What's the Real Impact of Ukrainian Strikes on Russia's Oil?

Tom, it's great to see you today, it's a pleasure to be with you Jason Thomas, you're a well-known economist at the Hudson Institute and you've studied Russia for decades. What do you see happening there? How is the economic situation now in Russia? I think the Russian economy is slowly deteriorating in a number of ways, both in terms of production and in terms of its financial situation. First in terms of consumer economics, which is important. Inflation is a huge problem. It is anywhere between the official rate of 8% and

what

famous economist Steve Hanky ​​says is closer to 24% due to Manpower's flight from Russia and the slaughter of soldiers in the field.

There is a massive labor shortage, which is affecting production and the normal economy, let's call it the normal economy, also the shift of resources from manufacturing things like cars to manufacturing weapons, is slowing down the consumer economy, financially. , the L of massive amounts of oil and gas revenue that would normally have had um uh

impact

s on your budget um is a contributor to inflation U um due to the

impact

of inflation on interest rates um but a some

what

underestimated factor is the Russia's sovereign wealth fund that they have used to fill in the holes, due to the loss of revenue from fossil fuel exports, is starting to get serious, they have depleted about half of their sovereign wealth fund and, since taxes on oil and gas exports are one of the main contributors. to that fund are being depleted rapidly and the seizure of Russian assets abroad and the inability, I mean the capture, if you will, of the proceeds in the United States and Europe from those assets abroad to be used to help to Ukraine. it's also a drag on their economy so overall it's a weak economy that's getting weaker as time goes on because of various sanctions and because you know half the economy is now dedicated to the war effort so in the future, though pun intended.

He has said he has plans for the economy, for example he has promised a lot of social spending very soon in Russia on housing construction and huge new investment in the Russian military. Do you think that will help the Russian economy or what will happen? Well, he doesn't have the money to make the social welfare investments. That's clear, it seems clear that any new income that they have and I don't see a source, a new source of income to dedicate to these things would go to the military, so the fact that you are promising these personal welfare benefits, housing benefits, is an indication to me that there are grassroots rumors that are causing me to want to respond to the likelihood of even more discontent.

Deep in Russian society, as you know, Ukraine is carrying out a series of attacks on Russian oil facilities. What will be the result of that? Do you think that will

real

ly affect the Russian economy and what else should Ukraine or the country do? The West is doing to put pressure on the Russian economy. Attacks on oil refineries certainly hurt, but as far as I know, they are not a major destruction of refining capacity. The Russians have been able to recover some of that capacity. Uh, Ukraine needs to continue like this because it hurts the economy. It is another source of income, you know, an important source of income is the export of oil.

In the short term, it does not affect the economy much, but Ukraine can. getting access to longer-range weapons, which is starting to happen as the United States and Europe loosen their restrictions on their military aid, which could in the medium term

real

ly hurt the Russian economy, well, a lot of people have done it. However, he said that in the end China will come out ahead and rescue Russia and will be there to support it. How likely do you think that is? Much depends on the political will dedicated by the United States and its European allies and its Eastern Pacific.

Rim's allies are squeezing China through new sanctions they have imposed to try to cut off the aid China is giving to Russia. I'm talking about things like semiconductors that are essentially CH funneled through Hong Kong and Central. Asia, but many times most of the time with China's complicity, China's involvement, what allies could do, and there are some indications in the recent announcement of sanctions in the United States, it is really a blow to the Chinese banks that are complicit in financing these transfers, are also complicit in paying for the oil that China is buying and the gas that China is buying as well and given that the Chinese economy is weak and is almost its only source of the growth that What they have at this moment are exports of manufactured products and some technological products to the West.

They have to be very sensitive to Western sanctions and therefore, in the long run, China may have to choose between Russia. and their own economy and given that their own economy is weak and the social pact in China depends on uh or the political pact depends a lot on uh growth and well, the economic well-being of the people, I don't think the Chinese will choose Russia uh uh in total uh I challenge its economic dependence on the West, so if Moscow can't count on Beijing, can it count on bricks? What kind of future do you see for the brick countries and what kind of economic future can that Alliance expect?

Well, most brick economies are quite weak with the exception of China and India. um uh and I mentioned the Chinese dependence on the West already um India cannot provide the uh nor the market to uh in any way um um substitute for Western markets it is simply not a strong enough and big enough economy and it also does not have the technology that is available in the West, so if Russia depends for its economic future on the brick countries they are going to go to. You have a hard time, it's not a crutch, because those economies, apart from China and, to a lesser extent, India, are so weak and have such poor growth prospects that it's just not going to work.

Dom, that's really great. I appreciate your time today, okay? it's good to be with you