High-level analysis of the War in Ukraine with detailed economic data

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High-level analysis of the War in Ukraine with detailed economic data

The EU will likely not completely transition to solar, wind, and alternative oil and gas sources for energy for at least another 7 to 10 years. It will take a significant amount of time to construct all of that infrastructure. In ten years, renewables will account for 30 percent of the world's electrical power generation and 80% in Europe. 50 percent from wind, solar, and hydropower and 25 percent from nuclear energy. The percentage of biomass will be around 5 percent.

Currently, Russia continues to sell energy to Europe. They are simply employing intermediaries who inflate the price and claim that the product originated from somewhere else. Private refiners such as Reliance Industries are gobbling up Russian oil and selling it to the EU. Soaring oil and gas prices have helped Russia more than triple its current account surplus to $96 billion, its largest in 28 years. Russia has a current account surplus of $95.8 billion in the first four months of 2022, central bank data shows. That's more than triple the $27.5 billion from the same span last year. Export volume has rebounded to levels seen before Russia invaded Ukraine. In April, Russian oil exports climbed by 620,000 barrels per day from the prior month to 8.1 million, back to their January and February average.

Russian oil export revenue is up 50% since the start of 2022. Kyiv has accused the EU of funding Putin's war machine by continuing to import Russian energy. The EU has spent approximately $58 billion on Russian energy since Putin announced the onset of Russia's so-called "special military operation" in Ukraine in late February, according to the Center for Research on Energy and Clean Air. Revenue from oil and gas sales — as well as Moscow's strict capital controls — has helped prop up Russia's ruble, which has become the world's top-performing currency against the dollar.

In the meantime, Ukraine's GDP has declined by around 40% in three months. Western Ukraine is neither industrially nor agriculturally productive. Expect them to be much poorer than they are now, as they will lose the industrial foundation of the East and maybe the agricultural base of the center, unless the EU is able to bring industries there after the conflict (I assume these regions will not be under any form of Russian influence).

Economy is a crucial part in warfare. If the economy of Ukraine crumbles. Its combat effectiveness will be substantially degraded. Economically, Ukraine is surviving, but only barely. The sanctions on Russia that are expected to cause a less than 7% contraction in GDP compare rather unfavorably to the 45-50% GDP collapse Ukraine is facing. The Black Sea blockade of Ukraine’s ports—Mariupol, Odesa, Kherson, and others—by Russia’s navy is preventing both the import of fuels to power the agricultural sector, and also the export of grain and other Ukrainian products. The inability to export is costing Ukraine’s economy $170 million per day. Meanwhile, Russia is targeting Ukrainian fuel storages, grain silos, and agricultural equipment warehouses, damaging already tattered supply chains. The power sector is facing default because so few Ukrainian citizens and companies are able to pay their electricity bills.

Not only is May a critical agricultural month, but it is when Naftogaz usually starts buying natural gas to store it for the cold Ukrainian winter. The state-owned energy giant was already in bad shape before the invasion, with the CEO asking the Ukrainian government for a $4.6 billion bailout in September 2021. With very tight gas markets and no funds, it is unclear how the country can prepare for winter, when temperatures can fall to below 20 degrees Fahrenheit. Adding to the prospect of a tragic 2022-2023 winter, most of Ukraine’s coal mines are in the Donbas, where Russia’s offensive continues.

Ukraine went into the war in good shape, with its economy growing at an annualized quarter-on-quarter pace of almost 7%; strong prices for its exports of grain, iron and steel; a well-regulated banking industry and a government deficit of less than 3% of GDP last year. Its debt stood at just under 50% of GDP, a number that many finance ministers can only dream of. An impressively digitized tax and benefits system means that revenues are still coming in smoothly from the parts of the economy that are still functioning. Pensions and government salaries are all still being paid, even in areas that are now under Russian occupation, thanks to resilient digital systems and a surprisingly unscathed internet. Most businesses, for now, are still paying their employees, even if they cannot operate as normal, or at all.

Recent reports that 25,000-30,000 are returning daily to Ukraine from abroad are encouraging, but Ukraine faced a brain drain problem before the invasion. The poorest country in Europe, many citizens were already trying to leave. Before the war, Ukrainians were the third largest immigrant population in the E.U., behind only Morocco and Turkey. Now, the International Labor Agency estimates that 4.8 million jobs have been lost in Ukraine, which will rise to seven million if the war continues. And after many months of war, children will have settled in new schools abroad, mothers will be integrating in their new worlds, and both will be waiting for their husbands and fathers to join them. Some will return to Ukraine, of course, but many will prioritize their family’s comfort and children’s opportunities over the calls of patriotism.

They are now losing more than 500 soldiers every day. Over a quarter of Ukraine's armed forces and an area larger than England have been lost. Russian soldiers are advancing from the territory surrounding the besieged city of Severodonetsk and crossing the few captured bridges.

Bottom line, Russia is going to be the leading global food power, along with the leading hydrocarbon energy power (largest producer of oil, gas and coal combined), for a few years. Look for the Ruble to climb in the 40 range vs the US$ by the end of the year, further appreciating by 25%-50% and solidifying its position as a "serious", commodities-backed stable currency. Russia is already the world's biggest wheat exporter. It's going to take over close to half of Ukraine's production, and in addition, Ukraine is also dependent on Russian fuel and fertilizer for its production, and is now deprived of access to Black Sea ports for its exports to Africa and Asia.

Biden’s proxy war in Ukraine has been handled with characteristic incompetence. All these sanctions will slowly crumble over the next few months as Western companies only care about money. Russia and China appear to have been planning for these events for some time and are responding swiftly. Libya is closing the majority of its oil fields. This means that Libya is producing virtually no oil, putting more pressure on an already strained oil market.

US authorities appear to believe that Russia's invasion of Ukraine was the trump card. This was meant to result in: Russia invades -> Russian military becomes bogged down -> Russian military repeats Afghanistan -> People become dissatisfied with Putin -> Putin undergoes a color revolution -> Putin is replaced by a hand-selected politician who dismantles Russia. Officials were originally impressed by the willingness of corporations such as BP Plc and McDonald's Corp. to suddenly "self-sanction" and sell assets at fire-sale rates. However, the government was caught off guard by the possible knock-on implications of the companies' departures, including supply chain bottlenecks and uninsurable grain shipments, according to individuals involved with internal deliberations.

As a result of the adverse consequences of sanctions, fuel and food prices are now rising for the rest of the world. Three months have passed since the West launched its economic war against Russia, and things are not going as planned. On the contrary, the situation is really dire. Russia has no trouble finding alternate markets for its energy, with oil and gas shipments to China increasing by more than 50 percent year-over-year. Russia maintains stockpiles of key products to maintain its economy, but they will be depleted over time.

The Russian president has played a long game from the beginning, waiting for the international alliance against him to disintegrate. The Kremlin believes that Russia has a higher economic pain threshold than the West, and it is likely correct. I have been saying this for some time. Much of our ruling elite are 3rd-4th generation brats. No one in charge of anything now got there due to their brilliance and competence as a leader.

It is only a matter of time before the United States suffers additional collateral damage from the sanctions. The path to $10/gallon gasoline will result in severe hardship in the United States. Gas prices are already so high that a police department in one Michigan county has "blown over their gasoline budget" and will no longer respond personally to every 911 call. Due to the Ruble's 5-year high versus the U.S. dollar and even greater strength versus the Euro, I believe Russians will be the least exposed to inflation of any country in the world lol

Putin believes that the next world order, which is currently taking shape, will be comprised of powerful independent states like in the past. Those who do not follow this road will continue to exist as colonies without rights. Putin also stated that modern sovereignty can not be restricted. Everything is in order; either you are sovereign over your judgments, or you are not. Putin once more called for the nationalization of Russian elites, forcing large industry to choose between staying with Russia or risking all in the West. He said the USA can steal other people's money at any moment when they don't like something. He also said Russia will not go for the closure of the economy and will not strive for complete autarky; cooperation with countries pursuing an independent policy will be increased. He says the key tasks are the preservation of political and economic sovereignty.

Russia will likely not be a major player in the future if they do not invest in their people. However, the fact that the world is closing in on them may provide some motivation. Additionally, they only have a decade's worth of energy resources to sell.

The embedded corruption is a huge problem in Russia that not even Putin can fix. Enterprises cannot rely on the rule of law to protect their transactions or prevent attempts to extort or bribe them. Approximately 19.2 million Russians live below the national poverty line. Putin’s supposedly transformative national spending projects worth an eye-watering $390bn have largely failed to materialize. His promises of economic modernization and raised living standards must be set against a consecutive five-year fall in real wages and cuts to state pensions. Mostly, this is a result of American sanctions in 2014 after they annexed Crimea from Ukraine.

The slow pace of progress in the implementation of the national projects led Putin to chew out deputies on live TV and has fueled tension between the various branches of government. The Kremlin has put a lot of stock in the national projects, which is the state's leading investment program, but critics say not enough attention has been paid to improving the business environment, and state-led investment by itself will not be enough to spur growth. The program may increase Russia’s economic potential by 0.5 percent, the International Monetary Fund said. As I have said before, Putin is increasingly leaving the apolitical parts of the economy to the state apparatus to run, where market forces and the rule of law are supposed to apply, but he keeps control over those parts of the economy where the state makes and spends the most money, and where only his personal rules of the game apply. His state capitalism alternative is probably founded on a belief that the rule of law is insufficient to stop corruption in Russia – or at least it can’t be put in place fast enough for him to use it as a way of transforming the country.

In times of globalist laissez-faire, it is easier for nations to be small and independent. They can import what they need and focus on one or two key exports, or become a tourist destination or tax haven with free commerce. As we near the end of free trade and enter a new period of embargoes, scarcity, and protectionism, it will become increasingly difficult for tiny nations to maintain their independence. To varying degrees, they will be swallowed by stronger nations that will not hesitate to expand their empire. As a result of resource scarcity, Canada was conquered by the United States and much of East Asia was annexed by China in the Fallout video game franchise.

Nigeria was slated to become the first nation to ground flights on Monday, as soaring aviation fuel prices have rendered the industry unprofitable. That, however, was abandoned at the eleventh hour. Dollar shortages in Nigeria and a weakening local currency have exacerbated the sector's issues, which are compounded by the countrywide problems of double-digit inflation, sluggish growth, and rising unemployment and insecurity.

Who knows what Putin's plan is...

Western media has been continuously wrong and stupid.


I doubt the Russians truly intended to seize the Donbas region within a few days. This was the hope, but the United States and NATO have invested substantial resources in Ukraine. There was therefore always a backup plan. The Russians are currently advancing with stronger artillery and UAVs. They are essentially removing Ukrainians from the front line from fifty kilometers away. Then, packing everything up and advancing. Therefore, it is a very gradual procedure with little Russian casualties. Apparently, the Ukrainians' morale is deteriorating and their economy is in danger of imploding. I estimate a few more months until a peace agreement and compromise are reached.

Before predicting the Russian position in ten years, I believe it is necessary to examine their existing state of affairs and future intentions. The Kremlin is painfully aware that it must restore GDP and income growth or social unrest will continue to escalate. According to a report by The Times, the administration has prepared a repackaging of the national projects initiative. The national initiatives have been repackaged, renamed, and divided down into constituent parts. The government has invited specialists such as German Gref, CEO of Sber and architect of Russia's first economic reform program in 2000, to help to its plan to improve the economy and business environment based on the "change and disrupt" approach.

Putin enlisted Gref, an academic, shortly after assuming the presidency in 2000 to draft changes dubbed "the Gref Plan" that initiated the process of restructuring the Russian economy. Despite being unpopular with the elite at the time, Putin's personal influence enabled the plan to implement the first wave of improvements, but it lost momentum after a few years.

Currently, the government is striving to relaunch the reforms. New Social Contract, Client-Oriented State, Aggressive Infrastructure Development, New High-Tech Economy, and National Innovation System relate to five of the twelve tasks in the national projects for which teams have been formed. For each segment, a working group led by a specialized vice-premier is responsible. According to The Bell, the plan's materials are replete with technological concepts. In parentheses, the name of the kick-off meeting is "kick-off" (a term taken from English).

One objective is the reform of law enforcement and the judicial system to enhance confidence and the business climate. One of Russia's greatest impediments to quicker economic growth is the fact that businesspeople lack confidence in the courts and that property rights remain inadequate. The result is that successful businesspeople are extremely reluctant to spend and instead take a defensive stance to safeguard their present enterprises rather than expansionist stances to increase their businesses. This mentality operates as a growth inhibitor, and once a business reaches a scale where the owner can make a comfortable living, it ceases to expand.

A further objective of the revamped national projects programme is to reduce the state's share of the economy while simultaneously utilizing the potential of state-owned companies to "accelerate digital development" in an effort to make Russia hospitable to start-ups from throughout the Former Soviet Union (FSU).

The "National Innovation System" entails the creation of a conducive business environment for the development of technology and innovation. The blueprint documents obtained by The Bell reference the "model of Korean chaebols."

Aleksei Kudrin, the former Finance Minister and current chairman of the Audit Chamber, has been an ardent critic of the National Projects, often arguing that they are moving too slowly. Kudrin was one of the architects of the current program, but he has urged the Kremlin to tap more of its resources and divert more of its oil revenues into paying for the program: specifically, he has argued for raising the oil price threshold, after which oil tax revenues are siphoned off and sterilized in the National Welfare Fund (NWF), from $42 to $45, which would generate billions of dollars in additional budget revenue for investment.

Kudrin states that the majority of the national projects for which Putin issued a decree in May 2018 were not started until January 1, 2019. According to Kudrin, the implementation plans were not established until the end of 2019 and the crucial instructions were not added until the end of the year.

I can understand why so many nations desire their own sovereignty. The American leadership of the past three decades has been incredibly dumb. Afghanistan, Iraq, Libya, de-regulation, financial catastrophe, etc. America has dominated at the expense of all other nations. Want to get re-elected? Go drop some bombs on individuals who have been causing issues for your corporations. America is governed primarily by aging, avaricious Business people who could care less about anyone else. In America, you have *right* and *center-right* but there’s really no left like you see in Europe. They are only backing Ukraine to get rid of the Russian threat and get the oil and gas for themselves.

Russia might yet become a powerhouse for international shipping (from energy resources to transportation services), grain exports to processed food exports, vehicle manufacture by allowing foreign auto firms to construct their factories there, and so on. They are most likely about to refocus on developing countries. Indian, China and Africa have twice the populations of the Western world. In 10 years China is said to become the biggest economy in the world.

We'll have to wait and see how everything pans out. It’s pretty humorous to me to see Russians complain about foreign banks seizing their reserves and about sanctions seizing their properties/yachts when that pretty much happened by default mode against every single owner of a company that didn’t fully support Putin for the last three decades! It seems like Putin’s Russia is his playpen of supporters and dead people who didn’t get the memo to only support the guy, aka don’t try to coup d’etat because the secret police have your cellphones bugged, idiots.

In some capacity, this type of system is necessary in developing countries. The majority of people are simply too ignorant to make good decisions, and there is no "deep state" to right the ship. In Book Six of The Republic, Plato describes Socrates trying to get Adeimantus to see the flaws in democracy by comparing a society to a ship. Socrates asks: if you were heading out on a journey by sea, who would you ideally want to decide who was in charge of the vessel? Just anyone or people educated in the rules and demands of seafaring? The latter, of course, says Adeimantus, so why then, responds Socrates, do we keep thinking that any old person should be fit to judge who should be a ruler of a country?

Socrates’s point is that voting in an election is a skill, not a random intuition. And like any skill, it needs to be taught systematically to people. Letting the citizenry vote without an education is as irresponsible as putting them in charge of a trireme sailing to Samos in a storm.

Ancient Athens had painful experience of demagogues. For example, the louche figure of Alcibiades, a rich, charismatic, smooth-talking man who eroded basic freedoms and helped to push Athens to its disastrous military adventures in Sicily. Socrates knew how easily people seeking office could exploit our desire for easy answers. He asked us to imagine an election debate between two candidates, one who was like a doctor and the other who was like a sweet shop owner. The sweet shop owner would say of his rival:

Look, this person here has worked many evils on you. He hurts you, gives you bitter potions, and tells you not to eat and drink whatever you like. He’ll never serve you feasts of many and varied pleasant things like I will.

Socrates asks us to consider the audience response:

Do you think the doctor would be able to reply effectively? The true answer — "I cause you trouble, and go against your desires in order to help you" — would cause an uproar among the voters, don’t you think?

We have forgotten all about Socrates’s salient warnings against democracy. We have preferred to think of democracy as an unambiguous good – rather than a process that is only ever as effective as the education system that surrounds it. As a result, we have elected many sweet shop owners and very few doctors.

Democracy is a complete failure without the Republic understanding that the rules and laws must be there to prevent evils and abuses and corruption and pervasive of intents… I wish more people understood Socrates and philosophy!!! Should be like all types of tests questions concerning Socrates and democracies in histories… if you fail too many of the questions, your vote doesn’t count! Lol intelligence matters!

Probably the most important piece of information to look at when Judging Putin is how well the Russian people are doing?

The Russian economy is primarily directed by both the private sector and the state. As a member of the BRIC, Russia is currently experiencing accelerated growth within the economy with a chance of earning a place in the G7 economies. As of the 1990s, a large portion of the country’s industrial and agricultural sectors were privatized, but energy and military production remained with the state for the most part. As a result, the majority of Russian exports consisted of energy products as well as high-tech military equipment.

The effects of the global financial crisis of 2008 took a similar toll on the Russian economy, but only had short-term effects. Russia recovered after 2 years and has since experienced exponential economic growth and productivity due to aggressive and prompt actions from the government, providing Russia with one of the most profitable economies in the world. Additionally, unemployment reached an all-decade low during the recent Russian economic boom, which further implies that there is a slight growth in wages, but is also accompanied by a large worker shortage.

Apparently, they were importing Central Asians by the boatload... Between 2000 and 2008, disposable incomes more than doubled and climbed eightfold in monetary terms. Between 2000 and 2006, the volume of consumer borrowing multiplied by 45, fueling a boom in private consumption. The percentage of people living below the poverty level decreased from 30% in 2000 to 14% in 2008. In 2007, the World Bank announced that the Russian economy had attained unparalleled macroeconomic stability. Russia maintained exceptional economic discipline until October 2007, with budget surpluses in every year since 2000.

Between 2000 and 2012, real disposable income increased by 160 percent. In dollar terms, this represents a sevenfold rise in disposable earnings since the year 2000. During the same time span, unemployment and poverty fell by more than half, while self-reported life satisfaction among Russians increased significantly. This expansion was the result of the commodities boom of the 2000s, high oil prices, and cautious economic and budgetary policies. The World Bank rated Russia a high-income economy in 2013.

Currently, Russia has the fifteenth-highest patent application rate, the eighth-highest concentration of high-tech public enterprises such as internet and aerospace, and the third-highest graduation rate of scientists and engineers in the world....

One dollar = 36 hryvnia

Ukraine's central bank devalued the hryvnia currency by 25% against the U.S. dollar to help the country cope with the growing economic impact of the war with Russia. The devaluation comes a day after Ukraine asked its creditors for a two-year payment freeze on its international bonds in an attempt to focus its dwindling financial resources on repelling Russia.

Because of the effects of the war, Ukraine's economy is expected to contract in the range of 35-45% for 2022.

Ukraine has estimated the costs of the war combined with lower tax revenues has left a $5 billion-a-month fiscal shortfall - or 2.5% of pre-war GDP. Economists calculate that pushes the annual deficit to 25% of GDP, compared with just 3.5% before the conflict.

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