The Russian economy (catch all)

[Firn]

However it also shows once again what lessons Russian decision makers took away from history, that state debt makes Russia vulnerable to Western countries and has to be avoided at almost all costs.

All in all Russia does hit back and itself to ready itself for increased isolation.

The fact that Russia will use pension savings as a short-term budget fix for second year confirms this earlier view of mine which was based on words and actions of the Kremlin in recent years.

"This move breaches the 'social contract' between the state and society to develop long-term private savings," analysts at Russia's Alfa Bank said in a note, adding that it raised a long-term "risk for budget stability."

In a sign of deep disagreements among Russian officials, Interfax cited an anonymous source at the Central Bank on Tuesday saying that the move would "put an end to attracting investment into the sector and remove its growth chances," as well as "undermining the trust of citizens toward pension reform."

By limiting funds available for investment, the move would also lead to a sharp rise in interest rates on the bond market, potentially hurting economic activity and the budget, the source told Interfax.

So far most of the political moves regarding the Russian economy were about the short-term and very little about the longer one. This fits of course quite neatly into the (rather consistent) Kremlins political strategy as a whole, which doesn't necessarily act for the prosperity of the population. Having a budget shortfall wouldn't fit the media campaign about 'Russia is a very strong country', 'Russia can stand alone', 'Putin is doing a great job' and so forth. Kicking the can further down the road is of course a strategy employed almost everywhere.

Don't get me wrong, there was and still is a need to react to the current economic downturn but I doubt that the leadership strikes the porper balance between the federal budget and the health of the economy.

[Firn]

So just how much food does Russia import from the EU?



From left to right:

meat(products); milk(products) and eggs, fish;

fruits and vegetables; grain(products); coffee, tee, cacao, spices

[AmericanPride]

Firn,

Thanks for the graphs. I don't the West is the target of the purpose of the Russian sanctions. The target remains Moscow's domestic audience to demonstrate the country's resolve in facing down the U.S. The people will be called to sacrifice for their patriotic duty.

As to the effectiveness of U.S. sanctions, I came across Economic Sanctions Reconsidered by Hufbauer, Schoot, and Elliot. In their analysis of sanctions, they cite Leyton-Brown in stating that "compellant purposes of sanctions are the most difficult to achieve..." based upon the ineffectiveness of sanctions to change the foreign policies of Cuba, Iraq, and North Korea. And they assessed that the overall effectiveness of sanctions (regardless of purpose; i.e. coercion, signalling, etc) is about 34% (as of 2007). The success rate for coercive sactions is 30%.

[JMA]

The success rate for coercive sactions is 30%.

Can the current sanctions even be considered 'coercive'?

So what alternate action - if any - should be taken against Russia?

[AmericanPride]

Can the current sanctions even be considered 'coercive'?

Yes - if the intent is to change Russia's foreign policy in Ukraine.

No - if the intent is to signal to U.S. domestic audience or to U.S. allies.

[JMA]

You tell me - you're the one what wants to "emasculate" Russia.

Ok, so you have run out of ideas. Obama's plan has failed.

What you say? Let Russia annex some more of Ukraine and keep that and the Crimea.

Always safer to do nothing... is that the idea?

[JMA]

Yes - if the intent is to change Russia's foreign policy in Ukraine.

Interesting turn of phrase.

So that I understand you. Are you talking about a Russian withdrawal from both eastern Ukraine and Crimea and the payment of punative reparations?

Or just a gentle slap on the wrist?

But then of course the sanctions haven't worked, have they?

[AmericanPride]

So that I understand you. Are you talking about a Russian withdrawal from both eastern Ukraine and Crimea and the payment of punative reparations?

The official U.S. position (as stated to the public) is the complete withdrawl of Russian forces from Ukraine, the cessation of Russian support for separatists, and the return of Crimea to Ukraine. I think the first one is realistic, the second one achievable, and the third one out of reach.

But then of course the sanctions haven't worked, have they?

Nope. And I haven't stated my support of economic sanctions anywhere in this thread. In fact - I've been pretty clear in multiple statements that sanctions are generally ineffective.

Ok, so you have run out of ideas.

My idea was and remains the implementation of inclusive, internationally monitored elections in Ukraine. That brings in the moderates and isolates the radicals. Crimea should be returned to Ukraine, but that's a matter of principle, not material advantage, and it's not central to resolving Ukraine's economic crisis (the problem driving this conflict in the first place). And some arrangement should be conceived that brings Ukraine and Russia more closely integrated with the EU/West (you know, 'keep your friends close, your enemies closer' kind of thing...).

[JMA]

Your election idea is nonsense... but do tell why you believe the US Administration has taken such a wimpish position over the Russian actions in Ukraine?

The official U.S. position (as stated to the public) is the complete withdrawl of Russian forces from Ukraine, the cessation of Russian support for separatists, and the return of Crimea to Ukraine. I think the first one is realistic, the second one achievable, and the third one out of reach.

Nope. And I haven't stated my support of economic sanctions anywhere in this thread. In fact - I've been pretty clear in multiple statements that sanctions are generally ineffective.

My idea was and remains the implementation of inclusive, internationally monitored elections in Ukraine. That brings in the moderates and isolates the radicals. Crimea should be returned to Ukraine, but that's a matter of principle, not material advantage, and it's not central to resolving Ukraine's economic crisis (the problem driving this conflict in the first place). And some arrangement should be conceived that brings Ukraine and Russia more closely integrated with the EU/West (you know, 'keep your friends close, your enemies closer' kind of thing...).

[JMA]

The idea of elections is merely a wimpish attempt to avoid taking the right measure of economic and other action to bring Russia to heel.

Anything but a confrontation with Russia, right?

[AmericanPride]

The idea of elections is merely a wimpish attempt to avoid taking the right measure of economic and other action to bring Russia to heel.

What does the "right measure of economic and other action" mean?

Anything but a confrontation with Russia, right?

States don't maintain their power by exhausting their strength on battles with (near) peer competitors or lost causes. I'm perfectly content with writing off Crimea if that preserves U.S. interests elsewhere. Until there's a way around Russia's nuclear arsenal, large standing army, and political position in institutions like the U.N., negotiating with Russia is a fact of life.

[JMA]

What does the "right measure of economic and other action" mean?

I quote you:

The official U.S. position (as stated to the public) is the complete withdrawl of Russian forces from Ukraine, the cessation of Russian support for separatists, and the return of Crimea to Ukraine.

To this I would add the extraction of war reparations that would make the Russian's eyes water... together with other good stuff.

OK, so we basically agree... the crunch is that how the US is progressing - albeit with a very reluctant EU (especially Germany) - is not going to achieve that aim ever or anytime soon... or do you think otherwise?

[Dayuhan]

To this I would add the extraction of war reparations that would make the Russian's eyes water... together with other good stuff.

Is there any way to do this short of fighting a war with Russia? If not, why even bother discussing it?

the crunch is that how the US is progressing - albeit with a very reluctant EU (especially Germany) - is not going to achieve that aim ever or anytime soon... or do you think otherwise?

If you look at the three nominal goals:

Complete withdrawl of Russian forces from Ukraine

Probably achievable, if the separatists can be forced into an untenable position without providing the Russians with an opportunity to intervene directly. As I've said elsewhere, this could be achieved by offering a settlement at a suitable point, aimed at depriving the Russians of the pretext for an intervention in the guise of "peacekeeping".

the cessation of Russian support for separatists

If a settlement can be achieved with the separatists, the Russian support will eventually cease. If the Ukrainians insist on a complete military victory, I think the Russians will probably intervene, not because they really want to but because they're afraid of being accused of betrayal by their own nationalists. A face-saving exit point could save a lot of mess.

the return of Crimea to Ukraine.

Realistically, not achievable without incurring costs that vastly exceed any possible benefit.

Any discussion of courses of action has to be reality-based... there's just no point in chest-thumping bluster.

Existing policy is neither a success nor a failure. Putin has not done in the east as he did in Crinea, He has not pulled an open invasion and tried to link up with the breakaway Russian enclave in Moldova. His proxies in the east are not winning. He got his way in Crimea, he's not getting it in the east. Mixed results for both sides. The extent to which Putin's failure in the east is a consequence of the gradually escalating sanctions is not possible to know at this point.

If either party adopts the position that nothing short of total victory is acceptable there will probably be a major war, which wouldn't be good for anybody.

As always, criticism of existing policy would be far more credible if accompanied by some indication of what realistically possible policies might have achieved better results (in the opinion of the critic, of course).

[mirhond]

This seems a strange and self-defeating move, if true, simply because it hurts a lot more people in Russia than outside of it. The last thing most governments would want to sanction is their own imports of cheap food. People will overlook many things in the grip of nationalism, but the stomach is pretty close to home.

https://ph.news.yahoo.com/russia-ban...231321612.html

Poor Moscow hipsters, they will surely die without Spanish hamon and French butter
I've just checked my frige and found Latvian cheese, Spanish fish and Polish apples - well, I can handle without it, that's for sure.
Now, getting serious, all imported foodstuff isn't cheap, it's just slightly better than Russian/CU - I can't imagine I'd starve without it.

[AmericanPride]

To this I would add the extraction of war reparations that would make the Russian's eyes water... together with other good stuff.

Can you be more specific?

OK, so we basically agree... the crunch is that how the US is progressing - albeit with a very reluctant EU (especially Germany) - is not going to achieve that aim ever or anytime soon... or do you think otherwise?

Agreed. Since the Russian seizure of Crimea, I've been consistent in my belief that the U.S. is not well-positioned to counter Russian intervention. I don't think sanctions will produce the desired outcome of reversing Russian gains. But I do think Russian gains can be minimized.

[AmericanPride]

Some thoughts on Putin's calculations from Joshua Yaffa at Foreign Affairs:

To Putin, sovereignty constitutes the essence of power. “Putin’s motivating idea is that Russia’s influence is preordained,” said Sergey Utkin, the head of the Department of Strategic Assessment, part of the Russian Academy of Sciences. “It’s a genuine conviction, a call, a challenge that must be answered in the country’s policies.” Were Putin to back down over Ukraine, even after the attack on MH17, it would mean not just losing face but also turning his back on what he sees as Russia’s historic birthright. It is worth remembering that under the presidency of Dmitry Medvedev, Moscow never embraced the prospect of a so-called reset of U.S.-Russian relations; it simply regarded Washington’s conciliatory pose as a long-overdue adjustment. The impulse to avenge past geopolitical humiliations has intensified in Putin’s current presidential term. And now, the crisis in Ukraine has elevated its champions. For the country’s hodgepodge of hard-liners and nationalists, Utkin said, “confrontation is a plus,” in that it “allows the acquisition of ever more sovereignty.”

U.S. and EU sanctions will likely cause Russia’s GDP growth rate, which was already declining before the Ukraine crisis, to fall even more precipitously. But the latest sanctions do not block Russia’s oil and gas exports, which account for around half of the Kremlin’s budget. Those revenues will continue to flow into state coffers and from there into the pockets of the large contingent of Russians whose livelihoods depend on the government. (About 20 percent of Russians are pensioners, 20 percent work for the state, and 15 percent work for state-owned companies.) And so the sanctions will put little pressure on wages, which are central to political stability. As Vladislav Inozemtsev, an economist and the director of the Centre for Post-Industrial Studies, put it, “Sanctions will take a hit on growth, but they can’t keep Putin from raising salaries of bureaucrats and FSB officers.”

[OUTLAW 09]

Firn,

Thanks for the graphs. I don't the West is the target of the purpose of the Russian sanctions. The target remains Moscow's domestic audience to demonstrate the country's resolve in facing down the U.S. The people will be called to sacrifice for their patriotic duty.

As to the effectiveness of U.S. sanctions, I came across Economic Sanctions Reconsidered by Hufbauer, Schoot, and Elliot. In their analysis of sanctions, they cite Leyton-Brown in stating that "compellant purposes of sanctions are the most difficult to achieve..." based upon the ineffectiveness of sanctions to change the foreign policies of Cuba, Iraq, and North Korea. And they assessed that the overall effectiveness of sanctions (regardless of purpose; i.e. coercion, signalling, etc) is about 34% (as of 2007). The success rate for coercive sactions is 30%.

The countries of Cuba, Iraq and NK have never been as tied into the globalized world as is Russia---noticed you did not mention Iran and the effectiveness against them which has virtually closed down their internal economy.

The sanctions have been far more successful than many had anticipated and actually have worked quicker than many thought possible---Russia plays a shell game ie Ponzi scheme in a number of their state owned businesses and have been living deeply on 90 day lines of credit and or financed major projects off of USD bond debts which will come due next year to the tune of 45B USD and now cut off from the international banking world damages their internal economy to an extent they themselves never calculated. Those companies hit by sanctions are now starting to ask for government assistance.

This year VTB has to pay 14B USD on a debt line that is due.

The food sanctions that Putin wanted to damage the west with will in fact damage his own economy as prices have raised 45% just in the last two days regardless of how his propaganda spins it---which is to protect their own manufacturing base for food.

Watch what happens to Russia oil and gas earnings if the Ukraine via their own sanctions stops all transit of oil and gas to the west--right now the west is sitting on solid gas storage amounts and oil is easily replaced from other sources---but the loss of even three months of earnings will hurt especially if they take the transit stoppage up to say December.

Right now watch the steady eroding of the world price of sour oil which is what Russia exports---several leading oil experts have been startled by the over supply of sour and the low demand which has the rates now at around 95-98n USD and is going lower---they are predicting a potential lowering to around 90 USD and even breaking under 90 and if that happens then the price will go lower.

Russia has often stated they need a minimum of 85 USD in order to finance they national budget and had raised that to 89 USD so if it breaks lower they are in serious trouble

[AmericanPride]

The countries of Cuba, Iraq and NK have never been as tied into the globalized world as is Russia---noticed you did not mention Iran and the effectiveness against them which has virtually closed down their internal economy.

The sanctions against Iran have not altered Iran's foreign policy. Once you start breaking linkages with another state, you also remove leverage from influencing that state's policies.

The sanctions have been far more successful than many had anticipated and actually have worked quicker than many thought possible.

Is that why Russia still occupies Crimea and supports the separatists in eastern Ukraine?

Russia plays a shell game ie Ponzi scheme in a number of their state owned businesses and have been living deeply on 90 day lines of credit and or financed major projects off of USD bond debts which will come due next year to the tune of 45B USD and now cut off from the international banking world damages their internal economy to an extent they themselves never calculated. Those companies hit by sanctions are now starting to ask for government assistance.

Right - as I've stated before, states are resilient and they tend to adapt to their changing circumstances.

The food sanctions that Putin wanted to damage the west with will in fact damage his own economy as prices have raised 45% just in the last two days regardless of how his propaganda spins it---which is to protect their own manufacturing base for food.

And, as argued in a recent Foreign Affairs contribution, the sanctions do not damage Russia's most important sectors nor diminishes the state's ability to finance its most important constituents.

Watch what happens to Russia oil and gas earnings if the Ukraine via their own sanctions stops all transit of oil and gas to the west--right now the west is sitting on solid gas storage amounts and oil is easily replaced from other sources---but the loss of even three months of earnings will hurt especially if they take the transit stoppage up to say December.

And what will that do to gas prices in Ukraine, a country suffering from political crisis, economic fragility, and war?

[OUTLAW 09]

The sanctions against Iran have not altered Iran's foreign policy. Once you start breaking linkages with another state, you also remove leverage from influencing that state's policies.



Is that why Russia still occupies Crimea and supports the separatists in eastern Ukraine?



Right - as I've stated before, states are resilient and they tend to adapt to their changing circumstances.



And, as argued in a recent Foreign Affairs contribution, the sanctions do not damage Russia's most important sectors nor diminishes the state's ability to finance its most important constituents.



And what will that do to gas prices in Ukraine, a country suffering from political crisis, economic fragility, and war?

I know you are cheering for the economic ruin of a nuclear armed state, but you could be more effective in hiding your bloodlust behind a veneer of rationality.

AP---here is an article now tear it apart---let's see what you have to say on each and every paragraph to the author.

http://www.foreignpolicy.com/article...epares_for_war

Ukraine last week seized tanks emblazoned with the insignia of the Russian Airborne Troops (VDV), an elite military force that was instrumental in taking Crimea last March. The head of the VDV, Col. Gen. Vladimir Shamanov, has promised to expand his operations beyond Russian Federation territory, and Ukraine is not necessarily paranoid in suggesting that the launching ground for an invasion may also encompass Crimea, which is why Kiev argues that the real figure of Russian troops surrounding the country is more like 45,000.

Come on AP try it---let's see how you tear apart a journalist from the Interpreter---will be interesting to see your work. And maybe we can get your response to the article released in FP as a counter voice to the author who wrote the article.

Waiting AP---have gone over all of your responses in the thread and I am not exactly sure what you would suggest doing if the author is correct that the Russian troops are already over the border.

[AmericanPride]

Waiting AP---have gone over all of your responses in the thread and I am not exactly sure what you would suggest doing if the author is correct that the Russian troops are already over the border.

My suggestion was and remains: negotiate. The coercive tools available to the U.S. are not sufficient to fully dislodge Russia from Ukraine. Nor is Ukraine the exclusive or primary security interest of the U.S. The only reason why policy discussions in recent weeks have drifted to talks about increasing U.S. security commitments to Europe is to signal to NATO's eastern European members that they won't be left in the lurch - it has nothing to do with actually restoring Ukraine's territorial integrity.

You not only advocate aggressively reversing Russia's gains, but also to disarm Russia entirely. Despite repeated questions from Dayuhan on how that could be achieved, you have been silent in answering how you would disarm a nuclear state, and do so without further threatening U.S. security interests in Europe and elsewhere. Russia gave us a black eye in Ukraine - I can acknowledge that without recommending that we rush to war against Moscow. Now is the time to assess how Russia's new gains can be marginalized or minimized, since reversing them is out of reach, a war between the U.S. and Russia will do no one any good (including the Ukrainians).

Frankly, your ideas are poorly thought-out and would only lead to further erosions in U.S. security.