The Russian terror campaign against Ukrainian civilians does not seem to be abating, even though their military operations remind one of the Three Stooges. The Russian Air Force attacked a Mariupol maternity facility on Wednesday. They claimed that a very pregnant wounded woman, who happens to be a Ukrainian beauty blogger was a “crisis actor” (Alex Jones needs to demand royalties for this) before deleting their tweet. The Russians are claiming, without a shred of evidence, that the hospital was used for military purposes, that they had notified the UN (apparently in secret) that the hospital was being improperly used, and that they were “baited” into the attack. The attack appeared to be deliberate, but I doubt it. The Russians seem to have stopped using precision-guided munitions for their air attacks and rely on gravity or “dumb” bombs. Stinger MANPADS requires that the survival-oriented pilot fly at least 10,000 feet above sea level. It is unlikely that a Russian pilot could reach a city smaller than that at such high altitudes and speed. Russian pilots only fly 8 hours per month. This is not enough time to be flight-qualified. It seems that the Russian intention is something straight out of London’s Blitz. The Russians plan to bombard the city in an attempt to terrorize the civilian population. This attack is part of the Russians’ plan to mine Mariupol evacuation routes, knowing that civilians could use them.
Dmitri Perskov (Kremlin spokeswoman and Putin Minime), sniveled at how cruelly the West was treating Russia as these war crimes were unfolding. He declared that the West was waging “economic warfare” against Russia while all Russia was doing was killing women and children for the sole purpose of showing they could. Interfax also quotes him as the victim.
“We have said repeatedly that Moscow was, is and will be a reliable guarantor of energy security not only for the European continent, but also at the global level. And even now, as you see, energy resources are being supplied,” Peskov told reporters, responding to a question from Interfax as to whether Russia is ready to continue supplying energy resources to countries that have supported the sanctions.
“And Russia values this reputation of a reliable supplier of energy resources. European leaders all agree that Russia has fulfilled its obligations to the full extent of current agreements. But you see the bacchanalia, hostile bacchanalia carried out by the countries of the collective West, which, of course, makes the situation very difficult and makes us seriously ponder it,” he said.
I’d like to make two observations on his statement. I think Peskov got drunk and buggered his thesaurus (NTTAWWT) to come up with “hostile bacchanalia.” The reason that Russia is a “reliable guarantor of energy security” is because they get paid and energy exports are not subject to sanctions so it is crucial to Russia that they deliver agreed quantities of oil and gas and do so on time.
Are there economic sanctions against Russia? No. Not yet. Food, energy and medicines can all be exported or imported without restriction. Russia has begun to see the signs of economic warfare.
U.S. and European financial penalties and restrictions are throttling banks and other businesses in Russia and in Belarus, its ally, limiting the Russian government’s ability to use its enormous foreign currency reserves, and impeding millions of Russians from using their credit cards, accessing their bank deposits or traveling abroad. The Kremlin has frozen the foreign assets of rich individuals and companies that are allied to it. The European Union enlarged Wednesday’s list of sanctioned individuals and organizations to close to 1,000.
Rating agencies have sharply downgraded the Russian government’s credit, signaling that it may be unable to pay creditors. Fitch Ratings warned on Tuesday that in its view, “default is imminent.”
Hundreds of Western businesses — manufacturers, oil companies, retailers and fast-food chains like McDonald’s — have suspended operations in Russia; Mr. Peskov said Wednesday that he hoped the number of Russians left unemployed by the exodus “would not be in the millions.” Russian lawmakers are considering nationalizing the assets of foreign companies that leave in response to the war.
What has happened to the ruble rate since 2000? #PutinHe was elected to office. pic.twitter.com/Vd0Hw4kWwN
— NEXTA (@nexta_tv) March 3, 2022
Morgan Stanley expects Russia to face a Venezuelan-style default by April 15.
“We see a default as the most likely scenario…It is unlikely to be like a normal one, with Venezuela instead perhaps the most relevant comparison.”https://t.co/tZV7ft1gwg pic.twitter.com/pobrybMuzE— Cliff Levy (@cliffordlevy) March 7, 2022
There are some Americans who see sanctions as “driving Russia into China’s arms.” The downside of such an event escapes me. China doesn’t need what Russia has to export and can’t get it economically as Russia’s lines of communications and transport run to Western Europe. If Putin has sand in his thong about Ukraine’s NATO membership being a threat, why would he allow Russia, with a GDP about equal to Texas, to enter into a close relationship with the #2 economy in the world?
However, can China give Putin an economic lifeline in China? I’d say no, for four reasons.
First, China, despite being an economic powerhouse, isn’t in a position to supply some things Russia needs, like spare parts for Western-made airplanes and high-end semiconductor chips.
Second, while China itself isn’t joining in the sanctions, it is deeply integrated into the world economy. This means that Chinese banks and other businesses, like Western corporations, may engage in self-sanctioning — that is, they’ll be reluctant to deal with Russia for fear of a backlash from consumers and regulators in more important markets.
China and Russia, thirdly, are quite far from each other geographically. Both countries share a border. But most of Russia’s economy is west of the Urals, while most of China’s is near its east coast. Beijing is located 3,500 miles west of Moscow. There are only a few trains that can move things across this vast distance.
Finally, a point I don’t think gets enough emphasis is the extreme difference in economic power between Russia and China.
Some politicians are warning about a possible “arc of autocracy” reminiscent of the World War II Axis — and given the atrocities underway, that’s not an outlandish comparison. However, such an arc could lead to incredibly unequal partners.
Putin may dream of restoring Soviet-era greatness, but China’s economy, which was roughly the same size as Russia’s 30 years ago, is now 10 times as large. For comparison, Germany’s gross domestic product was only two and a half times Italy’s when the original Axis was formed.
So if you try to imagine the creation of some neofascist alliance — and again, that no longer sounds like extreme language — it would be one in which Russia would be very much the junior partner, indeed very nearly a Chinese client state. Presumably that’s not what Putin, with his imperial dreams, has in mind.
This is ironic because Russia attacked Ukraine in defiance of the possibility of being subject to economic sanctions. Russia’s financial institutions went to extraordinary lengths to minimize the impact of sanctions.
Vladimir V. Putin’s posture toward the West through the recent Ukraine crisis seems unusually defiant, even for him. However, his trust may go beyond military might or empty bravado.
Over the past several years, Mr. Putin, Russia’s president, has restructured his country’s economy for the specific purpose of withstanding Western financial pressure.
Russia has drastically reduced its use of dollars, and therefore Washington’s leverage. To keep its economy and its government services running even when it is isolated, Russia has amassed large currencies reserves. It has attempted to replace Western imports with a reorientation of trade.
Russian economic officials “are pretty proud, and have good reasons to be, for the work they have done to make the Russian economy more immune to sanctions,” said Alexander Gabuev, a senior fellow at the Carnegie Moscow Center.
This transformation, among the most dramatic examples of what is known as “sanctions-proofing” worldwide, comes less than eight years after Western sanctions over Moscow’s annexation of Crimea in 2014 mired Russia in economic and political upheaval.
Russia hasn’t yet been subject to an economic conflict. Nothing like the full range of potential sanctions and economic actions have been brought to bear and already Putin’s Russia is reeling like an aging punch-drunk fighter despite having used the last decade to prepare for the eventuality. When all this is over, one hopes Putin has learned a valuable lesson but one doubts that he’s capable of doing so.
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