Russia failed to destabilize, it did not endure economical shock, society did not take to the streets. There was no "regime change" – the overthrow of Putin and the taking over of power by trappers. Despite specified a powerful blow. Why?
Russia was struck with a powerful blow, which I described in the text “Russia after a year of economical war” (Jawszeniak: Russia after a year of economical war | Przemysł Polska (myślpolska.info). The economy has somewhat shaken, apparent and unavoidable, has slowed down (instead of 3% growth, it has recorded 2.2% decline), but has sustained and revived. How did this happen?
The obstacle to knocking out the Russian economy was not its size. This is only 1.8% of global GDP, erstwhile on the another hand, this economically attacking side stands 42% of the global economy – 25 times more. However, participation in planet trade is much more serious. Of course, in natural materials, unprocessed products, which is an apparent weakness, but these are key goods and very hard to replace. Russia occupies 11% of planet oil and products trade, 17% natural gas, 17% wheat, 20% potassium fertilizer, 30% ammonia... and many others.
And this export, and especially energy natural materials, the key origin of income, did not break down due to the skillful policy of maintaining the planet market. Although highly low prices of Russian oil and coal were paid for it. Russia does not gain as much as it could, but selling less, having to lower export prices – it earns a lot.
Washington cannot take drastic action, specified as a complete cut off of Russia from the dollar. This "nuclear option" in global trade would make specified chaos that the end of the dollar as a planet currency could happen much faster than the top black people can tell. America has created today's global market, controls it, and reaps large benefits from it, but at the same time is liable for it towards the full world. By causing hunger by astronomical food prices or fertilizers in the poorest parts of the world, she would yet discredit herself.
Russia has besides sustained the impact on the financial system. The central bank, repeatedly criticized by extremist patriots for representing the interests of the West (the "failure!"), responded exemplaryly by conducting respective operations (such as raising the rates or blocking the outflow of funds abroad, reducing cash withdrawals), stabilising the functioning of banks affected by sanctions and cutting off abroad capital. The work was carried out as early as 2014 erstwhile SWIFT analogue was built and the Russian MIR card was introduced. Earlier Western monopolists – Visa and MasterCard – dominated the market. As a result, their abrupt exit from Russia in March 2022 did not origin the financial strategy to collapse. For more than a decade, the dollarisation of the economy has been steadily decreasing, which has taken over full sectors of the economy.
Russia is besides liable for Russia's prudent fiscal policy to avoid the crisis. Usually, the Russian state budget has no deficit. These happen in years of crisis specified as 2022. And I'm certain it'll be even bigger this year. However, this does not undermine the financial stableness of the state as its debt is microscopic (13% of GDP erstwhile the US – 123%). Therefore, the effort to provoke Russia's bankruptcy in the financial marketplace failed.
The Russian economy has besides sustained the corporate impact – the mass exodus of western large players. This has paralyzed for a minute many industries, services, trade. But you intervened, defending jobs, and Russian business took over abandoned niches. 90% of the jobs lost were restored in the autumn, technological co-operators were changed and markets were recovered from which revenues had so far been abroad. Like McDonald’s restaurants, which took over Russian business, replacing them with the brand “Tasty. Period’. So alternatively of a wave of bankruptcys of Russian companies, cut off from western capital, there was their expansion and acquisition of areas occupied by western competitors. Seeing this, only one-tenth of the western corp evacuated from Russia, many limited their activity, but the overwhelming number (estimately three-quarters) continued to operate, not wanting to quit the marketplace that it gained for years.
But this is not the end of the paradoxes of resilience of the Russian economy. Read “Gaz to the ground” in Polish Thought.
Andrzej Szczęsniak
photo public domain
Think Poland, No. 9-10 (26.02-5.03.2023)
