Why is Russia’s GDP rising in the midst of a costly war?

T. Belman.  I disagree with the author about what Putin wants. I think he will settle for the four provinces and Crimea if there is an early settlement, otherwise he will take Odesa and all land east of the Dnieper.

By Gamaliel Isaac, AM THINKER

On July 29, 2023, Jamie Glazov posted an interview with Andrei Illarionov, a former economic adviser to Vladimir Putin.  The title of the interview was “Inside the Mind of Putin.”  Dr. Illarionov said that Putin wants to restore Russia to what Putin calls “historical Russia.”  Putin’s writing and speeches indicate that historical Russia refers to the Russian empire that existed from 1721 to 1917.  The modern-day countries with territories once controlled by the Russian Empire include Russia, Ukraine, Belarus, Latvia, Lithuania, Estonia, Finland, Poland, Moldova, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan, Tajikistan, and the United States (Alaska and parts of California).

Dr. Illarionov spoke about how the Russian GDP has increased significantly during the war with Ukraine.  It is counterintuitive that Russia’s GDP is increasing while it is fighting a costly war with Ukraine.  Dr. Illarionov blamed Joe Biden’s policies for making this possible.

The Biden administration issued a ban in March 2022 against purchasing crude oil and other petroleum products from Russia, immediately after the Kremlin’s invasion of Ukraine.  The problem is that the Biden administration did not ban purchasing gasoline and other products refined by other countries from Russian oil.  The result of this policy is that countries like China, Singapore, Turkey, and India buy the oil from Russia, refine it, and sell the refined oil to the United States.  Biden’s ban accomplishes nothing other than laundering American refining jobs to other countries, some of whom are hostile to the United States.

Biden’s war on domestic production of fossil fuels results in America buying more foreign oil than it would otherwise.  In addition, Biden’s policies lead to America exporting less oil and gas products to Europe so that Europe winds up buying laundered Russian oil as well.

Russia, in the meantime, is enriching itself by expanding its gas fields and its pipeline infrastructure for delivering oil and gas to Europe and China.  In addition, Russia is financing environmental movements in Western countries to stop domestic Western production of energy so that Western countries have less money to support their militaries and so that they become more dependent on Russian oil.

The environmental movements have been effective in accomplishing Russia’s goals.  Germany has shut down all its nuclear plants.  The United Kingdom has announced that by 2025, all its coal plants will be shut down.  Germany and several other European countries have largely banned fracking.  The result is that the high cost of energy is impoverishing the oil-dependent West, which can no longer afford to compete with the growing military power of Russia.

There is another country that is hostile to the United States and whose military is growing more powerful by the minute: China.  China, like Russia, knows the importance of energy when it comes to funding its military and has increased its coal output to 11.93 million tons a day.

While Russia’s and China’s military might has grown stronger, Biden is cutting spending on America’s military and is spending inflating dollars on green energy instead.  America’s military has become weaker, faces a recruiting crisis, and is being demoralized by Biden’s cuts and woke racial policies.  America’s navy was on a par with China ten years ago, but today, China has the largest naval fleet in the world.  Russia has hypersonic missile that can fly at nine times the speed of sound, which is too fast to follow with radar and which the United States can’t match.

Russia and China have officially declared their relations as not allies, but better than allies.  They recently conducted joint military exercises by the Aleutian Islands and the Sea of Japan.

The United States needs to learn from Russia and China and grow its energy sector and build its military.  Instead, while Russia and China prepare for war, the Biden administration makes war on domestic fossil fuel production, buys Russian oil, and weakens America’s military.

August 3, 2023 | 10 Comments »

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10 Comments / 10 Comments

  1. Yes, GDP is growing, but this is a soap bubble. GDP growth is due to the rapid fall of the ruble, and not due to production. Already today one dollar costs 91 rubles. The real economy has nothing to do with GDP growth. I have written about our real economy before (see my answer to Peloni)
    Throughout this year, Russia has managed to maintain social stability in the country. My country still has reserves for this. In addition, when money is invested in the military-industrial complex (MIC), it creates additional employment, but takes a significant amount of the budget. Mobilization and specialists who left Russia have created a vacuum in the labor market for science-intensive specialties. Unfortunately, the money invested in the military-industrial complex has a one-time use – tanks, missiles and drones are destroyed at the front, these resources do not work for the economy in the long run. Investments will be reduced in enterprises that do not work for the war, and this procedure will be done in the first place. Of course, Putin is still partially sane, and understands that social support must be kept afloat. Pensioners, disabled people (for some reason, there are more and more disabled people, didn’t they come from the war?) And their children (future voters) are the core electorate on the eve of the so-called elections in 2024. I think a significant deterioration will be in autumn-winter . There will be a new wave of layoffs, a decrease in wages (except for military enterprises), and mass mobilization (and an escape from it) are inevitable – and this is another outflow of specialists.

  2. The Russoskeptic podcasters, such as “Joe Blogs, claim that the Russian economy is hurting badly, and that the sanctions are biting. They site the major decline in revenue from petroleum products to foreign countries, The volume of Russian exports abroad has not diminished much, but in order to sell these exports, the Russin government has been forced to sell them at bargain-basement prices because of the sanctions. Because of high interest rates, the cherished goal of owning one’s own home and moving out of the rapidly deteriorating :Khrushev apartments” built in the 1950s has become out of reach for most Russians, While food, which is heavily subsidised, if reasonably cheap and abundent, most other consumer goods are very expensive and most Russians can;t afford them. For example, it nearly impossible now to buy a car unless you are rich. The standard of living has remained high in Moscow and St, Petersburg, at least in its higher-income neighborhoods. But living standards in provincial cities and especially in rural areas have taken a big hit The amount of poverty in these vast regions has increased, So many men of military age have been called to the colors and are in Ukraine that industrial production has fallen markedly, resulting in a severe labor shortage. Many factories have been forced to close, either temporarily for the duration of the war, or even permanently. Much of Russian industry relies on technology produced in the West, and access to this technology has become extremely diffricult. Even Putin in his public speeches has acknowledged that this is a serious problem. A ‘brain drain of the most highly skilled Russian engineeres, technicians and other professionals has been widely reported, with many now having emigrated to the West are working in Western countries. There has also been some emigration of less skilled people to the Asiatic republics, such as Kazakhstan and Uzbekistan, by less skilled people. The motivations of many of these “little people ” are to evade the draft. Although the government has tried to avoid reporting the terrible suffering and heavy casualties of the soldiers on the Ukrainian front , these are widely known from letters and phone calls home. Ukraine needs an end to this war desperately. But Russia also needs one badly as well if there is ever to be a renaissance of the Russian economy.

  3. @Ted
    The most important thing for Putin is not the territory.
    Of course he’ll keep the territory that he has liberated + remaining parts of Donbass Kherson and Zaporozhie oblast.

    However de-Nazification, neutrality, no-foreign military in Ukraine, of course no NATO are the most important.
    Every other solution will be seen as the West buying time and preparing for another war.

    This is the same error that Israel made in Lebanon.
    Settled for a half-ass, unenforceable UN ceasefire with Hezbollah.
    Then Hezbollah has accumulated one of the biggest rocket arsenals in the world. Now rapidly upgrading their rockets with guidance system.
    Israel has not achieved demilitarization of Hezbollah and now is paying price. And the price of the war is going to be high and painful for both Israel and Lebanon.

    Now Russia is bigger than Israel, more capable of withstanding all sort of sanctions, they don’t need to fold under UN and other corrupt organizations pressures.

    UN is telling them that they are occupying Crimea, and they don’t give a crap. They know it is their land.

    Israel should make a strategic alliance with Russia.
    Russia recognizes Israel’s claim to the entire Mandatory Palestine West of Jordan.
    Israel recognizes Russia’s claim to Crimea and Donbass. (Optionally 2 more provinces.)

    Russia takes over America’s role is the Middle East.
    Supports the Jordan option, and liberation of Israel from Arab occupation.

    Israel makes joint weapon projects with Russia.
    Russian planes, with Israeli electronics will compete with the best American.
    Likewise Russian tanks and drones.

    I don’t see any moral reason why Israel should not support Russia.
    Russia may even prevail on Iran and make it drop their anti-Israeli hysteria.
    Ultimately it does not serve Iran. And Iranian strategic adversary is the United States, not Israel.

  4. @dreuveni

    In the first place CO2 concentration is not a threat and are not the major driver of climatic changes.

    Also the climatic changes are not something unprecedented, and there is no significant rise of ocean levels. (It is rising as it has been for the last 10,000 years.

  5. @Adam Dalgliesh

    Indeed he did not have any desire to invade and did everything in his power to avoid war. Virtually begged the West to negotiate. And the tiny army that he assembled (190k) was far from sufficient for occupying Ukraine.
    He was trying to make a point, to show the West that he is serious.

    Meanwhile Ukraine was killing thousands of Russians in Donetsk and Lugansk, and building fortifications on preparation for war with Donbass.

    The final straw was Zelensky claiming that Budapest agreement was wrong and demanding nuclear weapons. Next morning Russia invaded.
    Still hoping to negotiate, and indeed in May it looked like there could be an agreement, but then US and UK told Zelensky not to negotiate.

  6. Glazov is wrong.
    I have listened to Putin many times and it is very clear that he does not have any ambitions regarding Poland.
    He never even once said that Poland is a part of historical Russia.
    Ukraine is an entirely different case.
    The so called “Ukraine” is the original Rus, from where the Muscovy developed.
    As for the central Asiatic states e.g. Kazakhstan, etc. the situation is different.
    There has never been such country like Kazakhstan. It was created by Soviet Union, and the area was inhabited by both Turkic and Slavic peoples.
    The Russians in Kazakhstan constituted 50% of the population before the fall of the Soviet Union.
    The original Kazakhs were seminomadic, while Russians cultivated the land.

    The connection between Kazakhstan and Russia is indeed deep and historical.

    In Uzbekistan, Kirgizstan, Tajikistan, Turkmenia Russians constituted some 10%. Russia’s claims to these territories is more as a sphere of influence rather than part of the country.
    It used to be a part of Turkey’s sphere of influence.

    Only other country with significant Russian population is Latvia.
    About 1/3 of population is Russian.

    All of the above states are very new historically.

    Polish statehood and national identity, on the other hand, is exactly as old as Russia. Over 1000 years.
    There are no Russians living in Poland.
    Let me look it up…

    Yea, in the entire Poland there are 8,200 Russians constituting 0,02% of the population.
    They are happily married to their Polish husbands and wives and speak Polish.

    So the claim that Russia wants to include Poland has ZERO validity. It is Polish hysteria and propaganda lie.

  7. https://www.bbc.com/news/world-europe-60392259

    Ted,I can’t find the post under which I had commented that Putin has a history of lying. and you rightly requested documentation, I think this BBC piece at least gives us a start in this direction, Before he began the February 2023 invasion, Putin denied he had any intention to invade and even claimed the Russian military was with drawing soldiers from Ukraine

  8. So we have a lot of subjects here.
    1. Putin said over a year ago that if no reasonable partners can be found, Russia will take over the whole of Ukraine.
    2. When talking about energy, the west has lost its collective mind. While China, India and Russia enjoy developing countries status and burn all kinds of fuel like there’s no tomorrow, the west is passing legislation to prohibit the same. The so-called agreements to permit developing countries to postpone their adherence to global climate guidelines is being used to the limit and they are actually profiting from the west’s “reluctance” to do the same == win-win for them.