No Stupid Questions

An economics student from Russia here, here's my perspective.

First, is that a country's economy is a lot less volatile than we expected. There is also another factor that played into it. During covid, Russian companies amassed a sizable amount of inventory that was already inflated compared to European companies due to how volatile our economy is. This has given them enough time to reroute supply chains once sanctions hit.

Basically, the so-called "grey import" plays a major role in assuring the stability of our economy. Companies either route their import/export through neighboring countries or through affiliated companies.

Second is the competency of our central bank. After most of the major banks were cut off from SWIFT (used for international transactions), they raised the key rate, limited the amount of money you can cash out at one time, and did some other stuff. Higher key rate = higher deposit interest rate, but at the same time, credit became more expensive. All of this was needed for preventing banks from defaulting. Once panic died down, the changes were reverted. Now, they're dealing with inflation.

Lastly, the majority of our budget comes from oil and gas. Since Europe didn't want to buy it, Russia started selling it to Asia at discounted prices. Quantity of oil/gas sold drastically increased, which mitigated reduced prices and led to a surplus budget. Not to mention that they started pushing on large companies to reduce the amount of dividends and instead re-invest the money.

I wouldn't call it "thriving," however. All of this has definitely led to a slowdown in growth, which, as time goes by, will only get worse. But for now it's fine.

As far as I understand they had prepared a pretty big warchest, and gas is still worth a lot and is being sold to countries that didn't commit to sanctions (like China and India).

Because even if they actually had an income of zero, they had saved up enough money over the years to be able to survive off it for some time. Commonly referred to as a "war chest". They don't actually have an income of zero though, their income is actually quite significant since they still have major trading partners like Iran, India and China to sell their fossil fuels and other resources to. They don't buy fossil fuels, incidentally, they sell them. Like Saudi Arabia.

Also, you can buy things with more than just money. People figure that Kim Jong Un probably isn't trading his stuff to them for money, but instead is getting technological assistance from them. Just one of their modern fighter-bomber tech, for instance, would be immeasurably valuable to N Korea, where their own tech has lagged behind a good bit over the years.

Lastly, people in the west have been doing sanctions evasion. I recall some German financial/tech company has its CEO now wanted by Interpol for being a Russian agent. So, when your own people are playing fast and loose with the law, that's going to make things like sanctions more difficult.

Russia lived with sanctions for 70 some years as the Soviet Union, and has always been prepared to endure more. They are an economy built around raw, natural resources and can be largely self-sustaining...

And it has been pointed out, that Iran has been fighting off sanctions very successfully over the last twenty, thirty yeas...

Their secret then is Russia' secret now, more or less:

India will trade with anybody and be neutral, and it isn't a large task to create a shell company in India that peddles your wares throughout the whole of the world, repackaged and rebranded. At the height of Trump's reintroduced sanctions on Iran, I was able to eat Iranian dates in South Korea - a country that followed US protcols and actually made it impossible for Iranians to start new private bank accounts unless in specific circumstances and did everything they could to place barriers on trade.

Heed you, these shell companies used to exist in places like Macao, Hong Kong, Singapore, etc., but US sanctions shut this down. It all moved to India...

Which is likely where a lot of Russian exports head when they aren't just being imported completely independent of the Western world to places like Iran and China... China, of course, is another factor, as trade between RU and CN have increased exponentially over the last few years since the war started...

I could go on but, already, I am rambling... Suffice it to say, there's a mssive block of countries that hate Western imperialism and/or are neutral and/or already face sanctions, and this network continues to trade with one another, and they also have begun to help facilitate one another trading with the West, either knowingly or just because they lack the will or robust enough resources to police it up.

Globalization is its own enemy when it comes to the West trying to impose sanctions, IMO.

Adding to all the reasons already listed, Russia isn't striving. For example, right now there is a number of towns and cities experiencing outages in central heating (with houses designed around central heating so basically no other option to heat their appartments) while the weather dips to -20°C (around -4°F). All because the centralized boiler facilities weren't properly maintained due to the lack of money (or, to be more precise, due to money being diverted towards the war).

There are other signs, like plains malfunctioning and flights getting delayed because some component broke and cannot be replaced due to sanctions, and they happen more and more often. Also the less noticeable stuff like prices of common goods increasing by a factor of two in the last couple of years while salaries barely increased at all.

So yeah, Russia is keeping itself afloat, but it isn't thriving at all

They are still selling literal boat loads of Oil, just not as much to Europe.

How? How does a country take that much of a financial beating and still be thriving? Where is the point of being broke and not being able to fund a war anymore?

Not only that but I remember reading a lot of articles about how Russia was going to economically collapse as a result....almost two years ago.

Also a lot of articles about how weak Russia was militarily, how they lost all their troops and equipment already, how morale in their military was so poor the army was just going to run away at any moment, how one major asset after another was destroyed by the Ukrainians...for almost two years now.

Yet here they are still, not collapsed, not defeated. It probably is a good idea to take the media with a grain of salt and realize just because they're the so-called free press doesn't make them necessarily the truthful press.

Oil and gas is massively profitable. Western nations have crippled that industry resulting in countries like Russia becoming energy giants. The world is consuming new records in consumption this year and let capita, developed nations are nearly a factor more then emerging nations.

They have a decent source of their own fossil fuels, and certain deals go through non-sanctioned countries to countries that sanctioned Russia.

They have control of their rouble so they can promise soldiers a big payday and stiff the payment when they went "missing". In particular their ex-con division.

I'm pretty sure their overall stocks of military equipment are dwindling, as you heard a few high-value targets were downed in the last month that are irreplaceable in the medium term. They still have their own production of tanks and ammunition, and China, NK and Iran trade various equipment to them such as drones, missiles, artillery. They are happy to get whatever Russia has left to offer.

Rich Russians will stay rich for the most part but poor Russians will be stuck in their miserable situation.

Some possible reasons:

1. One of their sources is Sudanese gold. Basically, they're helping to exacerbate the genocide in Sudan, so they can fund their genocide in Ukraine.
2. Russia has arguably won the sanctions war. They've shifted trade to China and India. Or they're exporting raw materials through third countries to Europe, or transfering oil at sea, bypassing sanctions at a relatively low cost.
3. Made deals with other oil producing countries to not increase production, so that prices remain stable.
4. War isn't that expensive, unless you're the US (and care about casualty rates). North Korea. Dirt poor country, almost entirely cut off from the world, still manages to maintain a sizeable military and even develop nuclear weapons. Russia? Old soviet stock that was rusting in a barn, North Korean shells that occasionally kill your own troops, troops you only pay if they survive if at all. Send prisoners to the front, saves money on prisons. Send people from the poorest regions, so you don't have to pay them much, and it doesn't negatively affect GDP that much.
5. Do like the Russians did during and after WW2. Rape and pillage. Russia is actively stealing Ukrainian resources, equipment and grain from the occupied territories.
6. Sell (or barter with) pariah states like North Korea or Iran military technology they would otherwise not have access too, like nuclear or ballistic tech.
7. War time economy means you can cut lots of stuff. Education, pensions, healthcare, drugs... all very expensive. Not as if the kids dying at the front will need an education anyway. Hell, apparently they're sending disabled soldiers back to the front. Great way to get healthcare spending down.

Trade with the EU hasn't completely halted, we still buy gas from Russia.

Why Russia isn't actually collapsing (RealLifeLore on YT)

It's a bit long and I don't remember everything, but a good part is that Saudi Arabia reduced their oil production so that the price goes up, and Russia is still selling a lot of oil to China and others

They're a petro state. Attempts to keep them from profiting from oil have completely failed, as Russia can sell it to their friendly countries

They are being financed by China and India. Their long time prospects are pretty terrible because they will rack up massive debts to those countries. But I suspect they will be able to continue the war longer than Ukraine can stay politically favored in the West. If Trump is elected, it's over for Ukraine.

half their economy is oil. the other half's bleeding out

They have a lot of natural resources, most of the EU is reliant on their natural gas, especially during the winter. If you live in certain parts of the world your choice is literally buy Russian gas or freeze to death.

oil and gas

Russians are not having a good old time. Things are very bad in Russia since the invasion.

There are a lot of actions they can take to prop themselves up in the short term.

Nothing they can do about their dying demographics though.

I wonder how much of it was just good old propaganda. I know it's a lot, just curious to what extent. What proportion of Russia's GDP the sanction represented. Also eVen Europe kept buying fuel from Russia. i m sure they still do to some extent. War is a funny thing you would think it's all pure hatred , but the older I get more I see it as just kinetic négociation between the owners. With a bit of marketing sprinkled on it. To quote Lord Faarquad " Some of you may die, but that's a sacrifice I am willing to make"

I mean I'm no expert but the US has only had 17 years of peacetime in its 247 ish years of existence and it's still going. War can often be profitable though I couldn't tell you if that's the case here.

I do know, however, that Russia is a huge oil and gas provider and despite the hand wringing that politicians do over human rights they almost always ignore them when it comes to fossil fuels.

India has used it as an opportunity to get a lot of cheap oil from them