This is my first post in 2023 - so Happy New Year to everyone of my readers! As I try to do it myself, I'm wishing that everyone of us would remember that no matter what happens around us in this crazy world, personally we all have a lot of positive things to look forward to in 2023 - so may all, or at least most of them come true for you and for the people close to you.
My apologies for the long radio silence. It was a Holiday season, of course, but as things and events started to pile up, it became more difficult to choose what to focus on in the next write-up. But one needs to return somewhere, so this article that started as a comment on Edward Slavsquat's recent post about Sergey Glazyev's evaluation of the current situation in Russia, but due to its length I decided that it better be posted as a separate entry on my blog with the link to Edward's post and vice versa.
Sergey Glazyev is a member of the Russian Academy of Sciences, professor of economics, he currently holds a position in Eurasian Economic Union responsible for developing closer economic ties between the member countries. He is also well known outside of Russia as a long time critic of the current economic course and the fiscal policies of the Russian Central Bank. Glazyev's recent article is the the harshest and the most direct accusation of the Russia's ruling elite for mishandling of the SMO (Special Military Operation) we have seen so far by the official of this level. There he says that moving into the "trench warfare" mode is detrimental for Russia (and Ukraine) as it plays into American/British plans to turn this war into a war of attrition where slowly but surely this bleeding wound would weaken Russia's economy and make society in general more and more hostile toward ruling class eventually destabilizing situation in the country. This article is yet another sign that Russia's political boat is being actively rocked. But Glazyev's opinion, that structure of the Russian political and socio-economic system needs to change rapidly or face the consequences, is expressed by many other prominent people, including pro-Kremlin philosopher Alexander Dugin. According to Glazyev and countless others if things will stay BAU (business as usual) the country is facing a strong potential for disintegration becoming a Duchy of Moscow and a miriad of other smaller states, thus falling 600 years back in history. But I don't think that Glazyev is an agent of NATO/CIA/MI-6/MOSAD or whomever, as some have suggested, because he essentially criticizes Putin for the system he created. He just uses his strong and very respected in certain circles opinion to point out the critical nature of the situation that developed during the course of last year, but in reality since 2012, when Putin started his third term as a president. Big portion of his article analyzes Russian finances at a macro level. It does a good job, but takes a rather conservative approach at interpreting the data, as state official at his level should do. Well, I'm not constrained by officialdom, so let me just point you to some basic facts that weren't spelled out as much in the Glazyev's article. Btw, Glazyev's Telegram channel is under constant attack since this article was published, he claims. To protect the channel (his main communication tool) from being hacked and compromised his admin stopped accepting new members and is enacting other defensive measures. So it looks like his article was noticed and is "well" received.
But, back to the facts... It is well known in international finance circles that Russia was a donor of the international financial system since the early years of existence of Russian Federation that replaced USSR. It donated huge amounts of cash to the West over the years that amounted to over 3 trillion dollars between 1994 and 2021. But last year has brocken all the records in a spectacular way. Glazyev estimates that equivalent of around 500 billion US dollars left the country primarily in favor of "unfriendly jurisdictions", this is how Russian foreign affairs office defines the countries participating in sanctions against their country. However my calculations show even larger amounts were lost, frozen or became a dead weight, closer to 900 billion US dollars. Here is how they add-up:
- 300 billion dollars - widely claimed by multiple sources approximately half of Russia's foreign currency and gold reserves that were held on accounts in the countries of the Western coalition got frozen after the start of the SMO on February 24, 2022.
- 19 billion dollars - foreign currency deposits by the citizens of Russian Federation on the bank accounts inside of the Western jurisdictions were also frozen based on one characteristic - account was opened using a Russian passport.
- capital flight - there is no official number for 2022 yet, but according to the CB of Russia total amount of capital estimated to leave the country by the end of year was 251 billion.
- and finally the number that is frequently missed in calculations but constitutes a significant portion of how Russia is being stripped of its earnings by the Russian natural resource based oligarchies, including formally state owned. By government's decree starting from the fourth quarter of 2022 Russia no longer discloses trade balance details. Interesting decision. Do they have anything to hide from the Russian people? Apparently they do... Despite huge discounts (30% - 40%) selling Russian natural resources abroad because of the sanctions war, Russian export in 2022 has grown 25% YOY (year-over-year) and by the end of September has shown 251 billion dollars in trade surplus. Assuming that trade patterns were retained until the end of the year, total trade surplus was 335 billion dollars in 2022. But isn't trade surplus good for the economy, you may argue? Not in this case. Since Russia is strongly restricted by the West on the kinds of things it is allowed to buy, specifically electronics, complex machinery, advanced chemicals and materials, this trade surplus means that money accumulated for selling prescious resources in exchange for fiat currencies simply became an economic dead weight, that Russia can't use for much and especially its own development. It sits on foreign bank accounts and can be frozen or money there simply stolen at any given moment.
So, let's do a simple math operation: 300 + 19 + 251 + 335 = 905 billion dollars, or almost 1 trillion dollars in enemy support during ongoing war or about half of Russia's GDP for one year. This is really unprecedented in history. I may be wrong, but if you know an example in history where one warring party was financing the other one to such an extent - just let me know.
So let me make some observations based on the facts presented above:
- Compared to presented numbers cost of Ukrainian war on both sides appears not that significant, after all. 900 billion would probably be sufficient to finance this war for another 10 years by NATO assuming they'll not run out of Ukrainians before they run out of money.
- Many people in Russia ask, how come, facing a clear act of high treason by the Russian financial authorities and specifically by Elvira Nabiullina, head of Russian CB, personally responsible for donating over 500 billion dollars to the enemy in just one year, she is not only not criminally charged, but was reappointed in April of 2022 to the next 5 year term as the head of the Bank of Russia (CB) by Putin and Duma? The only logical explanation is that it wasn't Putin or Russian Duma were the entities who appointed her to this position in a first place, so it isn't within their rights to fire her, let alone to initiate a criminal investigation.
- I also ask myself, considering Putin's huge efforts and success in financing and strengthening the Western coalition, what is he deserving more of - a trial by the international war crimes tribunal or a Congressional Gold Medal? I personally think the latter. What do you think?
- About Putin himself. Besides the fact recognized by a significant number of people within establishment and outside of it, inside and outside of Russia, that Putin has shown himself as highly unsuitable war time president without real power to change things, many are still trying to figure out, what is the deal with this guy? How can he be so inadequate to the situation which (presumably) he has initiated himself? Here are three working theories that I heard of:
1. Putin is so insulated from reality by his surrounding that he literally can't evaluate the real situation and makes a mistake in judgement after mistake.
2. Putin is the most successful ever recruited foreign spy. Recruited by the Western foreign intelligence when he served in East Germany during late eighties when Stasi has lost its grip and GDR was full of foreign spies and agents. Using unstable situation after the dissolution of USSR, previously unknown little man, lieutenant colonel in KGB, later deputy of a one term mayor of St. Petersburg, Sobchak, he was elevated within 3 years from a taxi driver (by Putin's own admission he was earning extra cash by using his car as a private taxi - today it would compare to working for Ãœber) to a president of still the largest and most resource rich country in the world. Since then he was very successful at playing a patriot on TV while sometimes covertly, but later more and more openly taking actions to waste and diminish Russia's potential.
3. "Tsar is not real!". Putin has succumbed to disease around 2010 and since then in order to retain stability it was decided to create a symbolic Putin, where president is played by a number of doubles including a primary one, while the country is ruled by a representative junta looking after interests of the key "families". Seemingly inconsistent political decisions from one to another are related to the fact that interests of one group sometimes win over and other groups' concerns become top consideration at different times. I would be disregarding this version right out of hand, but Putin's photos from late 1990s and 2000s compared to more recent ones show a lot of differences in facial features that are difficult to explain by simple aging or even use of Botox. There is actually one interesting video that shows Putin every year, between 2000 and 2018. Watching this video we can see that in 2004 man was very sick and some may say he was changed in 2005… Well, definitely he's got much better healthwise in 2006. Was it the same person we see in 2000? To me there is no evidence to the contrary. But I personally see a clear change between 2010 and the second half of 2011, where in 2011 I see the same man we know today as Putin, as not only I recognize the facial features, but the facial expressions, including constant slight smile that make it unmistakably the same person. Videos of the prior years don't leave the same impression on me. Watch the video and be the judge yourself. Let us know what you think in comments.
Which of 3 versions do you think is closer to reality? Or perhaps you have your own? Like Putin is the most benevolent ruler of the 21st century so far and a very decent human being. His sometimes inadequate in their mildness reactions to the clear aggression from the other side are related to his profound people loving nature and a classic liberal political views. He is the main hope for the world's future as no other world leader dared to openly stand up to the world's evil including current conflict with Ukraine taken over by satanic powers. But don't worry, his seeming weakness is just an appearance. The man is the most skilled 5D geopolitical chess player ever and he is a grand master of the evasive judo moves when offensive move by the opponent on tatami is used to turn the situation against the other party.
In any case, as events unfold I'll probably be coming back to some of the topics I touched upon above. I don't think that in 2023 Russia is capable of donating as much capital to the West as it did in 2022 - the vaults have been emptied. Was it the last divorce payment? Perhaps… But if current people at the helm of Russian finance - Siluanov, Nabiullina, Gref and Co. will stay in place, they're going to continue doing everything in their power not to allow real economic growth in that country.
Stay tuned.
The theory that Putin is a Western plant isnt that convincing because presumably in that case Putin wouldn't have done anything different than Yeltsin what so ever. The 90s disintegration of Russia would have just rolled on but the brakes were pumped a bit after Putin became head of state. The theory that present day Putin isnt even real is possible but I kinda feel like if he died the Russians would have just buried him and said so without any elaborate conspiracy to trick people into thinking he is still alive.
The theory that Putin simply doesn't have much real authority of his own seems the most likely imo. Like Yeltsin he is just a go between/middle man for the Oligarchy and silovaks and he can't do anything without some consensus between those groups. The only significant difference between him and Yeltsin is that Putin has more sympathy for the silovaks and doesn't always try to give the liberal Oligarchs everything they want.
A very good example of this dynamic is Russias reaction to the events in Ukraine in 2014-15. Russia moved very fast and competently to secure crimea but than went on to cock block the LNR/DNR militias from winning too much on the battlefield and observed the minsk agreements which Ukraine constantly violated. This seems schizo but viewed as a compromise between the Oligarchy and silovaks it makes sense. The silovaks got crimea but the Oligarchs got the minsk agreements and a cessation of active combat on unfavorable terms for the LNR/DNR.
This of course doesn't mean the silovaks are good, they are just not interested in totally destroying russia because they need russia alive and somewhat strong because Russia is their source of influence and they keep their ill gotten gains in Russia more or less. Basically they are patriotic parasites who want to be real partners of the West whereas the Oligarchs are true rootless Cosmopolitan parasites who would happily be outright vassals if they made a few more dollars that way. Putin imo has no power to make unilateral decisions at all and has to get these 2 groups to come to some sort of arrangement before any real change of course is made by the Russian state. Maybe the price for partial mobilization of the army was giving up Kherson or something like that?
Hi Stanley, this is an excellent post. I watched the Putin video, focusing on his ears. He has a weird ridge below the ear openings on both ears which is consistent throughout the videos. Another anomaly is above the ear opening on the left ear. It is the same in '04 and '18. Because of that I conclude it's the same guy. He did put a bit of weight on his jowls.
"Putin is the most benevolent ruler of the 21st century so far and a very decent human being." Did you mean that seriously??! He absolutely is not! He is on board with the genocidal covid shots knowing he is decimating his own people, and is pursuing the population enslavement agenda coming from the world ruling class.
Best, Jitka