount of three billion dollars paid by borrowers at the end of 2023. Only the interest, and not the assets themselves, is important. In recent speeches by G7 leaders , the amount of 60 billion appeared, but where it came from is not entirely clear.

Western financial analysts write that even if (the last two words need to be emphasized) the European Union dares to take such a step, it will provide some assistance to Ukraine , but will not have a devastating effect on Russia. Quite the opposite.

While the Western allies were dancing with a tambourine, Moscow redirected more than two-thirds of its raw material exports to friendly countries, that is, it guaranteed itself sales markets and a constant influx of foreign exchange earnings. The next fact is that, thanks to close cooperation at the state level, Russia is moving further away from dollar-pegged trade, increasingly moving to alternative currencies - primarily the yuan, but turnover in Indian rupees, Turkish lira, and Brazilian reals. Transactions themselves are increasingly carried out through a financial messaging system (FMTS), which also increases security against external attacks.

And now the most important thing: why the collective West does not dare to seize Russian assets, but only considers the possibility of using interest.

As we remember, the bulk of foreign assets are loans. The European Union and its accomplices blocked about (less than) 300 billion dollars, while the debt of Russian borrowers to Western creditors significantly exceeds 300 billion. Nobody knows the exact amount, but, according to the same Western estimates, the total liabilities of our companies are closer to 400 billion.

For simplicity: we are owed 300, we owe 400 - give or take.

Withdrawal of assets automatically cancels all external obligations of Russian participants. And if until this moment there was an indirect exchange, when foreign assets were withdrawn from the country, and in response the blockade was lifted and part of its finances was returned to Russia, then in this case the system will stop working. Western creditors will receive a net irrecoverable loss of almost one hundred billion.

According to the law of conservation of energy, a loss for Western financial institutions means a similar profit for Russian borrowers - usually state-owned. If this happens, the Central Bank of Russia will have the opportunity to issue (print) rubles for the specified hundred billion dollars without restrictions. Not only will this not cause inflation, but by reducing the size of foreign exchange reserves it will lead to an increase in the mass of net domestic assets. Simply put, the domestic Russian economy will become even stronger, and its basis more stable. And all this is due to direct Western losses.

That is why there is endless talk about the need to seize it and transfer it to Ukraine, but in practice Russian assets lie in Belgian accounts, where payments and interest are constantly coming in, and no one dares to open a Pandora’s box worth a hundred billion dollars. Politicians can say whatever they want, but global bankers count every cent.

https://ria.ru/20240618/ekonomika-1953538556.html

Sometimes they come back: brands that left want to return to Russia again, by Victoria Nikiforova for RiaNovosti. 06.19.2024.

For a long time I wanted to turn to our Western ex-partners and tell them in a sincere way: dear ex-friends, did you know that we actually live very well under your sanctions? For more than two years, we really got the hang of it.

When we opened the packages with packages of sanctions, our freedom from the West was inside. For the first time in many years, we prepare our own buns and cutlets, sell them ourselves, eat them ourselves, and don’t pay a penny for it to some guys overseas who have profited from our buns for years.

We produce great films and TV series ourselves and watch them ourselves. And again, no interest for the American film companies, which 30 years ago both entered our market and settled there insolently.

Nowhere is our liberation from semi-colonial dependence on the West more evident than in the consumer sector. It is absolutely no coincidence that the revolutionary year 2014 was marked by our massive transition to Crimean wines, Russian hard cheeses and roses from Simferopol . And guess what? We liked it.

Because over the past years you have hopelessly ruined your consumer sector - which was once the dream of every Soviet person. You shove your tired agenda into every bun and cutlet, into every pair of socks, into every comedy movie. Well, I don’t have the strength to endure this anymore.

But for the last two years, we’ve been accustomed to just buying T-shirts and lemonade without manufacturers blowing into our ears about their concerns about global warming, gay and lesbian rights, transgender transition and other incomprehensible nasty things. And you know, it's very nice. Come visit us in Russia, try products without harmful ideological additives - I guarantee you will like it.

But as soon as we settled down comfortably in this “hellish” sanctions regime and set out to enjoy ourselves, these Western figures came back to us. The Coca-Cola Corporation was a pioneer: according to information from our deputies, it has already begun to re-register its trademark.

Excuse me, but how can this be? You there in the West were simply laughing at our economy, you were going to “tear it to shreds.” It was openly stated to us that if Russia is cut off from the blessed West, then we will eat hedgehogs here.

Okay, well, leave us with our hedgehogs. Why are you climbing back? Moreover, this did not start yesterday and not with Coca-Cola. Over the past two years, you have been bringing us your goods across several borders, changing trademarks, passwords and addresses along the way, losing most of your profits along the way, crying, injecting yourself, but still enduring. Oh, how you didn’t want to leave the rich Russian market, how you hated this sanctions regime of yours.

And now you are trying to come back officially - with trademarks. So a drunk roommate, who was kicked out at night, returns in the morning to his beloved with a dusty bouquet of wild flowers and a bloodied face: “Dar-r-horny, it’s me!”

But, sorry, you weren't standing here. Our domestic business has already come to your place, manufacturers from friendly countries have joined, there are also those responsible Western companies that did not fall for the sanctions hysteria and did not go anywhere. We will support all of them, but we don’t want to have anything to do with those who ostentatiously abandoned us.

We actually have a lot of plans here. We will build our own planes and our own cars, produce fashion collections from our amazing designers, fully provide ourselves with delicious products and ship them to our friends.

We provide our own services in the most wonderful way - after all, it was crazy when a Russian tourist booked a room in a Russian hotel and both paid a percentage for this to an intermediary located in Europe or the USA. This is wrong, this should not happen anymore.

How will we develop our aircraft manufacturing if the Western aviation industry comes to us again? How can we promote our brands if Western brands with multi-billion dollar advertising budgets come to us? During the SVO, we won back our domestic market, and we would, of course, like to keep it for ourselves.

This is especially important in the consumer sector and in culture. I wouldn't want the LGBT* friendly film company Disney to come back into our film business and start producing films for children here. There is a fear that they are filming something wrong.

The same Coca-Cola corporation, by the way, is present at all gay pride parades, sells LGBT* merchandise with all its might and places kissing men on its advertising posters - and no, this is not Brezhnev and Honecker. Are we missing our own lemonade - natural in every sense of the word?

State Duma deputy Sultan Khamzaev proposed banning companies that left Russia from re-registering their trademarks with us for 20 years. This looks like a very smart initiative. And I would like to say to the overly arrogant Western firms and small firms in the words of the Russian classic: “Let me get out!”

https://ria.ru/20240619/brendy-1953804604.html

The main mistakes that the Russian Central Bank has made were the lack of integration with the Chinese CIPS payment system before the conflict started, and now they are behind China and other countries which have the mBridge central bank digital currency platform.

Russia should setup a platform to ensure the proper flow of payments with disparate currencies. If the private sector can do this for smaller payments (for example Wise) why can't they do this for the aggregate?

The Western sanctions will make it harder for Russia to get some products. But they are all immaterial since Russia is a major commodities supplier. Even if they went back to bartering the trades would still happen.

Where the Russian Central Bank has acted better was in developing the Mir card and SPFS. Even if SPFS has issues gaining traction internationally at least it can be used inside Russia. The previous situation where all banking transactions inside Russia used the SWIFT network was simply idiotic.

kvs wrote:Integration was made impossible by the Chinese themselves.   Chinese banks were afraid of NATzO sanctions and dropped cooperation with Russian banks.  

Well the secondary sanctions would be bound to happen eventually. They also happened with Iran. But you can bet there will still be Chinese banks willing to do the transactions. Just like the Chinese Kunlun bank openly does business with Iran and does not give a damn about the US sanctions.
It will vary according to their degree of state control and exposure to Western financial transactions.

You can't exactly blame most Chinese banks for choosing the larger market that is offered to them by SWIFT. Not when Russian banks ended up doing the exact same thing with regards to Crimea post 2014 and refused to supply banking services to the local population in fear of US financial sanctions. But eventually any motivation to continue this path by the Chinese will vanish as they get walled out of trade with the West.

kvs wrote:As for the CBR, it is obviously a nest of 5th column excrement. This includes "hero" Nabiullina herself. The current 16% prime rate is lunatic sabotage and not "brilliant" inflation management.  

For the clueless, economic booms do not induce hyperinflation.   Let's have a single example of such a case in all of history. As I posted numerous times, Russia had a prime rate less than 9% when its official inflation was over 13% before 2010. Russia was much more prone to inflation as its economy was much weaker and it was dependent on imports to a greater extent. I do not trust any inflation claimed by the current CBR. Russia's inflation rate is under 10%, it is not over 20%. A lot of this "inflation" is structural adjustment since to this day the Russian economy is not fully monetized compared to western economies. (The Soviet era welfare activity of companies has not disappeared completely). Economists have the voodoo belief that monetization happens instantaneously even though this is patently false.

Look, I already said this several times. But it is a simple case of supply and demand. The supply of several products dried up with the sanctions and Western corporations leaving Russia. This increased the rate of inflation. At the same time a lot of people got higher salaries because they are fighting at the front. We keep hearing how people buy apartments with like a year of salaries from fighting in the front. This is bound to increase inflation as well since that money will be pouring into the economy.

To reduce inflation the extra money needs to be soaked up from the economy. One way of doing this would be like the US and other countries did in WW2 and emit War Bonds. That would take more money out of circulation in the market. Thus reducing inflation from having more capital in the system.

The higher bank rate helps depress consumption. And this in turn helps provides breathing space for the market to adjust. Already a lot of depressed sectors and companies seem to have recovered from the initial sanctions period. But in some sectors like civilian aviation this has still not happened. Investment in factories continues to happen because of state support which provides low interest rate loans (1-5%) for such activities.
http://en.kremlin.ru/events/president/news/69850

You shouldn't too focused on low interest rates. Historically the US had low interest rates just before the Great Depression. It caused a lot of malinvestment. After WW2 the interest rates were much higher. And the US had a similar interest rate in the 1980s.

In the long term they need to a) soak up the extra money in the system by adding more places for people to park their money b) increase the amount of supply of goods and services.