Comments by "XOXO" (@xoxo9970) on "Explain 2 Me: Russian Declining Incomes u0026 Rising Prices?" video.

  1. Russia's full-scale war against Ukraine continues with unabated intensity and far-reaching consequences for civilians. At the same time, Russia spreads propaganda to try to portray the Russian economy as more efficient than it is. As part of countering Russia's propaganda, the government has today tasked the Economic Institute with analyzing the economic development in Russia. Russia's full-scale war against Ukraine continues with unabated intensity and far-reaching consequences for civilians. At the same time, Russia spreads propaganda to try to portray the Russian economy as more efficient than it is. As part of countering Russia's propaganda, the government has today tasked the Economic Institute with analyzing the economic development in Russia. Russia's full-scale war against Ukraine is taking place on the ground, in the air and at sea. At the same time, Russia spreads propaganda, among other things directed at the West and global partners. As part of this, Russia spreads an image that the Russian economy is resilient and growing, which is an image that has spread. At the same time, there are many indications that the Russian economy is not as well-functioning as Russia claims. Russia's investments in its war industry have led to labor shortages and high inflation. Several indications also indicate that the market's confidence in the Russian economy is low - including that Russian deposits with foreign banks have increased sharply since the invasion and that government bond interest rates are rising rapidly. - Russia spreads an image of a resilient economy that is growing at the same time that several figures show that the economy is not doing quite as well as it seems. Russia's economic propaganda needs to be countered. - How Putin describes the Russian economy is part of the war propaganda. According to the Russian central bank, inflation in Russia was 8.6 percent in June 2024. This can be compared with inflation in Sweden, which according to the CPIF measure was 1.3 percent in the same month.
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  2. Russia's economic mobilization after the February 2022 invasion of Ukraine has so far happened gradually and to a limited extent. The government has focused on minimizing the war financial costs and has chosen not to actively try to transform the economy into one war economy. Within the state apparatus there are those who want to pursue a cautious economic policy by keeping public spending down, partly by those who want to mobilize the economy in higher degree to finance both the war in Ukraine and the confrontation with the West. The government has so far chosen to try to find a golden mean between these positions. If the Russian system is put under greater stress, either through stricter sanctions or on due to a protracted war, the political leadership may find it difficult to maintain this balance. It will also become more difficult to insulate the Russian population from the economic effects of the war effects. The war further leads to a militarization of the economy, which creates lock-in effects. It would be both economically and politically painful for Russia to reduce military spending, even if the war in Ukraine is paused. Russia's leaders also want to rebuild and expand the Armed Forces. Therefore, it is likely that Russia's economy will remain structurally militarized as long as the confrontation with the West continues. Some analyzes highlight that Russia has adopted a war economy by drastically increasing the military spending and expand the defense industry at the expense of the civilian sector. In this way, they claim, Russia has managed to greatly increase the production of military equipment. This narrative contributes to an image that it is difficult or impossible for the EU and the West to match Russia's defense industrial investment. Rather, open sources indicate that the Russian government is doubtful to further increase military spending and transition to a war economy. In Russian thinking means war economy that the whole society mobilizes all available resources to win war. Russia has Although military spending has increased in the last two years, it is still not close to the levels that The Soviet Union spent during the Cold War, even during peacetime. There is every reason to examine how productive and resilient the Russian defense industry actually is, even if it has received access to increased financing and more labor. Economically speaking, Russia is in a precarious situation. Russia needs funding at the same time its war effort in Ukraine, maintain tolerable living standards for the population and continue to pay for imports of inputs and consumer goods from China and other countries. In contrast to Ukraine receives no financial support from other countries, Russia, and thus has to rely entirely on the domestic economy and a shrinking foreign exchange reserve. The Western sanctions mean that Russia finds itself in a dependent position vis-à-vis its trading partners in Asia. Several Russian investment in infrastructure necessary to manage if eastward trade flows have been paused or put on ice. Russia finds itself in a dependent position vis-à-vis its trading partners in Asia. Several Russian investment in infrastructure necessary to manage if eastward trade flows have been paused or put on ice. In this context, it is interesting to examine the extent to which Russia has mobilized it domestic economy since the attack on Ukraine in February 2022. My conclusion, based on the analysis of public spending and relevant legislation as well as reading Russian media and articles in Russian magazines, is that the Russian leadership has been slow to mobilize the domestic economy. Russia inherited an extensive system of economic mobilization from the Soviet Union, but it was abolished and Moscow has so far chosen not to transition to a war economy. Russia spent, conservatively estimated, around 6-8% of GDP on the military in 2023, that compare with approx. 15–18% in the Soviet Union during the 80s. Most likely, the Russian leadership wants to continue to maintain the illusion that the war is a limited special operation that does not affect the majority of the Russian population. In addition, President Putin has said that Russia should avoid being drawn into an arms race with the West which means that the Russian economy, like the Soviet economy, is cracking due to high military spending, something he repeated in his line speech on February 29, 2024. Nevertheless, economic factors become more important the longer the war goes on. Russia must continue to raise resources for the war effort. Military spending has gradually risen in 2023 and in the budget for 2024, and is now at the highest level since the dissolution of the Soviet Union. Furthermore, Russia has passed laws that enable increased government interference in the economy. For example, the state can detailing working hours, forcing companies to accept government contracts, and imprisoning business leaders who fail to deliver on these contracts. The increasing economic mobilization is coordinated by a special coordination council headed by Prime Minister Michail Misjustin. It includes a number of ministers as well as the leaders of the most important state-owned companies, and has the task of coordinating support for the war effort in Ukraine: supplies of military and other materiel, development of the defense industry, provision of transport, logistics, medical care, expansion of fortifications and payment of social spending. As the war progresses, the Coordinating Council takes on a more important role and responsibility for a growing military-related budget. Although Russia has not yet adopted a war economy, there are therefore signs that the country is moving in that direction. The economic mobilization that has begun does not appear to be the result of an active choice or form part of a long-term plan or strategy. Rather, it is the result of short-term decisions such as driven by the events of the war. The Russian government's economic policy has since February 2022 has been reactive and aimed at minimizing the economic damage of the war and sanctions. Vladimir Putin has so far not formulated a vision for the future or credibly explained how the Russian economy must develop. The new investments in infrastructure and social improvements which he promised in his line speech in February 2024 are relatively modest (around half a percent of GDP per year until 2030, if implemented). Inside and outside the state administration there is therefore a debate about whether the Russian state should do more to stimulate the economy. The group that currently has the most influence over economic policy, the "technocrats", advocate reduced public spending and maintaining the market economy that still exists. However, there are other groups, not least in the security sphere, which wants to see greater government involvement in the economy and increased public spending, either for new investments in the economy or for the military. Putin has so far balanced between these positions. This balancing act becomes more difficult the greater the pressure on the system i form of setbacks in the war or effects of sanctions. A transition to war economy with greater government involvement and even higher military spending remain a possible option. For the government could this option possibly appear as a way to create cohesion and support for the war. A such development could possibly lead to some increased defense industrial production in the long run, if new production lines are established. In the coming years, however, it is mainly the availability of labour and technology rather than funding which is limiting defense industrial production. The belated but increasing economic mobilization takes place in combination with an increasing militarization of the Russian economy. Although Russian society has not converted to one war economy, the military sector has assumed a special position in the Russian economy. The defense industry is prioritized and gets access to the best consumables and the most qualified the labor force. The military-industrial complex has become the growth engine of the economy and is working as an important distribution channel for the energy-related income to the regions. The Russian one the military leadership also has the ambition to rebuild and expand the Armed Forces The forces according to Defense Minister Sergei Shoigu's speech in December 2022. For these reasons will that, regardless of what happens in Ukraine or who leads Russia, it will be very difficult for the leadership to cut military spending or roll back the militarization of the economy. The experiences from the 90s shows how difficult it is to try to demilitarize the Russian economy, even under relatively favorable conditions external conditions and with Western support. There is a risk of the militarization of it Russian economy leads to lock-in effects, given that interest groups connected to it the military-industrial complex takes on an increasingly heavy domestic political role.
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