Recovery of Russian Economy as Western Lamestream Media Give Up on "Democracy"
Russian Economy
There are many contradictory narratives ongoing about the state of the Russian economy and I shall here present a negative assessment from the WSWS, and a more positive outlook (in line, by the way, with the IMF) from The Duran.
A recent article on World Socialist Web Site by Andrea Peters (Peters 02.11.2023) is bleak. It claims that key indices published since the start of 2023 show that key sections of Russian industry, the country’s treasury and masses of working people are in economic distress, perhaps explaining why the country’s Duma has recently passed a law ending the requirement that parliamentary representatives publicly declare their wealth.
[It is correct, by the way, that there has been a fall in the availability of statistics on many aspects of Russian industrial activity. This can be explained in part as a necessary defensive measure, hardly unusual in anyh war. But experts continue to accept the credibility of the many indices that are available and from which it is possible to deduce significant macro trends].
On the basis of official statistics (many of them already looking rather dated, as they do not reflect the extensive adaptation to new conditions which Russia undertook to counter the impacts of western sanctions) Peters concludes that the Kremlin has not overcome the impacts of western sanctions (an assertion that runs flatly counter to the predictions of the IMF that Russia will emerge from recession in 2023, see below) and the results of which are causing a rift between the Kremlin leadership and the working class. Yet Putin’s popularity rating is almost as high as it has ever been, and I would say that the most problematic rifts for Moscow have not been with its working class but with that part of Russia’s middle and upper classes who subscribe uncritically to western neoliberal ideology.
Peters centers the bulk of the analysis on auto manufacturing in Russia (which was indeed a major casualty of western sanctions) which declined by 59% in 2022. He bemoans both the departure of western companies and the reduction of employment through furloughs and conversions from full-time to part-time work. He sees nothing positive in measures that have required Russia to develop internal alternatives to its previous dependence (about 20%) on western expertise and western capital and to take ownership, therefore, of much more of its own wealth. He has nothing positive to say of subsequent evidence of partial recovery of the auto industry and deals with China (not enough for Peters who claims the new cars are more expensive and are offered only in three colors), and scoffs at government gifts of land to some of those who lost their jobs.
Peters cites an HSE analysis of government data that shows that real incomes in 2022 were 8 to 9% lower than they were in 2013, and takes issue with evidence that shows that poverty and unemployment levels are at historic lows in Russia, while inflation is falling. Peters notes that the fall in inflation (12% at its highest last year, but now projected, see below, to fall to as low 5% in 2023) is insufficient to ease the pain of higher prices - but this is precisely the same conundrum that is affecting the US and most European countries, perhaps even more than in Russia. The same may be said of Russia’s struggle to contain increases in utility bills. Peters attributes Russia’s utilities crisis to decaying infrastructure, failing to observe that precisely the same scale, or worse, in hikes of utility prices in the west are the result of grievously misjudged and counterpoductive western sanctions policies and that in the US many cities encounter grievous problems with polluted and insufficien t water).
Peter graciously conceds that the Russian government has resorted to subsidies to help the most distressed (and, the way, engaging in a vast swathe of programs of social welfare), failing to refer to similar and perhaps to similarly inadequate subsidy programs in the west. Peters decries the government’s decision not to increase the pensions of those of retirement age who continue to work but has nothing to say about multiple programs in the west whose purpose is to reduce the burden on western governments of either pension rates or pensions eligibility.
Other problems are discussed with equal disregard for context: one out of every five job-seekers is said to experience long searches to find new work; only a modest percentage of those under 35, make enough to be considered “middle class;” and 40% of Russians do not have enough savings to last even three months (Note, by contrast, this 2021 headline for the US: Over half of Americans have less than 3 months worth of emergency savings); an increase in crimes related to drug production; all this occurreing amidst Russia’s seventh year of population decline (Peters appears gloriously unaware that many European countries are experiencing equally problematic falls of population, including Italy, Spain, Finland, Hungary, Portugal Poland, Greece etc.).
Continuing to scrape the barrel to make things look as bad as they possibly can, Peters references Russia’s budget deficit of 2.2 percent of GDP - which is actually astoundingly good when contrasted with practically all western countries, and which Russia has no difficulty in keeping on top of through the issue of bonds. If this article by Peters passes muster as worthy of what should be one of the sharpest, left-wing critiques of this crisis-ridden world order, then it offers very little hope for intelligent analysis anywhere.
The Boomerang Impotence of Western Sanctions Policy
A Duran conversation between Christoforou and Mercouris today ((The Duran 02.11.23) notes, first of all, that the IMF report (IMF Russia)says that Russia may achieve economic growth in 2023, a view that is more optimistic than the Russian government itself which has anticipated a 1% contraction. What follows is largely a report of that conversation. Bloomberg, by contrast, has highlighted Russia’s $25bn deficit in January. But this is the result of a general fall in oil prices, nothing to do with the price caps, that negatively affects tax receipts from the oil and gas companies. There is also a fall in receipts of income tax and value-added tax receipts which is largely the product of a collapse in demand that took place last year (and which will probably correct itself in 2023). The biggest reason for the January deficit is because government spending has been very high, in part because of all the weapons production and in part because the Russian government has been increasing pensions and welfare benefits in its response to the challenge of a collapse in demand in 2022.
The January deficit is inconsequential; budget assessments need to be viewed in an annual time-frame. Russia has enormous reserves and these are growing. The size of the deficit will almost certainly fall during the course of the year, and it is easily affordable. Russia has just launched two successful bond sales and there is talk of negotiating a windfall loan from the fossil fuel industry. Bloomberg consistently reads the economic tea leaves from a Washington point of view. Russian officials themselves are becoming more optimistic, not less, and their most recent are beginning to fall into line with those of the IMF. Their earlier prediction of a 1% contraction is looking increasingly unlikely. There has been a small uptick in inflation and the underlying rate of inflation is probably around 5%. Oil production has remained stable through January and February at around 10 million barrels a day, to be followed by maybe half a million less in March (in coordination with OPEC+ efforts to deal with an overall glut in the market through production cuts).
Western media stories on Russia’s economy reflect a mixture of wishful thinking and[xenophonic?] distrust of Russian figures leading, in the case of Bloomberg, to extrapolate in an underinformed way on the basis of one month’s statistics, exaggerating their impact. Western media appear to be on a mission to protect the reputation of punitive western sanctions [incidentally, a weapon of war] even as more and more people are concluding that sanctions are not working against Russia and only hurting the west. Critics are finally noting that a lot of Russia’s oil and gas is headed to India,where it gets mixed up with other sources and some of it resold to the west, presumably undetected by western price cap police.
Neocons must be worried that with Russia in growth next year, there will be increasing calls for ditching the sanctions and they are trying, in desperate self-defense, to support anything they can find that suggests the sanctions may be working after all. There was an astonishing recent Bloomberg story about the original super-sanction last year - the freezing of supposedly $300bn of Russian Central Bank reserves - of which, as it turns out, the west has actually only been able to identify and local $36 billion (the rest was redomiciled in Russia where they were laundered through the sale of dollars and euros and corresponding purchases of rubles and yuan). Perhaps this explains why the EU is flagrantly stealing, in amazing abondonment of the pretence of due process, the assets of random Russian oligarchs, “Putin’s propagandists,” and anybody else they can think of, in an effort to make it seem that sanctions have constituted a serious contribution to helping Ukraine [in manouvers whose legality is highly questionable] when in fact the nine EU sanctions packages have been an utter failure, inflicting more damage on Europe than on Russia. All this is going on as the EU engages in its own circumventions around the price caps, and every day more it is becoming evident that the decision to seize Russia’s Central Bank assets and to cut Russia off from SWIFT was done without the consent and against the advice of the Federal Reserve and the West’s leading financial experts.
People who have lost their jobs and their businesses in the wake of this embarrassing debacle will not be pleased and will be pressing for deeper investigation. The Austrian government, leveraged into power in a sinister way, as is the case with the Czech Republic, are among those beginning to express doubts about all this but no European government has the courage to stand up against the runaway train of the sanctions myth. The momentum is too strong for them to resist. On a brighter note, perhaps, there are signs of increasing uphappiness in Germany. If there is to be a breaking point, therefore, it will probably be in Germany, the only place where the political strength exists to stop this train in its tracks, but at the moment we are not there yet. [Remember Germany! The country whose infrastructure the US sabotaged so as to boost US LNG exports and prevent the emergence of a strong German-Russian competitor to US hegemony). The expression of doubts in Austria may be indicative of an eventual likely change of mood in Germany.
Moldova
On Moldova, and the resignation of the pro-EU government, this is a country, somewhat like Ukraine, that is split between a pro-western faction, and a faction that would like reunification with Russia. The pro-western faction has been more successful in recent years in part because many Moldovans who live in the west have been allowed to vote in Moldovan elections. Arguably, the pro-western faction does not have majority support in Moldava itself. Over the past year there has been an economic crisis, and this has exacerbated Moldovan tensions. In other words, the political crisis has grown to the point that the pro-western and pro-Ukrainian government has been forced to resign. Zelenskiy, aware of the Moldavan crisis, aware of the use to him of Moldovan support for Ukraine, is trying to imply that the crisis is the responsibility of Russia. The story about a Russian missile flying over Moldova territory is probably fabricated in order to persuade the west to intervene in Moldova. The missile story is a distraction. The real story is one of political crisis in the face of economic crisis. Whether the west will allow Moldova to change course (towards Russia) we dont know, but there is the possibility that they may escalate their own regime-change efforts.
Takeaways from Mercouris Broadcast, Saturday February 11, 2023 (Mercouris 02.11.2023)
Mercouris considers that the scale of the earthquake disaster may be in part accounted for by the poor construction of many buildings, and that its consequences are exacerbated by the fragile state of Syria following the western-induced conflict from at least 2011 and by the western sanctions that are now impeding the delivery of aid to Syria.
Missile Strikes
The scale of Russian missile strikes on Ukraine (cruise and converted S-300 medium range, Iskander and other ballistic missiles, and large numbers of Geranium 2 drones) over the past one or two days is difficult to assess. Ukraine claims to have shot down 61 out of 71 cruise missiles. There is no corroboration for this and, as usual, it is likely that the figures for the interception of misilles are exaggerated. Ukraine has said in the past that it lacks the means to shoot down ballistic missiles, yet many of the missiles fired by Russia were ballistic. Mercouris doubts that the west generally has strong advantage in the interception of ballistic missiles and frankly doubts that western air defense has this capability. When Ukraine says it needs fighter jets to shoot down missiles, it is presumably referring to cruise missiles. The supply of western missile systems to Ukraine so far does not appear to have made the degree of difference that Ukraine expected.
Compared to the missile strikes that Russia started in October and continued sporadically through November and December and which primarily targeted Ukraine’s energy systems, the most recent strikes have targetted missile defense systems, industrial facilities, military warehouses, etc. Russia has not yet made an all-out effort to knock out Ukraine’s energy system. John Helmer has suggested that Russia is holding back on this, learning from the system’s weaknesses, degrading rather than extinguishing etc., until it launches a greater military offensive.A British media report even refers to the strikes as “reconnaissance.”
Drone Production, Air and Sea
The likelihood is that Russia meanwhile od perfecting its missiles and there are reports that Russia is building a large factory, in Russia, in cooperation with Iran, to build an adapted Geranium 2 drone which will be much faster, more powerful, and more difficult to shoot down, than its original. Production from this factory may appear on the battlefields in a matter of weeks rather than months. China has ordered 15,000 drones and Mercouris speculates that it may be involved with the new factory. He notes the impressive speed with which projects such as this involving Russia, or China or even North Korea (though there is no actual evidence of China or North Korea in this project) can be completed.
Russia has launched a water or sea-borne drone which attempted to strike a bridge or bridge complex in Odessa (which Russia has attempted to strike before, but with cruise missiles). This is the first time that Russia has used such a drone and perhaps it is still at the stage of understanding and controlling the use of this species of drone. Ukraine has previously employed a water borne drone, on naval vessels in Sebastapol, but was not very effective.
Targets that Russia will likely have in mind for the future are the heavy bridges across the Dnieper. Mercouris thinks it highly likely that at some point Russia will want to target these bridges, and the significance of the recent use of a water drone may have more to do with the Dnieper than with Odessa (possibly in combination with anti-ship and other missiles). In the context of this kind of speculation, Mercouris refers to a prediction from a British general that Russia will eventually launch offensives on both Zaporizhzia and Kharkiv.
The Battlefields
In Bakhmut, Mercouris confims that Russia is able to shell all major roads leading into Bakhmut city but that Krasnayagora, one of the villages north of Bakhmut, has not been fully captured by the Russians, as is also the case in a neighboring and bigger village close by. Both villages appear to have been effectively encircled and Ukrainian troops holding out there will soon be faced with the choice of staying or evacuating, although these decisions are taken in Kiev, not on the battlefield. Inside Bakhmut there is intense fighting, but it does seem Russian Wagner forces are edging closer to being in control of more than half of the city.
The siege continues. The time for an orderly retreat is probably past. At Chasov Yar, a small town to the west of Bakhmut, the Russians have reached the outskirts and are also moving on Sversk. Mercouris speculated that Russia may be preparing an encircling operation of the entire, larger Ukrainian force operating in this area. An article in the New York Times seems to be hinting that the eventual Russian plan might indeed be some kind of envelopment of Ukrainian forces in Donbass. It discusses the importance of the fighting near Vuhledar and Svatove-Kreminna area. Ukrainian sources have referred to a Russian attack here that was repelled. It is difficult to get a clear picture.
[I would guess we have Russian advances near Bakhmut, Svatove and Kreminna areas, and Vuhledar, but a Ukrainian stalling of Russian advances perhaps temporary, in Zaporizhzhia, all possibly supporting Prigozhin’s recent statement that it will take a couple of years before Russia can finally clear the Donbass of Ukrainian forces. He is a colorful character who once challenged Zelenskiy to a duel, and, referencing the Cervantes novel of Don Quixote, he has talked of advancing as far as La Mancha, surely a joke. So perhaps we should read the “two year” period in similar vein?. I am actually inclined to think that Prigozhin may either be trying to inject some realism into otherwise overexcited commentaries, or that he is bluffing in advance of a likely major Russian offensive].
Russia has gained a foothold in both the eastern and southern parts of Vuhledar. The New York Times article says that the capture of Vuhledar will severely damage Ukrainian defenses around Donestsk City, and open the way to Russia to capture southern Donetsk, clearing up roads and rails in this area and enhancing its capability for providing supply lines in the event of future offensives. In relation to Kupiansk-Svatove-Kreminna, Russia yesterday confirmed that another large village has been taken and that Russia is drawing increasingly close to Kupiansk. If Sversk is eventually encircled and captured then Russia will be close to strikes on Liman and Ukrainian forces around the Oskil river.
Weapons
We have had US admissions that the US provides Ukraine with intelligence and guidance when it uses its HIMARS missiles. There is less noise about HIMARS recently, possibly adding credibility to Russian claims that it has upgraded its short-range anti-missile systems and its Panzer and Tor gun and missile platforms. These have become increasingly successful at shooting down HIMARS missiles, and Russia claims to have taken out a significant number of the launchers. A military source told Mercouris even before HIMARS were delivered to Ukraine that these systems could only be used by Ukraine if the US was involved in intelligence and guidance.
There is a lot of recent western chatter about long-range missiles, with the US and Britain indicating they would have no problems about the use of missiles against Crimea. On the issue of fighter jets, there appears to be growing doubt in the west about sending these to Ukraine. Even a Guardian report today questions whether the British Typhoon jet should be sent.
Brian Berletic of New Atlas suggests that all this talk about weapons represents rather feeble attempts to try and bluff the Russians, to make Russia nervous.
There are so many questions swirling around just how many of these weapons any of the European countries actually have in their possession and that they could risk just giving away out of their modest stockpiles. None of these plans make much sense, they are probably unrealistic and this is probably well understood in the circles of power, and even perhaps among a few of the lamestream media commentators.
If it is a bluff, then it is a reckless and stupid one, one that Russia is likely to call. We have heard constant rumors about how Russia is running out o,f weapons of all kinds, of thousands of tanks being knocked out and the like, but in every respect Russian strength is seen to grow [and western propaganda less and less credible]. At its factory at Ormsk, one of two main sites of tank production, Russia has been refurbishing and producing new tanks at a feverish rate. It is probaby not especially impressed by the west’s weapons deliveries to Ukraine. At the least these are guaranteed to further convince Russia to ramp up its own weapons production capabilities even more enthusiastically, perhaps even motivating Russia to move further west than it might have otherwise considered.
Despite all the brave western talk there is, ever so slowly, a scaling down of western objectives, away from recapturing Crimea and the Donbass, and expressions of concern over making Putin even more irate than he already is. Biden’s comments on Ukraine in his union address were very brief, possibly because he cannot talk of victory any more, so he says as little as possible. In the meantime it does look as though Ukraine is running out of ammunition, is under increasing pressure all along the major fronts, and that the fighting in Bakhmut is approaching its end game.
Hersh, Nord Stream and the Lamestream Media
On the question of western media reporting of Seymour Hersh’s exposure of how the US sabotaged Nord Stream 1 and 2, Mercouris is concerned about the almost complete media blackout of this story in Europe and, to a slightly less extent, in the US as well. So the general public has not been told the truth. The Guardian, which once rightly lionized Seymour Hersh, has not yet published a single article on his Nord Stream reporting. If lamestream media want to say that Hersh is wrong, his sources unreliable, his methodology incorrect - although Mercouris finds him highly credible - then why not say so?
Why does this article have to be kep secret? Total silence is another crossing, another point, that marks the collapse of western claims to being “democratic”
An attempt in Britain to set up a meeting to discuss the implications, an event which might disrupt British support for Ukraine, has invoked warnings/threats, and British law enforcement authorities are not responding in the appropriate way.
The silencing of Hersh on Nord Stream is very ominous.