SocraticGadfly: No, sanctions haven't crushed Russia; it's BETTER in some ways

May 12, 2023

No, sanctions haven't crushed Russia; it's BETTER in some ways

In fact, per globally renowned economist James K. Galbreith, they may have helped Russian President Vladimir Putin in some ways. Andrew Cockburn notes how US sanctions (nowhere discussed by Hawkins) may have actually HELPED Putin do some internal reforms, working in part off Galbreith's paper. He also adds other tidbits, before you hit his paywall, like the ruble now trading vs the dollar at pre-invasion levels.  This trumps the US foreign policy establishment and the Nat-Sec Nutsacks™ or the NAFO Fellas. Oh people who really follow Russia-Ukraine war issues, and may have heard of Nadin Brzezinski? They were a nutter long before this. I'll certainly take Galbraith over that.

As for sanctions hitting Russia's war-funding ability? Galbraith notes that the Russian government (unlike Merikkka) was running an accounts surplus before the war, so it had cushion space. In addition, while half of that accumulated surplus was at the Fed, western banks, etc., and was frozen? Obviously, the other half was not.

As far as some Russian industries being hurt? Yes, Galbraith says its true. He adds that transshipments, interestingly often working through the three Baltic states (somebody's surely taking cuts) has mitigated that. He also noted that Russia addressed many other issues when the post-Crimea sanctions started in 2014. I've already noted here before that Russia became agriculturally self-sufficient in the wake of that. No wonder Putin celebrates global warming at times, eh?

Side note from Galbraith? Western countries wanting to truly and fully leave Russia had a variety of stranded assets that they have largely wound up selling at distressed prices.

Next, the oligarchs? Galbraith is simple — they're not the Russian state. They might not like their private assets abroad being frozen, but what can they do? (In some cases, I suspect some transfers and laundering have been done, for suitable cuts, anyway.)

The cut-off in Western products? Galbraith notes that (thanks to older version Jeffrey Sachs and others) Russia IS a market economy. So, to the degree possible, Russian manufacturers, service companies, etc., will fill these vacuums.

So, this:

The above covers the major points in the analysis of the Sonnenfeld team. Their evidence of sharp drops in consumer purchases at Moscow stores, of job losses as foreign firms exit, and the poor financial performance of major resource firms in the first half of 2022 are all logically derivative from these points. I dispute none of the stated facts. The problem lies elsewhere. It lies in the fact that the stated facts, taken together, may point to the opposite conclusion. Though with clear difficulties, they may indicate the potential for rapid recovery in Russia and the reverse in Europe, along with the consolidation of economic power inside Russia in hands aligned with the interests of the state.5

That footnote 5 is to the last piece WSJ reporter Evan Gershkovitz wrote before his arrest. Galbraith notes it attests to the Russian economy already becoming adaptive.

And, we're just halfway through a relatively short (16-page) piece!

Other issues, in brief?

On warfighting ability, Galbraith says he expects Russia stockpiled some high-tech stuff like avionics before the war. Trucks and tanks destroyed in battle? Russia certainly has better repair capabilities than Ukraine.

Continued warfunding ability? Oil etc. may have declined in foreign exchange levels but went up in price, even with Western "haircuts" and China freeloading on that. Grains went way up. Result? Russia's actually hauling in more foreign exchange.

Much of the rest of the piece is a call-out of various forms of fact-free handwaving by a few Nat-Sec Nutsacks™economists, often larded with American exceptionalism digs at poor, dumb, Russkies. Refuting Emily Blanchard, among other things, is what I noted above about Russia becoming agriculturally self-sufficient since the Crimea sanctions. Indeed, as I blogged back in 2010 in calling out Teapot Tommy, aka My Head is Flat, Friedman, Russia had become a net grains exporter already then. Confirming Galbraith elsewhere? Per that same link, Russia had been running governmental budget surpluses since 2001, as of that time. It was also EXporting computer software at that time. Now, much of that may have been to former USSR states, for various reasons. Nonetheless, a fact is a fact.

Related, on the grains issue? John Helmer notes that a 2020 update to Russian governmental agriculture food security focuses, with a link to a USDA piece, aimed to cut reliance on Western seed companies. It's part of a Helmer piece that looks at new Russian government 2023 farm "guidance" backed by the grain farmers' org but opposed by a berry farmers' one. One of the big takeaways from Helmer is that Bayer has still not fully pulled out of Russia and is still using weasel words to justify some degree of continuing investment. Helmer says Bayer appears to be afraid that, if it pulls out of Russia now, it will never get back in. Related to this, the 2020 standards were focused on further reviving internal, Russian-developed seed banks that atrophied in the later Yeltsin years. (And the early Putin ones, though John ignores that.) It's already paid off to a degree. More than 40 percent of corn and soybeans comes from Russian seed. Almost all wheat does. However, much of the potatoes and sugar beets, as of a year or two ago, still came from outside. There's a mix of state-funded and private seed banks being redeveloped. He concludes that this is another area where more cooperation with other BRICS countries is likely.

The USDA piece looks at Russian production, not seed sources, and self-sufficiency or beyond, or still short of that, by individual crops. It also has an English translation of the Putin 2020 food security update.

Update: Add this from the Spectator, via Mark Ames — the "stans" of Centra Asia, shades of Holland at the start of World War I, have massively increased imports of things like cars from Europe, and of course, from there, they're going to Mother Russia.

The conclusion?

The sanctions aren't just helping Putin in some ways. They're also helping Russian entrepreneurs, and yes, Galbraith uses that word. Stick THAT in your Treasury ass, Emily Blanchard.

Oh, I gave Brzezinski a copy of the link to Galbraith's piece, on Medium. I ignored their reply. As normal, I also made it a new post for myself on Medium.

And, then there was the Blue Anon last week saying they don't click on PDFs cuz viruses. Yes, that can happen, but, as if? Galbraith is stuffing his PDF with viruses? Anyway, I then gave "What you see" the link to Cockburn's original Substack. And heard crickets from him. And, I eventually muted said person. I had originally said I would post on Monday. I didn't, because I wanted to tweak, and because the Allen shooting and other issues gave me plenty of material for the start of the week. If he wanted to, he could tag me, if he missed this. He didn't.

In short, this seems to be an issue like BlueAnon tribalism on the lab-leak hypothesis at Wuhan Insttitue of Virology.

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