The harsher the court, the more money Russia has. Comment by Georgy Bovt
The political scientist recalls that, firstly, the effect of the oil embargo will be delayed, and secondly, the current strengthening of the ruble is largely the sharpness of seismic imports
fixture agreed the sixth package is taken against Russia. It provides for an embargo on the import of two-thirds of the oil entering Russia and the disconnection of Sberbank from the SWIFT system. The ban will come into force in six months, while it will only apply to the case that produces by sea, and will not occur before the operation of the Druzhba oil pipeline. The ban on the import of petroleum products from Russia is over in eight months. European Commission President Ursula von der Leyen announcedthat uses before the end of the year a choice of 90% of oil imports from Russia. Brussels also wants to get a job in the EU and three Russian state-owned media: TV companies “RTR Planet”, “Russia 24” and “TV-Center”. Under the verdict of new individuals, whom the EU considers “responsible for cases in Ukraine.” How to implement the new restrictive measures?
Almost two months passed between the fifth EU sanctions package and the sixth, the pace was clearly delayed. Only the oil embargo has been negotiated since the end of April. Europeans available. For example, the ability to buy Russian oil through third countries and extend concessions for countries for several years. Complaints about large sums for the private economy, So, the new sanctions package is the reference grade of oil met at around $124 per barrel. I have seen and predicted with figures of 150-180 dollars.
For households in Europe, utility prices are breaking records. Average annual inflation in the euro area exceeded 8%, within countries – 10%. A debt crisis also loomed on the horizon, primarily for over-credited economies such as Greece or Italy.
And in the West, some have already started talking about the close limit of detention. Complaints about the fact that they do not work, more and more often. Notable was the speech of Croatian President Zoran Milanovic, who declaredthat Vladimir Putin will smile a little at the new sanctions, since so far restrictive actions have not caused a shutdown of the ruble and the economy, Russian oil and gas, they say, will still be redirected to other places.
The share of oil and gas revenues of the state budget last year was 36% (9 trillion out of 25.3 trillion rubles). Due to the embargo, according to Bloomberg, our country lost $22 billion (about 1.3 trillion rubles). Approximately 14% of all oil and gas revenues. This is not critical, especially given the reserve fund of about 13 trillion rubles. Previously the same Bloomberg predicted that in the expected year Russia would earn up to $270 billion from energy exports alone.
The main goal declared by the European bureaucrats is “stopping the financing of the Russian military machine.” But she keeps going and is not even going to stop. And here fate follows that all previous sanctions precedents in the current case are not suitable as an exemplary model. Not North Korean, not Iranian, not Cuban. Moreover, in none of the cases, as in the vast majority of other sanctions wars, do they use their own goals. In the Russian case, the economic effect was unexpected, both for the sanctioners themselves and for many Russian officials.
In the context of the destabilization of energy markets, the Russian treasury, or, in the view of the European commissioners, the “Russian war machine”, began to receive money not less, but more. Russia’s income from energy exports doubled, reaching only 44 billion euros in trade with the EU, and taking into account other interests, even with a decrease of more than 35% and a reduction in volume, 63 billion euros. Russia’s trade surplus set to hit record soon, British magazine complains Economist. The balance of payments in January-April has already reached a record surplus of $95.8 billion, three and a half times more than a year ago. And by the end of the year, it can accept $250 billion against $120 billion in the past. The ruble has been updated to the level of 2018. The domestic debt of the country does not exceed 20% of GDP, while in the US it is already 130%.
At the same time, these macroeconomic indicators should not become a reason for complacency and capricious moods – they say that only better is sent to us. After all, we used to be proud of the canceled macroeconomic indicators, which, however, do not reflect all the complexities of the domestic economy. The low public debt and the highest trade surplus did not automatically transform in practice into an increase in the welfare of households and the incomes of the incomes of small and medium-sized private businesses.
And now we need to take into account that, firstly, the effect of the oil embargo will be delayed. Identification of not only a reduction in income, but also a subsequent decrease in income, excess costs for reconfiguring logistics, building “gray” distribution schemes, and for the conservation of wells. Secondly, the current strengthening of the ruble largely depends on a sharp reduction in imports – only if successful by 50%. At the end of the year, forecasts Central Bank, it will fall by 32-36%.
We do not yet know how this will affect the economy depending on imports – taking into account all cases of the production cycle – by 70% or more. It is not clear that import substitution will take place where it is generally possible in the foreseeable future. It is even more difficult to estimate what technological even semi-isolation will cost due to observations that suggest a long-term effect.
Many believe that with the money currently available in abundance, it is possible to solve any problem. According to a quote from Karl Marx, “provide 10%, and agree to every application; at 50% positively ready to break his head; at 300% there are no cases in which he would not risk, at least under pain of the gallows. But, first, Marx quoted the English publicist Thomas Joseph Dunning, who wrote about the slave trade, which is now a thing of the past. Secondly, the current “sanctions case” is also unique due to the unprecedented willingness, including by significant corporations, to refuse to do business with Russia at the cost of incurring losses, while it was previously estimated that greed is not certain to do so. So relax early. Or, to paraphrase one well-known figure, “there is money, but you hold on.”