The Russian economy (catch all)

[OUTLAW 09]

I do read most of the posts, though given the sheer volume and occasional incoherence it's always possible to miss something. I've seen little or nothing that indicates a specific suggestion. From JMA the closest I saw was a presumably facetious recommendation that the Ukraine be provided with nuclear weapons.



I've said from the start that the response should be multilateral, economic, and graduated, so we're not so far off being on the same page there. I try not to suggest specific economic sanctions, because I don't have the access to detailed data or the number crunching expertise to determine the cost/benefit relations of specific possibilities. If it were up to me I'd have had a team of experts on the Russian economy serving up lists of possibilities with projected impacts for each. I assume that this has been done.



Which specific red line do you mean?



I find it interesting that you say "Putin has totally established a dictatorship" and a few paragraphs later "Putin is struggling to get reelected". That seems to be a bit of a disconnect; can you explain?

I agree that Putin has backed himself into a corner: his proxies are failing despite very overt support, and now all his options are bad. This is a common problem in proxy war, as the US well knows: if your proxies can't do the job you're left without good options.

The question now is how to get him to take the bad option we prefer: not invading. Economic threats are part of that. So is undercutting the pretext: the last thing we need right now is a bunch of dead ethnic Russian civilians.



AP will have to respond to that; as I said before I don't see much point in negotiating without a solid supply of carrots and sticks at hand. The question is what the most effective carrots and sticks would be, and how and when they should be deployed.

Dayuhan--you need more actual physical interaction on a daily basis with Russian politicians and military and you then would understand that yes in fact he has established an authoritarian rule quasi a dictatorship actually more like the head of multinational corporation as Russia is made up of 4 distinct ruling elites.

Russia the former SU has a pendent to holding onto legal documents as if they somehow justify and grant that country or person "legal rights"---go back and reread all Russian comments especially Russian FM comments and count the number of times they mention that certain agreements, treaties, actions are in their view illegal---that goes to the concept that "the shine of legality" gives them their power--that is until that agreement, memo, treaty blocks them then they will totally ignore the fact they are in violation of the very agreements they signed.

Actually that should not surprise anyone as that was the core statement that Stalin told a high ranking Communist Party meeting in 1939.

Go back and reread Putin's Duma comments and his press conferences and list the arguments he states he considers the West having violated as his reasoning for moving into the Crimea and eastern Ukraine---it is in the public domain to be read by all---although some commenters here tend to not do that often enough.

Here is one of those statements---NATO has violated the agreements with Russia on the expansion into the bordering countries next to Russia---actually count the number of times that has been stated by both the Russian FM and Putin himself---then actually do the research and try to find that signed agreement---there exists none---it was a conversation between Gorbi and Bush that was not followed up on and signed into agreements---now explain to me just how an "agreement" is considered an agreement if verbal---and yes I know in some countries a verbal agreement can and is often considered a legal contract. The closest thing to an agreement that Putin loves referencing was the German Reunification Agreements 4 plus 2 and even Russian FM and Putin state them differently to the world than what is written in them---again cognitive dissonance.

I have dealt with Russian officers in 2012 and 2013--if you misused one word or sentence you could find yourself later arguing over that word or sentence as they will hold it in your face and blatantly state---this is what you said so it was agreed to but attempt to find it in the hand written recorded statements and the running video.

This is a major problem when dealing officially with Russian government officials---this cognitive dissonance penetrates into even the lowest ranking Russian officer or government official.

These "legal documents" grant them the cover and yes even a "democratically "appearing election however rigged is considered "legality" to the ruler ie Putin as he can say to the west see I am supported by 98% of the population so therefore you must deal with me the ruler of Russia not the political parties. this was if you noticed the argument on the Crimea elections--Dayuhan notice the trend--it is always there and when AP claims that negotiations are the way forward then he knows nothing on how to counter cognitive dissonance. That is why he is so set on getting reelected ---it gives him the appearance of "legality"--outside of his ego thing he has going for him.

I have stated here a number of times--this type of thinking often leads authoritarian leaders to believe their own propaganda and often that leads them into an altered state of reality which by the way Putin is in if you view his food ban decision in the light of cognitive dissonance--ie the belief that somehow this great milk and beef producing machine in Russian can replace overnight imports of upwards and depending on product 63% ---and that overnight ---and again "without" hurting the Russian consumer as that is what he told his population.

Remember even a population can be affected by cognitive dissonance if the propaganda begins to be believed as the "truth" as it must be "true" as our "democratically elected" leaders are the ones telling us.

In opposition to AP---we do not need negotiations right now we need a team of psychologists to talk to Putin as they are about the only ones capable of understanding this cognitive dissonance of his.

IMO that is why right now no western leader --not even Merkel is not getting through to Putin--they have no earthly idea how to deal with cognitive dissonance at the leadership levels as western leaders tend to work in the realm of logic and rational though processes---not the emotional world that causes decisions to sometimes go left instead of the intended right which Putin finds himself in right now in eastern Ukraine.

There though is one who fully understands Putin and has actually out maneuvered him---the current Ukrainian President.

It might sound racist but is not meant to be--it takes a Slav to understand a Slav.

[Firn]

The economic question is of course intertwined with the political one as we have seen all too clearly in those last weeks and months but I think we should still focus on the former aspect.

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Top Suppliers Of Food To Russia (2013). Brazil is surprisingly high up there, maybe animal feed is included? I will check later.

[JMA]

Dayuhan--you need more actual physical interaction on a daily basis with Russian politicians and military and you then would understand that yes in fact he has established an authoritarian rule quasi a dictatorship actually more like the head of multinational corporation as Russia is made up of 4 distinct ruling elites.

Outlaw, the smart guys don't think so, they believe that they are so smart that can just apply a little thought to the matter and come up with a workable solution. There is enough evidence to prove this both around here and in the Us Administration.

[Dayuhan]

Dayuhan--you need more actual physical interaction on a daily basis with Russian politicians and military and you then would understand that yes in fact he has established an authoritarian rule quasi a dictatorship actually more like the head of multinational corporation as Russia is made up of 4 distinct ruling elites.

Yes, we all know this; it's become pretty much conventional wisdom. The question is how you reconcile the assumption of quasi dictatorship with your observation that "Putin is struggling to get reelected". Dictators don't generally struggle to get reelected, because they control the electoral system: that's what makes them dictators. They do worry about the populace rising against them, but that's a different problem. If Putin is indeed, as you say, "struggling to get reelected", it brings the whole assumption of quasi dictatorship into question.

[JMA]

Dictators don't generally struggle to get reelected, because they control the electoral system: that's what makes them dictators. They do worry about the populace rising against them, but that's a different problem.

You seem a bit confused... again.

Your final sentence counters the premise in your first sentence as applied to Russia.

Arguing for the sake of arguing is pretty ridiculous don't you think?

[Dayuhan]

Your final sentence counters the premise in your first sentence as applied to Russia.

Not at all. A leader that has to struggle to get reelected generally doesn't have to worry about the populace taking to the streets: why would the populace bother going to the streets if they can just vote the bastard out?

Struggling to get reelected is the problem of elected leaders. The prospect of the populace in the streets is the problem of dictators. Dictators, by definition, don't struggle to get reelected. They dictate the results of the election, if they bother to have an election at all.

I simply asked Outlaw to clarify what appears to be an inconsistency.

[JMA]

Nah...

You getting yourself in a tangle here.

As long as there is the near certainty of the populace taking to the streets which could get ugly Putin needs to be careful just how much he can 'fiddle' the election.

You tried to be smart in a reply to Outlook, you got it wrong.

Not at all. A leader that has to struggle to get reelected generally doesn't have to worry about the populace taking to the streets: why would the populace bother going to the streets if they can just vote the bastard out?

Struggling to get reelected is the problem of elected leaders. The prospect of the populace in the streets is the problem of dictators. Dictators, by definition, don't struggle to get reelected. They dictate the results of the election, if they bother to have an election at all.

I simply asked Outlaw to clarify what appears to be an inconsistency.

[OUTLAW 09]

Yes, we all know this; it's become pretty much conventional wisdom. The question is how you reconcile the assumption of quasi dictatorship with your observation that "Putin is struggling to get reelected". Dictators don't generally struggle to get reelected, because they control the electoral system: that's what makes them dictators. They do worry about the populace rising against them, but that's a different problem. If Putin is indeed, as you say, "struggling to get reelected", it brings the whole assumption of quasi dictatorship into question.

And again Dayuhan you simply do not understand the beast you are commenting on---and you failed to mention my attempts to show you how "legality" plays a big role in Russian elections.

You really do have to spend some time in the former Soviet Union and then you will understand. Russia is offering some really good cheap Crimea beach vacations--- but wait the cheap Aeroflot daughter airlines cannot fly there anymore as they were grounded by the sanctions so that is out as a suggested place to visit.

[Firn]

I think we should focus here on the economic aspects to be able to have a more fruitful discussion.

European Banks Battle to Keep Russian Clients Amid Sanction Lending Freeze

Bank Austria, the central and eastern Europe [CEE] arm of Italian bank UniCredit, said this week it expects to keep making solid profits in Russia.

"It is a compliance complexity for sure, a very significant effort, but I think it is our approach and culture that any requirement from the sanctions we respect to the extreme detail," said Chief Financial Officer Francesco Giordano.

Bankers working on a syndicated loan of up to $900 million for Russian steel company Evraz — led by Dutch bank ING and Germany's Deutsche Bank — say they hope it will be signed as soon as this week, though they will have jumped through many hoops to get it over the line.

"I think the deal will get done, but it is more difficult at the moment. People are asking a lot of questions around the new sanctions," one banker told Thomson Reuters Loan Pricing Corp, or LPC.

As usual it is important to point out that the sanctions itself have a rather gradual impact in many areas instead of being a on/off switch. This deal might well go through but it is hard to imagine that the conditions for the Russian company are the same as before. I would be very surprised if they will have to cencede a risk premium. Other deals will fall through all those events will contribute to weaken the Russian economy.

Demonstrating this uncertainty, Russia's syndicated debt market, worth $47.2 billion last year, has dried up since hostilities broke out over the Ukraine. Just two corporate loans have been signed since March — a $1.15 billion pre-export loan for Russian iron ore company Metalloinvest and a $450 million unsecured loan for potash producer Uralkali.

Btw the same goes of course for trade triangles which might involve Belorussia or other countries. Even if they operate successfully there will be welfare losses in the West and Russia.

[OUTLAW 09]

firn---seems like now Russia wants to forego membership in the WTO.

Seems like they have realized that if they complain about something to the WTO they could themselves end up being penalized.

Since the sanctions hit their first response was we will go to the WTO---think they have found out that it is not that easy and I think they were shocked by the Yukos court decision of 50B USD.

It is really as if they do not understand globalization of economic systems---they have had way to much state owned economics and cannot seem to make the shift to a globalized world.

http://euromaidanpress.com/2014/08/1...to-membership/