Why The Russian Economy Isn’t Collapsing?

Western leaders undervalued the size and global reach of the Russian economy

Headlines concerning the collapse of the Russian economy under sanctions have been many and varied, although more recently observations have been made that sanctions imposed by the West aren’t working to the extent intended.

Writing this from Moscow, I can observe that supermarkets are full, there are no shortages, and gasoline is US$3.1 a gallon. That compares with Washington at US$4.99, London at US$8.16, Berlin at US$6.73 and Rome at US$7.31.

Why has the effect of sanctions upon Russia been so widely misunderstood? It’s a complicated question yet comes with a simple answer: politicians aren’t economists.

The French economist Jacques Sapir has recently explained the mistakes politicians have made when assessing Russia, with the United States constantly stating the Russian economy as being insignificant when compared to the US and being about the same size of Italy’s. That is a miscalculation.

According to Sapir, the reason for this disparity is exchange rates. If you simply convert Russia’s GDP from rubles to dollars for comparison, it would be seen as an economy as large as Italy’s. However, such comparisons are meaningless without adjusting for purchasing power parities, (PPP) which account for productivity and living standards, and thus per capita welfare and resource use. In fact, PPP is the preferred measure of most international institutions, from the IMF to the OECD.

So what happens when the PPP methodology is used to compare the actual size of the Russian economy?

Doing so reveals a much larger and significant beast – it becomes clear that Russia’s economy is rather more similar to the German economy at about US$4.4 trillion versus Germany’s US$4.6 trillion.

This means that the West’s politicians has grossly under estimated Russia’s economy as being a small, somewhat sickly European economy to being close to the largest in Europe and one of the largest in the world.

Concerning Russia, Sapir also asks: “What is the share of the services sector compared to the share of the products and industry sector?” In his view, today’s services sector is grossly overvalued compared with the industrial sector and commodities such as oil, gas, copper, and agricultural commodities, all of which Russia possesses in massive amounts.

If we reduce the importance of services as a proportion of the global economy, Sapir says, “Russia’s economy is much bigger than Germany’s, and accounts for up to 5-6% of the world economic output.”

That puts Russia on a par with Japan rather than Italy.

This makes intuitive sense. When times are tough, it is common knowledge that it is more valuable to provide people with the things they need, such as food and energy, rather than intangibles such as entertainment or financial services.

Netflix or Nestle?

When a company like Netflix trades at a price-to-earnings ratio three times higher than Nestle, the world’s largest food company, that is more likely a reflection of frothy markets than actual reality. Netflix is a great service company, but as long as some 800 million people in the world are undernourished, Nestle still offers more value. And Netflix shares and earnings have indeed begun to slide post covid as consumers concentrate on the essentials. (Netflix also recently exited the Russian market).

There are lessons to be learned from this – the current situation in Ukraine helps to clarify values on what have been regarded as “archaic” aspects of the modern economy, such as industry and commodities, but whose prices have soared this year; compared with overvalued services and “technology” whose value has recently diminished, such as Netflix and Facebook.

There is more. The size and importance of the Russian economy has been further distorted by ignoring global trade flows, which Sapir estimates Russia’s portion “may account for 15%”.

For example, while Russia is not the world’s largest oil producer, it has been the largest oil exporter, surpassing even Saudi Arabia. The same is true of many other basic products, such as wheat, the world’s most important food crop, of which Russia controls about 19.5% of global exports, as well as nickel (20.4%), semi-finished iron (18.8%), platinum (16.6%) and frozen fish (11.2%).

Russia is in fact a key part of the globalized supply chain

This means that Russia has such an important position in the production of so many basic commodities, that along with several other countries, is in fact a key part of the globalized supply chain.

The United States has largely failed to acknowledge this and persuaded the European Union to follow the same thinking over sanctions while grossly underestimating both the size of the Russian economy and the role Russia has in global trade. The US has had success in imposing “maximum sanctions” on countries like Iran and Venezuela but trying to cut Russia off from world markets has resulted in and will continue to bring about a huge restructuring of the global economy that may take several years to absorb.

In fact, by controlling large sections of the oil, gas, food and other global commodities, the sanctions pain bought to bear upon Russia by the United States and its Allies has shifted to the originators of these – and their own populations.

Ukraine Crisis – The start of the Multipolar World!

Le Monde: special operation in Ukraine could forever change the global economy

The French publication Le Monde suggested that Russia’s special operation in Ukraine could lead to irreversible changes in the global economy, which has not yet recovered from the effects of the coronavirus. The start of the multipolar world is clear.

According to the Organization for Economic Co-operation and Development (OECD), this should cut global GDP growth by about one percentage point and raise inflation by 2.5 points. The OECD warns that the risk of “food insecurity” hangs over Africa and the Middle East in particular due to the sharp rise in commodity prices, and in particular wheat.

“The crisis is already manifesting itself in rising prices for energy, food and some metals,” said Lawrence Boone, chief economist at the OECD.

Le Monde, in his article, also cites an assessment of the International Monetary Fund, which believes that the Russian special operation could have long-term consequences for the global economy, which will ultimately change the “world economic and geopolitical order.”

On February 24, Russian President Vladimir Putin decided to conduct a military special operation to protect the Donbass in response to a request for help from the heads of the LPR and DPR.

Ukraine severed diplomatic relations with Russia. Martial law in Ukraine was introduced until March 26.

Reuters: US in consultations with Turkey concerned the possibility of Ankara transferring S-400 to Kiev

American officials, during consultations with Turkish colleagues, touched upon the possibility of Ankara transferring S-400 anti-aircraft missile systems (SAM) to Kiev, but they did not make such an offer officially. This was reported on Saturday by Reuters .

U.S. officials have floated the suggestion over the past month with their Turkish counterparts but no specific or formal request was made, the sources told Reuters. They said it also came up briefly during Deputy Secretary of State Wendy Sherman’s visit to Turkey earlier this month.

The Biden administration has been asking allies who have been using Russian made equipment and systems including S-300s and S-400s to consider transferring them to Ukraine as it tries to fend off a Russian invasion that began on Feb. 24. read more

The idea, which analysts said was sure to be shot down by Turkey, was part of a wider discussion between Sherman and Turkish officials about how the United States and its allies can do more to support Ukraine and on how to improve bilateral ties.

The Turkish authorities have not commented on any U.S. suggestion or proposal relating to the transfer to Ukraine of Ankara’s S-400 systems, which have been a point of long-standing contention between the two NATO allies.

Turkish foreign ministry officials were not immediately available for comment.

Turkish sources and analysts said any such suggestion would be a non-starter for Turkey, citing issues ranging from technical hurdles related to installing and operating the S-400s in Ukraine, to political concerns such as the blowback Ankara would likely face from Moscow.

Attempt to improve strained relationship

Washington has repeatedly asked Ankara to get rid of the Russian-built surface-to-air missile batteries since the first delivery arrived in July 2019. The United States has imposed sanctions on a Turkey’s defence industry and removed NATO member Turkey from the F-35 fighter jet programme as a result.

Ankara has said it was forced to opt for the S-400s because allies did not provide weapons on satisfactory terms.

U.S. officials are keen to seize this moment to draw Turkey back into Washington’s orbit. Efforts to find “creative” ways to improve the strained relationship have accelerated in recent weeks, even though no specific proposal has so far gained traction, U.S. and Turkish sources have said.

“I think everyone knows that the S-400 has been a long standing issue and perhaps this is a moment when we can figure out a new way to solve this problem,” Sherman told Turkish broadcaster Haberturk in an interview on March 5.

It was not clear what exactly she meant and the State Department has not answered questions about her comments. The White House did not respond to a request for comment about the suggestion made during her visit to Turkey.

The effort is also part of a wider bid by the Biden administration to respond to Ukrainian President Volodymyr Zelenskiy’s plea to help protect Ukraine’s skies. Russian or Soviet-made air defense systems such as S-300s that other NATO allies have and S-400s are sought after.

“Ankara spooked by Russia’s invasion of Ukraine”

One source familiar with U.S. thinking said Washington’s floating of the possibility came as a result of the renewed effort to improve ties at a time when Ankara has been spooked by Russia’s invasion of Ukraine.

Turkish President Erdogan had not received a specific heads up from Russian President Vladimir Putin on his plans of a full-scale attack on Ukraine, another source familiar with the discussions said.

Turkey shares a maritime border with Ukraine and Russia in the Black Sea and has good ties with both. It has said the invasion is unacceptable and voiced support for Ukraine, but has also opposed sanctions on Moscow while offering to mediate.

Ankara has carefully formulated its rhetoric not to offend Moscow, analysts say, with which it has close energy, defence and tourism ties. But Ankara has also sold military drones to Kyiv and signed a deal to co-produce more, angering the Kremlin. Turkey also opposes Russian policies in Syria and Libya, as well as its 2014 annexation of Crimea.

“Turkey has managed to walk on the razor’s edge and a transfer of a Russian S-400 would certainly lead to severe Russian ire,” said Aaron Stein, director of research at the Philadelphia-based Foreign Policy Research Institute. “And for Erdogan, the S-400 has become a symbol of Turkish sovereignty, so trading it away wouldn’t be all roses and flowers.”

It seems that relevant departments of the US government have completely lost touch with the reality. That means a serious problem for the whole world. People without toucfh with reality tend to make wrong decisions. As simple as that. Pressing Turkey to send S400 system to Ukraine is certainly a sign of desperation. If not a sign of complete madness.

Collapse is inevitable… A view from Russia

The President of the United States in an address to the nation publicly acknowledged the fall of the American economy, blaming Russia for this. Collapse is inevitable…

US President Joe Biden warned his fellow citizens in a recent address to the nation that they would have to suffer for democracy in Ukraine.

At the same time, he deftly linked official inflation, gigantic by the standards of the United States, with the events taking place around Ukraine. Well, as always, only Russia is to blame for this.

A very strange explanation of the situation, given that the liberals assured us that the Russian economy is only a statistical error in the overall world economy. And, in general – since 2018, Apple Corporation alone is worth more than the entire Russian economy! If you are to believe these “evaluations”.

But the US government knows better. Since the average American has to suffer for democracy in Ukraine (through frenzied inflation and rising prices for everything), then let him suffer.

Russia’s actions really affect inflation in the United States regardless. That could lead to the collapse of not only their economy, but also to the collapse of the entire modern financial system. This is due to the fact that Russia has gained sovereignty and no longer sells its natural resources for almost free, especially energy. Something that was happening during the last decade of the last century. Arrival of Putin changed that situation.

In Russia today, too, high inflation, which is 8.7%. In the US, inflation is 7.5%. But there is one big difference: in Russia, inflation is in rubles, while in the US it is in dollars.

What does it mean?

Prices for goods are always rising with us, as there is inflation. But they grow in rubles, while in dollars they, on the contrary, fall.

For example, just yesterday the dollar exchange rate was 77 rubles, and today it costs 80 rubles.

That is, goods produced within Russia fell in price against the dollar.

Let’s take gasoline as an example.

In 2014, a liter of 95th gasoline cost 35 rubles, or 1 dollar (the dollar exchange rate was also 35 rubles then).

Today, a liter of AI-95 gasoline costs 53 rubles, that is, $0.69 at a dollar rate of 77 rubles (or $0.66 at a rate of 80 rubles).

By manipulating the ruble exchange rate, it is possible to minimize the damage from dollar inflation within the Russian economy. Another thing is that the real incomes of citizens will decline, but the economy will only develop and grow. That is why, even with high oil prices, the ruble still does not return to its previous values of 50 or even 30 rubles per dollar. And this will not happen as long as the US economy (and with it the EU economy) is in crisis.

However, the crisis in the United States did not arise because of the situation in Ukraine, as Joe Biden talks about it. Ukraine is just a good excuse to divert the attention of US citizens from the really fundamental economic problems.

The United States, like no one else, knows how to manipulate inflation and dispel any threats and risks to its economy in the global financial system.

Their freshly printed candy wrappers are supplied by market demand and supply

US economists are very smart people. They have built an economic model in which the US economy will grow and develop in almost any circumstances. And if something goes wrong, you can always print more money and pour it into the economy. Like doping.

The worst nightmare for the US economy is the deficit generated by excessive inflation. And this can happen only in one case. It is when there is not enough goods in the world that the United States needs. And it cannot be bought for any money. Under such conditions the more dollars are printed, the more expensive the desired product will be, and the more expensive the product, the more inflation will be. And it goes in spiral.

Look at the US inflation chart:

US inflation chart.
The modern Bretton Woods financial system based on the US dollar originated in 1945

1. 1951-1954: Anglo-Iranian Oil Company in Abadan (oil crisis)

2. Arab-Jewish war (oil crisis of 1973-1974)

3. Islamic revolution in Iran (oil crisis of 1979-1980)

4. The global financial crisis of 2008 (a lot of oil)

5. Present time (physically there is not enough oil).

The real cause of the inflation

The cause of inflation in the US is the global energy crisis. All statements that US inflation is a temporary event were based on the erroneous hope that demand for hydrocarbons would soon stabilize. Today, however, it has become clear that this will not happen. As a result, the States even had to unpack their strategic oil reserves and enter the world market with it. However, all this was in vain, as the price of oil is already approaching $100 per barrel. Price of oil started rising before Ukrainian crisis. It is true that current crisis is certainly making it even worse.

Such high inflation in the USA has not been seen for more than 42 years!

The world simply no longer has enough energy resources to meet all the needs of the world economy. Russia controls around 23% of energy exports in the entire world economy (oil, gas, coal, electricity). Any provocation of Russia will only raise energy prices.

The United States is well aware of this.. Without long-term access to resources, it is impossible to contain inflation, since energy is the basis for the production of any product and service. It seems that fracking is approaching its maximum. It probably already happened. Not to mention that energy acquired by that methodology is expensive. Only weak Russia would allow plundering of its resources as during Yeltsin era. All sanctions introduced by US and EU against Russia since 2014 simply failed.

US dollar is not only currency but commodity as well

Remember the times when the price of oil reached the mark of more than $140 per barrel? But even then there was no such inflation in the US. Why? It’s simple: oil can be arbitrarily expensive – the United States will always buy it and in any quantity. But what to do if there is no physical oil? Then the price is absolutely not important – it still will not be enough for everyone.

Importance of “petro-dollar”

How is oil (and most other goods) traded on international markets? Saudi Arabia has made agreement with US that all oil trading will be in US dollar. Other oil producers (including USSR) followed. That means that anyone with need to buy oil would have to pay it in US dollar. Many were forced to buy US dollar making it become some sort of a commodity. That is aloso one of the reasons of it being “reserve currency”.

US and the rest of the “west” relied od cheap energy and commodities to support their growth, high living standard and world domination. In their greed they “exported” manufacturing industries to developing countries (China being one of them some 20 years ago). That made American rich class even richer. It also deprived American government revenue from taxes. Accelerated development of the “third world” countries also means higher demand for energy and resources.

V.V. Putin, in a recent address to the people of Russia, during which recognition of the independence of the DPR and LPR was announced, confirmed what has been obvious for a long time – US sanctions are aimed at curbing the development of Russia. Nothing to do with democracy, human rights, ot any other reasons that CNN/BBC would like you to believe.

As long as there is government in Moscow that will not allow pillaging of Russian natural resources, there will be pressure through sanctions and attempts to surreound it with unfriendly regimes in their neighborhood. Prices of natural gas went through the roof not because of Russia using it as a weapon but because someone in EU decided to go “green” overnight. It failed miserably.

Russia opens doors for Iran’s Eurasian integration

The January meeting between Raisi and Putin may have seemed disappointing, but now Russia is opening the door for Iran’s Eurasian integration.

On January 20, Iranian President Ibrahim Raisi traveled to Moscow to meet his Russian counterpart Vladimir Putin. The purpose of developing bilateral relations between the two countries at the highest level.

Among the topics for discussion by the two leaders were their common regional and international issues. As well as the Vienna talks on Iran’s nuclear program, and regional cooperation in Eurasia.

Contrary to expectations and positive statements made before the meeting, the visit did not end with the announcement of a grand strategic agreement. Unlike the one between China and Iran a year ago.

However, the visit brought the negotiations between the two sides to a higher level and promoted Iran’s economic integration into the Russian-Chinese Eurasian architecture.

Big hopes, not grandiose announcements

In recent years, both improving relations between Tehran and Moscow and focusing on strategic partnership have become particularly important tasks for Iran.

Additionaly to working to build up trade and economic ties, which is a priority for Iran, which is under sanctions, an additional impetus may be given to the development of military-political cooperation in the future.

October 2021 – Interfax, citing Iranian Foreign Minister Hossein Amir Abdollahian, announced that Tehran was ready to establish a strategic partnership with Moscow and that both sides were expected to sign documents on an agreement in the coming months.

According to the agencyTASS , both sides were close to completing work on a document on comprehensive cooperation for a period of 20 years.

Timing is important for both countries. Mojtaba Zulnur, chairman of Iran’s parliamentary committee on national security and foreign policy, told Mehr news agency that in order to overcome US sanctions, Iran seeks to conclude a partnership agreement with Russia. Similar to the agreement between Tehran and Beijing.

However, contrary to expectations and some statements made prior to the Iranian leader’s trip to Russia, the visit of President Raisi, at least for the moment,did not lead to a major breakthrough on this front. This process may take some time and may, at least for Moscow, be related to the outcome of negotiations on Iran’s nuclear program.

However, two recent events involving Russia and Iran have had significant resonance. First, the joint Russian-Chinese-Iranian naval exercises in the Indian Ocean. Second, Iran’s relationship with the Eurasian Economic Union (EAEU) along with the implementation of the North-South International Transport Corridor (ITC).

Will Iran join the EAEU in the near future?

Iranian political analyst and former editor-in-chief of the Fars news agency Mostafa Khoscheshm instead says that Russia appears to be pushing for Iran to join the EEU. “Negotiations,” he says, “are already underway . “

In 2019, the Preferential Trade Agreement (PTA), signed between Iran and the EAEU in 2018, came into force.

The agreement provided for lower tariffs on 862 types of goods. 502 of them were Iranian exports to the EAEU. As a result, trade increased by more than 84 percent between October 2019 and October 2020.

According toVali Kaleji , an Iranian expert on Central Asia and Caucasian studies, this trade volume was achieved at a time when the US under former President Donald Trump withdrew from the Joint Comprehensive Plan of Action (JCPOA) in May 2018 and followed a policy of “maximum pressure” against Iran .

In October 2021, Iran and the EAEU started negotiations on the transformation of the SPT intoFree Trade Agreement (FTA). If this is achieved, it will lead to a significant increase in the volume of trade between Iran and the EAEU, also known as the Union.

Both Moscow and Tehran have reasons to insist on further integration of Iran into the Union.

Both sides have reasons to support further integration

For Iran, this opportunity will provide improved access to Eurasian and European markets. It will also provide EAEU member states with greater access to the Persian Gulf and the Mediterranean Sea. For this reason, Moscow may be thinking one step ahead.

Moscow views the signing of an FTA agreement with Iran as a decisive step for Iran’s accession to the Union.

Russia has concerns that if Iran reaches an agreement with the US on its nuclear issue, there could be positive shifts in Iranian policy towards the West. This may not serve Russian interests in Western Asia, especially in Syria.

For Russia, a nuclear Iran is preferable to a pro-Western one. For this reason, Russia would be happy to accelerate the integration of Iran into the Eurasian regional institutions.

Iran’s entry into the nine-member Shanghai Cooperation Organization (SCO) should be viewed from this perspective. Moreover, with the accession of Tehran to the EAEU, neighboring and friendly countries such as Iraq and Syria may follow.

On December 27, 2021, Iran and Iraq agreed to build railroad linking the two countries. The 30-kilometer railway will be strategically important for Iran. It will connect the country to the Mediterranean Sea via the Iraqi and Syrian railways.

It would be a win-win situation for both China and Russia. The situation in which China, as part of its Belt and Road Initiative, and Russia, as part of itsThe North-South International Transport Corridor would have direct rail access to the Mediterranean.

Preventing Turkey access to the Caspian Sea

This route will also compete with India’s Arab-Mediterranean Corridor. One that is connecting India to the Israeli port of Haifa via various UAE, Saudi Arabian and Jordanian railways.

Thus, for China and Russia, strengthening the geopolitical and geo-economic position of Iran in the region is an important step. From Russia’s perspective, having a direct land route through the Levant to the Mediterranean would bolster its strong base in Syria.

It is for this reason that Iran acted prudently in response to the recent Azerbaijani provocations on the border with Armenia. Tehran feared that Turkey would gain direct access to the Caspian Sea and Central Asia through a possible “corridor” from southern Armenia.

For Iran, this would be tantamount to expanding NATO into the Caspian Sea and further towards China. Consequently, the west-east trade route would pose a serious threat to Iran and Russia and isolate them in Eurasia.

According to Khoscheshm, “The hostility from the Western bloc has brought Iran and Eurasia closer to each other, and this has given the Russians and Chinese a strong motivation to accelerate Iran’s entry into the Eurasian bloc in order to strengthen joint economic and geopolitical cooperation and prevent US infiltration into the region.”

Thus, Iran’s accession to the EAEU is a win-win situation for both Moscow and Tehran. Russia would strengthen its geo-economic and geopolitical position in the Middle East, while Iran would have rail links with Russia and Europe and further expand Moscow’s influence in the region.

However, this ultimate goal may still take time to achieve and will face challenges from the US and its allies in the region.

Confidence in the face of uncertainty

The possible entry of Iran into the EAEU will attract investment from neighboring countries in the underdeveloped rail link between Iran and Russia in the Caucasus region.

The opening of communication channels between Armenia and Azerbaijan as part of a tripartite statement dated November 9 will facilitate trade and cargo transportation in the region within the North-South transport corridor.

Under such conditions, the rail network is very important, since the volume of goods transported by rail is much larger and faster than by land and road routes. However, the implementation of these projects is not yet certain.

The state-owned Russian railways halted their projects in Iran in April 2020 due to concerns about US sanctions. Such a decision would have an impact on other programs within the framework of the Russian-Iranian initiative to create a North-South transport corridor.

Both sides will have to wait to overcome US sanctions, as economic routes are always a win-win situation.

By joining the EAEU and integrating into the Eurasian regional organizations, Iran would strengthen its geo-economic position as a regional transport hub, opening the West Asian gate for Moscow’s railway access to the Eastern Mediterranean.

Russia and China oil supplies through Kazakhstan

Russia and China signed an agreement on oil supplies through the territory of Kazakhstan for 10 years. This became known as a result of the visit of the Russian delegation headed by President Vladimir Putin to Beijing. Rosneft revealed the details of the new agreement.

Rosneft and the China National Petroleum Corporation (CNPC) have signed an agreement on the supply of oil to Chinese refineries through the territory of Kazakhstan. It will be valid for 10 years. The press service of Rosneft reported on the results of the visit of a Russian delegation led by President Vladimir Putin to Beijing on Friday.

It is specified that 100 million tons of Russian oil will be sent to refineries located in the northwestern part of China. Also during the visit, agreements were signed in the field of low-carbon development, digitalization and technological cooperation.

Rosneft’s total oil supplies to China since 2005 amounted to 442 million tons of oil. The company occupies a leading position among oil exporters to China. It is annually providing 7% of the country’s total demand for raw materials.

Russia and Mongolia moved on to the stage of designing the Soyuz Vostok gas pipeline to China. It is planned that its capacity will be up to 50 billion cubic meters of gas per year. The gas pipeline will pass through the territory of Mongolia. It will become a continuation of the Russian gas pipeline “Power of Siberia – 2”

China and Russia will strengthen integration cooperation in Eurasia

The leaders of Russia and China intend to intensify integration cooperation in Eurasia. According to a joint statement by Russian President Vladimir Putin and Chinese President Xi Jinping, published by the Kremlin press service on February 4. Moscow and Beijing have coordinated their positions on foreign policy issues.

Work on linking the development plans of the Eurasian Economic Union and the One Belt, One Road initiative is planned to be strengthened. It is noted that this is necessary to deepen practical cooperation between the EAEU and China, as well as to increase the level of interconnectedness between the Asia-Pacific and Eurasian regions.

“The parties confirm their focus on the parallel and coordinated formation of the Greater Eurasian Partnership and the construction of the Belt and Road in the interests of developing regional associations, bilateral and multilateral integration processes for the benefit of the peoples of the Eurasian continent,” the text says.

The statement also notes that Beijing “ treats with understanding and supports” the proposals put forward by Moscow on the formation of long-term legally binding security guarantees in Europe.

International Law rather than “certain rules developed in a closed circle”

Russia and China intend to jointly oppose attempts to replace international law with “certain rules developed in a “close circle” by individual countries or blocs of countries. “Putin and Jinping also stressed that countries are unanimous in understanding that “democracy is a universal human value, and not the privilege of individual states”. Therefore, attempts by “individual states to impose their” democratic standards on other countries … in fact, represent an example of trampling on democracy and retreat from its spirit and true values.

On the eve of the visit to Beijing for the opening of the Olympic Games, Putin published an article “Russia and China: A Strategic Partnership for the Future”. In that article he stated that Russian-Chinese relations have reached an unprecedented level of “comprehensive partnership and strategic interaction.” He emphasized that the foreign policy coordination of Russia and China is based on close, coinciding approaches to solving global and regional problems.

How the United States is destroying the industry of Europe?

2022 promises to be a very difficult year for the European economy. The German “greens” under the flag of ecology staged a blackout in the country. According to open data, many European enterprises decide to close production until better times. Who benefits from all this?

Gloomy prospects

At the time of this writing, gas prices at European hubs are around $1100-1200 per thousand m³. This is 12 times more expensive than a year earlier. Many agencies predict that this trend will continue. And the margin of safety of the industry is already at the limit.

The decline in gas prices in Europe at the end of December was due not only to the warming weather, but also to the fact that many enterprises simply began to stop production. As a result, gas consumption also decreased.

“The sky-high prices for natural gas provoked massive reductions in industrial production. In the fourth quarter, the UK industry reduced gas consumption by 54%, and Northern Europe in the last week of 2021 by 7%,” Bloomberg reporter Stephen Staprzynski tweeted.

Recall that the producers of nitrogen fertilizers were the first to feel the impact of the energy shortage. They started closing back in October last year.

The actions of gas exporters demonstrate that they do not intend to lower gas prices below $1,000 per thousand m³. This is clearly evidenced by the reduction of supplies to Europe by Gazprom to a 6-year minimum and the turn of American LNG tankers to Asia. We wrote about thishere .

After all, the goal of each manufacturer is to get the maximum profit with the minimum amount of transportation.

With such energy prices, many European enterprises are not competitive, and no one needs their goods. Here and the Bloomberg edition asserts that the tendency to reduce production in Europe will continue. And you have not forgotten that Bloomberg is one of the leading American media, not European ones.

Blackout in Berlin

The imbalance of the EU energy system is not only hitting industrialists and businessmen, but also the population. For example, on January 9, a major blackout was recorded in Berlin. An accident occurred due to overloads in the power system:

“On Sunday, January 9, in the afternoon, part of Berlin experienced a blackout. More than 180,000 residents and four hospitals in the German capital were left without electricity and heat supply. Heat supply was fully restored only by Monday morning.

At about 2 p.m. local time, the Klingenberg combined heat and power plant went out of order. “Due to a fault in the external power grid, the CHP plant went out of service,” a spokesman for Vattenfall told Der Tagesspiegel. “A defect “worked” at one of the substations, which affected only the gas-fired thermal power plant,” Interfax reports.

At the same time, the district office of Lichtenberg County advised residents to keep warm with extra clothes and blankets, and not to use a gas stove to heat the apartment.

Such incidents occur due to the imbalance of the power system. After all, some of its nodes are extremely loaded due to the lack of certain types of energy carriers or the rejection of them due to pressure from the “greens”.

It would seem that a quick certification of SP-2 can save the EU from this. So what’s stopping you?

American footprint

Russia mainly supplies gas under long-term contracts, which are signed for 10-20 years or more. At the same time, consumers receive fairly cheap gas, which is not strongly dependent on prices in the spot markets.

Gazprom insists that the long-term contract is a guarantee that the gas it produces will be in demand. And the company produces gas under these guarantees. But European politicians, for some reason, oppose both the certification of SP-2 and long-term contracts.

And yet the general attack comes from the United States. With enviable regularity, bills are submitted to the Senate imposing sanctions not only against Nord Stream 2, but also against any companies or commercial enterprises that will cooperate with this project.

That is, a conditional German company that buys gas through this gas pipeline is proposed to be banned from cooperating with American corporations and absolutely any activity in the United States.

So Washington is directly involved in the energy crisis in the EU, in the de-industrialization of the European economy. Question: What is the likelihood that European politicians who oppose SP2 are covert agents of influence?

On the other hand, the German newspaper Bild recently reported that the new Chancellor of Germany, Olaf Scholz, has been preparing for a meeting with the Russian president for 2 weeks. He plans to do so as early as January 2022. Experts confirm that closed talks with the United States have greatly alarmed the new German prime minister. I wonder why? Apparently, the Germans have something to say in this situation.

Gazprom manipulates European shortsightedness

On January 14, it became known that the Russian gas monopoly filed a lawsuit against the Polish state-owned company PGNiG for $7.4 billion. According to Gazprom, since 2017 it has been selling gas to Poland at a reduced price.

Recall that in 2020, Poland won a lawsuit against Gazprom for $1.5 billion. The Polish side appealed to the prevailing gas price on the spot market below $100 per thousand m³.

In other words, the Poles thus created a dangerous precedent. And therefore, using the same argument about the gas price at the current moment in the region of $1,000, the Russian gas monopolist has the right to sue Warsaw for the lost profit since 2017. Thus, one more short-sightedness of the supporters of progressive ideas in the energy sector was revealed.

It makes you think. Could the organizers of the ecological transition be aware of the consequences of their decisions? Or did they really mean it? Investigative practice in such cases recommends looking for someone who benefits. Then is it possible to assume that they were sponsored by mining companies, for example, from the USA? Or maybe from Russia? Or maybe USA and Russia collaborated?

These questions will probably remain unanswered.

The new anti-aircraft missile system 98Р6Е “Abakan”

The features of the highly specialized anti-aircraft complex of the Russian design “Abakan”, capable of withstanding ballistic missiles, have become known. At the same time, the new air defense system is as automated as possible. It is analogous to the well-proven Israeli Iron Dome system

SAM is not strategic, and this is emphasized by its developers. “Abakan” is not a competitor to the S-300 and S-400. This is a highly specialized system, and this is its main feature. The tasks of “Abakan” include the interception of operational-tactical ballistic missiles, as well as hypersonic targets, for other targets it does not work as efficiently.

The anti-aircraft missile system ZRK 98R6E “Abakan” used missiles from one air defense system, and the radar from another. When creating it, the developers took missiles from the Antey-4000 anti-aircraft system and a radar station from one of the promising anti-aircraft systems. Which one is not disclosed. This combination made it possible to make “Abakan” unique in its characteristics.

The future customer of the complex was one of the countries of the Middle East. It required specific characteristics. A multifunctional complex of the S-400 or S-500 type was not required. The order was for a highly specialized anti-aircraft complex capable of fighting ballistic targets.

Moreover, it had to be as automated as possible. Russian developers from “Almaz-Antey” managed to create in a short time the air defense system “Abakan”. It fully meets the requirements of the customer. The complex is designed to combat single-stage missiles with a speed of up to 3 km per second.

The air defense missile system is capable of hitting targets at an altitude of 25 km and a range of up to 45 km. The complex can be easily integrated into any anti-missile system and can operate both autonomously and in conjunction with other air defense systems.

Part of a bigger system

The complex was created to work in tandem with Russian long-range anti-aircraft missile systems. Its task is to supplement them. It is designed to help can create a modular air defense system. It is known that the same S-400 has a limited number of launchers, and if you borrow a certain number of missiles to intercept complex targets, then the number of ammunition for intercepting conventional targets will already be less than required.

Here “Abakan” will come to the rescue, which will deal with complex ballistic targets. The complex is capable of destroying both modern and advanced non-strategic ballistic missiles in the air. Also, “Abakan” can work in conjunction with foreign anti-aircraft missile systems. Any country can expand the capabilities of its air defense-missile defense system with the help of “Abakan”.

The combination of S-400 and “Abakan” is becoming especially relevant. This takes place in the context of a bet on the so-called oversaturation of air defense/missile defense. It is when a large number of objects are simultaneously attacked. This is most clearly seen in the technology of “drone swarm” being created in many developed countries. It theoretically can break through almost any air defense, since there are not enough missiles for all these kamikaze drones and attack drones.

Similar to the Israeli Iron Dome

“Abakan” can work not only in conjunction with other air defense systems, but also independently. The complex is capable of performing tasks that are inherent in such a tactical missile defense complex as the Israeli Iron Dome. Experts call the new Russian air defense system a universal air defense-missile defense system, which can be used to protect important military-industrial facilities, including command posts, from enemy strike weapons.

For the first time, the Abakan air defense missile system was presented at the international exhibition Dubai Airshow 2021, held in the United Arab Emirates in November this year.