Russia: from sanctions to slump?

The economic war between the US-led NATO group and Russia is hotting up alongside the real war in Ukraine itself.  In response to the invasion of Ukraine by Russia, the US and Europe have upped the ante in imposing economic sanctions. The first of these was the suspension of any dealings with several leading Russian banks, including the two largest, Sberbank and VTB.  However, it was significant that the sanctions excluded Gazprombank, the major Russian lender to energy export companies.  Clearly, the West does not want to disrupt oil and gas exports through sanctions, when Germany alone relies on 40% of its energy from Russian imports. 

As a result, the NATO sanctions package has substantial exceptions. Most notably, while it sanctions major Russian financial institutions, it exempts certain transactions with those institutions related to energy and agricultural commodities, which account for nearly two-thirds of total exports.  Significantly, Italy successfully lobbied to exempt the sale of Italian Gucci bags to Russia’s rich from the export ban!

So now EU leader Von der Leyen and Biden in the White House announced that “we will work to prohibit Russian oligarchs from using their financial assets on our markets.” Biden says that the US will “limit the sale of citizenship – so-called golden passports – that let wealthy Russians connected to the Russian government become citizens of our countries and gain access to our financial systems”.  The EU and the US are launching a task force to “identify, hunt down and freeze the assets of sanctioned Russian companies and oligarchs, their yachts, their mansions, and any ill-gotten gains that we can find and freeze.”

The irony and hypocrisy of these proposed measures should not be missed.  For decades, Western governments have been happy to take this ‘dirty money’ and even allow the oligarchs to gain citizenship and special privileges to exert influence in politics in their countries in order to bolster pro-capitalist parties.  Now these privileges are to be withdrawn (although we shall see how far this goes). 

Russia’s super-rich (including Putin) have massively increased their wealth during the COVID pandemic.  Russia’s billionaires (we like to call them ‘oligarchs’ in the West) have the highest share of wealth to GDP of all the major capitalist economies, closely followed by ‘social democratic’ Sweden, and then the US. 

Like other billionaires, Russia’s export and hide their wealth in tax havens, and in obliging Swiss and other banks and also buy property and assets abroad.  Their ‘offshore’ wealth is way higher than other billionaire groups. 

Source: Gabriel Zucman;

Export and trade bans, the suspension of dealings with selected banks, and the withdrawal of some privileges for Russian oligarchs will have little effect on Russia.  Energy trade is to continue, with Russia still providing 25-30% of European energy supplies.  And Russia is no longer dependent on external financing.  Russia’s current account surplus has risen from below 2% of GDP 2014 to around 9% of GDP in 2021, leaving substantial buffers of excess savings that can be tapped should the need arise. The wider public sector, including the Central Bank of Russia (CBR), the corporate sector, and the financial sector are net external creditors. The CBR has over $630bn in reserves, enough to back up three quarters of domestic money supply, so there would be no need to print rubles to fund economic activity.  In addition, Russia has a $250bn sovereign wealth fund, which although relatively illiquid, could be run down to bolster funding.

Russian businesses and the government have prepared for potential future shocks like losing access to the dollar and the use of the USD in trade and financial transactions has already sharply declined. The Ministry of Finance no longer holds any USD-denominated assets in its oil fund and the CBR has also reduced the share of USD in its reserves by half, to around 20%; as the euro, and to a lesser extent the Chinese renminbi, have become preferred alternatives.  Many Russian corporates and banks now routinely include clauses in contracts that stipulate the use of another currency for settlement in case the USD can’t be used. Russia has also accelerated the use of its own payment cards, like Mir, as well as its own SWIFT-like System for Transfer of Financial Messages (SPFS) messaging service. However, both currently only operate domestically, leaving vulnerability to cross-border transactions in other currencies.

That’s why the US and European governments have now decided to introduce much more serious sanctions.  They now plan to kick Russian banks out of the SWIFT international transactions system and to freeze Russian central bank assets.  The SWIFT measure will sharply complicate the ability of Russian banks to conduct international activities.  They will be forced to use bilateral arrangements with ‘friendly‘ banks, or old technology like faxes. 

But this could also damage banking and trade for Europe, in particular, if the Russian energy lender Gazprombank is also removed from SWIFT (not likely).

The most serious measure is the proposal to freeze the dollar assets of the Russian central bank.  This has never happened to a G20 member state before.  Only Venezuela, North Korea and Iran’s CBs have suffered this fate.  If effective, it would mean that Russian FX reserves in dollars could not be used at all to support the ruble in international FX markets or sustain domestic commercial bank dollar financing.  The government would have to rely on ruble financing (and the ruble is plunging in world currency markets) and non-fiat currencies like gold. 

Most of Russia’s currency FX reserves are held in Western central banks.  Russia has about 23% of its reserves in gold, but it is not clear where this is physically held.  If this proposed sanction is applied, then it could seriously damage monetary flows and the Russian ruble, causing accelerated inflation and even runs on banks. 

Then there are the ‘slow burn’ sanctions on Russia’s access to key technologies.  The US aims to cut Russia off from global chip supplies.  The move shuts off supply from leading US groups such as Intel and Nvidia.  Taiwan Semiconductor Manufacturing Company, the world’s largest contract chipmaker, which controls more than half the global market for made-to-order chips, has also pledged full compliance with these new export controls.  Russia is now effectively denied access to high-end semiconductors and other tech imports critical to its military advancement.  However, it’s possible that Chinese companies, especially those that have themselves been the target of US sanctions, might help Russia circumvent the export controls. Huawei could step in to develop the Russian telecom equipment market.

All in all, Putin’s invasion of Ukraine is a huge gamble which if it does not succeed in ‘neutralising’ Ukraine and forcing NATO into an international agreement, will seriously weaken the Russian economy.  And Russia is no super power, economically or politically.  Its total wealth (including labour and natural resources) is way down the league compared to the US and the G7. 

World Bank Wealth Report

The collapse of the Soviet Union in 1990 was followed by Yeltsin and the pro-capitalist government accepting the ‘shock therapy’ policies of Western economists to privatise state assets and dismantle public services and the welfare system.  A small elite, mainly former Soviet government officials, were able to buy massive state assets in energy and minerals on the cheap and through bribery and thuggery.  Russia’s oligarchs emerged, along with an increasingly autocratic regime personified by Putin.  Russia’s GDP plummeted and average living standards dropped sharply.  The Russian capitalist economy eventually recovered with the global commodity price boom after 1998, but by 2014, Russia’s average annual GDP growth was still only 1.0%. 

Life expectancy in capitalist Russia has now been surpassed by China.

World Bank

And when we look at the United Nation’s Human Development Index, which measures key dimensions of human development (a long and healthy life, being knowledgeable and having a decent standard of living), we find that since 1990 Russia has performed worse among major emerging economies and compared to the world average.

Human Development Index – World Bank

The Russian economy is a ‘one-trick’ pony, relying mostly on energy and natural resources exports.  After a short boom from rising energy prices from 1998 to 2010, the economy has basically stagnated.  Although Russia’s economy is larger than it was in 2014 in real terms, final domestic demand is still at its pre-2014 level. And cumulative GDP growth over this period was only positive because exports were 17% higher in real terms in 2019 than in 2014.  Russia’s capital stock is still lower in real terms compared to 1990, while the average profitability of that capital remains very low. 

The World Bank reckons that the long-term potential real GDP growth rate for Russia is just 1.8% a year – and even that is faster than it has achieved in the last decade. This war is going to be costly for Russia and its people.  Oxford Economics reckons it will knock at least 1% pt a year in real GDP growth over the next few years.  If that happens, basically Russia will be in economic recession for several years.

Of course, much depends on how the war pans out.  If Putin can gain control of Ukraine, that opens up significant riches to be exploited.  Ukraine is rich in natural resources, particularly in mineral deposits. It possesses the world’s largest reserves of commercial-grade iron ore—30 billion tonnes of ore or around one-fifth of the global total. Ukraine ranks second in terms of known natural gas reserves in Europe, which today remain largely untapped.  Ukraine’s mostly flat geography and high-quality soil composition make the country a big regional agricultural player. The country is the world’s fifth-largest exporter of wheat and the world’s largest exporter of seed oils like sunflower and rapeseed. Coal mining, chemicals, mechanical products (aircraft, turbines, locomotives and tractors) and shipbuilding are also important sectors of the Ukrainian economy.

All of this remains to be fully exploited.  The EU and the US have also been drooling over the prospect of getting hold of these resources.  As I showed in my last post, the Ukraine government plans to sell off huge tracts of land to foreign and domestic investors to develop.  That could deliver huge dividends to whichever power controls the country.  Either way, once the war is over and after thousands have been killed or injured, Ukraine’s people will see little of the benefit.

39 thoughts on “Russia: from sanctions to slump?

  1. The economic analysis is very interesting and I know that’s your central brief here, not broader political issues: but I’d be interested to know what you think about Russian imperialism and Ukraine’s right to defend its national self determination in the face of the invasion.

    1. Hi Jim. yes this blog concentrates on the economic issues but of course they cannot be separated from politics; one leads to the other and back. The answer to your questions would require a separate post. But suffice it to say that Russia is not imperialist in the economic sense. It is a weak capitalist state without military bases around the world, without a major technology base and without the financial tentacles of the g7 imperialist bloc. Instead, it is a crony capitalist state, controlled by an autocrat based on bunch of billionaire oligarchs- nothing new there: Turkey; Saudi Arabia; Egypt; Morocco; Myanmar, Iraq, Syria etc. – none of which are imperialist in the Marxist sense.

      Ukraine as an independent state has the right to defend itself and resist the Russian invasion. But the current pro-capitalist government in Ukraine, by demanding to join NATO; preparing to open up Ukraine’s rich resources to EU and US exploitation; and its discrimination against the Russian-speaking minority has created the crisis. The refusal of the Ukraine government (egged on by the US) to follow through the Minsk accords was the tipping point.

      The US wants to establish its hegemony in Eastern Europe and weaken Russian influence as Putin has not played ball with US interests. In turn, Putin has tried to re-establish what he sees as Russian control over Ukraine and resist NATO advance – eventually by force. Ukraine is the pawn in all this and will suffer the most.

      1. Michael, the defeat of NATO and the US could mean another step towards the decline of the hegemony of the Americanist West. China is closely following the real dispute of the 21st century: the geopolitical dispute.

      2. Interesting analysis by Micheal Hudson ”America Defeats Germany for the Third Time in a Century: The MIC, OGAM and FIRE Sectors Conquer NATO” at the Vineyard of the Saker Blog. I agree with Michael’s affirmation that Russia is not imperialist in an economic sense. But I have come across statements by what look like ultra-stalinists to the effect that not to oppose Russian imperialism is to fall into ‘revisionist’ and ‘trotskyist’ positions. This is bitterly ironic. Pacifism or a ‘plague on both their houses’ is not a Marxist position. The Chinese revolution won because the CP led the fight first against Japanese Imperialism, then against its own fascistic Kuomintang. Similarly,in the circumstances surely the only road for socialists in Ukraine and Russia is first to help defeat the fascist US imperialist junta and then to use the ensuing social contradictions to oppose with socialist policies the Russian and Ukrainian oligarchies. Starmer has now declared that any member who criticises Nato will be expelled from the Labour Party. Is the only alternative now for leftists to go to the Ukraine and ask the Nato- Nazis to ‘Give Peace a Chance’?

      3. I agree that Russia does not qualify as an imperialist country in a specifically capitalist sense. Obviously imperialism is not an invention of capitalism. Imperialism also existed in ancient times. In fact, Lenin speaks of the Roman Empire in his well-known work. But capitalism did substantially change the way imperialism operates. For example, in modern imperialism colonial possession is irrelevant. Imperialist capitals today exploit the global working class by purely economic methods, direct political coercion (colonial administration) is not necessary to obtain surplus value. It is true that in the so-called “classical imperialism” (say 1890-1945) the colonial position was important. But to a large extent the colonial position was a pre-capitalist heritage: Spain conquered its part of America before the capitalist mode of production dominated that country. In general, the colonial position showed that the capitalist mode of production was insufficiently developed on a planetary scale. I see the panorama on the left globally as bleak. There are those who directly deny the existence of imperialism, on the one hand, and those who use the category “imperialism” from a merely ideological point of view.

  2. I think the racist and hypocritical attitude towards Christian and white European Ukrainians and non-scarf-wearing women as opposed to brown and black refugees is worth a mention. Countries that built or have been building fences to ward off non-European refugees are now declaring they are ready to receive hundreds of thousands of Ukrainians.

  3. Good as always.
    But unfortunately Gucci is owned by Kering (Pinault), France – as much of the fashion italian Industry.
    Best regards.
    Vladimiro

    Inviato da iPhone

  4. The objectives of the West (NATO) is to make Ukraine a “swamp” for the Russian military, therefore making it a war of long duration, and to, with the financial and economic sanctions, cripple the Russian economy. The goal is to trigger a liberal unrest in Russia, which would topple the United Russia (Putin) government, and install another Yeltsin.

    However, it is important there is a lot of unfounded optimism in the West over this strategy. Scholz has already made a public announcement stating the Russian economy is already collapsing (based on the sole data that the Russian stock market fell 30% in one day). Some pro-war NATO ideologues (journalists, analysts) are talking in terms of weeks before a color revolution topples the Putin government. They calculate the Russian people will blink before the European people in terms of revolting against higher gas and energy prices.

    In my opinion, this strategy, albeit mathematically possible, is very unlikely to be successful. It arises from a deep misunderstanding of modern Russia.

    Misinformation is rampant on both sides, as is common with every war (no side will ever admit it is losing). However, all indicates the Russian invasion of Ukraine is highly successful. I think Ukraine will capitulate in a matter of days, boosting Putin’s approval ratings to the roof in Russia (it has already risen to 69% on February 24th). Ukraine will not – and could not – become a “swamp” to Russia, for many reasons that I’ll not write here because this is an Economics blog.

    –//–

    I would like now to reflect about the immensity of Russia in today’s geopolitical affairs.

    On the surface, Russia is a failed Third World country. However, the rise of China changed this picture.

    Russia declared the independence of the two Donbass republics and the invasion of Ukraine for one reason: the expansion of NATO to the Ukraine would render its nuclear arsenal useless, which would certainly pave the way to the balkanization of Russia, killing millions in the process, making the destruction of Yugoslavia look like children’s literature. For Russia, therefore, the calculation was pretty straightforward: this battle for the Ukraine is a battle for simple survival, for its existence.

    But see how the other countries in the West are reinterpreting this simple, straightforward war: in the UK, there’s a debate about oligarchic funding of the Tories; in the USA, it triggered the process of discussing the fate of the world, between “freedom and democracy” and “autocracy and darkness”; in Brazil, the debate became whether Bolsonaro deserves being reelected because he visited (a completely irrelevant visit) Putin days before the war and it fractured the Brazilian Left between the liberal vital-centrists and the communists (i.e. it probably ended the Brazilian Left); in Germany, it became a debate about whether the country should go full green energy powered or not; in France, it accelerated the conflict between the European imperialists and the Atlanticists. I could go on, but the underlying factor is this: everybody is interpreting the war for its domestic politics interests, it is shaking and fracturing Western domestic policy.

    If that is not an testament to Russia’s centrality in modern-day world affairs, I don’t know what it is. Sure, I agree that Putin is a transitional leader – collapsing or reemerging, the consensus he built inside Russia will not last after he’s gone – but we cannot deny the fact that, today, Russia is central to world politics, to the point a simple straightforward military operation for a very simple political objective sends a shock wave to the Western world.

    –//–

    Finally, in the economics area, I’m from the opinion that the great winner in this conflict (assuming Putin won’t be toppled) is China. Cutting Russia from SWIFT will only accelerate China’s project to defy the USA in the financial front.

    If Russia finalizes the Ukraine quickly as is expected, this could well be the beginning of the end of what the center-leftists of the post-war called “Western Civilization” (i.e. Western hegemony).

    1. “If Russia finalizes the Ukraine quickly as is expected, this could well be the beginning of the end of what the center-leftists of the post-war called “Western Civilization” (i.e. Western hegemony).”

      I would say you are being a little hopefully presumptuous declaring a Russian victory over Ukraine and the demise of western civilization.

      The Ukraine may well fall to Russia but it may not be a clean win.

      The question is, while NATO has stood aside in Ukraine, will it as easily capitulate if Russia moves on other buffer (NATO) states?

      If NATO does capitulate in such circumstances then it will give the Russian and Chinese imperialists much encouragement.

    2. “If that is not an testament to Russia’s centrality in modern-day world affairs,”

      Russia has a land mass equal to one eighth of the Earth’s land surface. It has immense natural wealth. It has a highly educated population. It could be one of the great economic powerhouses.

      Yet it has allowed its paranoia and desire for empire to distract it from building on what it already has in abundance.

    3. “Yet it has allowed its paranoia…” bs, bs, etc…
      Rech you seem to cover the whole of Russia’s history since a Swedish pirate named Rus established the first Russian state in the 10th century near modern Kiev–which, therefore, should give Ukraine the historic right to demand the return of all of present day Russia to itself, and then force the populace to speak only the Ukrainian dialect of the Russian tongue….I don’t think Putin believes that. If he does, I’d say he’s paranoid.
      Probably you refer to “Stalinist” paranoia in the 1930’s when the Soviet leadership imagined that the “allies” were paving Hitler’s path to the Soviet Union and Poland (Germany’s “Africa”) and then sat back and left almost 30 million Soviets to die fighting fascism for NATO’s latter day fascists to resurrect…
      The revolution of 1917 happened precisely because Russia could not be allowed to develop its economy within the imperial system then, just as it is not allowed now. It’s too big and in the wrong place. Don’t you know that? and that the Soviet Union had to be destroyed in WW2 because it SUCCEEDED in developing a modern economy? It’s amazing how blind Western liberals can be. Even social liberals. Even those liberals who claim to be marxists.
      This buffo/tragic war on two neocolonial slavic countries is being orchestrated by a smirking senile-sadicstic US/NATO imperialist oligarchy because despite Putin’s pathetic role, in the overall historical circumstances, Russia and China, simply by existing, represent a threat to the continued existence of of a purely destructive capitalism

    4. m&m

      What does Russia have to fear from the West militarily?

      Nothing.

      It’s a stalemate which only a paranoid expansionist/imperialist madman would disturb.

      And to say that Russia has been thwarted by the West economically is nonsense. Yes there were sanctions in place prior to the invasion of Ukraine. This is just punishment inflicted by the West for other stupid Russian naughtiness.

      Russia has enormous potential which it could develop if it wasn’t so paranoid and imperialist and intent on protecting the interests of a bunch of very greedy oligarchs (including those of Mr. Putin).

      Russia craves to be part of Europe. Every time it gets close it shoots itself in the foot.

      “Russia and China, simply by existing, represent a threat to the continued existence of of a purely destructive capitalism”

      This has to take the (ironic) cake. Russia and China are fascist states promoting their own brand of capitalism.

      1. Rech, you are impenetrable. In understanding nothing (not just my comment), you undestand everything. So have your own cake and eat it too….Beware, its poisonous.

    1. They are at least more modern authorities than Aristotle!

      Seriously, the blood letting has been going since the overthrow of Yanukovych, both in the endless war against the Donbas and within Ukraine. The fascist violence there simply is not reported. The honest criticism of Putin is that he did nothing when fascists came to power. But that pales in comparison to the condemnation deserved by those who supported the fascists, the EU and the US and the supporters of imperialism, both open and self-proclaimed lefts.

  5. The USA willed this war, and Putin could not sidestep it. But he overreacted as all great Russian Chauvinists do forgetting the lessons of the past. It seems that the USA anticipated this with their training and equipping of special forces in the Ukraine for close quarter fighting. Sanctions on their own will not break Russia but getting bogged down (literally the rain and with it the mud comes in two weeks time) in an unwinnable war, together can.

    What worries me is that the peace movement has been hijacked by the chauvinists in the West. Many on these peace protestors and speakers would not only jeer Putin but cheer NATO if it invaded Russia.

    And how the US is laughing, now that it has embroiled Europe in War. Gas prices which had a differential of between 60 and 80% now have a 240% differential burdening the EUs competitive position. And Wall Street knows this. As soon as Putin invaded Nasdaq shares soared to rise by 7% or $2 trillion by the week end. The Yanks know that war in Europe is good for US business because it is bad for European business.

    Honestly, the EU does not deserve to exist. If it can be played in this manner by the US it is a political embarrassment paralyzed by its internal divisions. So maybe our slogan should be RUSSIA OUT OF THE UKRAINE, THE US OUT OF EUROPE.

    1. The EU does not “deserve” to exists, regardless of the US’s presence. The EU is a confederation of capitalists. Why should that be preserved, when such a confederation can only act against a workers social revolution?

      Slogans might not do the trick here. At least not the US out of Europe. Europe out of NATO might be a better slogan as it holds much more significance when coupled with “For a unified workers’ Ukraine.” And even then there has to be a concrete program accompanying the slogans that includes cancellation of the IMF programs; review of EU, and World Bank reconstruction programs by worker commissions; and other programs that speak to a different class exercising social power..

      Shameless self-promotion: https://anticapital0.wordpress.com/the-big-mash-up/

      1. I bow before the effervescent prose in your post. The capitalist live by the adage, divide and rule, we should also divide and overthrow. NATO is the USA in another guise, in fact it is the way it asserts itself and subordinates many European countries. So bear with me. USA out of Europe has a ring to it and any success with this tactic would be the long nail in the coffin of US imperialism.

  6. The average wage income in Ukraine is $267/month, $3204/year, and $1.54 per hour. The U.N. Human Develpment Index puts it medium low, near Argentina and Moldova, Armenia, Romania, and just below Russia. Citizens of the capital Kyev earn about triple the average. I was reading a book about population reaching 11 billion, Eleven is the title by Paul Hanley, 2014. He said most of agricultural production in both Russia and Ukraine happen on small family plots of between a quarter to a full hectare (about half a football field to 2 football fields). 70% of Russian families are engaged in agriculture, same in Ukraine. Ukraine’s soils are richest in the world, up to 50 centimeters deep, and if Ukrainian farmers produced the same yield as European farmers, they could feed 619 million (not 46 million), and a maximum production could produce enough to feed 980 million people. Russia is also under-productive, and could feed 2.9 billion. But their average yield per acre or hectare is half the European average. What are investors thinking?

  7. It’s important to highlight that, in war (and other greater force catastrophes), the thresholds economists usually adopt to measure societal tolerance of a system do not apply.

    For example, the ruble fell 30% today. That would be catastrophic in peaceful times, but is perfectly fine in wartime. The same is true for the exclusion from SWIFT, airlines’ banning, sports venues banning, interest at 20%+ etc. etc.

    The real world is not the cute formulas and parameters modern-day economists think they are. The USA, for example, easily soaked 1 million + deaths from COVID-19 pandemic in the name of the preservation of capitalism, no risk of revolution at all.

    That’s why I don’t expect any risk for the Russian government. Ukraine would have to become an epic swamp, draining thousands of Russian soldiers’ lives and dozen of billions of dollars equivalent in treasure and years long for it to really degenerate into a regime change scenario. This won’t happen both because Russia will win the war in a matter of days now and because the Russian government has already neutralized the CIA and its assets in its own territory. To make things even more favorable to Russia, the opposition – both far-right, liberal and communist – actually support Russia’s cause in the Donbass and Crimea (even Navalny, who publicly stated he support the annexation of Crimea). United Russia faces opposition at home, but not because of its motives in the Ukraine.

    1. ” Ukraine would have to become an epic swamp, draining thousands of Russian soldiers’ lives and dozen of billions of dollars equivalent in treasure and years long for it to really degenerate into a regime change scenario. This won’t happen both because Russia will win the war in a matter of days now and because the Russian government has already neutralized the CIA and its assets in its own territory.”

      Could swear I heard the same nonsense– then the USSR will win in a couple of years– when the FSU went into Afghanistan. Same rhetoric, and the outcome? Hmmh….Russian withdrew in 1989 and by 1991– we had a regime change. What’s that about tragedy and farce Marx wrote?

      1. And by the way, you know when and where I heard that same rhetoric? When the US invaded Iraq in 2003. Unfortunately it hasn’t resulted in regime change here, yet.

    2. ‘The United States, for example, easily absorbed more than 1 million deaths from the COVID-19 pandemic in the name of preserving capitalism, without any risk of revolution. That is why I do not expect any risk for the Russian government.
      Certain. The USA did it this way and so did the rest of the countries. But that “zero risk” of revolution is not indefinite for any government. In the 19th century, with a quarter of those deaths in any country, it meant immediate revolution. What is it that temporarily stops revolutions in the 21st century and lengthens the revolutionary cycle? : the States stop them. With subsidies and loans financed by the Central Bank to companies and citizens. States that grew in the 20th century, multiplying their size by 5 in terms of GDP and assets. And that they grew only because of the incentive and example of the socialist revolution. That is to say, it is the socialist mode of production introduced and in progress in current Capitalism, which is giving a little more life, terminal life, to the capitalist model and its unstable and declining governments.
      Is the Russian state big enough economically and with real social interest to want to help its citizens suffocated by an economic war with NATO or will its billionaire oligarchs, including Putin, flee the country without thinking twice if the recession is hard and long? The M. Roberts report describes Russia as a minor economic power, with lights and shadows, and with a more than likely recession in sight. Its per capita income (8,900 euros) is really low and the Russian people have already suffered a severe cut in their income with the sanctions due to the invasion of Crimea. Therefore, Putin should not see anything safe as “zero risk”. The sea transfer of his 100 million euro yacht from Germany to Russia a few days before the Declaration of War with Ukraine seems to prove such fear as well as showing colossal cynicism with his people. People who are deceived, oppressed and from whom they extract savage personal gains with false nationalist proclamations.
      Three good and historical socialist slogans are a good summary. Slogans that contain both a diagnosis of the situation and action plans:’
      ”Russia out of Ukraine and USA out of Europe” //
      ‘’ No to war and yes to class struggle’’ //
      ’ A single class in a single country’’//

      1. You answered your own question: Russia doesn’t need to satisfy the basic needs of its people anymore, it is now capitalist. If poverty skyrockets in Russia, all the better for its capitalist class, which will prosper in a new wave of primitive accumulation.

        The USSR couldn’t take the small fall in living standards during the five years of Perestroika, or, in fact, even a long stagnation, because it was socialist. The socialist system depends on the welfare of its people to survive as a system.

        That’s why economic sanctions (isolationism) are much more effective against socialist countries than against capitalist countries. The peoples of the capitalist countries are born and raised on brutality and exploitation; to them, this is a normal fact of life, therefore misery and poverty don’t scare or revolt them.

        As a rule of thumb, the more primitive the economic system, the more resistant to brutality and privation it is, because it is simpler. Capitalism is more primitive than socialism.

        The destruction and privation the Russian people went through in 1914-1917 has no comparison in History. The Tsarist Empire literally evaporated. The Bolsheviks had a walkover victory (the subsequent Civil War was the counter-revolution, not the revolution per se). Whatever economic sanctions the EU and the USA impose to Russia, it certainly won’t get to that level of destruction.

  8. I’ll just ask one thing. What differentiates a “Robber Baron” from the beginning of the capitalist accumulation process in US, from a Russian oligarchs. “For me they are exactly the same junk. Or is a way to differentiate the” Discreet Charm of the Bourgeoisie “West from Exuberance Grotesque of the new rich (not Westerner, of course).
    Who builds rockets to get one minute in zero gravity?
    The use of the term oligarch simply hides a European racism against the Slavs.
    Capitalists are trash, no matter your pedigree.

  9. Brazil during the two world wars, which was prevented from importing junk from Europe, managed to develop an industry.
    I would be extremely pleased if the US subject Brazil to a strict embargo.
    This view of economists forgets that necessity leads to creativity.

  10. Russia developed extremely well under Putin and it is a superpower unlike the US ‘hyperpower’ of old that since 2000 has lost every war it has been involved in and Russia has done the opposite and won (Chechnya, Georgia, Syria…)
    Putting can treble the price of all oil and gas exports to EU and charge solely in rubles, he can nationalise all overseas direct investments in Russia and focus solely on trade with China, India, Iran etc.
    We aren’t in the 1980’s when the ex-USSR was still isolated.
    The losers in all of this will be the EU. Follow Biden at your peril.

  11. ” A small elite, mainly former Soviet government officials, were able to buy massive state assets in energy and minerals on the cheap and through bribery and thuggery.” Unless I am gravely mistaken, the billionaires are mostly not ex-government officials. My impression is that the Soviet officials by and large were bought relatively cheaply but it was the bribers who got the big money, not the bureaucrats. I still don’t think there is any crony capitalist mode of production.

    It is unclear how Putin is “increasingly” authoritarian. Yeltsin attacked the Russian Parliament and rigged the first so-called democratic elections, setting the pattern followed ever since. Putin is merely a sober Yeltsin. If anything, Putin is less erratic than Yelstin, less autocratic. Imperialists of course assume that Putin arbitrarily began the war. But this war began with the overthrow of the legal government and the attempt to exclude Russian from public life, way back in 2014 and Kyiv has refused ever since to make peace.

  12. If this SWIFT sanction endures for long enough and the NS-2 is indeed paralyzed, then I think it is very possible we may be witnessing the beginning of the end of Europe as a potential main global player. If China successfully open up on the financial front and absorb the Russian necessity for a financial architecture, and the gas prices continue to spike for long enough time, Germany will quickly deindustrialize, turning the EU into a failed bloc.

    On the ideological front, it would be the victory of the Atlanticists over the Europeanists.

  13. So… at a critical point “economics” or the critique of political economy has to give way, or be superseded by class struggle, not “progressive” coalitions, not geo-political counter to some real or imagined hegemony, not a fuzzy anti-imperialism that shelters religious fundamentalists under its umbrella, but class struggle beyond borders.

    The only attempts I’ve seen to chart those steps for the working class to act internationally have been offered by those who oppose the Russian invasion. Incomplete as those maybe, even with mistakes, those groups at least offer something that is not based in nostalgia for either the former Soviet Union, the current Russian oligarchy, or visions of the creation of a new, or old, Russian empire. See for example Putin’s speech announcing the “mission” into the Ukraine, which happens to be all three at once.

    On the EU/NATO side we can find the agitation points to “hot cargo” NATO and European weapons shipments to Ukraine; we can even find one or too arguing for European countries to leave NATO. We can find opposition to the IMF/World Bank programs in the Ukraine, and calls for disarming the rightist/nationalist militias in the Ukraine. On the Putin side? What is there. You want to call on Russian workers to enlist in the army? What about the ultra-right pro Russia militias that have been active in Donetsk and Luhansk for years. Any need to call for the disarmament for those who want the restoration of the Great Empire?

    Exactly where and how does support for Russia translate into international working class solidarity? Or is that solidarity not necessary; has class been abolished, as the bourgeoisie would love to hear, to be replaced by “peoples” and not just peoples, but “good” peoples and “bad” peoples? By fascist people and non-fascist people.

    How does support for Russia become something other than what it was in Poland in 1970, 1980; Germany, Hungary in 1956; Czechoslovakia 1968– a dead certain defeat for the working class?

    1. “Exactly where and how does support for Russia translate into international working class solidarity….”

      Russia got the opposite of support from the organized Western working class in 1917. Roosevelt’s New Deal co-opted what solidarity there was (mainly communists) up until the Nazi invasion of the Soviet Union. Then it was too late. Anyway, war state’s persecutions of all leftiests during the 1950’s destroyed the marxist left. Today 95% of the “left” (such as it is in the US) will be out Saturday calling for an invasion of Russia, not because it is oligarchic, but because of their latent fear and hatred of communism, especially from the “Jacobin” youth of Soro’s DSA.

      But there is some hope of a rebirth of a marxist anti-racist/anti-imperialism left in the United States. We should support these youth and leave the Russians alone. There’s a much stronger left there than here.

  14. According to the Global Times (CPC’s extraofficial newspaper), the USA economy will significantly benefit from the war in the Ukraine: it will be able to cover 72+ bln m³ of gas to Europe, the USD will strengthen (it strengthened by 8.7% after the Maidan coup of 2014), it will be able to cover up to USD 250 bln in annual trade with Europe and its MIC will grow greatly, as the NATO members will probably accelerate the process of spending at least 2% of their respective GDPs in defense.

    That, combined with the financial assets freeze (including those of the Russian Central Bank) and the confiscation of the wealth of the Russian oligarchs, result, in the economic plane, in one of the greatest and most dramatic processes of centralization of capital: Europe and the USA are essentially ransacking Russian wealth.

    Indeed, that’s one remarkable feature of this first fifth of the 21st Century: a series of uninterrupted, often brutal and always dramatic and on a large scale, episodes of centralization of capital. In the absence of any significant scientific-technological breakthrough, this is evidence of chronic falling rates of profit in the West.

    1. VK- Just 5 days ago, you were telling us:

      “If Russia finalizes the Ukraine quickly as is expected, this could well be the beginning of the end of what the center-leftists of the post-war called “Western Civilization” (i.e. Western hegemony).”

      Now it sounds like you consider the war to of immense benefit to “Western Civilization”–which like the Holy Roman Empire is none of the above.

      Consistency can be overrated at times. I just don’t happen to think this is one of those times.

      FWIW, for years some of us eurocentric western Marxists have claimed that the conflicts in Syria, Iraq, Afghanistan and the next battlefront would not be resolved or even suspended without a socialist revolution. Maybe it takes Putin to prove us right.

      In 1991, the goal of the “west” was to drive the Soviet bloc’s industrial production and footprint out of the markets, local and international, until it could be shrunk to a point compatible with the persistent overproduction that had triggered the 1989 recession.

      I think this is another phase of that struggle to drive even that reduced footprint out of the markets– in aluminum, in wheat, in natural gas, and in particular liquified natural gas again dealing with persistent overproduction. The difference being, this time Russia is not totally disoriented by the rapidity and depth of social change. Putin’s got an army and he’s using it.

      Sorry to say, this is just the opening round of a battle, hot and cold, among the capitalists, east and west, that can only be stopped by a socialist revolution, east and west.

  15. I am intereted in Putin’s wealth growth, who support the White glove service? In China, it is hard to find related data. Could anyone provide some documents? Many people in China were misdirected by the gov to support Putin, even some Communism parties also support Russia, what a shame.

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