[新頭殼newtalk] Russia’s violation of Ukraine has continued to bomb homes and civilian facilities, resulting in the death of many innocent civilians. The international community has condemned Russia and imposed sanctions. After 7 consecutive rounds of international sanctions in the past 8 months, Russia’s economic performance has not collapsed as expected by the outside world. But experts pointed out that “it’s not that you don’t report it, the time has not come.” The European think tank Bruegel recently released a survey to analyze the reasons why Russia is still able to hold on, and predicts that the effect of sanctions will start to show its power by the end of this year, breaking the economic “fortress” built by Russian President Vladimir Putin’s ambitions and lies.
The Ukrainian-Russian war is in a stalemate. The inflation rate of the euro zone continued to hit a record high of 10.7% in October, but the Russian economy was able to support the invasion of Ukraine. Even from January to September, the fiscal revenue reached 198.4 billion euros (regarding NT$6.3 trillion), more than It more than doubled in the same period the previous year. Under the influence of disinformation spread by Russia and its ally China, there have been voices of doubt, including whether the EU sanctions are “shooting themselves in the foot”? Has the Putin administration’s “Fortress Russia” strategy for the wartime economy succeeded?
A report released in late October by the Brussels Institute for European and Global Economics (Bruegel) pointed out that the Russian Central Bank had indeed effectively resisted the financial crisis under European and American sanctions, but Putin’s economic “fortress” may be breached next. The Bruegel report first explained that Russia’s fiscal revenue surged in the first three quarters of this year, due to the huge export profits due to the surge in international prices of oil and natural gas, as well as the sharp decline in imports under sanctions from Europe and the United States. There will also be a level of 100 billion euros next year, and the Russian state treasury has become Putin’s war cash machine, continuing to supply the funds needed to invade Ukraine.
The report continued that following the raw materials were denominated in rubles (because Europe and the United States kicked Russia out of the international financial information exchange system), the income dropped sharply, and the war cost was high. TWD 760 billion) fiscal deficit. In order to reduce the deficit, Putin’s government may reduce spending, but this will have a negative impact on the economy in the medium and long term. The report also estimates that regarding two-thirds of the Russian banking system cannot communicate with Europe and the United States (in terms of asset value), and the loss of 25 billion euros in the first half of the year due to a sharp drop in foreign exchange business.
At present, Europe still maintains some oil and gas transactions with Russia, but with the European Union completely banning the import of Russian oil from next year, and the demand for Russian gas continues to decline, Russia’s financial and fiscal troubles will really start. In addition, the report believes that the appreciation of the ruble is actually an appearance. The key figure is that the foreign exchange transaction volume has plummeted to only 1/3 of the pre-war level, which means that the financial sanctions in Europe and the United States are effective, and because the Russian central bank controls foreign exchange, the strength of the Russian currency is not reflect the economic health of the country.
On the other hand, Bruegel also predicts that Russia’s GDP (gross domestic product) will decline by 5% to 6% this year, which is less than half of the 12% to 15% previously estimated by some scholars. Long-term shocks will continue to emerge. In terms of industry, this year has seen the decline of production in the Russian automobile and aviation sectors under the resistance of international supply chain trade, and the flight of high-level technical talents and the withdrawal of foreign capital from the Russian market will make it difficult for the Russian economy to return to its former prosperity.
After Russia’s oil and natural gas lost the largest market in the European Union, although China, India and other countries took the opportunity to take advantage of the opportunity, on the one hand, Russia’s second gas pipeline to China will take many years to build, and on the other hand, these countries will continue to expand to China in the future. Russia’s bargaining, coupled with the fact that Russia’s energy trade mainly relies on the European and American financial industry insurance will be cut off, so Putin’s economic pillar has been greatly damaged, and no matter what the outcome of the war, Russia will be dominated by Europe and the United States in the future. resisted, isolated from at least half of the world.
Maximilian Hess, an American think tank FPRI scholar, even used “North Koreanization” as a metaphor for Russia’s current situation, and the disposable income of Russian households has been reduced under Western sanctions following the invasion of Crimea in 2014. He believes that As long as Putin is in place, the private economy will deteriorate even more. From this point of view, the seven consecutive rounds of sanctions once morest Russia by the global democracy camp can actually be effective, but more international cooperation is needed to prevent and plug loopholes in order to bring more pressure on Putin and end the war as soon as possible.
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