Why Russia is in its weakest position since 2022
Is it true that the Russian economy is on the verge of collapse and the empire will soon fall apart?
No.
But the truth is that Russia is now in its weakest position since 2022. And as long as the war continues, the situation will constantly worsen. And all these belligerent statements by Putin, where he once again showed Europe Kuzka's mother and once again put the "Oreshnik" on combat duty, should not be misleading.
In 2022, Russia had money, weapons, a trained army, and the element of surprise. Now, everything that could have gotten worse has gotten worse.
Russia has exhausted its accumulated oil dollar reserves. 30 years of savings have been burned in the war. The Russian economy has stopped operating in the mode of "take money, spend it on war, have economic growth." Economic growth has ended because it was based on burning state money, which has run out.
There's nowhere to get money from, we can only print it. Every day of printing will bring us closer to a hypothetical "Venezuela," with runaway inflation and a shortage of goods. Not immediately, but very clearly. And the budget deficit will remain at a crazy level as long as the war continues. Because war is very expensive.
And they can't afford inflation, because they need to lower the key policy rate to get the non-military economy working at all. That's the trap. And there's no solution to this dilemma. Because you need to print money for war. And printing money doesn't let you forget about inflation. And inflation doesn't allow for long-term cheap money, which is needed for the economy.
The ruble can be weakened, and this will help cover a small part of the budget deficit. But this will provoke greater inflation. And again, the same vicious circle.
Of course, if they cover the budget deficit for only a year with the printing press, there will be no catastrophe. The crisis will simply deepen. And this could fuel Putin's irrationality, as he doesn't feel his clock is ticking. However, the situation will worsen with each day of printing, weakening an already weak position since 2022.
In addition, oil prices are currently at their lowest since 2021. And the market itself has become more limited for Russia. The European gas market has been lost altogether. And it won't be brought back in the medium term.
Russia has a shortage of labor resources. Russia needs migration for its economy. But at the same time, fascism dominates Russia, where people are urged to hate "others." And again, it's a trap.
Without migration, economic stagnation will be even greater. But migration is impossible because an atmosphere of hatred is being spread in society, and migrants are immediately wanted to be sent to war. Another trap.
Russia has exhausted its weapons stockpile, accumulated over 80 years, since the time of the Soviet Union. Yes, they are making missiles and more drones, but they no longer have all those tanks, armored personnel carriers, and other equipment that had been stored in warehouses since the Brezhnev era, ready for a march on Berlin, Paris, or Washington.
Drones and missiles can strike our energy infrastructure. But they are not decisive on the front lines. So this is a weapon for the Ukrainian home front. And there is a lot of it. But it is designed to strike at our minds. And there, after all, we are our own masters. At least we should be.
Well, a peace agreement from Russia now would be unexpected, not a continuation of the war. And this is not an analysis of the balance of power between Ukraine and Russia or Russia and Europe. This is about Russia's own dynamics. And this is the only thing that can make Putin negotiate in good faith. If he is rational.
But this is where the biggest question lies. And when he talks about "piglets," the question of his rationality only grows. Especially when a person who has very quickly weakened his country puffs out his cheeks and says that Russia has finally gained true sovereignty.
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