Russia & Ukraine

https://oilprice.com/Geopolitics/In...ormation-Campaign-As-NATO-Gains-Strength.html

Russia Launches Disinformation Campaign As NATO Gains Strength
By The Jamestown Foundation - Mar 30, 2023, 12:00 PM CDT
  • NATO's enlargement through Finland's accession has prompted Russia to take desperate measures.
  • Russia has resorted to nuclear bluff, deploying tactical nuclear weapons in Belarus, and spreading disinformation by alleging risks of nuclear escalation from depleted uranium shells.
  • Russia's deteriorating strategic posture and outdated military capabilities mean that their attempts to counter NATO's growth may ultimately prove futile.
On March 23, the historic process of North Atlantic Treaty Organization (NATO) enlargement passed a critical milestone as Finnish President Sauli Niinistö signed into law legislation on accession to the Alliance approved by parliament. In response, the Kremlin merely expressed regret about this development and reiterated the absence of any threat from Russia to its North European neighbors (Rossiiskaya gazeta, March 16). The Russian Foreign Ministry described the accession, which will be finalized at the Vilnius summit in mid-July, as “counterproductive” and rushed without “proper public discussion” (RIA Novosti, March 23). This veiled moderation did not camouflage a major failure of Russian foreign policy, which for many decades had hoped to cultivate special relations with Finland, and the profound shift in the geo-strategic situation in Northern Europe caused by Russian President Vladimir Putin’s decision to invade Ukraine on February 24, 2022. The urge to deliver a more assertive response came clear in Putin’s announcement of the plan to deploy Russian tactical nuclear weapons in Belarus, where specialized storage could be constructed by July 1 (Svoboda, March 25).

Conventional countermeasures to the increased proximity of Russia to NATO—now, only separated by a mere 1.34 kilometers—were outlined by Russian Defense Minister Sergei Shoigu, who promised to form a new army corps in Karelia (Karelinform.ru, January 17). Furthermore, the headquarters for a new grouping will presumably be created in St. Petersburg, which is due to become the center of a new military district (RBC, December 21). These plans, however, are as detached from the reality of Russia’s deteriorating strategic posture as were the designs for a blitzkrieg aimed at capturing Kyiv and Odesa. The Russian army is suffering such heavy losses in the seemingly never-ending attacks on Ukrainian positions in Donbas that the units gathered through the mobilization at the end of last year are practically exhausted. Moreover, the new proposition for recruiting up to 400.000 contracted servicemen clashes with the deteriorating demographic situation within Russia and the deepening discontent in Russian society (Sibir Realii, March 15; see EDM, March 20).

Arming the new units imagined by Shoigu is next to impossible as the legacy T-54 and T-62 tanks from the old Soviet arsenals are presently being deployed to the combat zone (Topwar.ru, March 25). For its part, Ukraine is equipping its new brigades with modern armor, and Finland—in a move fitting for a new NATO member—has contributed several Leopard 2 main battle tanks to the pool gathered by the “tank coalition” (Izvestiya, March 23). Putin tried to belittle this development and promised to deploy three times more tanks than Ukraine; however, the Russian president’s boasting alone will not alter the shift in the balance of military capabilities (Meduza, March 25).

Concerned about the outcome of tank battles in late spring, the Russian top brass has resorted to spreading disinformation about the risk of radioactive contamination from the depleted uranium shells for the British Challenger 2 tanks delivered to Ukraine (Interfax, March 24). Putin picked up this issue in his concluding words at the meeting with Chinese President Xi Jinping, alleging a risk of nuclear escalation (Novayagazeta.eu, March 23). The Russian leader’s vague reference to “nuclear components” in such shells was ridiculed even by some “patriotic” bloggers (Topwar.ru, March 24). Yet, he opted to reiterate this false claim and used it as a pretext for the transportation of Russian nuclear weapons to Belarus (RIA Novosti, March 25).

Putin’s desire to wield nuclear instruments is driven by Russia’s growing shortage of conventional capabilities, which is denied by the Kremlin but has been exposed by the uncharacteristically feeble responses from the Russian high command to the NATO exercises Joint Warrior and Joint Viking in Norway and the Barents Sea, respectively (Barents Observer, March 22). The Northern Fleet can hardly muster any response, as one of its two modern frigates, the Admiral Kasatonov, is returning slowly after a year-long deployment to the Mediterranean. Additionally, its sister ship, the Admiral Gorshkov, is exercising in the Gulf of Oman, together with Chinese and Iranian ships (Severpost.ru, March 17). Russian fighter jets conduct occasional sorties in the direction of the NATO exercises, but Northern Europe’s airspace is effectively controlled by the newly integrated air forces of Denmark, Finland, Norway and Sweden (Kommersant, March 25). Russian combat planes may feel more confident over the Black Sea, where a US MQ-9 Reaper drone was forcefully intercepted on March 14; however, the ongoing NATO naval and air exercises of Sea Shield 2023 in Romania stand as a strong warning against further provocations (TASS, March 15).

Russia’s major concern in the Black Sea theater is Turkey, which also happens to have a say in approving the Finnish application for joining NATO and in delaying the progress of Sweden’s request (Kommersant, March 17; Izvestiya, March 18). Putin has already held six phone calls with Turkish President Recep Tayyip Erdogan this year, including most recently on March 25. Yet, according to official transcripts, neither NATO enlargement nor nuclear matters were ever touched upon (Kremlin.ru, March 25). The Syrian crisis usually provides a key theme for these conversations, and Shoigu discussed the rise in tensions there with Turkish Defense Minister Hulusi Akar over the phone last week (Interfax, March 22). Moscow seeks to dissuade Ankara from launching a new operation in Northern Syria aimed primarily at boosting Erdogan’s campaign in the presidential elections scheduled for May 14 (Nezavisimaya gazeta, March 23). Putin is keen to help his long-term partner in retaining his grasp on power, even if Turkey’s military modernization and export of modern weapon systems to Ukraine unnerve some Russian military planners (Rossiiskaya gazeta, March 8).

Turkey is the anchor of NATO’s strategic posture in the Black Sea region. Thus, Moscow is wary about any nuclear gestures in this high-risk theater. On the northern flank, where Finland will now make a solid contribution to the Alliance’s defense capabilities, Russia cannot risk an escalation of tensions by staging a nuclear demonstration (or indeed, a nuclear test) because its conventional forces are too weak. While Belarus may seem the most convenient place for Russian attempts at exploiting nuclear weapons for political propaganda, it will only undercut President Alyaksandr Lukashanka’s domestic standing and strengthen the cause of the Belarusian opposition. In this regard, Russia’s nuclear bluff is too transparent and does not warrant any response from NATO. However, it emphasizes the urgency of the need to supply Ukraine with arms and ammunition sufficient for executing a powerful and far-reaching spring offensive.

By the Jamestown Foundation
 
delete.jpg
 
upload_2023-3-30_16-32-0.png



Without firing a shot, President Joe Biden’s team and American allies are successfully waging an economic war against Russia, my analysis of data from the Kremlin and other sources shows.

Vladimir Putin’s economic muscle is fast withering even as his inept generals, demoralized conscripts, and mercenaries recruited from the Gulag fail to gain much ground against the scrappy Ukrainians with their flexible field tactics, superior intelligence gathering, and expanding arsenal of sophisticated American and European weapons.

Russia’s economy, never vibrant, is now in tatters. Russia is pretty much a one-note economy: Fossil fuel exports pay the bills. More than 75 percent of Russian exports are fossil fuels, chemicals, and other products made with fossil fuels.

That lack of diversity makes Russia vulnerable to smartly designed and rigorously enforced Western economic sanctions. The sophisticated sanctions drawn up by the Biden administration are proving far more effective than the sanctions imposed by previous administrations against various misbehaving countries, sanctions that were mostly cosmetic and easily sidestepped.

Ominously for Putin, Russian oil now sells for well below the world price of oil, another sign of effective economic sanctions.

The European Union has cut Russian oil imports from about 750,000 barrels per day to near zero. Europe’s replacement oil is coming largely from the Middle East, a boon to dictators there, but a tightening vice on the Kremlin pocketbook.

Europe has also weaned itself off cheap Russian natural gas, which Putin mistakenly thought gave him a cudgel with which to beat Europeans into closing their political eyes or at least looking the other way at his Ukraine invasion. Some more cynical experts asserted when the war started that Europe would never make these moves, but Europe has proven them wrong.

Comparing three prices for oil illustrates Putin’s revenue problem.

West Texas Intermediate, an American oil used to set benchmark prices, has plummeted more than 44 percent, from a high of $123.68 last year to $69.20 last Friday.

Brent crude, oil from beneath the Atlantic between Scotland and Norway, is selling at $73, down from $114 last June.

The price of Russian oil fell from $92.20 a barrel a year ago to $49.50 this month. That’s a 46 percent decline. Those figures come from the Kremlin Finance Ministry.

Since the war began, the ministry has cut back sharply on the release of information. Still, its statistical reports assert that the Russian economy is growing.

That’s hard to believe because of a 30 percent drop in Russian net exports—mostly fossil fuels—from a year ago.

But then it’s much easier to fudge or even outright lie about domestic economic numbers than those for imports and exports because data from other countries can be compared to Russian Finance Ministry reports.

Because of sanctions, Russian oil shipped on water by tanker is limited to $60 a barrel, well below the two benchmarks for crude. Actual Russian price: lower by more than $10 per barrel, based on the Kremlin’s own account.

The West can limit the price to $60 because seagoing tankers rely on maritime insurance companies that Western governments can make comply with their sanctions on Russia.

To get around this it is widely believed that Russia has been paying huge premiums to buy aging oil tankers. This will help Russia create a shadow fleet to, maybe, get around the $60 price cap. Savvy reporters atBloomberg, CNN, and The Washington Post are among those who sussed out the purchases of old tankers through fronts.

Russia no longer has oil buyers with strong finances. Its remaining overseas oil customers include Cuba, Egypt, North Korea, and Sri Lanka, all countries with little capacity to pay cash for imported oil.

The one bright spot for Putin is the oil he moves by pipeline to China and other neighbors on whom maritime sanctions have no effect. That’s almost certainly one of the topics that Putin raised when Chinese President Xi Jinping visited Moscow last week.

Putin has also driven some of the best minds out of his country, a costly brain drain that will further weaken government revenues, perhaps reduce revenue from cybercrimes, and hurt long-term economic growth. Ukraine also has a brain drain.

The Western oil companies with the technological skill to extract oil from the harsh Russian climate—including BP, ExxonMobil, and Shell—have all withdrawn from Russia, which will likely mean damage to Russian oil fields, pipelines, and refineries due to a lack of technical expertise.

Poor management of oil fields and equipment is an old story in Russia, which in the Soviet era relied on corporate spies in America to improve its petroleum technologies.

Because Western companies won’t sell Russia spare parts, its internal air travel network is shrinking. Many Russian jetliners were impounded overseas. Airbus and Boeing jets are being cannibalized for parts, which risks compromising flight safety.

Putin is also vulnerable because, despite almost as much land mass as America and China combined, the Russian economy is small. In 2021 Russia’s economic output, or gross domestic product, was less than $1.8 trillion, compared to $23.3 trillion for the United States.

California alone has a $3.4 trillion economy, almost twice the size of Russia’s but with only about a fourth as many people.

Russia’s economy is $4 trillion when measured using purchasing power parity, the most favorable way to compare Russia to the rest of the world. That’s still not much more economic output than California, which if it were a nation would have the world’s fourth-largest economy.

Russia’s ability to import is also weakened by the falling ruble, down 30 percent against the dollar since the war on Ukraine began in late February 2022. Computers, machinery, and vehicles account for more than 40 percent of Russian imports, items all needed to pursue the war that now cost much more at a time when money to buy these items is tighter than tight.

My analysis of the latest Russian Federation budget shows that spending in the first two months of this year was 59 percent greater than in the same period in 2022 and 90 percent more than in 2021. That hints at how much Russian economic activity has shifted to war.

At the same time, government revenues fell 28 percent and oil revenues fell 46 percent.

Rising spending and falling revenues aren’t sustainable, especially for a country that must sometimes borrow in foreign currencies, unlike the U.S., which has no trouble rolling over its debts and taking on more debt.

At some point, the Russian Federation’s fiscal mismatch, the falling ruble, and weak export revenues, along with revulsion at the war, have led to scattered demonstrations despite the Russian culture of coping with privation, queues, and government oppression.

To finance his war, Putin has been breaking into the national piggy bank. In a year, he has drawn down more than a fifth of the Russian sovereign wealth fund. In September 2021, it stood at 14 billion rubles, but it shrank to 11 billion rubles this month, which is less than $150 billion. For a country the size and population of Russia, that’s not a lot—even without a war.

In time, Putin will run out of economic bullets to buy war material—drones, missiles, and Wagner Group mercenaries. Every policy that forces Putin to spend down Russia’s sovereign wealth fund, constrains his revenue from exports, and makes technology and spare parts difficult to get is a smart way to stop his atrocities.
 
Well, right or wrong, I think this will turn into one more problem for Biden, because I doubt the WSJ will relegate this to the back-burner. They have quite the bully-pulpit when they want to. Obviously.

Putin can't face the truth. Russia is an economic train wreck and fading quickly.

WSJ Reporter’s Latest Piece Might Offer Clues to Why He Was Detained By Russia for Being a Spy
https://www.mediaite.com/print/the-...riter-was-detained-by-russia-for-being-a-spy/

Wall Street Journal reporter Evan Gershkovich was arrested in Russia on Tuesday under espionage charges. However, the reality very well could be that the Kremlin hated the facts he provided on Russia’s flailing national economy.

Russia’s Federal Security Service announced they detained Gershkovich in Yekaterinburg, claiming that he was “collecting information about one of the enterprises of the Russian military-industrial complex” while acting on the instructions of the United States. The Journal has denied the allegation against Gershkovich and demanded his immediate release.

The relationship between Russia and America has been tense since the invasion of Ukraine. However, Russia’s arrest of a U.S. correspondent marks a further escalation since this is the first time it has happened since the Cold War.

Gershkovich’s detainment follows the publication of “Russia’s Economy Is Starting to Come Undone,” an article he co-authored with Georgi Katnchev. The two explored Russia’s economic struggles and isolation since the Ukraine war started and the long-lasting impacts they will likely have.

“As the war continues into its second year and Western sanctions bite harder, Russia’s government revenue is being squeezed, and its economy has shifted to a lower-growth trajectory, likely for the long term,” the article states. “The country’s biggest exports, gas, and oil, have lost major customers. Government finances are strained. The ruble is down over 20 percent since November against the dollar. The labor force has shrunk as young people are sent to the front or flee the country over fears of being drafted. Uncertainty has curbed business investment.”

The report notes that Russia has been leaning increasingly on its economic relationship with China while being cut off from other international markets. With the hits Russia has taken to its energy revenue, it is now a question of how long the Russians can keep their economy afloat before it reaches the breaking point.

The International Monetary Fund has estimated that Russia’s potential growth rate — the rate at which it could grow without courting inflation — was around 3.5% before 2014, the year it seized Crimea from Ukraine. That has now fallen to around 1%, some economists say, as productivity declines and the economy becomes technologically backward and more isolated.

“For an economy like Russia, 1% is nothing; it’s not even a maintenance level,” said Ms. Prokopenko, the former central bank official.

The fall in exports, tight labor market and increased government spending are worsening inflation risks, the central bank said this month. Russia’s inflation was running at around 11% in February compared with that month last year. That rate will temporarily fall below 4% in the coming months, the central bank said, though that is because of the high comparison base of the post-invasion surge in prices last year. A number of other economic indicators will also temporarily improve in the coming months due to such base effects, economists say.

The country’s industry is in its worst labor crunch since records began in 1993, the Moscow-based Gaidar Institute for Economic Policy has said. The post-invasion brain drain and last fall’s 300,000-man military mobilization have resulted in around half of businesses facing worker shortages, according to the central bank. Locksmiths, welders and machine operators are in high demand.


The article goes on with further analysis that the Russian economy’s trajectory has shifted dramatically with limited chances of mitigating the damage. At the same time, it remains cut off from most of the world.
 
Putin can't face the truth. Russia is an economic train wreck and fading quickly.

WSJ Reporter’s Latest Piece Might Offer Clues to Why He Was Detained By Russia for Being a Spy
https://www.mediaite.com/print/the-...riter-was-detained-by-russia-for-being-a-spy/

Wall Street Journal reporter Evan Gershkovich was arrested in Russia on Tuesday under espionage charges. However, the reality very well could be that the Kremlin hated the facts he provided on Russia’s flailing national economy.

Russia’s Federal Security Service announced they detained Gershkovich in Yekaterinburg, claiming that he was “collecting information about one of the enterprises of the Russian military-industrial complex” while acting on the instructions of the United States. The Journal has denied the allegation against Gershkovich and demanded his immediate release.

The relationship between Russia and America has been tense since the invasion of Ukraine. However, Russia’s arrest of a U.S. correspondent marks a further escalation since this is the first time it has happened since the Cold War.

Gershkovich’s detainment follows the publication of “Russia’s Economy Is Starting to Come Undone,” an article he co-authored with Georgi Katnchev. The two explored Russia’s economic struggles and isolation since the Ukraine war started and the long-lasting impacts they will likely have.

“As the war continues into its second year and Western sanctions bite harder, Russia’s government revenue is being squeezed, and its economy has shifted to a lower-growth trajectory, likely for the long term,” the article states. “The country’s biggest exports, gas, and oil, have lost major customers. Government finances are strained. The ruble is down over 20 percent since November against the dollar. The labor force has shrunk as young people are sent to the front or flee the country over fears of being drafted. Uncertainty has curbed business investment.”

The report notes that Russia has been leaning increasingly on its economic relationship with China while being cut off from other international markets. With the hits Russia has taken to its energy revenue, it is now a question of how long the Russians can keep their economy afloat before it reaches the breaking point.

The International Monetary Fund has estimated that Russia’s potential growth rate — the rate at which it could grow without courting inflation — was around 3.5% before 2014, the year it seized Crimea from Ukraine. That has now fallen to around 1%, some economists say, as productivity declines and the economy becomes technologically backward and more isolated.

“For an economy like Russia, 1% is nothing; it’s not even a maintenance level,” said Ms. Prokopenko, the former central bank official.

The fall in exports, tight labor market and increased government spending are worsening inflation risks, the central bank said this month. Russia’s inflation was running at around 11% in February compared with that month last year. That rate will temporarily fall below 4% in the coming months, the central bank said, though that is because of the high comparison base of the post-invasion surge in prices last year. A number of other economic indicators will also temporarily improve in the coming months due to such base effects, economists say.

The country’s industry is in its worst labor crunch since records began in 1993, the Moscow-based Gaidar Institute for Economic Policy has said. The post-invasion brain drain and last fall’s 300,000-man military mobilization have resulted in around half of businesses facing worker shortages, according to the central bank. Locksmiths, welders and machine operators are in high demand.


The article goes on with further analysis that the Russian economy’s trajectory has shifted dramatically with limited chances of mitigating the damage. At the same time, it remains cut off from most of the world.

Putin doesn't want any fact-based economic summary which challenges his fake narrative.


Putin’s getting nervous about Russia’s sinking economy
https://finance.yahoo.com/news/putins-getting-nervous-about-russias-sinking-economy-201143630.html

Kremlinologists think it’s no coincidence that Russian authorities seized Wall Street Journal reporter Evan Gershkovich just a day after he co-authored a Journal story on how Russia’s economy is “starting to come undone.”

Russia says Gershkovich was spying, which the Journal adamantly denies. It’s safe to believe the Journal because Russia passed a law last year that basically criminalizes what journalists do: ask questions about things the government doesn’t want anybody to know about.

That law focuses on anybody spreading information about the Russian military, which may apply to Gershkovich because he was reportedly researching a story on the Wagner paramilitary group that’s part of Russia’s invasion force in Ukraine. But that’s just a pretext for Russian President Vladimir Putin to punish and silence one voice highlighting the economic price Russians are starting to pay for Putin’s disastrous invasion of Ukraine.

For several months after Russian forces invaded Ukraine last February, the Russian economy seemed resilient. A spike in energy prices boosted Russia’s oil and gas revenue, its largest source of funds. Deft maneuvers by the Russian Central Bank helped the country withstand tough sanctions imposed by the United States and other allies of Ukraine. Russian forces floundered in Ukraine, but that was due to poor military planning and execution, not sanctions.

Now, however, sanctions are finally beginning to strangle the Russian economy in ways that could set it back for years. Laura Solanko of the Bank of Finland recently described how Russia is undergoing “reverse industrialization” in which the military-industrial complex driven by war needs crowds out the consumer economy, as in Soviet times. “Russia is stuck ineluctably on a path to lower potential growth and a bleak economic future,” Solanko wrote on March 27.

On paper, Russia seems to be surviving. Official data show its economy shrank by 2.2% in 2022, with the International Monetary Fund (IMF) forecasting flat GDP growth in 2023. But Russia, never the most trustworthy data purveyor, has stopped publishing a variety of economic statistics, and some IMF critics have blasted the agency’s Russia forecast as naïve and wrong. The wonky debate matters because it gets to the question of whether sanctions are accomplishing anything or not.

In early March, Russian journalist Boris Grozovsky detailed a new Russian economy in which “all resources go to war” and “household goods are sacrificed.” Spending on consumption, he reported, fell by 49% in 2022, largely because there was nothing to buy. There’s been explosive growth in sectors related to defense production, but cars, furniture, and appliances have grown scarce as imports disappeared and the Russian economy pivoted toward materiel needed for the war.

Murmurs of discontent are seeping out of Russia itself. Aluminum magnate Oleg Deripaska said at a recent conference in Siberia that Russia will run out of money by 2024. He complained about new taxes on Russian businesses to help finance the war effort. Even Putin has acknowledged that “restrictions imposed on the Russian economy may indeed have a negative impact.”

Sanctions imposed after Russia invaded Ukraine in February 2022 aimed to isolate its financial system and restrict trade while leaving Russia’s energy exports more or less intact. Since Russia is one of the world’s largest exporters of oil and natural gas, the goal was to hurt Russia without causing a global energy shortage that would send prices soaring. That largely worked, but the scheme allowed Russia to continue earning huge amounts of energy revenue that helped finance the war.

Last December, the European Union banned most imports of Russian oil, while a U.S.-led group of large economies imposed a price cap of $60 per barrel on Russian oil. Those sanctions were novel and nobody was sure they’d work. Some Ukraine allies wanted a lower oil price cap that would reduce Russia’s oil revenues even more.

Energy markets remained calm after those moves went into effect, and in February a similar set of sanctions went into effect on refined Russian hydrocarbons such as diesel fuel. Russia is still exporting energy, but the sanctions do seem to be forcing costly workarounds in Russia’s energy exports and denting revenue. The allied nations could lower the price caps on Russian energy at any time, effectively tightening the sanctions.

Russia’s economic woes are intensifying as it seems to be running short of tanks, artillery, and other weapons vitally needed in Ukraine. The intent of sanctions is to make it progressively more difficult for Russia to sustain the war. Ukraine, of course, is suffering weapons shortages of its own and a sharp economic contraction, though billions in aid from the United States and other partners compensates for some of that.

The Journal piece, written by Gershkovich and Georgi Kantchev, catalogued Russia’s economic woes and its diminution into a kind of junior partner for China, whose economic assistance it depends on. The story described how sanctions prevent Russian airlines from obtaining spare parts and finance firms from updating software. New-car sales have plunged by 62% year-over-year. Investment in Russian oil and gas exploration is down 42%, which could lead to a long-term decline in Russia’s energy output.

That wasn’t the first story on Russia’s economic problems, but it was comprehensive and may have arrived just as Putin is feeling the rising heat of a failing war and a flatlining economy. Snatching Gershkovich on bogus charges probably reveals increasing desperation for Putin, yet it’s consistent with the bullying behavior of a dictator who has badly erred and blames the messengers. It won’t be the last of Putin’s aberrant behavior.
 
Hahaha.
Tony put me on block. He couldn't handle being proven wrong for the umpteenth time yesterday.
As always... case closed. :p
His decision is understandable, given, that he was called stupid, dumb, low IQ and safety in numbers.
 
Back
Top