Russia has lost 40% of its GDP as foreign firms quit the country

Russia has lost 40% of its GDP as foreign firms quit the country

August 1, 2022 0 By Ellen Novack

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Moscow has embraced the “Z” iconography, but foreign firms want nothing to do with it

Every time I see an anecdote like this, I marvel how it equally applies to MAGA: 

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No wonder MAGA loves Russia and vice a versa. They both love living in a media cocoon that protects them from reality, as the rest of the world watches in horror. Reminds me of this: 

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Don’t worry, she lived and is still a despicable deplorable despite suffering from long COVID symptoms. Those Russians acting like they’re god’s gift to the world will have their comeuppance as well. Or maybe they’ll just move permanently to Paris as Russia burns to the ground. Russian oligarchs play by different rules. But rank and file Russians? Serious trouble is brewing. 

Vladimir Putin may have a corrupt and incompetent armed forces, but his economic team is some of the best. They propped up the ruble by forcing domestic companies to convert foreign currencies to the Russian currency. Record prices have proven a bonanza to Russia’s massive energy industry, and buyers are forced to pay in rubles. All of this increases demand for the currency. Yet Russians can’t convert their rubles to foreign currencies, and they have less to buy with those rubles because of sanctions. That means conversion is a one-way street: Russia is forcing key sectors to buy rubles, and no one can sell them. Hence, price goes up.  

Putin loves his record-high ruble, equating a “strong” ruble with a “strong” Russia. The reality, however, is that all those backroom economic manipulations can’t hold back calamity forever. Yale’s School of Management has tracked over 1,000 companies leaving Russia, and those companies represent 40% of it’s GDP.

– Despite Putin’s delusions of self-sufficiency and import substitution, Russian domestic production has come to a complete standstill with no capacity to replace lost businesses, products and talent; the hollowing out of Russia’s domestic innovation and production base has led to soaring prices and consumer angst

– As a result of the business retreat, Russia has lost companies representing ~40% of its GDP, reversing nearly all of three decades’ worth of foreign investment and buttressing unprecedented simultaneous capital and population flight in a mass exodus of Russia’s economic base

– Putin is resorting to patently unsustainable, dramatic fiscal and monetary intervention to smooth over these structural economic weaknesses, which has already sent his government budget into deficit for the first time in years and drained his foreign reserves even with high energy prices – and Kremlin finances are in much, much more dire straits than conventionally understood

The authors concluded that “Looking ahead, there is no path out of economic oblivion for Russia as long as the allied countries remain unified in maintaining and increasing sanctions pressure against Russia,.” Meanwhile, energy prices are dropping on weak factory demand in China and Japan as global recession looms, and Europe is working furiously to wean itself from Russian energy. It’s not happening overnight, but within the next 24 months, Russia will be forced to sell elsewhere. Already, China and India are benefiting from big discounts on Russian oil. There’s little price leverage when the world’s wealthiest nations won’t buy your energy. 

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This is heart-wrenching. 

I’d love to see less of that, and more of this: fathers and mothers and sons and daughters coming home for good. 

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This is interesting: 

We have confirmation the main bridge into Kherson from the south is still unusable. Russia’s “ferry” service in and out of Kherson is two pontoon segments lashed together. 

If you watch the video, the focus is on civilians and their vehicles. We all know undoubtedly that the service (which reportedly consists of four such ferries/barges) is also being used for military purposes, whether at night, or simply when the camera isn’t recording. Thus, when Ukraine sinks these barges, as is inevitable, Russia can scream about Ukraine attacking civilian targets. Like conservatives, everything Russia says is projection. 

We’re lucky that Russia’s efforts are so transparent and stupid. 

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The situation on the ground hasn’t changed (publicly) from what Mark last wrote yesterday. He’s now on vacation, so I’ll cover until Friday, when I myself also go on vacation, then attend Netroots Nation. Hunter will cover several days between me leaving and Mark returning. 

Some other odds and ends: 

We’ve had a full-on insurgency in Kherson and Melitopol for months, but there was a tight lid on reporting their activities. That is now lifting as Ukraine is ramping up its psyops to erode Russian morale:  roadside bombs (IEDs), targeted assassinations, threatening flyers, and “propaganda shells”—fliers urging surrender delivered via artillery. As Ukraine tightens the supply noose around the region, it’s giving Russians the opportunity to consider whether it’s truly worth dying for Putin’s ambitions. 

Meanwhile, down in Sevastopol, the home of Russia’s Black Sea Fleet at the very bottom tip of Crimea, stuff is happening.

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If Russia says five were wounded, does that mean than in reality, 20+ were killed? Why would they cancel their big Navy Day festivities over a supposedly minor breach? It’s very interesting either way, since Sevastopol is about 160 kilometers from Ukrainian-held territory. So some drone just lazily flew into what is one of the most heavily protected places in all of Russia, and actually scored a direct hit into the fleet’s command and control center? Perhaps that’s why this was happening in Sevastopol last night: 

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One more for the morning:

I get most excited about “captured.” Russia is Ukraine’s best weapon’s supplier. 



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