this post was submitted on 26 Feb 2025

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179

Why Putin is finally negotiating (www.politico.eu)

submitted 4 months ago by perestroika@lemm.ee to c/world@lemmy.world

31 comments fedilink hide all child comments

"If fiscal expenses remain at their January levels throughout the remainder of the year, the NWF reserves could vanish in just three months. And even if they don’t — as is more likely — 2025 is probably the last year Moscow will be able to fully cover its fiscal deficit by tapping into those savings."

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[+] perestroika@lemm.ee 150 points 4 months ago* (last edited 6 days ago) (5 children)

[deleted]

[–] Buffalox@lemmy.world 58 points 4 months ago* (last edited 4 months ago) (2 children)

This pretty much nails the article.

But there are things the article doesn't mention, so it's even worse than that. Because the real estate market is on the brink of collapse.
And the financial institutions are not well bolstered, because they've been forced to lend money to the weapons industry, so the Russian state can buy weapons below cost price!
So if the real estate market collapses, the banks will collapse, and apart from the extreme economic slow down that causes, the weapons industry will simply not be able to make weapons for the Russian army!!!

It's all a house of cards, and there are many more fractures in the Russian economy than this, but this is the most obvious AFAIK.
As things are going, there is no if, It sems to be literally only a matter of time when the Russian economy will collapse. Some are guessing that it can't hold longer than until Mid summer. But Russia has this weird tradition, where people keep meeting for work, even if they haven't been paid for months?! This could possibly extend it a bit further.

The Kremlin has no plan D to finance its budget deficit

This key point is worth mentioning too IMO. Russia is out of options, because every aspect of their economy is stressed beyond sustainable limits already.

For the Kremlin, it thus looks like this year is set to be difficult on the fiscal front.

This gave me a chuckle, it's such an understatement.

[–] NaibofTabr@infosec.pub 36 points 4 months ago (1 children)

I think the inevitable outcome will be China buying up a lot of Russia's economy in the form of property, businesses, and access to natural resources.

[–] LegoBrickOnFire@jlai.lu 7 points 4 months ago (1 children)

Probably the US will do that too :)

[–] NaibofTabr@infosec.pub 8 points 4 months ago

Hmm, Trump might actually attempt it, but I think Russia in general is far more likely to sell to Chinese interests and accept a long-term Chinese presence.

[–] CoCo_Goldstein@lemmy.world 12 points 4 months ago (1 children)

Not mentioned in the article, but mentioned elsewhere - trains. Russia relies heavily on trains to move things. One part of train maintenance is the replacement of bearings. Russia can't manufacture bearings for its trains and it can't import them either because of sanctions. Russia has fewer and fewer operational trains and train cars. One very important thing that the trains haul is grain. There are reports that Russia could face starvation by the end of the year if it doesn't get its trains repaired because they will be unable to haul food to the cities. Russia doesn't have enough trucks and roads to replace the trains.

[–] Buffalox@lemmy.world 6 points 4 months ago (1 children)

I've heard a lot about Russia not being able to make good ball bearings, so I think you are right it will impact transportation especially by train.
Regarding food, Russia is also likely to have way below average harvest in 2025 for several crops. Because they can't import quality seeds, and have to make do with Russian seeds that have lower yields.
Note that this import is not restricted by embargo, because it's for basic food items which have exceptions. It's simply Russia themselves that prevent imports, probably because of lack of currency for imports.

So for sure prices of basic food items will go up in 2025, also more than inflation itself would require. And this is very likely to cause huge problems for especially pensioners and other low income households.
I don't think we will see widespread starvation, but shortages rising prices and possibly food stamps are very likely.

[–] CoCo_Goldstein@lemmy.world 5 points 4 months ago

probably because of lack of currency for imports

That makes sense. Russia is saving its money to pay smugglers to smuggle in weapons components.

[–] Fiivemacs@lemmy.ca 17 points 4 months ago

I wonder what will happen when trump just wire transfers multi trillions to russia from American accounts..

Like, is that reversible or how does that work.

[–] skillissuer@discuss.tchncs.de 16 points 4 months ago* (last edited 4 months ago)

not only money runs out, it's also some categories of military equipment. i mean, it's not like russia will run out of tanks entirely, because they still have ongoing production, but most of what goes to front are increasingly old rustboxes reanimated in tank factories - because it's faster than building new one, but that happens too.

according to perun, they'll start running out of tanks, ifvs, apcs, things of this type somewhere in 2025 - that is, storages will be emptied and any replacements would have to be new, which means that replacements will come something like 5x slower. it's a bit harder to say with artillery, because barrels have limited number of shots and it is known that barrels can be taken from towed guns to put them in self-propelled guns. but it's also bad, even if it means there's another year there

[–] WildPalmTree@lemmy.world 5 points 4 months ago (1 children)

There is always the good old money press.

[–] wewbull@feddit.uk 2 points 4 months ago (1 children)

borrowing from foreign lands is blocked.

So, no... There isn't. There's no source of capital to back new rubles, so it would devalue the ruble and drive inflation which is already 20+%.

[–] WildPalmTree@lemmy.world 1 points 4 months ago (1 children)

Of course it will drive inflation. But printing will be done.

[–] wewbull@feddit.uk 1 points 4 months ago (1 children)

Yes, but it's a desperate kamikaze act.

[–] WildPalmTree@lemmy.world 1 points 4 months ago

Always is...

[–] avidamoeba@lemmy.ca 4 points 4 months ago* (last edited 4 months ago) (1 children)

This only makes sense under the neoliberal assumptions that the financial side of the economy faithfully represents the real side. If they're really doing the whole hullabaloo with the banks, dipping into funds, I guess they also believe that and are practicing neoliberal economics. If the real economy doesn't suffer from lack of resources, and whatever they can't make can be important from say China in exchange of oil and gas, they can go like this until they run out of something, people, oil or gas, or China stops buying those and/or selling other goods to them. I'm not rooting for the Russians to keep their war effort going but I think looking at the financial side alone has mislead us before. For example when we were promised they're gonna buckle under the sanctions in short order.

[–] Tuuktuuk@sopuli.xyz 4 points 4 months ago

People keep repeating that we were promised the sanctions would have an almost immediate effect. Could someone tell me where that promise was made?

I don't think that was ever promised, really.

[–] Anarch157a@lemmy.dbzer0.com 127 points 4 months ago (1 children)

Basically, Fall of the Soviet Union 2.0. The west was able to outspend the ruskies until they croaked.

EU, please, keep up the pressure, break those murderous bastards in the Kremlin, don't let them win.

[–] suburban_hillbilly@lemmy.ml 88 points 4 months ago (1 children)

So right at the moment Putin is finally over a barrel, Trump has arrived to ~~bend over~~ swoop in to save the day.

[–] PugJesus@lemmy.world 90 points 4 months ago (1 children)

Europe has a chance to pull through for Ukraine.

I hope Europe does. Ukraine shouldn't have to pay for Americans' stupidity, credulity, and absurdity.

[–] wewbull@feddit.uk 3 points 4 months ago

Unfortunately Trump could completely undermine Europe by opening trade with Russia, financing them.

[–] HappySkullsplitter@lemmy.world 43 points 4 months ago

All this time money, effort, Ukrainian lives lost and property destroyed to get to this point just for Trump to swoop in and save... Russia

[–] wirebeads@lemmy.ca 26 points 4 months ago

Let Ukraine keep nailing them with EU and Canadian weapons. Fuck Putin and screw Trump for being raw dogged by Russia and actively destroying democracy.

[–] Bytemeister@lemmy.world 17 points 4 months ago (1 children)

Explains why trump was so desperate to make a "deal" too! That's his bonus uncle Vlad is burning in trenches.

[–] Geobloke@lemm.ee 2 points 4 months ago (1 children)

Can sanctions be over turned by executive action? If not how well republicans convince the choir that Russia has learned its lesson?

[–] wewbull@feddit.uk 3 points 4 months ago

That's a really important question.

Financial sanctions are administer by the department of the treasury, and export sanctions are under the department of commerce, both of which are executive departments.

So yes.