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from https://finance.yahoo.com/news/putins-getting-nervous-about-russias-sinking-economy-201143630.html

Putin’s getting nervous about Russia’s sinking economy
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Rick Newman
Rick Newman·Senior Columnist
Thu, March 30, 2023 at 1:11 PM PDT·6 min read

Kremlinologists think it’s no coincidence that Russian authorities
seized Wall Street Journal reporter Evan Gershkovich just a day after he co-authored a Journal story on how Russia’s economy is “starting to come undone.”

Russia says Gershkovich was spying, which the Journal adamantly denies.
It’s safe to believe the Journal because Russia passed a law last year
that basically criminalizes what journalists do: ask questions about
things the government doesn’t want anybody to know about.

Stay ahead of the market
That law focuses on anybody spreading information about the Russian
military, which may apply to Gershkovich because he was reportedly
researching a story on the Wagner paramilitary group that’s part of Russia’s invasion force in Ukraine. But that’s just a pretext for
Russian President Vladimir Putin to punish and silence one voice
highlighting the economic price Russians are starting to pay for Putin’s disastrous invasion of Ukraine.

A picture taken on July 24, 2021 shows journalist Evan Gershkovich. - A
US reporter for The Wall Street Journal newspaper has been detained in
Russia for espionage, Russian news agencies reported Thursday, citing
the FSB security services.

A picture taken on July 24, 2021 shows journalist Evan Gershkovich. - A
US reporter for The Wall Street Journal newspaper has been detained in
Russia for espionage, Russian news agencies reported Thursday, citing
the FSB security services. "The FSB halted the illegal activities of US
citizen Evan Gershkovich... a correspondent of the Moscow bureau of the American newspaper The Wall Street Journal, accredited with the Russian
foreign ministry," the FSB was quoted as saying. He is "suspected of
spying in the interests of the American government" and of collecting information "on an enterprise of the Russian military-industrial
complex," agencies reported. (Photo by Dimitar DILKOFF / AFP) (Photo by
DIMITAR DILKOFF/AFP via Getty Images)
More
For several months after Russian forces invaded Ukraine last February,
the Russian economy seemed resilient. A spike in energy prices boosted Russia’s oil and gas revenue, its largest source of funds. Deft
maneuvers by the Russian Central Bank helped the country withstand tough sanctions imposed by the United States and other allies of Ukraine.
Russian forces floundered in Ukraine, but that was due to poor military planning and execution, not sanctions.

Now, however, sanctions are finally beginning to strangle the Russian
economy in ways that could set it back for years. Laura Solanko of the
Bank of Finland recently described how Russia is undergoing “reverse industrialization” in which the military-industrial complex driven by
war needs crowds out the consumer economy, as in Soviet times. “Russia
is stuck ineluctably on a path to lower potential growth and a bleak
economic future,” Solanko wrote on March 27.

[Drop Rick Newman a note, follow him on Twitter, or sign up for his newsletter.]

On paper, Russia seems to be surviving. Official data show its economy
shrank by 2.2% in 2022, with the International Monetary Fund (IMF)
forecasting flat GDP growth in 2023. But Russia, never the most
trustworthy data purveyor, has stopped publishing a variety of economic statistics, and some IMF critics have blasted the agency’s Russia
forecast as naïve and wrong. The wonky debate matters because it gets to
the question of whether sanctions are accomplishing anything or not.

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Rick Newman
Rick Newman·Senior Columnist
Thu, March 30, 2023 at 1:11 PM PDT·6 min read
Kremlinologists think it’s no coincidence that Russian authorities
seized Wall Street Journal reporter Evan Gershkovich just a day after he co-authored a Journal story on how Russia’s economy is “starting to come undone.”

Russia says Gershkovich was spying, which the Journal adamantly denies.
It’s safe to believe the Journal because Russia passed a law last year
that basically criminalizes what journalists do: ask questions about
things the government doesn’t want anybody to know about.

Stay ahead of the market
That law focuses on anybody spreading information about the Russian
military, which may apply to Gershkovich because he was reportedly
researching a story on the Wagner paramilitary group that’s part of Russia’s invasion force in Ukraine. But that’s just a pretext for
Russian President Vladimir Putin to punish and silence one voice
highlighting the economic price Russians are starting to pay for Putin’s disastrous invasion of Ukraine.

A picture taken on July 24, 2021 shows journalist Evan Gershkovich. - A
US reporter for The Wall Street Journal newspaper has been detained in
Russia for espionage, Russian news agencies reported Thursday, citing
the FSB security services.
A picture taken on July 24, 2021 shows journalist Evan Gershkovich. - A
US reporter for The Wall Street Journal newspaper has been detained in
Russia for espionage, Russian news agencies reported Thursday, citing
the FSB security services. "The FSB halted the illegal activities of US
citizen Evan Gershkovich... a correspondent of the Moscow bureau of the American newspaper The Wall Street Journal, accredited with the Russian
foreign ministry," the FSB was quoted as saying. He is "suspected of
spying in the interests of the American government" and of collecting information "on an enterprise of the Russian military-industrial
complex," agencies reported. (Photo by Dimitar DILKOFF / AFP) (Photo by
DIMITAR DILKOFF/AFP via Getty Images)
More
For several months after Russian forces invaded Ukraine last February,
the Russian economy seemed resilient. A spike in energy prices boosted Russia’s oil and gas revenue, its largest source of funds. Deft
maneuvers by the Russian Central Bank helped the country withstand tough sanctions imposed by the United States and other allies of Ukraine.
Russian forces floundered in Ukraine, but that was due to poor military planning and execution, not sanctions.

Now, however, sanctions are finally beginning to strangle the Russian
economy in ways that could set it back for years. Laura Solanko of the
Bank of Finland recently described how Russia is undergoing “reverse industrialization” in which the military-industrial complex driven by
war needs crowds out the consumer economy, as in Soviet times. “Russia
is stuck ineluctably on a path to lower potential growth and a bleak
economic future,” Solanko wrote on March 27.

[Drop Rick Newman a note, follow him on Twitter, or sign up for his newsletter.]

On paper, Russia seems to be surviving. Official data show its economy
shrank by 2.2% in 2022, with the International Monetary Fund (IMF)
forecasting flat GDP growth in 2023. But Russia, never the most
trustworthy data purveyor, has stopped publishing a variety of economic statistics, and some IMF critics have blasted the agency’s Russia
forecast as naïve and wrong. The wonky debate matters because it gets to
the question of whether sanctions are accomplishing anything or not.

Russian President Vladimir Putin takes part in a ceremony via video link
at the Kremlin in Moscow, Russia March 30, 2023. Sputnik/Gavriil
Grigorov/Pool via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY
A THIRD PARTY.
Russian President Vladimir Putin takes part in a ceremony via video link
at the Kremlin in Moscow, Russia March 30, 2023. Sputnik/Gavriil
Grigorov/Pool via REUTERS ATTENTION EDITORS - THIS IMAGE WAS PROVIDED BY
A THIRD PARTY.
In early March, Russian journalist Boris Grozovsky detailed a new
Russian economy in which “all resources go to war” and “household goods are sacrificed.” Spending on consumption, he reported, fell by 49% in
2022, largely because there was nothing to buy. There’s been explosive
growth in sectors related to defense production, but cars, furniture,
and appliances have grown scarce as imports disappeared and the Russian
economy pivoted toward materiel needed for the war.

Murmurs of discontent are seeping out of Russia itself. Aluminum magnate
Oleg Deripaska said at a recent conference in Siberia that Russia will
run out of money by 2024. He complained about new taxes on Russian
businesses to help finance the war effort. Even Putin has acknowledged
that “restrictions imposed on the Russian economy may indeed have a
negative impact.”

Sanctions imposed after Russia invaded Ukraine in February 2022 aimed to isolate its financial system and restrict trade while leaving Russia’s
energy exports more or less intact. Since Russia is one of the world’s largest exporters of oil and natural gas, the goal was to hurt Russia
without causing a global energy shortage that would send prices soaring.
That largely worked, but the scheme allowed Russia to continue earning
huge amounts of energy revenue that helped finance the war.

Last December, the European Union banned most imports of Russian oil,
while a U.S.-led group of large economies imposed a price cap of $60 per
barrel on Russian oil. Those sanctions were novel and nobody was sure
they’d work. Some Ukraine allies wanted a lower oil price cap that would reduce Russia’s oil revenues even more.

Energy markets remained calm after those moves went into effect, and in February a similar set of sanctions went into effect on refined Russian hydrocarbons such as diesel fuel. Russia is still exporting energy, but
the sanctions do seem to be forcing costly workarounds in Russia’s
energy exports and denting revenue. The allied nations could lower the
price caps on Russian energy at any time, effectively tightening the
sanctions.

Russia’s economic woes are intensifying as it seems to be running short
of tanks, artillery, and other weapons vitally needed in Ukraine. The
intent of sanctions is to make it progressively more difficult for
Russia to sustain the war. Ukraine, of course, is suffering weapons
shortages of its own and a sharp economic contraction, though billions
in aid from the United States and other partners compensates for some of
that.

The Journal piece, written by Gershkovich and Georgi Kantchev,
catalogued Russia’s economic woes and its diminution into a kind of
junior partner for China, whose economic assistance it depends on. The
story described how sanctions prevent Russian airlines from obtaining
spare parts and finance firms from updating software. New-car sales have plunged by 62% year-over-year. Investment in Russian oil and gas
exploration is down 42%, which could lead to a long-term decline in
Russia’s energy output.

That wasn’t the first story on Russia’s economic problems, but it was comprehensive and may have arrived just as Putin is feeling the rising
heat of a failing war and a flatlining economy. Snatching Gershkovich on
bogus charges probably reveals increasing desperation for Putin, yet
it’s consistent with the bullying behavior of a dictator who has badly
erred and blames the messengers. It won’t be the last of Putin’s
aberrant behavior.

Rick Newman is a senior columnist for Yahoo Finance. Follow him on
Twitter at @rickjnewman


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Friday
19 hours ago
When hundreds of thousands protest in the streets of Moscow, then I’ll believe Putin’s time is running out. Until then, it doesn’t matter if Russia’s GDP falls 50%.

jeff-2019
10 hours ago
A protracted war is always a war of attrition, requiring enormous human
and material resources to support it. Clearly, Putin overestimated
Russia's economic and military strength when the war started. From
another perspective, the Ukraine war may be an excellent opportunity for
the West to significantly weaken Russia's economic and military
strength. This is a good lesson for Putin, his successors, and the CCP
to understand that never underestimate the strength and determination of
the free world, and overestimate their own dictatorial power.

Lee
6 hours ago
It is WW3 by proxy, and you have to hope the desperation doesn't drive a
mad man to do things the world shudder at. That said, the cost of doing
nothing far outweighs the cost of intervening. Don't we know another
historical figure that repeatedly extended it's borders through
aggression and what that outcome was? The world begins to forget, and complacency begins to take hold as generations are taught that the
actions are unnecessary and the cause baseless. According to
campusreform, 36% of millennials approve of communism. That number is
rather shocking when you take into consideration what most communist
nations have not only allowed to happen in their nations, but also
perpetrated on their own people. I cannot understand how one sees a
system of government where you and your family can disappear for
practicing free speech as something you would approve of. What are they
being taught, by whom, who funds it, and why does it continue?

David
4 hours ago
Free world? Our own country is bent on locking up the leading candidate
of the opposition party on what even many Democrats consider a 'trumped
up' charge.


nino
3 hours ago
Prosecuting former politicians is common in the free world everywhere
but the US. Finally that is starting to change. The president is
afforded no special powers. Not one Democrat thinks the charges are
trumped up, some just think we'd be better off to ignore Trumps
transgressions. There's a difference that you apparently cannot see.
Show 2 more replies

jim
3 hours ago
agree a war of attition against the west is a war you cant win he was
betting on energy dependence on Europe would have them fold. now he is
in an unwinnable situation and longer he drags it on the more damage he
does. but I think he knows he doesnt have a long time left, and
quitting now means you loses so he cant and will never accept it. needs
to come within Russia people to over turn. not happening anytime soon.


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