What follows is a 28-minute podcast I did on Nov. 12 with The Times in Britain about Russia’s economic meltdown, its war, and Ukraine’s strategy and political situation. Click to watch the conversation, and a summary of highlights is listed below.
The salient developments:
Russia’s oil revenues are down 27% due to the effectiveness of sanctions and intense bombing by Ukraine of its refineries and other oil facilities. Petroleum exports finance the war. Ukraine has also embarked on an intense and successful aerial war targeting Russia’s electrical grid.
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Russia has had to dip into its National Welfare Fund to finance the conflict. In 2022, this “national piggy bank” totaled $100 billion and is down to $34 billion. Russia has also lost access to its $300 billion in foreign-exchange earnings, which were frozen after its 2022 invasion. Allies are close to agreeing to transfer these funds to Ukraine to help rebuild the country.
Russia is on the ropes and now being gouged by suppliers, at home and abroad. The cost it pays for essential components or weapons has risen by 30% to 80%, according to reports. Also, its oil customers are driving harder bargains by paying dramatically less for Russian oil.
Russia is so cash-strapped that it has requested advance payment at deep discounts from China for oil and LNG.
Russia’s VAT taxes soar to 22% along with inflation.
Russian rail freight – an index of manufacturing health – has collapsed, and Reuters reports major factories have furloughed workers to save wages. Twenty of its 24 key industries are in simultaneous decline.
On Oct. 14, President Donald Trump predicted that Russia would economically collapse this year or next.
Russian opposition politician and chessmaster, Garry Kasparov, said Russian GDP figures are a “mirage” and that Moscow is a “Potemkin Powerhouse.”
Reprinted from [email protected] – Diane Francis on America and the World.
The views expressed in this opinion article are the author’s and not necessarily those of Kyiv Post.
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