Yale University has just released a study that claims that sanctions are having a profoundly negative effect on the Russian economy and that they should therefore be continued and strengthened. This begs the question of the survival of the Putin Administration if the average Russian finds themselves worse off despite what military action may deliver.
The study may be downloaded here:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4167193
Comment: The usual suspects have their hair on fire over the veracity of this report. My own opinion is that it may well be accurate today but in the longer term there is probably little from the West that cannot be replaced.
What support will Putin have for his SMO if the Russian economy implodes? Does the economy trump military successes?
“What support will Putin have for his SMO if the Russian economy implodes? Does the economy trump military successes?”
Can you have a sustainable military success if your economy is in the toilet ?
Can you even have a modern military if your technological sector lacks manufacturing tools, parts and qualified people ?
They absolutely can, in time, replace everything they need. But will they ?
If they were Germans, I would say definitely yes. They are not Germans however.
Also, they have a lot of problems to overcome.
They don’t have a resilient political system, have loads of corruption, highly educated people are leaving the country, they are waging a war with their neighbor, are semi-isolated with a diminishing list of friends and allies, have a lot of potential internal sources of trouble including separatism, and the list goes on.
It doesn’t look like they have thought this through and are putting a lot of faith in their own capabilities.
Yet this allegedly poor country is the one being strengthened while the west is dying on the vine.
Amazing how all these eggheads from Yale, Harvard, Eton etc are being made fools by those dastardly Russians.
It appears Putin believes Napoleon’s adage, “never interrupt your enemy when he is making a mistake.”
I agree with your assessment regarding the situation. Some how people are so invested in certain outcomes they can’t see the massive train coming their way. It is just mind boggling. Thanks
The UK economy has now officially shrunk by over 10%.
The biggest drop in 300 years. The second-biggest drop ever recorded for the UK.
But it is the Russian economy is tanking, as Boris Johnson (still UK Prime Minister, however hard it is to believe) has been telling us since March.
What you want to do is mentally go back to one of those awesome Sergio Leone Clint Eastwood movies, or possibly one of the Dirty Harry series, and picture this. One one side tens and tens of millions of millions of pauperized, nearly starving Russians with 7,000 or more nuclear weapons. On the other side an unshaven, short, unattractive guy in a green T-shirt, just after pumping iron for five minutes so his arms look manly and muscular. A cosmic voice, a lean mean dark silhouette in ten gallon hat whose shadow removes a cheroot from between his matinee-idol movie star lips, and you hear it say: Now you just have to ask yourself one question – am I feeling lucky?
Walrus,
This is the Sonnenfeld led piece discussed weeks ago. Russia is defeated(!), and a month after this report was put out is still defeated, and yet still hasn’t left Ukraine.
“Does the economy trump military successes?”
That’s a good question to ask the Germans. What will their economy look like once they’ve successfully destroyed their own middle class in an effort to sanction Russia into defeat?
Fred: At this stage the opinions of any Westerner opining on Russia must be taken with an enormous grain of salt. The Russians were going to run out of money and missiles months ago. Remember those idiotic claims?
This war is the most falsely reported and dubiously analyzed war in my lifetime.
Trust, but verify EVERYTHING.
Fred,
The German Conservative Christian party aligned with the Green party to voluntarily shutdown German nuclear electricity production and with the aid of former Chancellor Schroeder who is on the payroll of Gazprom, became completely dependent on Russian gas. This set the stage to where we are today. The Russian economy, just like the head-chopper supporting economies in Saudi Arabia and the Gulf countries has certainly profited from the run-up in oil & gas prices.
We normally think of such type of corruption happening here since our political system has been captured by oligarchic interests for several decades. But it goes to show that the Germans have succumbed too!
blue peacock,
so investing in the EU solar initiative in Africa might have been a bad idea? How about ‘green’ steel because CO2, like from those Dutch cows that need to be slaughtered (not to bankrupt the farmers so the land can be acquired cheap), is causing global warming; I mean ‘climate change’?
Yes, the Russian will find ways around a most sanctions, but they will still pay a price. In particularly the exclusion from the use of Dollars and Euros will hurt. That creates costs and inefficiency. There is a reason Iran wants sanctions gone. Russia has a better position due to their mutual enemy – USA, so they can get reduce the impact,
National Interest has a piece on work-arounds
https://nationalinterest.org/feature/have-western-sanctions-against-russia-failed-204354
Missing in sentence..
“a better position due to China and their mutual…”
Enduring Stalinism and a devastating war and then the descent into hell of the Yeltsin era gives resilience to a society. Otherwise, it would not have survived.
It will be interesting to observe: has this will to live, whatever the suffering endured, been passed on to the next generations?
I think it has. Being optimistic, I believe that they will even bounce back.
The fear of an economic collapse is particular to our artificial societies. Let’s not project this fear onto others.
I agree w/y. Russians are made of much stronger stuff then the citizens of western European socialist economies. BUT, if Ukraine forces Russia out of most of Ukraine, it will emerge as a different, diminished country. Continued sanctions will take their toll and refusal of the other world’s children to play with Russians will wear down on their society. “Who can I turn to, when no body needs me…? asked the song. China of course. But the Russians will find that the Chinese have not forgotten that Peter and Catherine took a lot of land that the Chinese believe is theirs. The Chinese are not Russia’s friends. I continue to believe that Russia simply can not afford to lose Ukraine. To lose it, they lose Russia. We are in act three of this horror. The Invasion, the Resistance, and the Stalemate, will be followed in October by …?
When you see the images of Xi and Putin together, Putin is obviously Xi’s bitch. Putin, and his bubbas, need to be beaten down. And, with the cooperation of our Eastern European allies, who have known the injustices of the Russian, Russia (no empire) must be carefully brought back into our sphere – together, ultimately, against China. (Perhaps it was all that acid :-/ )
A couple of Russian girls visit the the Russian replacement for McDonalds:
https://www.youtube.com/watch?v=y0qTrqTJtIs
They are not big fans of McDonalds but they say that the difference is mainly in ambiance and the food is pretty much the same.
If only western technological products and services were replaced as easily as just slapping a new brand name on a food chain.
They should visit a Lada factory next.
borko
Yes – the big question is how successful will Lada be at flipping over to Chinese made parts? Also – will the “McDonalds bootleg” as the girls call it manage to keep quality up or will quality slide over time?
“These Biden-selected statistics are then carelessly trumpeted across media and used by reams of well-meaning but careless experts in building out forecasts which are excessively, unrealistically favorable to the White House”
OK I changed a couple of the words in this extract from para 2 of the abstract, but my point is illustrated just as well with “Scholz” and “Bundestag” or numerous other combinations. This degree of PDS on display right at the outset, as well as what looks like 60% of the the authorship being of Polish extraction, leads me to suspect to what extent the report’s findings were determined before its commissioning. But this part (also from the abstract) is important:
“Looking ahead, there is no path out of economic oblivion for Russia as long as the allied countries remain unified in maintaining and increasing sanctions pressure against Russia..”
This seems to me the crucial point; who will crumble first, Russia or Germany. If it is the latter I’d expect the EU and NATO to sue for peace rather than risk busting the EU. We are certain the find out the answer some time in the next 6 months, but I always come back to the level of commitment to this war: From what I read, the Russian population generally believes Putin that the outcome of the SMO is an existential issue for Russia. This happens to accord with my own view. Putin may lose support as belts are tightened, but he is starting from a high base level. Can we say the same about the German people’s view of the war and prospects for Scholz’ popularity as German industry starts to shut down without the lifeblood of Russian gas?
Even if this report is lacking bias, I’d say it is near useless without a companion report on the short and medium-term prospects for the German economy. To paraphrase Mattis; your allies get a vote too.
Barbara Ann,
“who will crumble first”
Let me hazard a guess: no Yale professors will lose their jobs or a $ of income off being wrong. No will any of the named contributors. A whole lot of Europeans are going to see their standards of living drop like a rock. The really rich (to include investment funds) will be able to buy up more assets on the cheap. What the former are going to do about the latter, and the politicians that set the stage for it, is another matter.
BA,
In the realm of economics the situation to really watch is Emperor Xi’s CCP run state.
https://twitter.com/mkt_sentiment/status/1561340858921877504?s=21
Xi and his CCP politburo have expanded the size of their banking system relative to the size of their economy even beyond what Japan did in the late 80s before it imploded. Decades later Japan is still trying to get out of that morass.
There are reports of mortgage payment strikes where hapless speculators have stopped paying on their yet to be completed apartments. Some of the biggest property developers are essentially bankrupt and not paying the banks who extend and pretend. At some point Xi will have to bailout their banking system. What happens when that forces a devaluation of CNY?
The Russia story completely hinges on their war. If they’re unable to cow the Ukrainians or even worse they start losing ground things could get shaky to say the least.
Sam,
Some people think that Japan’s big mistake was signing the “Plaza Accord”. China’s leadership likes to brag that they will not make the same mistake.
JT
The Plaza Accord was to devalue USD vs JPY. That had nothing to do with the expansion and scale of their banking system. The problem that Xi has is similar. The size and scale of their banking system and the size of the recapitalization required. Funding even more construction only exacerbates the banking system problem. FDI is already declining and expecting more foreign capital to plug the hole considering growing political risk may not pan out. We can be certain they’ll attempt to postpone until not possible.
Sam,
The argument is that when JPY strengthened against USD Japan no longer had enough aggregate demand so Japan had to expand domestic credit and that expansion of domestic credit was not sustainable – thus ongoing banking crises.
Japan would have had to rebalance from export led growth to domestic led growth eventually but the the Chinese argue that the Plaza Accords hampered MITI’s ability to do it more effectively. Ironically the Chinese are trying to do such rebalancing right now and having a lot of trouble pulling it off.
James,
The Plaza Accord not only depreciated the US dollar against the Yen, but also against the Deutsche mark, French franc and the British pound. Neither the British nor the Germans or French had an excessively large banking system relative to the size of their economies and didn’t suffer a banking system underwater as in Japan. Just the real-estate on the grounds of the Imperial Palace in Tokyo was valued higher than all the real estate in California at the peak of their boom. Recall how the alliance between MITI and the keiretsu was supposedly the superior form and would lead Japan to global economic dominance. They were at that time the second largest global economy with many prognosticators suggesting they would overtake the US within a decade. Japanese banks had the largest share of the world’s Top 10 largest banks at that time.
The closest analogy is our own mortgage credit boom with NoDoc loans and other forms of leverage including CDS, CLOs. etc. In our case it was not just the banking system but also Wall St that fueled the credit boom. Goldman Sachs, Morgan Stanley, Citi, AIG and others were all bankrupt until the federal government & the Federal Reserve provided them all both explicit and implicit guarantees and unlimited liquidity. The Fed still has all the Maiden Lane assets that they acquired from Bear Stearns!
In both Japan then and China now – the vast majority of the credit boom is concentrated in their banking system. Note, the losses have already occurred. It is just a question of when it gets apportioned and to whom. I concur with Sam, that it is only a matter of time before the Chinese banking system has to be recapitalized. The difference is that just like Japan in the late 80s, the size of the Chinese recapitalization will have to be gargantuan. The implications are not that sanguine.
blue peacock,
I am fascinated by the parallels between Japan 1988 and China today – if you have any reading recommendations I would be very interested to hear them.
I really like Tom Orlik’s book ‘China: The Bubble that Never Pops” – he was on the ground in China for 10 years and is the chief economist of Bloomberg.
Michael Pettis is a super smart guy but he has been predicting a reckoning for China for over 10 years and it hasn’t happened yet.
Maybe China’s growth will hit a wall tomorrow … but I talked to a young Chinese woman in Zanzibar 2012-ish about the property crisis that was happening then and she was so ‘don’t worry the crisis is over and prices are going back up’ that I was 100% convinced that the bubble was about to pop. One hundred percent convinced. It didn’t – and now I am not so quick to believe that the end is nigh … but I certainly realize that China’s bubble will have to pop at some point.
James,
My reading suggestions are Minsky, Mises, Kindleberger and Dornbusch. All economists who studied financial instability, credit booms, currency crises and financial speculation. They provide a good foundation to frame the issues. To your Zanzibar acquaintance’s perception and the discreditation of the Cassandra’s in the past decade, Dorbusch had this quote “In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”
That’s why financial forecasting in many ways follows Heisenberg’s Uncertainty principle – you can’t forecast with accuracy both price levels and timing. Consequently following the financial and business markets is important. What’s changed here are the first defaults of some of the largest property developers. The repricing of their tradable debt substantially. Their inability to raise international finance. Then the spreading of this financial tightening to other companies in other related sectors like steel mills, construction equipment and materials companies. This is the financial market responding to their perception of increased risk.
In any credit boom, what needs to be observed is the second order derivative and if it is accelerating or decelerating. Credit booms need continuous ever increasing fuel. When the rate of change starts to slow down and then reverses it is an important signal. What is to be kept in mind is the scale of the credit inflation in their boom and the actual cash flows on those assets.
As Sam said in an earlier post – the CCP will pull all the stops to reflate. If they’re successful, they get to postpone the denouement. If not Xi has the biggest challenge in his hold on power. The party propaganda machinery has elevated him to peer-level with Mao and he has put in place unprecedented surveillance and repressive tools focused of course on any potential political adversaries.
https://twitter.com/jeffsnider_aip/status/1561904186786291714?s=21
It will be interesting to watch this chart. The CCP can’t afford a freefall. It could be hugely challenging for Xi. The top party apparatchiks would want to get their money out despite stringent capital controls. New fissures and alignments against Xi’s paramount rule could form. If financial instability continues to rise it could cause a loss of confidence in the banking system by Chinese citizens. The scale of the bailout would then have to be unprecedented and the losses apportioned to the average working family and future generations.
The CCP will pull all the stops to reflate.
BA First my thanks re your info on Montbatten’s name. Been reading deeply into the French and Indian (my side of the Atlantic) War and my take is the Brits got tight w/t Prussians and Germans and never got free. Your comment on Cromwell’s portrait in Welsh pubs was also interesting. My father b. 1912 said his uncle Maurice, told him the only good Englishman was a dead one. My father told me, b. 1946, that I should treat all people as they treat me. So I guess there is some progress.
Your comments on Germany are spot on. The Deutchers will cave. Go to the bank on it! There never was any empathy for Slavs in the German mind. They will not accept a cold winter and industrial decline on Ukraine’s behalf. Will this impact NATO’s support for UKR? The Germans aren’t providing much currently so “nothing from nothing etc…”.
Your insight on the impact German acceptance of Russian gas will have on the EU is something else. Why should other EU members accept privation while the Germans drink their beer during a Tyrolian winter. When the Germans cave on Russian gas, who will follow; the Dutch or the French? Speaking of the French, Monsieur L’Macron has been silent of late. He prefers to be a listening post for Putin. Does that absolve France from hard military aid?
We live in interesting times but no more so then in 1760. Pitt wants to end the European conflict and Amhearst is about to meet Pontiac. Interesting times.
Bill Roche
The Cromwell murals are to be found in some ‘loyalist’ towns in Northern Ireland, not Wales (to my knowledge at least). The Welsh have Owain Glyndŵr.
Re the EU, it is my perception that the EU suffers from the structural fault of being a consensus-based organization, i.e. everything it ever does has to be agreed by all members. Ever looked closely at a Euro note? The architecture depicted thereon is not real, every design is a simulacrum. The reason? Apparently the various nations could never agree on whose architecture got to be on which notes.
So, if and when Germany decides to make nice again with Russia you can bet the Russians will drive a hard bargain which will include relenting on sanctions. If Germany gets a pass the whole EU sanctions regime collapses. Sure some countries may choose to continue to apply country-level sanctions but the loss of EU credibility would be tremendous. The key point I think is that a crack in the fragile unified front supporting Ukraine could and probably would turn into a rout and Ukrainian morale would evaporate as a consequence.
I therefore agree with Fourth and Long’s assessment in the previous post that the Dugina assassination is probably one of many attempts to force Putin into escalating the military campaign. I expect the neocons see the writing on the wall in the economic war and have decided they need to drag NATO into the war directly. I pray I am wrong.
They are frightening thoughts. I believe Germany will fold, and for the reasons you point out, the rest of EU sanctions. Ending sanctions will free Putin’s hand. Ukrainians will see that Europe has abandoned them again and help enough can not come from just the U.S. Putin will sit back and force an exhausted and demoralized Ukraine to become another Russian administrative unit. A horrible future for the Ukrainians and a frightening one for the Balts.
Bill Roche
a winter does not last a century.
Even if the EU continues buying Russian gas for a while longer, the process of substitution has already started. This is not good for Russia long term. The EU was a good customer.
Russia chose to go this way and is paying and will continue to pay dearly for it.
As for Ukraine, the US kinda broke it in 2014. It disrupted the political status quo and put it on a trajectory leading to this war.
Like Victoria Nuland said, “F*ck the EU”. We’ll do it our way.
Well, the US should now pay for the consequences of this policy, support Ukraine and not be so surprised if the EU balances its support for Ukraine with EU’s own economic and social interests.
The US still does business with Russia in areas where it suits the US.
borko
I do not think the existing paradigm is useful in informing long term thinking. When this war is over I expect at most one side to remain standing and the other to be well on the way to collapse. Russia will either have won and be able to largely dictate terms to a disintegrating Europe or it will have lost. In this case I’d expect its gas and everything else will be appropriated by Neo-liberal vultures dismembering Russia’s balkanized corpse. This process would make the 90’s look like a picnic, the neocons will ensure that Russia is utterly destroyed. An intermediate outcome is hard to imagine at this stage.
Barbara Ann
I fail to see why the EU would disintegrate over Ukraine or the policy towards Russia.
As long as the bureaucrats don’t try to impose policies that go against core interests of member states and remember the economic roots/benefits from which it evolved, the EU should be fine.
As for the current conflict in Ukraine, it could well end up being put on pause after the sides exhaust each other.
There is no shortage of frozen conflicts in Europe (Georgia/Abkhazia/N. Ossetia, Serbia/Kosovo, Armenia/Azerbaijan, Bosnia, Cyprus, Transnistria…).
borko
IMO this conflict is fundamentally different from the others you mention. As soon as Russia invaded Ukraine the die was cast. The combined West (including Switzerland FFS) has been mobilized with the aim of destroying Russia economically.
There exists a broad opinion that sanctioning Russian gas is very much against Germany’s core interests. Only the truly delusional Greens do not see it, but hey, they are in power there. The EU almost certainly expected a quick win and not to have to endure a winter without Russian gas. Now they are committed and the EU’s credibility is on the line. If Russia wins the EU will be seen to have caved and its vaunted “rules based international order” will be shredded. I do not think it would survive such a crisis.
Barbara Ann,
This conflict definitely galvanized NATO and the West, but the aim wasn’t to destroy the Russian economy. It was/is an effort to stop the Russian invasion and save Ukraine. The West and everyone, except Ukraine, thought Russia would overrun Ukraine in a matter of days and the Ukrainian resistance would be pure UW for as long as it took. Either that or they thought Russia would back down in the face of the economic sanctions. Sure this winter may suck for much of Europe, but I doubt they will ever return to a total dependency on Russian gas and oil no matter what happens in Ukraine. The world’s energy market will be forever realigned.
TTG,
“The world’s energy market will be forever realigned.”
Sanctions will never end, only the reasons to impose them will change. Unless the politicans who put them in place lose elections. Regardless, I’m sure there are member states in the EU that would be more than willing to obtain fossil fuels at a discount from Russia.
TTG
Save Ukraine? I fear you are hopelessly delusional about the motives of the neocons. “F*ck the EU” Nuland and the gang planned the 2014 coup and ever since have worked tirelessly to trample all over Russia’s red lines in a premeditated plan to force Russia’s hand. They finally got what they wanted on February 24th. Ukraine is a tool to them, nothing more. These folk will fight Russia not just to the last Ukrainian but to the last European, if necessary. None of this prevents me from supporting the Ukrainians in their efforts to eject the invader.
Barbara Ann
Indeed, most everyone expected a quick Russian victory but here we are.
Stopping Russian gas and oil immediately would be against core interests of all EU countries that are dependant on it. That is why it did not happen.
Banks and facilities that are needed for uninterrupted gas/oil flow were not sanctioned, Hungary, Slovakia and Czech Republic were given exemptions on oil ban, there are various other schemes of buying Russian energy products through third parties etc.
It is a scramble, it is messy and this winter will be difficult, but it will pass.
Ultimately it is in Germany’s and every other EU member country’s interest not to be over reliant on any one supplier of energy.
As for EU’s credibility, I can’t help but laugh. We are talking about politicians here. What credibility ?
To all those skeptical of the damage to the Antonovsky Bridge, this is from Strelkov’s latest Telegram:
“Antonovsky Bridge in Kherson completely disabled (passage is impossible, although the bridge itself did not collapse) as a result of another missile strike. 2 repairmen were killed, up to one and a half dozen people were injured. Also fired upon again (but functioning) bridge in New Kakhovka.”
By way of dealing with the underutilized Chinese construction
You can’t say Xi and the CCP aren’t demonstrably addressing the real estate issue.
MS,
Dunno if that is a fake. I saw it a few days ago too. But remember Xi’s banking system funded that and they ain’t getting paid after that demolition. They could of course fund another construction but that earlier asset-backed liability is now a NPL. These NPLs are now mounting. Extend and pretend only goes so far. Their banking system is not just sitting on no-cash flow residential properties but also steel plants, ports, high-speed rail and other SOE investments and infrastructure. Like in any bubble environment, local governments and CCP regional bosses got in on it too. $60 trillion asset value just in the property sector. Now add in all the other boondoggles. Even if there’s a small impairment that’s a gigantic hole in the balance sheet of their banking system. We can be certain just like here in the US during GFC ordinary Chinese without the massive financial wherewithal will pay the brunt of the cost. When one looks at the amount of money we spent to recapitalize – both public & private financing – it was several trillion dollars. The size and scale of the Chinese banking system is some multiple of ours.
I found an interesting statement in this article on Russia Exports and Imports (imports are the second list)
“Imports to Russia rose 40.1 percent to a 6-month low of USD 24.75 billion in January of 2022, before the invasion of its neighbor Ukraine and West sanctions.” https://tradingeconomics.com/russia/imports
This change in trade is what I like to call a ‘high low discard’ (a high low discard is a term used for competitive card games where all the players can see what is in the discard pile).
It underscores the importance of an honest trader or economist as they will be among the first to see signals of imbalances of power.
One of the biggest problems with assessing Russia’s economy is that so much of it is ‘off the books’.
Anyone I have ever known that actually imported anything to Russia – it was always consumables (on openly reported markets). A recent Moscow News states that the Russian ‘Shadow Economy’ is estimated to be about 20% – I think it is much higher than 20% https://www.themoscowtimes.com/2019/02/22/russias-black-market-totaled-20-percent-gdp-2018-reports-a64592
I am of the thought that the whole ‘sanctions’ thing may be hit and miss when it comes to that ‘shadow economy in an established kleptocracy – and THAT is an important Missing Piece of this assertion that ‘Russia or Ukraine has lost because of the economic impact argument (IMO)
kj
I assume that Rishi Sunak, who is now contending for the Tory leadership to become Prime Minister of Britain, early on in his career must have become involved in military security matters when he became MP for Richmond, North Yorkshire, a market town at the beginning of the Dales (there are also, the Downs, but somewhere else), that has lying nearby, the largest British military base in the world, Catterick Garrison. He would also have been responsible for GCHQ Scarborough, one of Britain’s oldest and most important signals intelligence bases, built to monitor German North sea naval communications originally, and now, among other things, a satellite ground station, on the North Yorkshire coast. On Dec. 1, 2017, Sunak published an article titled “Undersea Cables: Indispensable, Insecure” on Policy Exchange. This is an interesting article, one of the first I read about this wonderful, strange, and potentially quite dangerous Laocoon- like thing, the sea-snaky internet that lives mostly down there in Fiddler’s Green, and not at the center of the earth. (I am now from time to time looking into ‘Tubes, a Journey to the Center of the Internet’ by Andrew Blum.)
Rishi Sunak speaks quite bluntly about the undersea cables. A successful attack on them would be “an existential threat.” Strong words that ought to be recognized.
Then, last January 7 or so, Admiral Sir Tony Radakin, who is now British Defence Chief, gave an interview to the Times of London. Newsweek picked up on the Times interview in an article on January 8, by Brendan Cole, in which Radakin emphatically warned of the “phenomenal increase in Russian submarine and underwater activity” over the last two decades. Radakin stated that he believed Russia’s underwater program intended to “put at risk and potentially exploit” the undersea cables that provide the world’s “REAL INFORMATION SYSTEM,” (My emphasis.)
What I am noting here is the strong words coming from two important leaders of the British armed forces and government: “Existential threat?” At this point, I might raise the question. How can underwater cables of the internet become so dangerous? If the world’s Real Information System is somehow damaged, crippled, or worse, partially or completely (in the Atlantic) shut down, what does it mean? What happens? Surely, this needs to be talked about?
Now consider this most recent, roughly August 1, article by a team of RAND Corp. experts headed by one Bryan Frederick titled “Pathways To Russian Escalation Against NATO from the Ukraine War.” The team concluded that “Russian responses are more likely to begin with non-kinetic attacks.” These would be “cyberattacks against critical infrastructure targets such as power grids, power plants, or KEY INFORMATION OR TELECOMMUNICATIONS SYSTEMS, INCLUDING SATELLITES. ” (Again, my emphasis.)
I find that there is something disingenuous about this article. Again, to repeat, anyone who knows the least minimal thing about the internet knows that the real danger lies under the sea. And these RAND guys definitely know this. To mention satellites in this context is to put a little squirt of cuttlefish black ink out there. The world’s Real Information System is not up in the sky! And Russia has spent some fifty or more years developing its submarine forces not only with new weapons systems now being deployed, such as Poseidon, Zircon, Sarmat, but more significantly for this matter, there is a class of their subs that has deep dive capabilities. I suspect that the well-paid, well-shod, and surely well-beholden authors of this RAND Corporation so-called threat assessment are so afraid of what they know and what they can see coming that they cannot bring themselves to deal candidly or forthrightly with the problem. Why? Because there isn’t any answer. And to extrapolate further, what this means, I think, is that there are folks very high up in the American government who are in a cold sweat about what could happen to the American economy if the Atlantic internet cables are successfully attacked. I will say it again. Wall Street and the City, the business part of London, could simply STOP.
There are no precedents. Noone knows what could happen. And it looks like it is going to escalate.
I wouldn’t expect RAND to pay too much attention to undersea cables. It’s an Air Force creation. Here’s more what you’re looking for;
https://www.csis.org/analysis/invisible-and-vital-undersea-cables-and-transatlantic-security
ked,
Thank you for providing that link. It is very helpful.
Incidentally, Admiral Radakin talked as if he thought Russia would use violent methods to disrupt the function of the undersea cables, which I think could include cutting and towing long sections of cable away for miles, as was done off of Norway, in that case, to deliver a warning. And he stated that this would most likely be an act of war. “Kinetic” in other words, quite possibly right from the start, somewhere out there in the ocean deep over a distance of how many miles of sea bottom? Assuming that investigators could determine what had happened to the cables, how, when, by whom–all that evidence would be needed to make a war out of it. The cutting of the cable off of Svalbard has been investigated, but no Norwegian authority up to this point has tried to make a formal, legal accusation against any perpetrator. I doubt that they can.
I suspect that RAND finds itself extremely reluctant to reveal to the American public the quite possibly terrifying conclusions its scientists and engineers will have reached about what could happen as a result of an attack on the undersea cables. (Yeah, I am saying that it’s that bad!) And it doesn’t need to be limited to only one attack, or to be an attack that takes place somewhere in only one of the seven seas. It could be a staggered series of targeted attacks, in the Atlantic, Caribbean, and Pacific, using perhaps timed explosive charges, put in place over a distance of many miles, lit off at intervals over several days, weeks, months…
What Stoltenburg and others say could be done about this permanent and forever dilemma strikes me as being suspect, hollow, probably unworkable; and if you start to think about it a little bit more, not much more than pathetic.
The startling truth is that if among the naval powers, you cannot keep the peace, then you cannot keep the internet.
https://twitter.com/vtchakarova/status/1562205228182675457?s=21
Watch this interview. This is something many among the “the US forced Putin’s hand” crowd don’t get. Like many Eastern Europeans with experience of Russian subjugation the Ukrainians too wanted the NATO umbrella to protect their sovereignty. It appears the US didn’t force these countries to join NATO to emasculate Putin. Clearly Finland & Sweden weren’t strong armed to join NATO. It is the opposite motive. Fear of Russian revanchism.
Why should anyone care about Yale University, if they were competent they would be running the USA and would have predicted that Europe will freeze this winter. Which if you remember I predicted in April. Oh well, got 4 tons of wood in will have another 6 within a week, better sooner than dead.
Given that I read here frequently doomsayers commenting not on the topic Russia but on Germany, I would like it to be noted that the diversification of the gas supply has been completed. In the winter 2021-22 50-60% of the gas imported to Germany came from Russia. At the end of June 26% of Germany’s imported gas came from Russia. This now stands around 10%, due to lowered summer consumption, relaunching of two major coal power plants and Russian maintenance on the pipeline. The ‘delta’ is being made up primarily by imports from Norway (currently delivers 38% of German gas consumption) and the Netherlands (who sometimes get their gas from elsewhere). This means that even a total stop of these 10% will have only a negligible impact. Graphic is here in the middle of the page: https://www.tagesschau.de/wirtschaft/gaslieferungen-deutschland-101.html
Total demand will increase for the winter, but instructions have been given to lower temperatures for heating and we’ll get also through this.
Back on topic: Russia lost a well-paying and expanding market as a result of its unprovoked invasion of Ukraine. It will be extremely difficult to win it back, and get the higher paying prices that went along with it.
Even if in the words of some commentators ‘Germany would fold’ and want to re-establish full trade relationships, it’s going to be really hard. Currently the costs in due diligence for any Russia-related business are skyrocketing. It is very expensive to do a check whether your business partner is on sanctions lists, or turns out to be involved in any of the warcrimes being reported to the Federal Police (e.g. the April draft indictment against 33 individuals submitted by former Minister of Interior Baum and former Minister of Justice Leutheuser-Schnarrenberger). The lists are growing by the day. This chilling effect will survive even if sanctions are lifted tomorrow.
it’s amazing what a people & their nation can accomplish under duress. I (seem to) have more confidence in the younger generation than many. generalizing, I think they are capable of taking on the challenges of the modern world… that the greatest impediment for them is hidebound financial / corporate policies & behaviors… leadership w/ a death grip on power who won’t let go of the reins.
I think the practical outcome of Russia cutting off energy supplies to NATO nations is an acceleration in development of varied types & suppliers of energy, an expansion of renewables, RD&E into efficient processes of all power consuming systems. let the kids set policy & take action – can’t be much worse.
ked,
“an expansion of renewables,”
you haven’t been paying attention to what Germany did to its own electric grid?
I’m referring to a likely & laudable future. Half of Germany’s energy comes from renewables now. Their plan is to get to 100% in 13 yrs. I believe they can reach that target sooner, if so inspired.
https://www.reuters.com/business/sustainable-business/renewables-provide-49-power-used-germany-first-half-2022-2022-07-05/
https://www.reuters.com/business/sustainable-business/germany-aims-get-100-energy-renewable-sources-by-2035-2022-02-28/
ked,
Envirnomentalism be praised! Earth is saved! I mean Germany. There will NOT be a cold harsh winter and Germany will not NOW need to burn ‘sustainable trees’ for heating like thier pre-industrial ancestors did for thousands of years. Industry will not have to curtail operations in the winter of 2022-2023?
Oh, sorry, you were talking about their future! If only the German government had imposed – by regulatory action – all these Essential changes to energy generation – to keep them all from dying from green house gasses, co2, etc, instead of waiting for the US to impose sanctions on Russia because of the the sacred obligations to Ukraine. On the bright side in only a dozen years they’ll have 100% of their ‘target’. How laudable.
It will never happen. Wind and sun are unreliable energy sources.
Take El Hierro. Tutted as a success in 2014
https://www.npr.org/sections/parallels/2014/09/17/349223674/tiny-spanish-island-nears-its-goal-100-percent-renewable-energy
But look at the data. Figur 11. Type of energy based on month from 2015-2018.
https://www.mdpi.com/1996-1073/11/10/2812/htm
There is no way to quit fossil fuels or nuclear energy. You need a base production. El Hierro ended up with having two energy systems one based on green energy and one based on diesel as a back-up. And diesel ended up being the most used.
That’s expensive extra infrastructure investments. Furthermore Germany needs to develop their inferior power grid net work. They are presently unable to handle the big fluctuations that green energy creates. Their system would burn out from overload.
nothing ventured / nothing gained. esp since it’s a zero-sum gain, looking backwards. we shall see what the future (from near to far) holds. I hope it isn’t just status quo ante.
Wunduk,
“instructions have been given to lower temperatures for heating and we’ll get also through this.”
Reuters says that only going to account for 2% of the energy needed, if everyone complies. The German government is ordering its citizens to lower thermostats because it fouled up the energy supply by regulatory action. You might want to ask what happens to manufacturing that employs a number of Germans:
“the federal government wants to spend several billion euros to compensate as far as possible for the negative consequences of the sharply reduced Russian gas supplies.”
So the industries about to get ruined because of the regulatory actions of the Germany government will get some bail out money, which the state will have to go into debt to obtain. But remember – ‘climate change’, unlike global warming that we heard so much about for decades, is real. Which is why Economy Minster Habeck ruled out keeping your nuclear plants running. Maybe if you chant “Russia Russia Russia” enough people won’t notice the change in electricity prices or what else their own government’s policies have brought about.
On a brighter note the Russian economy is about to collapse and the Ukrainian offensive, minus an effective air force, is going to start any day now and drive the defeated Russian military out of all the occupied territory and retake Crimea. Or so we are told.
Walrus,
I’ve spent some time keeping up with friends in Russia, and trying to understand the impact of the sanctions.
Life is normal. While some imports are more expensive, perhaps fish, inflation is flat overall, and they’ve been able to find foreign substitutes for the Western consumer goods they used to buy.
Their have been specific issues. Their auto manufacturers were in trouble for a while. 2022 model year cars didn’t have airbags? But those are supposed to return in 2023.
It’s a global market. And they can and will buy from China.
The study is bullshit.
Yale doesn’t mean much anymore. But that’s a national phenomenon. We aren’t the country we were even twenty years ago.
– Eliot
A good look at the Yale study warts and all plus the sanctions on Russia.
Worth the time.
https://intellinews.com/long-read-is-russia-s-economy-headed-for-economic-oblivion-as-a-report-from-yale-says-252508/?source=russia