Just about anywhere you look there is the same story, Vladimir Putin made a big mistake misjudging how the Ukrainians would fight so hard. Putin knows that not only have the Ukrainians been fighting so hard against him taking Ukraine as if it were going to be a walk in the park.
The US and its NATO allies have put together numerous actions against Russia, the most crippling sanctions Russia has ever faced. As we have witnessed, sanctions don’t work instantly, but they do have serious consequences.
I was writing then about Vladimir Putin, whose decision to invade his neighbors looked more catastrophic by the day. The war in Ukraine could very well end, and not for Vladimir Putin’s benefit before Russia finds ways to circumvent Western sanctions. It would not be a surprise if the war ends, and not to Putin’s advantage before the invaded nation finds ways around Western sanctions.
Now, there is the possibility that over time, Russia might come up with an alternative solution to evade Western sanctions. Part of the answer cannot be the whole story, as Russia seems to have lost access to imports from countries even without sanctions.
As a result, Russian exports have held steady, and Russia seems headed toward record-breaking trade surpluses. As a result, Russian exports have held up, and the invading country appears to be headed for a record trade surplus.
The trade surplus, a record, is a sign of weakness, not strength, since it mostly reflects a drop in imports from the invaded nation, which even pro-government analysts have said is straining its economy. Russia’s trade surplus is a sign of weakness, not strength; Russian exports are holding (alas) well, despite the pariahs status, but its economy is being crippled by the cutoff in imports.
Russia’s trade surplus is a sign of weakness, not strength; The invading nation’s exports are (alas) holding up well despite its pariah status, but its economy is being hurt by a blockade of imports. Trade surpluses sometimes help to bolster weak economies, and although imports enrich the country, they may be displaced and impoverished some workers.
Russia’s military failure in Ukraine has defied almost everyone’s predictions. First came abject defeat at the gates of Kyiv. Then came the incredible shrinking blitzkrieg, as attempts to encircle Ukrainian forces in the supposedly more favorable terrain in the east have devolved into a slow-motion battle of attrition.
What’s important about this second Russian setback is that it interacts with another big surprise: the remarkable — and, in some ways, puzzling — effectiveness, at least so far, of Western economic sanctions against the Putin regime, sanctions that are working in an unexpected way.
As soon as the war began, there was a great deal of talk about bringing economic pressure to bear against the invading nation. Most of this focused on ways to cut off Russia’s exports, especially its sales of oil and natural gas. Unfortunately, however, there has been shamefully little meaningful movement on that front.
The Biden administration has banned imports of Russian oil, but this will have little effect unless other nations follow our lead. And Europe, in particular, still hasn’t placed an embargo on Russian oil, let alone done anything substantive to wean itself from dependence on Russian gas.
As a result, Russian exports have held up, and the country appears to be headed for a record trade surplus. So is Vladimir Putin winning the economic war? “msn.com“
Yet China, as well as Russia, is giving us a practical lesson right now about the utility of having an open society, one in which strongmen are not allowed to make up their own realities. The point is that these setbacks, such as Vladimir Putin’s setbacks in Ukraine, are all ultimately due to inherent weaknesses in authoritarian governments.
Apparently, no one dared tell him that Russian troops may have been overrated, that Ukrainians were more patriotic and the West less decadent than he had assumed, and that Russia was still very vulnerable to economic sanctions. Most focused on ways to halt Russian exports, particularly sales of oil and gas.
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There is a downside to a country that has a trade surplus, as you mentioned, but the country having the largest trade surplus, China, has been using their surplus to build their military, so depending on the country’s goals, a trade surplus can be beneficial. When China was allowed to become a partner in the global economy, that was one of their major goals, and still is. I don’t know how those economic sanctions are hurting an economy that has been based on central government manipulation, since Russia has had essentially a central government since 1917, through communism’s central government, only to be replaced by an oligarchy, who controls all the resources of the country just like its predecessor did. It was just a change of appearances.
We judge Russia and China by our understanding of what economies should be like. The problem with that is that they have a different understanding and set of needs and goals. The old Soviet Union failed under it’s own weight because of their economic and political model, where China has the same model, but adapted just enough to take advantage of massive trade surpluses. In a lot of ways, modern day Russia is similar to China, but only with oil. If Russia’s economy was more diverse, we would be seeing a harder road to using sanctions. If anything the world is not sanctioning Russia, or China, enough.
The question of how Putin believes his military is so great comes from his soviet roots, I think, since that appears to be how he wants to rebuild the old soviet empire. That just shows how corrupt the communist ideology is, and how naive a ruler of a country with that ideology can be. It could be that Russia, under Putin, wants to have that net trade surplus. The problem can be that it is dependent on one commodity, and that could be Russia’s downfall, if Putin continues to remain in power.
Look at how we, having a net trade deficit, for decades has empowered China, through the flow of hard currency, if you can call paper hard currency that. China and Russia are said to have the largest reserves of gold in the world because of our deficit. We pay for what China produces, and sell them virtually nothing in exchange, leaving us in a deficit situation with China. Remember that saying “Giant sucking Sound”? That’s the money being sucked right out of the US and into the coffers of both of those countries, that is, when we buy Russian oil. China is rather self explanatory, already. Trade balance is probably an unreasonable goal to begin with, since no two countries share the same needs and have the same resources.
so, depending on one’s perspective of another country, both deficits and surpluses can be destructive, or, they can be good.
Russia has this self limiting problem: a left over ideal known as communism, and China still has the official version. The difference with Russia is that it relies on one resource and that may be their downfall.
Both China and Russia have this other big problem. They steal much of their technology, but can’t make it work, like the ones who created it can. That may just be both their downfalls.
And to think we have Democrats in charge, right now. I think that’s more scary than anything coming from China or Russia, and we are the ones feeding both, even with sanctions in place. We are not sanctioning either of them like the government would like everyone to believe.