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The Russian economy is in dire straights. It is heavily dependent upon oil; and is now in recession.
Putin needs to deflect the attention of the Russian people away from the reality of increasing poverty, towards other things. For Putin such "other things" are almost exclusively wars - wars that Putin creates, or gets involved with; currently wars in Ukraine and in Syria.
But now he has the problem that wars cost money, and his reserve fund will run out in less than a year's time.
At the G20 summit this week Putin undoubtedly tried to do some deal whereby western sanctions would be removed in return for his "cooperation" on Syria. But no deal has been forthcoming, and arguments seem to be persisting at the UN over a resolution on Syria. Russia wants its own plans, and the west seems to be supporting the plans put forward by France. Putin is looking for a way out, but can't find one.
Some points in more detail -
Russia is very heavily dependent upon oil for its economic success or otherwise.
Here's How Dependent Russia's Economy Is On Oil And Gas
...In total, oil and gas comprised 68% of all Russian exports, with crude oil and petroleum products netting them almost four times as much revenue as from natural gas.
By way of comparison, in the US the figure is just 8%.
According to this article in bloomberg, Russia depends on oil revenue for 45% of its income.
Will Cheap Oil Choke the Russian Economy?
...knocking a potentially gaping hole in the national budget, which draws 45 percent of revenues from oil taxes.
Now consider the decline in oil prices over the past half-year - and recall that the Russian budget was originally based on an oil price of 110 dollars - a typical price just over a year ago -
And the impact of that decline on GDP. This chart is only up to 2014. I would expect negative growth - i.e. recession - now in later 2015
What does Putin do now?
His emergency reserve fund is declining rapidly. Most analysts think there will be nothing left of the 74 billion usd this time next year.
Does Putin pull out of the Donbass? Or at least pretend to pull out, at least removing western sanctions, and opening the road for credit?
Or does he create a Transdneistr in the Donbass - but this would only itself create more economic demands on the Kremlin's dwindling financial reserves.
Does he step up the war in Syria, and try and using it as a bargaining chip for the release of sanctions?
Putin's main problem is the oil price. And oil reserves are currently at record high levels.
US stockpiles are at record highs, and China is reported to be massively stockpiling oil while the price is low. Here Saudi stockpiles -
Putin's revenues have fallen through the roof. He is spending his reserves quite crazily.
Is there a risk that the Russian people will revolt at some point against his authoritarian rule?
Unlikely. Putin's support stems mostly in the rural communities, and among the uneducated of the Russian people.
Personally I see no way out for him. Except more of the same.
Brainwashing the Russian peasants - those in the rural communities, and those with low educations - to believe that all the problems are due to the west hating Russia.
The Russian economy will slowly collapse, but Putin will hang on via the "patriotic" angle that he - the dictator - who represents Russia, must be supported.
To add to his problems the current oil price is very close to a six year low. I think in August this year WT touched 37.75. And now it is near 40.
What does this all mean for the war in Ukraine? Support for Putin's lies have slowly eroded back home in Russia. Russia is more and more isolated.
And more people are blaming Putin for the problems, if not on tv, then amongst themselves. The war against Ukraine has reached a dead-end. Putin is looking for a way out; some political control over Ukraine - or at least - in the east through Kernes, and other Kremlin puppets which he will install in currently occupied Donetsk and Lugansk. As for Russia - I can see nothing but steady decline. Unless the oil price reverses significantly.
How much support does Putin have? Internationally it is from either communist dictatorships, or fascist dictatorships. Assad in Syria, China, Vietnam, Belarus, North Korea. Among western politicians, much of the same - the extreme right in France, the nutcase left in England - represented by Milne and Corbyn - and ulta-right and ultra-left in places like Italy and Greece. How much support remains for Putin in the Kremlin remains to be seen. But those with money in Russia must be very angry now.
Can Putin launch a further offensive in the Donbass?
Militarily it would be very risky now for him. I sense that any desire to fight amongst his Russian nutcase terrorists has long since disappeared. And many have left to go home, or to go to new wars - simply for the money. Furthermore, at the present time the ground in Ukraine is absolutely saturated. Massive amounts of water have fallen over the past month. Well well above average. The ground is sodden. Not conducive for a major military offensive.
And any offensive would not now be seen as "spontaneous" by the gullible western media. Even the idiots among the western press would likely see it for what it would be - a deliberate offensive on the part of Putin. So good bye to any softening of sanctions if he goes down this road.
Putin has serious problems. And that is only good for Ukraine. And for humanity in general.
Last edited by Nelson on Thu Nov 19, 2015 7:58 am; edited 1 time in total
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"...Our reserves volume [in 2015] will decrease by approximately 2.6 trillion rubles ($40.85 billion) - more than half," Siluanov said, according to TASS.
"This means that 2016 is the last year when we are able to spend our reserves that way. After that we will not have such resources," he warned.
... As of October 1, the [reserve] Fund was worth 4.67 trillion rubles ($70.51 billion).
Earlier this month, the Russian finance ministry said it spent 402.2 billion rubles ($6 billion) from its Reserve Fund to cover the budget deficit in September, double the amount spent in July and August combined.
Remember now that the oil price is actually lower still. But -
12 x 6 = 72. So in a year, 70 - 72 = nothing. September. Maybe earlier.
This from the Russian news propaganda site, Tass, itself!
Russia's reserve fund may total about $15 billion by end of 2016 — finance minister
Article dated Nov 13.
This also from Tass
Russia’s international reserves fall by $3.1 bln over one week
MOSCOW, November 12. /TASS/. Russia’s international reserves mostly comprising gold and foreign exchange declined by $3.1 billion over the week of October 30 to November 6 to $366.1 billion, the Central Bank of Russia said on Thursday.
[Presume spent supporting the ruble?]
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NEW YORK — Reuters
Published Wednesday, Nov. 18, 2015 12:40PM EST
Prices have recovered slightly, back above 40. For the moment.
“This week’s data point is unlikely going to relieve the selling pressure on the oil markets with U.S. stocks at record levels for this time of year and knocking on the all-time high set earlier in the year,” said ,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
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