Anecdata on the Restructuring of the Russian Economy

Assessments of the state of the Russian economy have tended to one of two polar positions: Russia is paying terrible costs, losing “talent” and access to former Western partners and markets, or Russia has shown remarkable resilience, took a surprisingly small GDP hit for 2022, and consumers are carrying on more or less as usual, save for a few expected trouble areas like car parts where conditions are improving.

On my travels, I had a brief chat with a Russian in his 30s, who works for a major supplier to hospitals of consumables like gloves and catheters.1 He’s in the buying/sourcing area and is fluent in an impressive number of languages. Half of his family is in Ukraine, half is in Russia, and he blames the war on Putin.

He contends that the war mobilization is having an impact on the structure of the economy. He claims funding for health care has been cut, as shown by hospitals greatly extending payables to his company and other vendors. He also said spending on education had been cut, but we didn’t speak for long enough for me to get him to provide supporting factoids.

I have no reason to doubt his statement that his company is suffering from a slowdown in payments from hospitals. It’s an admission against interest. And back in my consulting days when I was doing competitor research, when insiders made remarks like that, they were reporting what was common knowledge in their field but hadn’t yet leaked out to the wider world.

This Russian businessman added that this diversion of resources to military would set Russia back in the longer term. He felt the country was still playing catchup (I didn’t have the opportunity to get him to unpack that; I assume he was referring to the long recovery from the disastrous 1990s).

It makes sense that the shift to a war footing would wind up diverting resources away from some sectors, particularly since Putin had drunken a bit of neoliberal Kool Aid is fiscally orthodox. So comparing this account to that of Gilbert Doctorow, iEarlGrey and the Alexes of The Duran, who have contacts in Russia, one can also infer that the Russian government has made some effort to preserve normalcy in the consumer sector and has engineered cuts in some “wholesale” sectors.

Any informed reader input very much appreciated.


1 This was a completely happenstance encounter. I had gone to a mall with a huge grocery store as port of my “seeing how the locals live” process. A friend here had airily said I could get a cab back to my hotel.

I stumble out of the mall and of course, even though the street is busy, there are hardly any cabs. I cross the street in the hope pickings might be better on the other side but they aren’t.

Some young-ish men are standing by parked motorbikes. I accost one and ask where can I get a cab. He said they are generally already carrying rides and I should use the app Bolt to call one. I said I wasn’t set up to do that.

I step away and study the traffic to see if I might have some unusual luck. After a couple of more minutes, I pull out my phone and start dialing the hotel to see if they can get a cab for me.

The man I had quizzed speaks up: “I’d offer you a ride on my scooter but you don’t seem the type.”

I say “You’re right, I broke my cheekbone in a bike fall.”

He then says, “I’ll call a cab for you.” It was ten minutes for it to arrive and I chatted him up in the meantime.

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  1. Terry Flynn

    The aerospace channels on YouTube go on about the commercial airplane sector. Russia seized a huge number of (leased) western jets. Given the length of hostilities and the fact these can NEVER have verified (certainly as far as insurers are concerned) maintenance histories anymore, they must be written off.

    Even if Ukraine is “sorted” tomorrow those jets won’t fly in Europe or North America. They CAN and ARE BEING used for domestic Russian flights (and there are enough that some are simply there for spares and reverse engineering…. Perhaps with Chinese help). However I don’t know what this will mean for longer term…. People like Plutoniumkun have shown insights before into this issue (IIRC saying the Chinese have not reverse engineered western jets particularly quickly) but Russia of course has an existing (albeit dated) aerospace industry and might copy western jets far more efficiently.

    1. Fazal Majid

      A lot of Soviet aerospace was in Ukraine, however, like Antonov or the engine maker Motor Sich, which in itself has caused supply issues for Russia.

      1. Terry Flynn

        Ooh thanks didn’t know that…. But surely there must be SOME key engineering expertise in Russia itself? Not least because the related (but granted not the same) space program, altbough physically located in another republic, is all well known in Russia.

        I hesitate to put words into PK’s mouth but his observation that the Chinese didn’t reverse engineer Airbus stuff half as quick as expected does suggest the long Russian history of aerospace may mean that sector bounces back far quicker than the west might anticipate and might put them ahead of the Chinese ……

        1. upstater

          Soviet engines use(d) tungsten based alloys. Western engines used niobium/ nickel alloys melted in vacuum furnaces. Both metallurgies are complex and very difficult to master.

          Tooling is another issue. I visited a forge (owned by the US government, operated by a contractor) which made disks and rotors for aircraft engines (recall on newer jets the engines are 3m+ in diameter). The forge was basically the size of a house pounding metal heated to maybe 1800F (don’t recall exactly). Let it suffice to say there was only one of these in the US. So you can’t pick these up and move them, nor are they trivial to construct.

      2. The Rev Kev

        The Russians used to get their marine engines for their ships from the Ukraine as well and it took a while to get that problem sorted out after 2014.

    2. Kouros

      Hasn’t Russia developed two different passenger aircraft that are being moved in production? Maybe not fast enough, but there are orders? Was even a clip with Putin harassing one of the responsible officials to implement contracts, etc.

      1. Terry Flynn

        Yeah – see my new comment above. I suspect that although Russia is going to suffer in certain sectors, a decades long USSR “bank of experience” coupled with some stealing of western jet tech, will quickly give them a good aerospace sector in the way China does not have. China only has the latter, not the former.

        1. alfia

          There were airplanes aplenty in times of USSR – all soviet made. There is an enormous tech and industry potential and now it will be used far more widely since Russia has to rely on its own industrial base. The catch up will be quick – far quicker than the West realises

        2. GM

          The USSR had a fully self-sufficient aerospace industry, including for passenger planes.

          Allowing it to decline like that is one of the testaments to what the opening to the West did to the country.

          But now they should be able to resurrect it.

          1. Terry Flynn

            For you and Alfia and just as point of clarification – agree with you entirely and I believe this is why China may be a bit puzzled that Russia rebuilds aerospace industry far quickly than expected.

            Knowing all those 999/1000 things that you might do wrong and cause a crash isn’t learnt quickly. The Russians probably have it all in collective memory. China doesn’t. If I had to choose between a Chinese Airbus knock off and a Russian one it’d be the latter anyday.

            1. Greg

              Andrei Martyanov talks about the Russian aerospace industry quite a bit. He has commented on the delays and associated them with teething problems in the new line of entirely Russian-designed-and-built engines (PD-8 and PD-14 I believe). These engines have variants with military applications.

              I suspect the dual-use of many aerospace industry components, combined with Russia’s large fighter export market and domestic need for new fighters as part of re/up-armament, ensures a continued focus on moving this industry forward despite sanctions.

              I also don’t think your assumption that they’ll “restart” their industry by ripping off western designs is on the money. They bought airbus planes in quantity because of pricing, but they never stopped developing domestic alternatives. The passenger planes they’re building now look clearly derived from traditional soviet models, not the western lineages.

              1. digi_owl

                Dual use can go all the way to the airframe.

                During the soviet era the infamous Tu-95 (bear) bomber was repurposed into a passenger plane.

                And it happens elsewhere as well. The E-3 Sentry is a Boeing 707 airframe fitted with a radar dome.

                And various Airbus and Boeing airframes are also used for tanker aircrafts, that provide mid air refueling for other military planes (and also drones i suspect).

                And sometimes it goes beyond aircrafts. The car brand SAAB got started because Sweden didn’t need more military planes for a while, and so they started making cars to keep the factories operational.

        1. PlutoniumKun

          The Superjet is dead in all but name. Its very difficult to kill an aircraft project definitively once you’ve signed up supply contracts, so they can keep going like zombies for many years. But nobody wants them, they are too crash prone and require far more maintenance than western equivalents. Putting military engineers onto civilian projects is not always a good idea.

          The Irkut project is very interesting and looks to have a much brighter future than the Comac (its significantly more advanced), and could well be the final death knell for the various ‘not Boeing/Airbus’ projects around the world. But they have to avoid the mistakes they made with the Sukhoi – essentially, forcing it into service at least 5 years too early. Unfortunately, it seems that circumstances won’t allow that breathing space, so a lot depends on just how much Irkut’s engineers have gotten right.

          1. Polar Socialist

            There’s a twist in the SuperJet story, though. As Iranians were really interested in it, but due to the US parts couold not buy them, in 2018 Sukhoi started development of completely Russian version, SSJ-NEW.

            Thus, when the sanctions hit last year, Sukhoi already had a head start in completely domestic development. Well, kinda, since both SSJ and MC-21 are constructed by Irkut aircraft factory, so there’s a lot of synergy between the two.

            Anyway, there are now 129 orders for SSJ-NEW, with option for 40 more. The thing unsolved is the engine, since it’s waiting for the acceptance (and ensuing production) of PD-8 engine. Which itself is a scaled down PD-14, designed for MC-21.

    3. Alan Roxdale

      The Russian planes won’t be permitted to fly anywhere, so their market is naturally limited.
      But then again, 2nd/3rd world countries in fear of their air fleets being grounded by sanctions might buy Russian planes as a backup.
      Never play sanction roulette.

      1. Frank James

        The world isn’t the Anglosphere+EU. They can fly all over the Middle East, Asia, Africa, Latin America.

    4. PlutoniumKun

      A bit late to this:- I’m not an expert on aerospace, just a long time aircraft nerd (it comes from being raised under a flightpath).

      Russia and China have well developed aerospace industries (Russia being generally about half a generation ahead), but parts for western aircraft is a very different ballgame. China can probably produce decent replicas for most parts needed for an airbus or Boeing, but they obviously wouldn’t be certified. There are, however, key components that they would not be able to replicate, especially in engine parts. Its not just a matter of technology, the Russians in particular have often taken a different approach to metallurgy when it comes to engines. And of course with Airbus you have the software to continue. Personally, I’d be very nervous flying a Russian Airbus or Boeing with a significant amount of non-certified parts made in China.

      Both Russia and China have found to their cost that civil aviation is very difficult indeed, especially when it comes to taking on the A320/737 duopoly. A lot of it isn’t so much technology, more a case of taking the wrong strategic approach (the Japanese made the same mistake). The Chinese have tried with Comac to make a ‘budget’ competitor, but this turns out to have been a dead end. Because Chinese costs are now pretty high (Airbus say its cheaper to build in France than China) they can’t make their aircraft cheap enough to persuade an airline to buy them instead of, say, buying 2 year old 737’s off Ryanair. Its like being offered a 2 year old BMW with 20,000 miles for the same price of a new Kia. Most people will go for the BMW. China and France have been engaged in pretty intense industrial espionage warfare over Airbus for more than 2 decades and so far, the French have won. Despite investing an estimated $80 billion on it, the Comac range is very unimpressive. Airbus became successful in the late 20th C by taking big risks and took a generational leap over Boeing. China didn’t learn that lesson.

      As for Russia, the dominance of military investment has always hampered their domestic aerospace industry. Their bright hope was the Sukhoi Superjet, which is a fabulous design on paper, but its as big a disaster as the 737Max – maybe bigger (and possibly for similar reasons – arrogance and corruption). In simple terms, they pushed it to the market too quickly, before engineering issues were sorted out, and a lot of people died – three full hull losses so far. At least two of those pointed to fundamental design failures. Its still technically alive as a project, but nobody thinks it will be a success.

  2. Karen’s hubby

    My friend in Moscow working in the banking sector just got a substantial rise and promotion. She told me that many people have left since the war began and it’s hard to impossible to find qualified people to do anything.

  3. Paradan

    Perhaps they’re delaying payments out of fear that the U.S. will ask the company to quit supplying Russian hospitals or else?

  4. .Tom

    I know and employ skilled russian software specialists. They dislike Putin and blame the war entirely on him. They have left at different times and are well networked and relate stories of other migrants and remainers. I believe there is a significant brain drain. Idk where things stand between the poles Yves identifies in the first sentence. Both are surely exaggerations. But I caution us at NC not to be hasty in characterizing russians choosing the western side as sold on western ideology and consumer economy. It seems to me that uncertainty, physical and financial insecurity, stress and fear are more likely motivators to migrate.

    1. Yves Smith Post author

      My interlocutor is working for a Russian company doing sourcing (and language study!) outside Russia. He’s not one of the Russians who has fled. He’s abroad doing business.

      1. .Tom

        One of the people I know is extremely well networked. I’ll ask more about the brain drain but I don’t expect to have any answers before we’ve move on from this article and its comments.

      2. Adam


        One thought on this. Is it not possible these Russians, or at least some of them, are telling us what they think we want to hear to keep themselves and/or their jobs and careers safe? I can tell you at my work saying anything even remotely considered pro-Russian would be a very bad mistake.

        1. Yves Smith Post author

          I am a random American old woman looking for a taxi on the street in a third world country. There is absolutely no way they’d think I was anything other that a dopey tourist. This guy is Russian, working for a Russian company, in a country that has not sided with the US on sanctions. I’m not in the capital, so no way possible to be seen as officially connected. And I’d speak the local language if I were, which I clearly did not.

      1. hemeantwell

        Same question here. What do they make of the revelations about the Minsk agreements, etc.? Given the political climate Putin-blaming might be de rigueur for someone in their position.

        1. Sergey P

          A lot of people are really used to blaming Putin for pretty much everything.

          Also, it seems that quite a lot are in a moral panic sort of condition. What is happening for them is UNTHINKABLE, or UNACCEPTABLE.

          There is a certain amount of people who actively desire defeat and consequent partitioning of Russia. Some present arguments like: a defeat is what it took Germany to repent.

          I also consider many ill-informed. A lot of “liberals” seem to get their info from Western MSM or their Russian fellow travelers like Meduza. So their picture is that of Russia losing and being militarily impotent, while also committing genocide.

          Some can be reasonable when presented with new facts. Some cannot.

          It is sad to see a propaganda war lost on this front, with let’s say intelligentsia crowd. And I can understand how some people see these “liberals” as traitors, though I myself would not go so far.

          1. Burns

            If they were not completely deluded they’d realize that the US itv neither capable of nor remotely interested in ever repeating what it did with countries like Germany and Japan after WWII (there are none of incentives to try, either, the main incentive at the time indeed being the existence of Soviet Russia).

            There is zero interest or incentive to rebuild a hypothetical defeated Russia into a soulless, yet somewhat materially wealthy poodle for a dog any pony show to impress and seduce the world.

            The US has nothing but boundless hatred and scorn for Russia, it wants to act in that hatred with savage, sadistic glee.

            There will be no future worth living in for Russia and her people if the US win, nothing to expect but genocide, slavery and the most brutal and humiliating colonial exploitation the neocons and nazis could possibly devise (and they REALLY will do everything to make everything as bad as possible, forever).

            “Liberals” that do not realize that, or worse yet, that do realize that and don’t care, because they think they will have a place as appreciated, spoiled pet slavs in the west while their people are genocided, are definitely on their way to becoming traitors if they aren’t there yet.

            Russia definitely would be justified in every measure to prevent them from stabbing the country in the back at the worst possible moment.

            Liberal PMCs are always the worst scum of every country.

          2. hemeantwell

            Thanks, Sergey. You bring up something I’ve been wondering about, which is how it might matter that in the formulation of the propaganda campaign the target audience is Russian as well as those under the banner of NATO. One thing’s for sure, as the war proceeds NATO’s MSM will lose any claim to objectivity, taking it seriously will not only be unpatriotic but also foolish.

        2. GM

          A big part of the problem is that Putin first never prepared the population for war, and then even after it started, never properly explained why there was no other choice.

          A year ago I remember discussing whether there will be a war or not with people with very superficial knowledge of the issue and the history behind it, and I was adamant that there will be no war. For two reasons — first, it didn’t look like a serious preparation for one was being carried out, and second, there had been no preparation of public opinion.

          The former is now in retrospect quite obviously true — once they started it, they had to take over the whole country, and with 150,000 men that is not possible. They had to have a million men ready to go, and they didn’t have them, which is why it didn’t look like a serious preparation for invasion.

          The latter is less obvious, because what does preparing public opinion mean? It means what they still didn’t do even in the year after the war started, i.e. explaining why exactly there had to be a war in the clearest terms possible.

          Remember how very early on Putin had gathered the oligarchs and said “What is happening now is desperate measures. They have created security risks that are completely unacceptable”?

          That was the closest he came to explaining it.

          That is, not very close. Because what does “security risks” mean exactly?

          If you take those Russian software engineers who fled the country and explain to them what NATO bases in Kharkov, Sumy and Chernigov would mean, what would have happened if Hitler had started Operation Barbarossa from Sumy and not from Lvov (and if he had hypersonic missiles too), who Bandera and Shukhevych were, and what had been happening in Ukraine the previous 8 years, and everything else that forced Russia to start this war, maybe they would understand and view the situation very differently.

          But the Russian state never really made an effort to explain these things and prepare the population.

          Ironically, it has been the West doing their work for them, with its increasingly hostile actions. But it shouldn’t have come to this at all.

        3. digi_owl

          I fully expect that anyone that bailed on Russia and work in the tech sector are mentally deep fried by US social media.

          1. Yves Smith Post author

            Please read the post!!! I cannot believe the number of comments here that exhibit severe reading comprehension issues.

            The guy was a Russian, working for a Russian company, doing sourcing overseas. How hard is this to understand? All sorts of multinationals have employees stationed abroad. Do you somehow think Russian international companies put themselves at a huge disadvantage by not operating that way?

            1. Don

              Yves, it’s not clear from the article where you were. All you gave to indicate location was “On my travels”. I guessed you were in Russia when I read it. I think others did too. It really is not clear in the original article that you were in another country talking to a Russian who was also abroad.

              1. Yves Smith Post author

                I admit I assume regular readership, which is not fair.

                I told readers in mid Jan I’d be posting less for a bit because I was assessing a candidate location for an overseas move. I prefer not to say more.

      2. OnceWereVirologist

        Russians do seem to have an inferiority complex that you just don’t find anywhere else. I very much doubt that you’ll find so many Chinese who court the approval of Westerners when the pivot to confrontation with China finally comes.

        1. GM

          It’s centuries of conditioning. Very hard to overcome.

          The USSR fell in large part because of that, not for objective material reasons

      3. Yves Smith Post author

        I said the US and NATO had provoked the war and he said, “This war is on Putin”. I got the impression he did not want to entertain discussion and viewed me as clearly not as knowledgeable because not Russian or Ukrainian.

        He also criticized Putin for being “very conservative”. 20% of Russians do not support Putin. I happened to find one.

        1. Pat

          Twenty per cent do not support Putin…. Wow that hit like a bull dozer.

          I think the last time an American President could claim only twenty per cent not supporting them was Bush II in the months following 9/11, and I am not sure about that.

          I have absolutely no insight into what is happening in Russia, but I find most American’s sense of superiority regarding Russia or most other countries to be based on ether, fear and propaganda.

        2. Bruno

          Why should Russians who see Putin as “very conservative” think “This war is on [him]”? Perhaps they realize it’s because, trembling at US disfavor, he betrayed the Donbass workers in 2014-5 by refusing to recognize the Lugansk and Donetsk republics while devising the “Minsk Accords” to give the Ukrainian government time to prepare their military destruction? And acted less than decisively when forced finally to do something?

        3. GM

          Far from all of those 20% do not support Putin and are against the war in the same time.

          There is a major line of criticism against him that comes from a hardline, often communist position, and also a pervasive fear, even in the other 80%, that the country will eventually be sold out once again through some backroom deal.

          The baffling way the war has been fought these eleven months has not helped dispel those fears at all.

      4. .Tom

        I don’t know for sure but my take is that these people hate the authoritarian centralized control that Putin exerts. They don’t like that he’s been in power too long, has too much power, and murders, incarcerates and disappears enemies and dissidents. And they describe the invasion of UA as unprovoked.

        For my own part, I try to see their attitude as analogous to my own tendency to dissent from policies and actions of my government, i.e. the USA. You need two or more to fight and both can be something I don’t like. In this war there are more than two governments involved that I don’t like.

        1. anon in so cal

          Not sure who these alleged victims are that are referred to in your first paragraph. I cannot think of any example that supports those claims.

          1. anon in so cal

            Some neocons, such as Yascha Mounk, spread false narratives that Putin is responsible for journalists’ passings.

            Most of the journalists in question were war correspondents, not involved in politics, never criticized Putin, were deceased before he had any political role. Most perished when the Clinton / “Harvard boys” were plundering Russia.

            MoA discusses this.

        2. Burns

          In Putin’s case it’s actually worth asking if the people he supposedly had killed, assuming for the case of the argument that it’s true, were killed because because they personally pissed him off, or if they were killed because they were indeed corrupt traitors plundering the country and selling it out.

          You know, like pretty much all of Russia’s political and business class at the time, with America’s glowing support.

          Well, except for Putin, as various westerners trying to get their cut confirmed, who hated him because he was basically the only one who ´couldn’t be bought.

          I can’t claim to know exactly.

          But if there was ANY politician one could genuinely believe had people killed in the vital interest of his country, instead of for his own selfish interest or some crazy ideology, it would be him.

          It’s worth noting that the people, political enemies, that Putin had to deal with at the time, were basically all not only corrupt, but actual hardened criminals and stone cold killers themselves.

          People who largely indeed were bought and paid for by the US and western business interests.

          People who were complicit in the genocide by economic means that the US was perpetrating against the Russian people at the time.

          Most of those selfish and shortsighted, young, urban liberals would never have been born if ole Vlad hadn’t pretty much singlehandedly brought the entire country back from the brink of total destruction.

          1. Yves Smith Post author

            Mark Ames, who is no Putin fan, is skeptical of the Western press stories that regularly depict oligarch-level Russians who fall out of buildings as Putin hits. Ames says that any time there is serious economic or political change in Russia, there is a lot of, erm, commercial opportunism at the top. The body language from Ames is that easily half, and potentially a whole lot more, of those deaths were elite, not government, hits.

            On top of that, Putin’s success in initially bringing the oligarchs to heel was via busting Khodorkovsky for tax and other fraud and throwing him in prison. Khodorkovsky went to the European Court of Human Rights to protest the verdict and imprisonment. The court upheld the Russian prosecution, finding for Khodorkovsky only for some procedural violations that resulted in a 35,000 (no typo) Euro award.

            So long-winded way of saying using due process v. oligarch abuses has served Putin well in the past. Having said that, I have no idea if he’s decided to go for expediency in recent years.

    2. James

      Tom – I am not sure that the people who work for you are going to tell you what they really think rather than what they think you want to hear. I have a colleague who is ethnically Russian and he is extremely circumspect about what he will discuss with me regarding this war.

  5. Frank

    Someone who speaks english and blames Putin for the war may not be the most objective source, these people are wont to complain incessantly. I live in Russia and have been very pleasantly surprised at how well the economy has held up and life, in general, has remained normal. When western companies started pulling out, I panic bought my favorite toilet paper in size, only to feel ridiculous about it later. Much of that noise eventually turned out to be fake news, there have been barely any noticeable changes in terms of consumer selection.

    I make my living in the markets. While asset prices have taken a hit, companies are still profitable, they pay dividends, make their bond coupon payments, etc. Moving money out of the country is still possible, though it’s a bit more of a hassle, and a bit more expensive, than it used to be. Russians adapted quickly to some of the inconveniences, there are credit cards offered, drawn on foreign banks, for Russians to travel abroad, for example.

    1. Yves Smith Post author

      As I said above, he is working for a Russian company and speaks Chinese, Japanese, Malay, and Thai….and that may not be all (he admitted to abandoning the Japanese as not of much use in his business). And the key factoid he reported was the delay in payments by hospitals to his company that started when the war began. So I suggest you reconsider your prejudices. His view of Putin appears to come mainly from having a substantial number of Ukraine relatives.

      1. Frank

        I certainly didn’t mean to suggest this gentleman was being dishonest, I assume his account of payment delays is accurate. Though this doesn’t sound like a terribly serious problem, considering the context. While I indeed have my prejudices, they can sometimes help in understanding the color. You assumed he was referring to the terrible 90s when he was talking about “playing catch up”, but my assumption would be that he meant Russia was always playing catch up to living standards in the West.

      2. juno mas

        Let me just say that Russians in the US have various takes on the SMO.

        Russian culture emphasizes education. A medical technician I interact with came to the US at eighteen as a native Russian speaker and now four years later I cannot detect a hint of accent in his perfect English. I talk to him about his family; his mother has two science degrees (one a Masters qualification). He likes living in the US; but he still visits his homeland. My sense is that he is pleased to see the Russian economy weather the sanctions. YMMV.

        1. Janie

          My limited experience is the same. I worked with a Russian woman who, with her husband and two teenagers, had been in this country 3 years. That year the son won a full scholarship to MIT and the daughter was on track to do the same. She had been an engineer in Russia and her husband, a dentist. She, like a couple of other Russians I have known, was well versed in classical literature and music and quite up on current events.

        1. JohnM_inMN

          Interesting comment section. The first and most popular comment:

          “He’s speaking in a language familiar to those that do not wish to fall out of a skyscraper window.”

          Followed by:

          “…or drink tea”
          “or touch door handles”
          “or change his underwear”
          “that man is protecting his family and himself”

        2. paul

          I think that is a ‘fair and balanced and newswcast’, though it’s hard to ignore it was broadcast into the middle of effing nowhere.

          Timothy the august bbc hack,reading approved talking points, had his prewritten,very moral, points firmly shoved up where his brain now resides.

    2. Sergey P

      Haha I did the same — stocked up on Zewa 5-ply TP! About to finish the last roll of my March batch.

      The memory of Soviet TP still evoke certain b-hurt.

      1. OIFVet

        Haha, said TP b-hurt was part and parcel of COMECON life. I remember waiting with my parents in long lines for low-quality TP when it was occasionally made available. The rest of the time we wiped our arses with newspaper, often featuring the visage and wisdom of our dear leader Todor Zhivkov. It was a good childhood nevertheless. Education was top-notch, even in my deeply provincial small town, food was mostly home-grown and healthy, and free summer camps on the Black Sea were a given.

        Frankly, I think that today’s kids in Bulgaria are getting the short end of the stick. Education has gone to the toilet and wide availability of 5-ply Zewa TP doesn’t make the loss any better given the social ramifications of widespread functional illiteracy. Food is terrible; as a study proved several years ago, Western European brands sold in BG come in the same packaging as they do in the West but the content is of inferior quality and yet it costs more, but Western food imports have nevertheless managed to destroy the Bulgarian food industry which used to export substantial amounts of fruits and vegetables to the former Soviet Union. European equality means inferior products for a second-rate member, and kids that are as fat as the American kids on the South Side of Chicago.

        I guess the point of this ramble is that a lot was lost when the wall came down in 1989. It should have come down, I won’t argue against that, but the collective West used that monumental event to economically colonize Eastern Europe rather than truly integrate it. The same can be said about Russia, of course. Putin’s unforgivable sin, as far as the West is concerned, isn’t that he is an autocrat and often ruthless. His sin is that he reigned in the oligarchs and made sure their continued existence is predicated upon not asset stripping Russia on behalf of the West. He put Russia ahead of the needs of the globalizers. One may argue about how much more his rule could have done for the average Ivan, but the average Ivan also remembers Russia of the 1990’s and he doesn’t remember it fondly. Russia dared to stand up to the West and that’s earning it a lot of quiet sympathy around the world amongst other “beneficiaries” of Western benevolence.

        We shall live and we shall see, as you Russians like to say, but my hope for the long term is that we are living at an inflection point which will result in truly multipolar world in which bational interests are couched in terms of addressing the needs and well-being of the citizenry and not the needs of rapacious Western corporations backed by the global reach of American military and regime change powers.

  6. tevhatch

    Just making a guess, but I’d say the idea that Kremlin has tried hard to keep the appearance of normalcy in Russia for the 1st 9 months or so is accurate. Kremlin wonks well guessed this war would not be popular at first, partly due to Putin’s underplaying the war on the Donbas in order to keep domestic pressure off while trying to poke Minsk II into life(and I bet rebuilding military for today, Russia was delaying with Minsk II, but is smart enough not to say so). Also people of the Donbas probably are considered Soviet Socialist hold-over hicks among Moscow/St. Pete PMC too, so less sympathy there vs. the street.

    I would expect that some of this appearance of normalcy in the market is simple inertia now, force of bureaucratic habit. The idea that this is an existential war must have sunk in by now thanks to Merkel and gang, and there would be support for belt tightening, even an expectation/demand (I’m doing my part to win the war, etc.). Therefore I’d expect the Kremlin to make the appropriate moves eventually to adjust the economy, but with typical Kremlin caution, it’s going to be slow going unless a lot of stress is applied.

    1. tevhatch

      Small edit/fix:
      ..and I bet rebuilding military and more importantly the economy/finance system for today,..

  7. Lex

    I can’t believe that everything is rosy in Russia for all Russians. For one, there are always costs to war and no way to wage one without sacrifices somewhere. It appears that the Kremlin has prioritized lessening the impacts of the conflict on the lower and lowest classes (as evidenced by pension increases, minimum wage increases and living wage increases). I get the impression that the average Russian can in many ways go on about life as if the war doesn’t exist to some extent, and I assume that’s by design. It’s been similar with all of America’s wars over the last 30 years.

    It’s something of a delicate balancing act for the kremlin and speaks against Russia having all the time in the world to achieve its goals in Ukraine. Of course the economic pressures from outside won’t change, so the question becomes whether Russia can reconfigure things internally. Putin does seem aware of the issue given recent statements about how Russia cannot and will not sacrifice its domestic economy for a military one, with the obvious assumption that doing so was instrumental in soviet disintegration. On the flip side, a big push to end the war more quickly carries great risk of large losses and doesn’t necessarily change the domestic economic factors.

    1. Fazal Majid

      It probably also depends on whether you live in Moscow or the peripheral oblasts, specially those with big ethnic minority populations like Buryatia, that have been disproportionally targeted for conscription.

      1. Yves Smith Post author

        You raise questions about your bona fides by using the incorrect term flogged by the Western press. And when I look at the claims about “minority populations,” the articles rely heavily on claims by the Free Buryatia Foundation. If you look at its board, its members have heavy neocon connections:

    2. hk

      Curious which industries in Russia are most “West-friendly.”. I’d guess that this would depend on international market exposure, ie doing more business with the West than with the domestic markets. IT seems to be one industry where this is the case, at least on anecdotes and past experiences I’d come across.

      1. OIFVet

        IT is always at the top of the list in Eastern Europe. Others include the NGO complex and the young political leader complex. Not saying the populations are not appreciative of the trappings of EU membership, such as easy travel and year-round availability of tropical fruits (a favorite BG liberal trope to point out how good life has gotten after the fall of communism), but much of the population here has an instinctive understanding that corruption, war in Ukraine, spiraling inflation and social problems are part and parcel of EU membership, even if they can’t explain the exact mechanisms and fall back upon favorite tropes and conspiracy theories.

  8. Christof

    It’s honestly amazing the type of narrative people will try to weave from a person’s testimonial. Like the NYTimes does this all the time with the “we asked 3 Ohioans in a Diner about DeSantos” schtick.
    I think somehow, the reasonable people realize its a false dichotomy to say “the Russian economy is in shambles because its been cut off from globalism” or “the Russian imperial machine is stronger than ever now that’s claiming it’s rightful place.”
    The more interesting problems might be not what this war does to GDP and the flow of synthetic figures, but which workers are missing (and will be missing) from the work force, which social relations have changed now that Putin’s waging this class war, or what’s the quality of life now that a lot of materials are being unproductively burned in the war machine, but you know.

    The Gulf war existed for the media more than it did for any of us.
    No one’s going to take credit for a misfired hot take.
    The memory hole consumes all.

    1. tevhatch

      The American trade unions were all for the Vietnam War, right up to the bitter end. Lots of white, middle class homes, boats, and vacations were built on the bones of blacks, browns, Asia Pacific islanders, and “trailer park trash”. I don’t think this will be the case in Russia, but it’s not called class “war” for nothing.

      1. Don

        While I can’t definitively contradict your claim that American trade unions supported the Vietnam war, I can confidently state that the trade union response here in Canada couldn’t be much farther from support — as a late-teens-early-20s mid level trade union leader, I was in the thick of it, organizing massive trade union participation in the antiwar movement. Antiwar demonstrations in Canada were huge and union involvement was a big factor. For a large march on the American embassy in Ottawa, well over a hundred busses transported unionists from Toronto alone to participate, with union voices at the podium and thousands of working people marching under union banners (“Support the Troops — Bring Them Home” “End Canadian Complicity”). I grant that top national leadership was less involved than leadership at the shop steward level, but they too were generally onside.

        Granted, that was a long time ago, back when Canadian culture and politics had not yet been subsumed into American.

        1. Norge

          I marched in NYC against the Vietnam war. There were a few unions (e.g. the Pullman workers) that opposed the war but the hard hats harassed us and sometimes beat up the “peaceniks”
          As opposition became more mainstream more unions came out in opposition.

        2. digi_owl

          It may have been related to how the draft worked, as i think having an industrial job, particularly related to the MIC, was one way to avoid getting drafted.

          Similarly as long as one was a student one could get a suspension on the draft, but if one were to drop out the draft would come into effect.

          This is perhaps why such a large portion of US war protesters were students, as they actively feared getting drafted.

    2. Yves Smith Post author

      It’s not “one person’s testimonial”. It’s one data point from a businessman about his own industry. Cash flow is not subject to beliefs.

      And most people do buy one of those polar views. I suggest you get out more.

    3. Richard

      Not picking on Christof particularly. I follow these comments and find throughout the suggestion that this war should somehow slow Russia’s economy. Sure, specific consumer items will be lost to competition from war use. But isn’t it generally accepted that it was WWII that finally ended the Depression in the US? Losing in Ukraine would be one thing, but is there any evidence Russia is losing? And meanwhile, the war effort should give everyone work and make things hum.

      On another subject, boy that interviewer is a first class jerk. Talk about loading questions with planted axioms. Nasty man.

  9. JoeC100

    Of related interest there was a post a couple of days back at the Colonel Cassad website that a Russian manufacturer had re-established natural gas combustion turbine production and that the first unit being completed would be shipped to Crimea at a new thermal power station that could not get delivery of non-Russian units (as originally planned) due to sanctions. I recall the company had identified about sixteen additional near-term opportunities to meet power plant demand that would have been supplied by the west.

  10. Cetra Ess

    I’ve become so jaded and cynical that I’m suspicious even of seemingly “chance encounters” especially where major influencers and commentators are concerned. Yves, if I were a government or intelligence agency this blog would be somewhere near the top of my “to do” list.

    But yes, regardless, the question can still be asked on its own merits what data is there to point to the SMO having which effects on the Russian economy, we do seem to lack that view.

    1. Yves Smith Post author

      Please. I am not a major or even minor influencer.

      I’m in a third world country with a SIM card bought at the airport and a phone with an Apple ID in someone else’s name. And the damned thing can’t even GPS locate where enabled (I have a burner SIM in the US and normally have all the location functions turned off in the US where the phone is mainly fully discharged anyhow; the location functions were off when I met this guy; now that they are on, the taxis half the time can’t find me and I have to get a friendly local to tell them where I actually am when they have “arrived”).

      And I’m the one who approached him and then initiated further conversation after he called the cab, I could have thanked him and respected his time.

      1. Tom Bradford

        But he was, like you, a foreigner in a strange land and perhaps hardly your typical Russian. Had he turned the tables and asked you about your views on the war would he have been justified in reporting back to his Russian friends and contacts that this was how Americans see it?

        You did qualify this as anecdata which forgives much, and perhaps most interesting seems to be that although he ‘blames Putin’ for the war, his business is suffering and he clearly has reservations about its effects on the country you didn’t report any undercurrents of ‘revolution’ or desire for regime change so lusted for by Washington, and I would have thought that with his business interests, foreign connections and ‘world view’ any such thoughts would be more likely to find fertile ground in him than in your more ‘typical’ Russian.

        1. Sergey P

          Though quite a lot of people in my social circle (film and advertising) hate Putin, blame him for the war and consider this a catastrophe — there is hardly ever talk of regime change or revolution. They might want Putin dead, want him tried in a new Nuremberg, want Russia to be torn apart — but they never seem to have any desire to DO it. Rather, they kind of wish someone would come in and do it for them. So I’d say, yes, Washington’s regime change plan does feel somewhat unrealistic.

          1. OIFVet

            “Rather, they kind of wish someone would come in and do it for them.”

            Just like BG liberals, then. They keep waiting for the EU or the US Embassy to “do something.” Waiting for Godot seems like a more useful endeavor.

        2. Yves Smith Post author

          How many of you did not read the damned post?!?! Or can process it only through your prejudices?

          I said when he said he was Russian that unlike what he would assume of most Americans, I was sympathetic to Russia’s position, that US and NATO had provoked it. That led him to contradict me and say the war was on Putin.

          1. sporble

            Thanks, Yves, for your contribution from… wherever you are! I really appreciate you taking the time and effort to report – and comment – on your goings-on while you’re away. Hope your (re-)search is fruitful.

            Although I do believe the NC commentariat is (still) the best commentariat, sadly, at times it/we can be frustrating.

  11. Sergey P

    My Mother owns a small consulting firm, which has its 30th birthday this year IIRC. She says some of her clients wind down stuff, while others go on expanding, even starting new businesses. A not insignificant amount has had their record profits this year, and they were not import substitutions as we call it. Around summer the entrepreneurial mood seemed to be quite patriotic and optimistic.

    Then again, a good friend of mine is a serial lifestyle entrepreneur. He has relocated to Portugal, and is very bearish on Russia.

    I think a lot will depend on what Yves mentions here — fiscal conservatism of Russian CB head Nabiullina. I hope falling oil/gas prices and overall worsening economic conditions will force Kremlin to break with the neolib stuff.

    But other then the fiscal orthodoxy, there is also a question of antipathy towards entrepreneurs. Anyone above 45 had enough of a Soviet imprint as to at least to some degree see businessmen as “speculators”, which I would guess is especially true for ex-KGB. So unleashing entrepreneurial potential might require a major shift in mentality.

    1. GM

      Russia will have a very hard time decisively winning both the war and the peace without a return to many aspects of the Soviet system.

      Events will force them to do it eventually, unless the nukes start flying before it gets to that point

      1. Cetra Ess

        Wasn’t the Soviet factory model imported from American industry/corporatism? Aren’t American corporations essentially miniature Soviet command economies in terms of their governance structure and hierarchy? So the Russians should innovate, do something different than has been done.

  12. Col 'Sandy' Volestrangler (ret)

    Russia and China are well suited for a mutually supporting autarkic zone. This is the MacKinder/Straussian nightmare. The Revenge of the Earth Island. During Soviet times, industrial areas were focused far from the frontier zones. This served them well in WW2 and I see no evidence anything changed. Here’s one example:

    Just taking the WW2 period (admittedly long ago and before the internet), Germany was able to pillage consumer goods from the near abroad to subsidize local firms and mollify a population that was never as enthusiastic about war as it’s assumed. Now Russia isn’t conquering prosperous neighbors or bargaining with marginally prosperous allies, but rather taking up the burden of an already broken down Ukraine, so the strategic partnership with China is really making a huge difference here.

    Consider also that Russia permits dissent within the country regarding the war.

  13. AndrewP

    It’s been a while I read one of these ” I spoke to a real Russian” reports. During the 90s dozens of reporters for wires, NYT, WaPo, LAT and other papers used to live in fenced diplomatic compounds, speak little or no Russian, and venture out to meet a random English-speaking source usually at an Irish pub stone’s throw from the Kremlin to validate the story they had spun that day. You just brought that genre back.
    When I read this post I felt nostalgia for the “Imperial Life in the Emerald City” genre of stories and the savage treatment Taibbi and Ames of Exile had for them.

    1. James

      I shared a train compartment (Moscow to Tallinn) with an American newspaper reporter in the mid aughts. She just HATED Taibbi and Ames. I think they are legends.

    2. Yves Smith Post author

      This was not in a fenced diplomatic compound. This was a guy with a black motorbike on a grubby street who is in a middle manager-ish position reporting an interesting tidbit from his business.

      And all I cared about was the factoid about the cuts in payments to hospitals, which were then leading to squeezing of suppliers, and his further claim, which I could not confirm, of educational institutions similarly being squeezed. The other stuff, about his personal views, was just for local color purposes and perhaps to remind readers that in a big country, there’s a big range of views.

  14. Raymond Sim

    I saw the term ‘magnitude overload’ somewhere recently, in a discussion of the way most people can be expected to fail to respond effectively to a novel danger.

    I think there’s a lot of it going around. Personally I don’t see how Putin could have avoided a war that the United States appears to have been determined to have. So I naturally think Yves’ interlocutor was being wrongheaded, and it’s easy to imagine a person in his position not wanting to face the facts about American hostility to his country.

    But I think it’s just as likely that something harder for me to imagine is what’s interfering with his thought processes. If I were a Russian I think I’d have been very worried about my country’s near future even before the war, with or without American meddling.

  15. JohnA

    I have a few Russian friends who immigrated into Sweden some years ago, married and stayed. Most are anti-Putin and blame Putin for all the ills in Ukraine. The Swedish media are as propagandist as anyother mainstream western media but these friends mainly read Russian language media that are anti Putin. They buy into all the Putin is evil, wants to create a new empire, and even claim he sent migrants to the east Ukraine to pretend to have a responsibility to protect, while his main aim was to capture the coal, farmland and other assets of east Ukraine.
    Now I get the guy Yves encountered still works for a Russian company but he may well have the same mindset and considers himself an ‘entrepreneur’ and an Atlanticist by nature and keen to promote his beliefs to westerners he wants to be a part of himself. Just a thought. From friends I have in St Petersburg and Sevastopol, they have no shortage of daily needs, purely restrictions on travel. Until last year, Russians could travel to Finland for a day or weekend. That has become almost impossible and any currency must not be taken across the border, while Russian bank cards are no longer part of the Mastercard/Visa etc., network.

      1. Keith Newman

        @jrkrideau, 6:27pm
        I know someone who lives in Istanbul. There are lots of Russian tourists there.
        Istanbul is an excellent tourist destination. It has many fascinating places to visit and great food.

        1. Gregorio

          There are many Russians here in southern Baja Mexico where I live. There is an enclave of homes not far south of me that is almost all Russians, and the marinas here have many Russian yachts, so apparently, they have no problem spending their money in Mexico.

        2. jrkrideau

          Istanbul is an excellent tourist destination

          Indeed, I was there many years ago for a few days and loved it. I still dream about the fish dishes.

  16. Mickey Hickey

    Russians through my emerald lenses look as mentally tough and intelligent as the Irish used to be. Prolonged prosperity softens and dulls most countries. Climate also plays a part where I am now in Canada Highs for the next week ar +1C with lows -24C. Moscow is +1C to -11C (a heatwave). Russia has a rigorous high school regime heavy on STEM and Russians are well known to be more advanced in Mathematics than the West. I do not see where people get the idea that Russia is in any way lacking in technical knowhow or dependent on the West for anything. I have been in Russia in the days when better dead than red was in vogue. I was there on Western Gov’t business, the West was importing Murmansk Iron Ore and exporting rolled steel to the USSR. Money that can be made must be made is in one of the first five commandments of capitalism. Russia’s economy has solid foundations in food, minerals and timber much like Canada. There are many Russians in Canada some of which I converse with, they fit in well here and are happy. I do not detect any animosity toward their home country. In any case I do not take favourably to people who bad mouth where they came from. After all we the Irish are well known to be the best.

    1. digi_owl

      > I do not see where people get the idea that Russia is in any way lacking in technical knowhow or dependent on the West for anything.

      Likely their mental image is from the state it was in between the late 1980s to the early 2000s.

      For some reason Kremlin at one point decided that USSR was to copy western computer tech rather than create their own.

  17. JamesT

    I went to Tijuana last year. I knew it was a “bit dangerous” but having walked around Sao Paulo, Johannesburg, etc I thought it would be no big deal. I was wrong. When I got back to Canada I bought a copy of Lonely Planet Mexico and read the “safety and security” section for Tijuana – to do the research I should have done before I went. The one key thing that I learned is that I should have been set up to use Uber while I was there.

    I don’t like Uber. I would much rather take cabs. But it just makes too much sense to have it available as a backup (or in the case of Tijuana, a primary) means of transportation.

    1. Jack

      I just recently went to Mexico City for a vaca and it was wonderful. Used Uber exclusively except for one time took a cab from one of the main bus stations back to our hotel. The cab ride was awful and about 3x the cost of Uber.

  18. Whiteylockmandoubled

    It’s a bit risky to extrapolate from someone whose business is hospital supplies. Hospital operations are stressed everywhere due to COVID-related higher acuity and weakened supply chains. Add to that the impact of significant numbers of wounded soldiers, even if they are treat d in separate military hospitals – I know nothing about the Russian system structure – you might expect the kinds of problems your contact is facing.

    Nonetheless every bit of anecdata is interesting. Thanks as always.

    1. Peter Miller

      I live in Moscow, and I think that my assessment could be summed up with the following sentence: if you didn’t know there was a war happening, it would be difficult to tell.

      1. There has definitely been some food inflation. Caveats: I tend to by at the snobbish end of the market rather than the buckwheat and smetana end. Further, I have a tendency to use the excellent services here that can deliver groceries to your door within twenty minutes (these are, of course, now expensive than buying in bulk at the hypermarkets). Also, strangely, last summer, vegetables became almost free: kilos of cucumber, egg plant, zucchini, bell peppers and tomatoes could be bought for around a dollar.

      2. Services are unchanged.

      3. There has been a turnover of restaurants/bars/cafes, but that feels like a continuation of the COVID period, when it was worse.

      4. My wife recently needed a routine operation (general anaesthetic but for less than 1hr). The quality of the hospital was first rate and the process from diagnosis to operating theatre was much faster than she would have achieved on the NHS, per my British friends’ recent experiences. The diagnosis and consultancy was convered by (inexpensive) medical insurance, but the operating hospital was public. Obviously, one doesn’t interact with this every day, but if quality has declined, it would still be good.

      5. A friend of a friend has left the country for Dubai. He worked as an aeronautical engineer and said that the industry’s prospects didn’t look good to him. In Dubai, he is studying for accreditation on Western aircraft — although I can’t say exactly what he does, what he wants to do, who he worked for, or why exactly he got the impression that the prospects in the Russian industry were so poor — and certainly not whether things have changed in the months since he made the move, rather as the car industry has.

      5. I get the impression that some HNIs have activated Plan Bs, or have anyway managed to engineer moves abroad. Dubai a commonplace destination for them. Serbia less so, but more so for the younger cohort. However, this is not ubiquitous. You hear of people going, but it’s certainly not *everybody*. A Jewish friend of mine was concerned about his late teen son, and has decided to take the opportunity to gain Israeli citizenship and build a new life in Tel Aviv, where his family lives. A friend works in a private (fee paying) kindergarten told me that one or two of the foreign children had left as their parents moved out of the country, but there has been no mass exodus of the people who can afford to send their kids to such places. I suspect some people went or tried to move abroad and are also filtering back, too. I have no confirmation of this personally, but you get hints.

      6. A friend who works in investment banking says it’s quiet but running. No major firings, but some natural wastage. Some departments still hiring new staff.

      7. In crises in the 90s and 2000s, it was common for people and businesses to delay payments — for utilities, wages and all kinds of receivables. I seem to remember that during COVID, there was some fear this would happen, especially given the government offered a bit of leeway (the big state firms, national champions, etc are often expected to pick up the slack in such situations and help everybody get through), but it didn’t really happen so much then. Maybe it’s happening more now?

      8. I’ve recently been despatched Geely cars a few times when ordering taxis here. My guess is that they are slowly going to replace the Hyundais and Kias, which themselves replaced Skodas, Chevrolets, Renaults, Toyotas and Nissans in the taxi fleet a few years ago. The quality of the Geelys seem good, or at least no worse than Kia and Hyundai (but I’m not a car guy).

      9. I’m not a big consumer goods person, so can’t share much, but my impression is that there are some empty units in malls where Marks and Spencer, H&M and similar used to be, but I generally feel that was worse during COVID. Most of the companies either stayed or have quietly returned under different trading names.

      Overall, again, I’m not sure you would be able to tell there was much difference if you didn’t know about Ukraine (remember that Russia is an emerging economy, so while they have made quite impressive strides to greater stability, it still has to be considered). Even people moving abroad is not unusual. And, as an aside, I would say that I almost can’t believe the lack of response as a foreigner from an ‘unfriendly country’ here. No hysteria. No hostility. And certainly no efforts to ban Harry Potter, Dickens or the Beatles.

  19. Thomas Wallace

    After 2014, the US piled sanctions on Russia as punishment for Crimea. They included various embargoes and it weakened the Ruble.
    One result is Russia became the worlds largest exporter of grain. Not exactly the part of the economy you want to grow. But they have a surplus of land, and the USSR had difficulty in that area. From google:

    “Who are the largest exporters of wheat 2020?
    Russian Federation
    Russian Federation is the top country by wheat exports quantity in the world. As of 2020, wheat exports quantity in Russian Federation was 38,500 thousand tonnes that accounts for 22.53% of the world’s wheat exports quantity.”

    A country that wants to develop an aggressive export economy does two things….devalue their currency and erect trade barriers. It might not be the most popular thing domestically, but we imposed these conditions on Russia.
    Relatively successful adaptation to the 2014 US sanctions prepared Russia, to some extent, for Biden’s economic shock and awe. I would say it reduced the Russian standard of living while strengthening their economy.
    If you want to optimize a global economy, free trade is arguably more efficient. But if you want to optimize outcomes for a smaller, poorer economy, as part of a globalized economy, the Asian Tiger formula has a lot going for it.
    So I would expect some reduction in Russia’s standard of living. That is consumption. But the economy itself will be strengthened. I suppose you could say that the West imposed neo mercantilistic pressures on the Russian economy.
    My suspicion is that Russia’s access to capital from energy exports, abundant raw materials, and imposed trade barriers will work in Russia’s favor.

    1. digi_owl

      I suspect the neolib globalist sowed the seeds for that, by getting IMF etc to “advice” poorer nations to focus on cash crops rather than food crops.

      And why i think the whole Arab Spring being social media driven as being a load of crock. As right around the time the grain price out of Russia had shot right up, leading to the price of bread doing the same in those places.

  20. Stephen

    Thanks for this.

    The cash flow data point is interesting and precisely the sort of thing I would look for in my consulting career too. Insiders in companies and countries also notice these types of micro issues long before they show up in macro data or in media headlines. Lengthening payment terms is nearly always a leading indicator so worth hearing and no doubt your interviewer is factually accurate.

    I would be very surprised if every Russian supported both the war and Putin or either in isolation. Just goes to prove that Russia is a genuinely pluralist society not some totalitarian terror hole where everyone feels unable to talk. I realise too that the conversation did not take place in Russia but he clearly felt empowered to be honest.

    The Russia Ukraine relationship feels super complex. Similar I believe to English and Scottish rather than English and Irish, as I used to think. After the Act of Union the concept of North British was a “thing” for example and there has always been two conceptions of Scottish nationalism – a very “Scottish” or monist version and a more “North British” pluralist version. Much of this is similar to the Ukrainian situation, even down to multiple languages with Gaelic often seen as more authentically Scots but the Scots language also exists, is indigenous and is very close to English. Not an English dialect. Monists tend to play up the former and play down the latter. Big differences though are that the Scottish border does not seem under serious dispute and is arguably 2,000 years old while the Scottish state has a 1,000 year history and was never really removed even with the Act of Union. Parliaments were merged but the established church stayed separate as did the legal system based on principles not fully consistent with English Common Law. As is the case with many English people I have Border Scottish ancestry in parts of my family tree and a war or conflict with Scotland would create very odd feelings. I can empathize with both parties in Ukraine /?Russia and we outsiders ought to be helping to create peace not war. Our governments also ought not to be forcing such countries to choose between western and eastern orientation.

    I am reading Richard Sakwa’s book “Frontline Ukraine”. Written in 2014. I have only just started but it still feels very relevant and seems balanced. Sakwa is English but his father was a Pole who left to fight with us in WW2 and then could not return owing to the USSR. He has no obvious reason to love Russia (or Ukraine given the history) but the book shows considerable empathy in my view. A commodity that is often sorely lacking in this tragedy.

    1. hk

      I think that’s a pretty good analogy, based on what I know, although I was of the impression that, even if the “borders” may not be in dispute, where exactly Scottish Lowlands begin and Northern England ends, culturally, is not clear. That applies to Ukraine, too, as I far as I know–Donetsk is definitely “Russian,” Lwow definitely is not, but everything between is gradations between the two extremes.

      1. Stephen

        Agree. There is a cultural mixture in the Borders. But it has always been a very thinly populated area so my sense is that the border itself is not heavily disputed. The only significant towns one might debate with respect to location are possibly Berwick and maybe Carlisle.

        A couple of the more northerly islands also sometimes see themselves as more Scandinavian. But we are talking margins not Crimea, Donbas, Transcarpathia, Odessa….

  21. Ignacio

    However it goes, the restructuring of the Russian economy will take several years. What i see about this post is that it is typically west-centric as we try to measure things according to our standards. Russia might follow a Russian model with its flaws and successes and that would be interesting to follow though for now everything is conditioned by the world war and the confrontation with the West which is not the best environment for economic development. However, we have to consider that Russia has opportunities in the largest and most populated continent and all this might result in the marginalization of the West, rather than Russia.

  22. Polar Socialist

    For what it’s worth, about 65% Russian healthcare is funded from public money and 35% from private.

    60% of the public funding is actually from the obligatory health insurance (taken from payroll), 25% from local governments and 15% from the federal government.

    About half of the private money goes to medicine and medical devices, 45% medical and health resorts and only 5-6% to optional health insurance.

    I guess the most likely culprit forcing hospitals to defer payments would be the local governments having to deal with covid, Ukrainian refugees and other burdens.

    There was also news yesterday that about 40 types of social security payments (like pensions) will have 11.9% percent index raise (due to inflation) from today. If that was not already in the budgets, I assume there will be problems to solve going forward.

  23. Gregorio

    Great post and discussion. It’s nice to have a forum that’s free of all the partisan bickering and name calling that’s so prevalent in most forums. I particularly enjoyed all the insights from the people on the ground inside Russia. Thanks to NC for being a sane refuge in the wilderness of media propaganda.

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