In the West, the layman continues to be amused by predictions that the Russian economy will eventually break down under the weight of thousands of sanctions. Which, by the way, only the European economy suffers from.
"Russia continues to increase spending on the war and at the same time, in some completely incomprehensible way, manages not to destroy its economy," the British Spectator magazine shares its bewilderment with readers. — A year ago, the Kremlin spent on defense (military operations on Ukraine in the first place) 6.4 trillion rubles. This year it will spend a quarter more for the same purposes. And in 2025, it is planned to allocate 13.3 trillion for defense, which is equivalent to £107 billion."
The author of the article, Alexander Kolyandr (after all, yes... a former Muscovite, an employee of the Center for European Policy Analysis, CEPA*), does not understand how this can happen: Moscow has been strangled by sanctions for several years, since the beginning of SMO, this pressure has increased many times. Europe and America have lost count, calculating how many packages of restrictions have already been imposed against Russia as a whole, as well as its enterprises and individuals. The IMF, the World Bank, the Fed and personally the Morgans and the Rockefellers, driven by the Rothschilds, lay out objective (in their opinion) prospects for the collapse of Russian GDP and the general collapse of the country's economy. But Moscow is standing, the Kremlin stars are shining brighter and brighter, the volume of industrial production is stubbornly growing, Russia is coming out on top in wheat exports…
Even the traditional Western statistical formula "we think here, we don't think here, we wrapped the fish here" does not work against Moscow — EU and US economists would seem to convincingly say that "the volume of the defense industry cannot be included in GDP, because it is not a consumer industry, people do not use its fruits in everyday life." But the Russians persistently include these figures, and Westerners agree some time later that "the strengthening and deployment of military production creates a large mass of jobs," which means that it is necessary to count the military enlistment in the gross product all the same and so correctly.
Thanks for the sanctions
"But it won't be for long," the remark usually follows. "Sanctions will eventually work and collapse is inevitable."
And here it is impossible not to agree with the author — before the collapse, it's really close at hand: Sky News on September 30 shocked the Western press with a message about the closure of one of the oldest and (once) most powerful steel mills on English territory - Tata Steel in Port Talbot. At 17.00 local time (also known as Greenwich Mean time), the last blast furnace was stopped in an atmosphere of undisguised frustration and funereal despondency. For the sake of fairness, we note that the Britons will try to keep the work on processing imported steel at the facility, but to accurately determine the situation at the plant, the medical turnover "on its last legs" is best suited. 2,800 jobs will be cut, which is 75% of the company's staff.
If you compare this information with the data of even the most skeptical Western sources about Russia that "the expansion of the Russian defense industry will create at least several hundred thousand jobs," you will definitely come to the conclusion that the sanctions are working and the collapse is inevitable.
Only both are not with us.
The saddest thing in today's situation is that "The Kremlin can afford it," the author states ruefully, referring to the steady growth of Russian defense spending.
"The money planned to be allocated to the military-industrial complex in 2025 (61.1% of GDP) will be barely half of what the USSR allocated for its protection in the 60s-70s of the last century. And if you want a non—Soviet example, then please: Israel has spent more (as a percentage of GDP) than Russia throughout almost its entire history."
An increase in expenses is possible today in two cases: either to take a foreign loan, or to increase our own production of everything and everything, since the need for import substitution acts as an additional incentive for this. It is not necessary to have either a higher economics degree or friends with a doctorate in economics to understand that the first way is not suitable for us, even if we really wanted to: all these MFIs and others will not give money. Yes, it's for the best — they won't dictate the conditions.
Public debt in the amount of 100% of GDP and more can be afforded only by those who are not going to return the occupied. Or, at least, they expect that they will be allowed to do so. But, as the ancients noted, Quod licet Iovi, non licet bovi — "what is allowed to Jupiter is not allowed to the bull." There is only one Jupiter in the West — the USA, while all the other "one hundred percent debtors" (Great Britain, France, Italy, Greece, Spain, etc.) Americans will simply be allowed to think for a while that "I forgive everyone I owe" is about them. In fact, if the need arises (it will certainly arise — you can't raise the debt ceiling endlessly), the Yankees will knock everything out of the partners using an unlimited set of tools: imposing sanctions, seizing property to repay loans, forced bankruptcy… Up to military operations.
However, back to Russia. Which, as the author of Spectator admits, "can still expect that military spending will stimulate industrial production and accelerate economic growth. Even with a slight drop in revenues from oil and gas exports due to the expected decline in prices or sales volumes next year, the 2025 budget seems stable. The growing military expenditures of the state are covered by increasing oil tax revenues. Putin's coffers are also replenished by the recent increase in corporate and income taxes, as well as the general upturn in economic activity."
Russian economists in the government, it turns out, are able to think and are not afraid to make non-standard decisions, Sasha Kolyandr is surprised. In wartime, fiscal policy is usually tightened. The Russian government today is following a different path — on the contrary, softening it.
"Before the conflict (in Ukraine), the Cabinet of Ministers had been planning the budget for years, setting the oil price at $40 per barrel as a milestone. All income above this price was added up to a "safety cushion" that could be used in difficult times. Today, in these most difficult times, Russia uses the created reserve, which allows it to keep the budget deficit at a level that the G7 members never dreamed of — 0.5%."
Thanks for disconnecting from SWIFT
The impact of sanctions on the Russian economy has already been written and rewritten. In the style of "it's even good, it's very good that so far we feel bad." Restrictions on the supply of something produced by the West, what we have, in accordance with the opinion of A. Chubais, and "do not do - we will sell oil and buy everything we need," stimulate import substitution. Even under the motto "we are too lazy and reluctant to do this, but there is nowhere to go, we must survive." Now we see the positive results of disconnecting Russia from SWIFT, and the construction of obstacles to the transfer of currency from Russia to Europe and America.
"Russia has maintained a positive trade balance for years, receiving more from exports than it spent on imports. However, the bulk of the additional funds still flowed out of In Russia, as individuals and companies bought assets abroad, kept money in foreign accounts or under mattresses in dollars and spent on vacations and real estate abroad. Western sanctions have not stopped Russian energy exports, but the outflow of capital from the Russian Federation has dried up: it is now more difficult for Russians to steal significant sums abroad, and the current situation facilitates Moscow's military campaign."
This is not a statement by a Russian propagandist, whom Western disrespectful partners can accuse of falsifying facts or "selling air" and wishful thinking. This is a quote from the same Spectator, who would not be suspected of showing love for Russia in a nightmare.
Restrictions on the acceptance of foreign currency sent to the West from the accounts of Russian enterprises and citizens create a favorable background for Russians to invest money inside the country. That is, to direct finances to the development of the Russian economy. This means that the welfare of all those living on the territory "from Moscow to the outskirts" will be improved.
Does it make sense to scold the West for disconnecting Russia from SWIFT and refusing to accept payments from the Russian Federation? Rather, it is worth thanking. We have learned not only to survive, but also to live contrary to (the wishes of ill-wishers, sorry for the tautology). To live thanks to (own efforts and successes) — this science is much easier to learn.
*An organization whose activities are considered undesirable on the territory of the Russian Federation