Economic effects of the Russo-Ukrainian War

CaliforniaBased

Woodpecker
Catholic
I made a new thread to discuss topics such as the effects of sanctions and war on the Russian economy, and the effect of increased military spending / higher energy costs on our own Western economy.


This will be my first post for this thread:
1646111906248.png
translation: General Motors suspends the export of cars to Russia, Fox Business TV channel reports.
Swedish Volvo, Scania and Ericsson announced the suspension of business in Russia.
However, what will become of the Russian auto industry which is has significant western ownership? Ford and other Western brand cars are also currently made in Russia. GM itself recently ended auto production in Russia. Truthfully, I would not have been surprised to see GM continuing to sell Russian made GM cars while stopping the importation of american made GM cars. Keep in mind temporarily ceasing to import vehicles to Russia is easy; shutting and selling (and later restarting) a factory is not.
Mercedes benz also makes cars in Russia, and Porsche had a hand in development in "Putin's Limo".

Western companies such as MacDonalds have large amounts of property and business assets which can be held hostage by the Russian government should the economic war intensify.

Ownership status of Russia's largest automaker
As of December 2021, AvtoVAZ's owner is Lada Auto Holding, which is a joint venture between Renault and Rostec.[5][85] Renault owns a controlling 67.61% stake of Lada Auto Holding, while Rostec owns a 32.39%, making AvtoVAZ a subsidiary of the Renault group. - LINK

Another major asset besides oil Russia has is the minerals/metals industry:

RUSSIA RULES TITANIUM MARKET

VSMPO is among four major aerospace titanium suppliers, the others being US firms TIMET, ATI and Howmet Aerospace. But the Russian firm has outsized market share, producing at least half of the global aerospace industry’s required structural titanium, says Michaels. It supplies some 35-40% of titanium used by Boeing, at least half of Airbus’s requirement and much of Embraer’s, Michaels says. “VSMPO is by far their largest [titanium] supplier,” Michaels says of Airbus. A titanium shortage would “be a huge issue for Airbus”.
I suspect that in many cases the Western need for Russian commodities and the Russian need for Western hard currency are such that both sides are willing to look the other way to keep doing business.

It will be interesting to watch as Putin develops either a successful "fortress economy" or a backwater of the Chinese economy.
Another interesting question is to what degree countries with close economic ties to Russia such as Kazakhstan could play a role in circumventing sanctions.
 

8ball

Kingfisher
Catholic
Clearly Russia has a lot of tools in its economic warfare arsenal, the sanctions are going to have more collateral damage on the West than on the Russian economy...
I highly doubt this, Russian economy is small, apple/google pay or credit cards not being able to work in russia wont have to much of an affect on master-card or apple but it will greatly affect the lives of Russians and Russian businesses.

When i thought of sanctions i didn’t predict the almost total unity from the west and private sanctions from some American/western companies which are worth more than the entire economy of Russia.

Russia wont be able to access half the reserves, which they now need to continue to fund the war that might take longer with the west funneling money/volunteers in.

Also lets think 3-6 month from now, what would the west need from Putin to stop sanctions, keep in mind that by this time the isolation of Russia would be to levels not seen since the 80s. Does Putin siege Kiev for a year? And whats the effect on Russia?
 

MartyMcFly

Ostrich
Other Christian
Ukraine is clever. Never let a crisis go to waste. People are so drunk on the Ukraine Kool-Aid that they would likely approve giving Ukraine an extra $57 billion no questions asked economic stimulus. I give this a 90% chance of success and of course western taxpayers will bear the cost of this.

 

SlickyBoy

Ostrich
I think this is the least understood aspect of this war. If Russia succeeds in teaming up with China more than they already have, and the US thinks they can snuff out Putin with sanctions and SWIFT bullying, it's bye bye, petrodollar.

Well thought out thread (and embedded thread) on the subject:

 

SlickyBoy

Ostrich
Ukraine is clever. Never let a crisis go to waste. People are so drunk on the Ukraine Kool-Aid that they would likely approve giving Ukraine an extra $57 billion no questions asked economic stimulus. I give this a 90% chance of success and of course western taxpayers will bear the cost of this.

Yeah..... we didn't have enough scratch to build a fence on the border, but just like that, we can cough up 600 million or so for Ukraine's nationalism, border protection and whatever else. Funny how that works.

What will all these liberals do when they have to stop championing border protection, nationalism and civilian gun ownership?
 

NoMoreTO

Hummingbird
Catholic
I found this video to be quite interesting.

Russian Energy is a huge point of leverage. The US can't cut itself off of Energy because it is so dependent.
If Russia asked to be paid in physical Gold for Gas, the vaults would go bare in no time.

There is a currency proxy war going on here, and the hegemony of the dollar is at risk.


 

dicknixon72

Pelican
However, what will become of the Russian auto industry which is has significant western ownership? Ford and other Western brand cars are also currently made in Russia. GM itself recently ended auto production in Russia. Truthfully, I would not have been surprised to see GM continuing to sell Russian made GM cars while stopping the importation of american made GM cars. Keep in mind temporarily ceasing to import vehicles to Russia is easy; shutting and selling (and later restarting) a factory is not.
Mercedes benz also makes cars in Russia, and Porsche had a hand in development in "Putin's Limo".

The Russian domestic auto industry in terms of passenger cars is finished.

First, there never was much of one beyond domestic consumption and for those in Soviet allied and satellite nations.

Second, any exports beyond the USSR sphere was very limited - England, Scandinavia, Canada, and Aus/NZ I believe and of course 3rd-world Asia and Africa. But those markets were either saturated with inarguably superior product or couldn't afford much beyond a Soviet car anyway. With the fall of the USSR combined with cheap cars from Korean and now China, Malaysia, and Vietnam, there are alternatives.

Third, why in heaven would anyone want a Russian car? Yes, as an automobile nerd, I would love a GAZ-21, 24, or even a 3110 just for the laughs. Yeah, I know the Niva is legendary and you can hand-crank start some GAZ and Ladas made in the 80s, but unless you're a Russophile and you need one as dependable transportation - why? You can buy a new Asian car for slightly more and have a modern drivetrain, features, and parts availability. Or - as most do - buy a used European or Japanese car from the United States.

Finally, yes, AutoVAZ still has some market share, but are they really Russian? Its like Chrysler stateside - its part of the Stellantis empire now with foreign ownership. And the two best-selling new cars in Russia are the Accent and the Rio.
 

frankunderwood

Pigeon
Protestant

The EU imports 40% of it's natural gas and 25% of it's oil from Russia. If they want to Russia can stop it's oil exports to the west and ramp up it's export to China instead. The result will be an energy crisis and a following depression, especially in Germany and Poland which still have industry to speak of and are dependent reasonably priced energy.
 

the high

Kingfisher
Other Christian
I think this is the least understood aspect of this war. If Russia succeeds in teaming up with China more than they already have, and the US thinks they can snuff out Putin with sanctions and SWIFT bullying, it's bye bye, petrodollar.

Well thought out thread (and embedded thread) on the subject:


Considering all that's happening to Russia with sanctions and what have you, wouldn't it maybe be a bit ill-advised from China's perspective for them to further strengthen their ties with Russia? China seems to be at a pretty good middle ground right now with the west and Russia.
 
Last edited:

MartyMcFly

Ostrich
Other Christian

Punishing ordinary Russians and demonizing them will only create new enemies. Maybe some pro-western Russians will start to hate the west for doing this. Funny that if someone criticizes Muslims or Somalians, they are told that most of them are friendly or peaceful (after being called 'racist' of course) but now we get to 'All Russians are evil unless they openly state they hate Putin and they love Ukraine.'

A Russian that lives in a western nation and states he doesn't care about politics will likely be demonized by many as well. This is an example of western 'tolerance.'
 

8ball

Kingfisher
Catholic
The longer this goes on the more isolated and economically crippled Russia becomes from the West. It doesn’t look like the emerging markets are ready yet for a 1:1 substitute.

Hopefully, a negotiation is reached.
 

Valentine

Kingfisher
Orthodox Inquirer
Gold Member



Some takeaways:
- SPFS is Russia's alternative to SWIFT and is currently used for Russia-Belarus as well as domestic transactions, plus they're supposedly onboarding China
- SWIFT is just the metadata messaging system, thus blocking it doesn't block financial transactions from occurring, those transactions just lack metadata
- Blocking foreign currency accounts for Russian banks however would prevent these transactions
- A digital ruble cryptocurrency would circumvent all such blocks
 
Top