Sanctions at work:Russia posts its second highest deficit in the post-Soviet era

[Smartprofit]

Talking about sanctions, did sanctions stop Iran? North Korea? Venezuela? The answer is no. Did sanctions stop Putin? No. Will they? Most probably not. That's all we need to know about sanctions - they don't work.

The United States dealt another heavy blow to Russian banking and energy. The last major Russian bank was deprived of access to American correspondent accounts, that is, now it will not be able to carry out transactions with US dollars. The Kremlin financial structure will not be able to make cross-border dollar transfers from next Friday, January 27th. The reason is the closure of correspondent accounts of Gazprombank in the American JPMorgan Chase Bank and Bank of New York Mellon.
To trade Russian energy resources, the Kremlin will now have to switch to gray and even criminal schemes. And this means that the budget of the Russian Federation will become even more scarce than previously expected. Well, in Russia there is a good opportunity to switch to cryptocurrencies in their calculations, or at least to stablecoins.

Yes, it is possible that Russia will use bitcoin and the US dollar in cross-border trading. 

Russia has a lot of goods that it wants to sell to foreign countries (oil, natural gas, timber, wheat, mineral fertilizers, etc.).

At the same time, there are options for receiving payments from abroad in US dollars, euros, Japanese prices, British pound, Swiss  The franc is getting smaller and smaller.  There is also a need to purchase the necessary goods and materials abroad. 

Therefore, the option of using cryptocurrencies in the calculations is likely to be implemented.  This will inevitably lead to higher prices for bitcoins and alternative cryptocurrencies.

Sanctions on Russia affect its economy.  But over time, the economy adjusts to the reality of sanctions.  Perhaps he may recover soon and be able to find solutions to compensate for the shortage caused by those sanctions.  Do not forget that Iran has been living under harsher sanctions for years.

Would you like to live in Iran?  In conditions of total restrictions and international sanctions?  In a country where there is no place for human rights, and the entire social life of people is under the control of religious fundamentalists? 

Yes, Iranians live in such a society.  And they live a very long time...

But Iran is the former Persian Empire.  Of course, one should not judge the country by Hollywood films, nevertheless, the film 300 Spartans shows a very vivid image of the Persian Empire.  This is a country where a single human life is of no value. 

What is happening in modern Russia is absolute madness. 

However, Russia is very much a European country, with European demographics and European consumption.  Modern Russians are not collectivists, but individualists. 

The crazier everything that is happening now.

[1715473899]

1715473899

[tygeade]

I would even go so far as to say that Bitcoin's market cap and trading volume as of today are also indicators that the network is used to cover certain needs like circumventing sanctions. The more political measures like sanctions are imposed, the more attractive will the Bitcoin network become. Authoritarian governments (and others as well of course) will learn the hard way that the ultimate way to transact safely and reliably around the globe in a world of sanctions can only be via a decentralized network like Bitcoin.

The trading volume we currently have is politically relevant. It was in 2017 when we first crossed the billion USD mark. While mostly authoritarian regimes considered banning Bitcoin also back at the time, it wasn't relevant to them anyway as they thought it is not enough volume and liquidity to ever complete huge cross boarder deals anyway. Now it is totally realistic to close a billion dollar deal and agree to transact in Bitcoin. So even these political issues around the world will eventually increase the need for the very network that many of those regimes have or had been trying to ban.

I do not think that we can say that based on just the market cap and trading volume, we have no data to back up if it is used to go around the sanctions, I am sure it does, but at what level? We do not know, maybe a few million dollars, maybe a billion, who knows?

I think it is clear that it is seen as a saviour to some people, specially during early days when Russians wanted to get their money out before it got held by courts, but as of right now? Not that many, because the ones who wanted to take it out, probably already did. I think it is important to focus on how sanctions were put there for a political reason, and without that reason going away (war ending) it is going to keep making Russia poorer.

[el kaka22]

I do not understand why people are mad at western nations for not wanting to trade with Russia? I mean I get that you think it is unfair, but the reality is that if one nation doesn't want to trade with another, how do you think it is fair to force them into trading with each other?

Let's assume USA for a second, if USA doesn't want to trade with Russia, telling USA that they HAVE TO trade, is that fair? Every nation should make their own decisions and their own laws and if they do not want to, then it's their own business. In this situation, Russia needs to either accept that what they do will get them sanctions and continue (which is what they are doing) or just change and try to avoid that.

[Fortify]

With gas prices being lower than last year during this period, but with Russia selling just 1/3 of it now, with Urals trading full 33$ down from a year ago to 52$ but with Russia so desperate to sell that it does so even at $38 per barrel, it's obvious what the budget income will look like this year. On top of that add the hundred do thousands of job losses once companies pulled out, a figure that will start to bite around now since a lot of them were generous enough to make a 6 to 12-month payment before firing people, and the hundreds of thousands dead and mutilated in Ukraine and the hundreds of thousands that fled Russia with full pockets, and those were the guys that earned a lot, a real brain drain that will leave its mark for decades.

But of course, there will be some that will say Russia is stronk, Russia has resources, Russia this and that but Russia is a shadow of the URSS that had all of those and much more, but still ended in the garbage bin of history! You can't wage an economic war when you're dirt poor and your ally is the one that should tell you a few things about the sanctions that turned the wannabe global power into an economy the size of Denmark but with 50% inflation and unable to feed its population, although it also turned out they are pretty good at killing and hanging their own citizens.

The bottom line is that when economics are involved, nationalism and pride are useless, you can lie to yourself whatever you want but this won't change a thing, you can dream of anything you want but this won't do any good either once you wake up, so the right choice is doing something about. And the first step for a population to not fall into this is by not having a dictator in charge, not being a slave terrified of going against the ones that should fear your vote, and stop blaming everyone else for the things you could have avoided. Not all resources on earth and all of humankind's glorious history will be able to offset the disaster a moron can unleash!

It's quite comical to see how badly Putin has blown the end of his appalling reign. Up until he decided to push the full blown invasion of Ukraine in 2022 he looked somewhat like an evil genius - running successful online manipulation campaigns, poisoning people who were against him with impunity and using oil & gas to blackmail European governments to let him get away with things. However he has thrown every single advantage away and murdered hundreds of thousands of people for no benefit to Russia, in fact it has made Russian extremely weak and shown their army to be an absolute farce - even if they turned things around now they have thrown away so much equipment and shown their tactics are so pathetically weak it would never be worth the shame he has brought to his country.

[franky1]

so a year of sanctions on russia. and they have a deficit of 2.6%

yet UK/america are saying that UK/america are in a recession of far more than 2.6%

the UK/america is seeing many businesses cutting back on staff
the remaining staff going in strike. the national governments claiming us/uk need to cut back on public spending.

soo who's better off?

[DrBeer]

so a year of sanctions on russia. and they have a deficit of 2.6%
yet UK/america are saying that UK/america are in a recession of far more than 2.6%
the UK/america is seeing many businesses cutting back on staff
the remaining staff going in strike. the national governments claiming us/uk need to cut back on public spending.
soo who's better off?

If you really believe in a 2.6% fall in the economy in Russia, I must disappoint you - you are easily deceived

Now I will explain what the problem is. I will tell you about the state budget of Russia. And it will become clear to you what actually happened in Russia, and not according to propaganda and distorted statistics... So, these are the data for the BEGINNING of 2023:

- Oil and gas revenues in January 2023 collapsed by almost 2 times compared to January 2022: from 795 to 426 billion rubles!
Non-oil and gas companies fell by 28.1%: from 1.29 trillion to 931 billion!
Spending soared by 58% - up to 3.1 trillion!
The budget deficit for January exceeded 1.76 trillion rubles! This is 60% of the budget deficit plan for the whole of 2023
- The Ministry of Finance of the Russian Federation for the first time had to sell 3.6 tons of gold from the National Treasure Fund and 2.3 billion Chinese yuan to cover the budget deficit. This is the largest deficit since the default in 1998.
- Revenues of the Russian budget from exports collapsed by almost 4 times. Customs reported a 73% drop in export fees.

And you still believe in just a 2.6% fall in the economy?

[Ozero]

In my opinion, the situation with transnational payments has the following features.... 

Russia's problem is not that the ruble is not a convertible currency.  The Soviet ruble was also not a convertible currency. 

Russia's problem is that international sanctions have been imposed on it, including a ban on the use of the international financial system.  And without the possibility of using this system, it is very difficult to make all cross-border payments.  This applies to both exports and imports of goods. 

The Russian government does not need to convert bitcoins into rubles and vice versa. 

It is important for the Russian government that critical goods for Russia are imported.  And for this it is necessary to export raw materials (for example, hydrocarbons).  It is impossible to transfer rubles abroad and back (foreign banks block such transactions).  Russia is disconnected from the SWIFT payment system. 

And payments with bitcoin cannot be blocked, since bitcoin is not subject to censorship.

Due to the severe sanctions imposed a year ago, which continue to intensify to the present day, the last international bank Raiffeisenbank leaves Russia, it refuses to open new foreign currency accounts for clients, and also blocks other Russians from accessing the euro, their correspondent accounts are closed. These actions of the bank hit the Russian Federation, since it is he who makes 40-50% of all cross-border payments of the local business.
So international sanctions continue their destructive work for the Russian economy.

Raiffeisenbank began to abandon the Russian Federation after the US Treasury expressed claims to the bank. The point is not only in the actions of the bank in Russia, but also in Syria and the occupied territories of Ukraine. The noose around the Russian economy is getting tighter and tighter.

[stompix]

And the deficit is going full steam, numbers from February are in:
Russia’s Oil Revenues Plunged By 48% In February

Budget income from oil and gas sales reached 521.2 billion roubles last month, compared to 425.5 billion in January and 971.7 billion roubles in February 2022.

So last year they made 970 billion in February alone last year while this year they've made 940 billion in two months.
And, last year they still had a deficit of 2% even without committing fully to the war, having sky-high oil and gas prices and coming from a period of economic growth of 5% in 2021.
And it doesn't stop here:

Russia's Ministry of Finance said in a separate statement that it sold 3.6 tonnes of gold and 2.3 billion Chinese yuan from the Russian National Wealth Fund (NWF) in January. The sale of both assets added up to 38.5 billion roubles (USD $543 million).

They are actually selling both gold and yuan to prop their currency as capital outflow still bites, even with a blocked fx market and ist's still creeping up, from a low point of 54R per $ when gas prices hit their minimum levels to 75R per $ now.

But yeah, everything is fine! I've heard that in 89 and 98 also!

[trendcoin]

Wars have many negative effects. Undoubtedly, Russia is currently experiencing one of them. All I can say is this: I hope this data ends the war. Well, will these data end the war? Unfortunately I don't think so... The human tragedy in Ukraine is happening for a reason greater than a few dollars. Bringing the sides together and starting to talk about all possibilities to end the war should be our first priority. I know it's hard, but if we can do that, I think we're going to do something better than talking about all these economic parameters.

[Ozero]

Wars have many negative effects. Undoubtedly, Russia is currently experiencing one of them. All I can say is this: I hope this data ends the war. Well, will these data end the war? Unfortunately I don't think so... The human tragedy in Ukraine is happening for a reason greater than a few dollars. Bringing the sides together and starting to talk about all possibilities to end the war should be our first priority. I know it's hard, but if we can do that, I think we're going to do something better than talking about all these economic parameters.

Peace agreements in Russia's war against Ukraine are impossible at this stage. Now Putin is leaning towards a plan of peace talks so that in exchange for parts of the Kherson and Zaporozhye regions occupied in Ukraine, he will retain the Ukrainian peninsula of Crimea, which has been occupied since 2014. But in Ukraine they clearly said that they did not intend to trade their territory. The only condition for the start of peace negotiations is the complete withdrawal of the Russian occupying forces from the entire territory of Ukraine, including the Donbass and Crimea.

Ukraine reminds all adherents of peace talks with Putin that he understands only the language of force and perceives any negotiations as a sign of weakness in order to impose his onerous conditions. If Ukraine seeks now to solve the problems of this brutal war through peaceful negotiations, this will only be a delay for a new Russian invasion after it has gathered its strength and eventually Ukraine will cease to exist as an independent state.

Ukraine, with the support of other states, is capable of inflicting a military defeat on Russia, and only after that can a lasting peace be established, when conditions are created to guarantee that Russia will not attack in the future.

[Theones]

The bottom line is that when economics are involved, nationalism and pride are useless, you can lie to yourself whatever you want but this won't change a thing, you can dream of anything you want but this won't do any good either once you wake up, so the right choice is doing something about. And the first step for a population to not fall into this is by not having a dictator in charge, not being a slave terrified of going against the ones that should fear your vote, and stop blaming everyone else for the things you could have avoided. Not all resources on earth and all of humankind's glorious history will be able to offset the disaster a moron can unleash!

sanctions are not going to work! that is for sure At some point both the countries have to sit together to find a way out
War wont work - sanctions won't work.

[Smartprofit]

In my opinion, the situation with transnational payments has the following features.... 

Russia's problem is not that the ruble is not a convertible currency.  The Soviet ruble was also not a convertible currency. 

Russia's problem is that international sanctions have been imposed on it, including a ban on the use of the international financial system.  And without the possibility of using this system, it is very difficult to make all cross-border payments.  This applies to both exports and imports of goods. 

The Russian government does not need to convert bitcoins into rubles and vice versa. 

It is important for the Russian government that critical goods for Russia are imported.  And for this it is necessary to export raw materials (for example, hydrocarbons).  It is impossible to transfer rubles abroad and back (foreign banks block such transactions).  Russia is disconnected from the SWIFT payment system. 

And payments with bitcoin cannot be blocked, since bitcoin is not subject to censorship.

Due to the severe sanctions imposed a year ago, which continue to intensify to the present day, the last international bank Raiffeisenbank leaves Russia, it refuses to open new foreign currency accounts for clients, and also blocks other Russians from accessing the euro, their correspondent accounts are closed. These actions of the bank hit the Russian Federation, since it is he who makes 40-50% of all cross-border payments of the local business.
So international sanctions continue their destructive work for the Russian economy.

Raiffeisenbank began to abandon the Russian Federation after the US Treasury expressed claims to the bank. The point is not only in the actions of the bank in Russia, but also in Syria and the occupied territories of Ukraine. The noose around the Russian economy is getting tighter and tighter.

I did not know that the commercial bank Raiffeisen Bank refuses to work with individuals - residents of Russia.  For Russians, this is really very sad news. 

I know this bank very well, I know where the branches of this bank are located and where its ATMs are installed. 

Raiffeisen Bank is one of the few commercial banks that has not disconnected from the Swift international system of cross-border transfers. 

This allowed Russians to use the bank for cross-border payments (for example, payments for foreign goods).  Of course, the departure of Raiffeisen Bank from Russia is another step towards the international isolation of Russia and Russians from the outside world.

[DrBeer]

sanctions are not going to work! that is for sure At some point both the countries have to sit together to find a way out
War wont work - sanctions won't work.

The mistake is that you perceive today's war in Ukraine as a "domestic conflict between the two sides." No . In fact, everything is much more complicated and worse. Russia is not fighting against Ukraine. Russia is fighting against the rule of law, freedoms, democracy, development, normal relations...
Russia is the world center of terrorism, mixed with Nazism. Russia in its entire existence has not brought peace or development to anyone, only destruction, death, destruction of cultures and languages. Russia acts like a leech that sticks to the victim and draws all the blood out of it in order to exist! I have written more than once - the most understandable example for everyone who does not know what Russia is - it is a cancerous tumor of the world. And all their "enclaves" - the PMR. Abkhazia, the DPR, the LPR - are metastases. And you can’t negotiate with cancer, you can’t treat it with spells. The fight against such an ailment is very difficult, and this fight has one option - to destroy all cancer cells and metastases, having cleansed the body completely of them.

[Woodie]

Quadrillions from energy exports are only happening thanks to their discounted prices of oil but this can't be sustained  in the long term as these resources making financial gain will be depleted in no time and real pressure will mount to political pressure,but with the likes of Putting at the helm of everything its really scary to think about it because the man looks like a life president something we have seen in Zimbabwe and sanctions didn't deter people like the late Robert Mugabe now imagine Putting with all the resources to his disposal the ball is in its citizens hands tbh...the outside world Will bring out what it can but it's people need to do the rest.

[stompix]

sanctions are not going to work! that is for sure

If sanctions wound;t work then you wound;t have all those countries under sanctions begging every single week to have them lifted!
You won't have Russia demanding and threatening with reciprocal actions, and you wouldn't have Iran begging on all for with inflation at 50 to have them lifted, it just takes time, but once they are in place that country is done forever. Just because there are people still living in Cuba and North Korea doesn't mean the sanctions haven't worked. Will talk in 2-3 years and talk about Russia's income is on par with sub-Saharan Africa.

sanctions didn't deter people like the late Robert Mugabe

Oh, when was the last time Zimbabwe invaded Europe? 

[DrBeer]

Quadrillions from energy exports are only happening thanks to their discounted prices of oil but this can't be sustained in the long term as these resources making financial gain will be depleted in no time and real pressure will mount to political pressure,but with the likes of Putting at the helm of everything its really scary to think about it because the man looks like a life president something we have seen in Zimbabwe and sanctions didn't deter people like the late Robert Mugabe now imagine Putting with all the resources to his disposal the ball is in its citizens hands tbh...the outside world Will bring out what it can but it's people need to do the rest.

That is why most countries are investing huge amounts of money in the development of alternative "eternal" energy sources. Moreover, the largest investors in new technologies are the leading countries producing oil and gas - the United Arab Emirates, the USA, Canada...
Every year the extraction of fossil resources (oil and gas) will become more and more expensive. There are many reasons - limited easily accessible deposits increase the cost of developing new fields - they are deeper, more difficult to extract ...

[Ozero]

sanctions are not going to work! that is for sure At some point both the countries have to sit together to find a way out
War wont work - sanctions won't work.

The sanctions imposed against Russia are working and continue to gain momentum, regardless of the fact that someone tries to ignore them or downplay their effect. According to experts, in 2023 the annual budget deficit of the Russian Federation will increase by 3-4 times compared to last year. In addition, the National Wealth Fund may be exhausted before the end of 2023.
Already in February 2023, the federal budget deficit of Russia amounted to 820 billion rubles, and in the first two months of the year the total amount was 2.6 trillion rubles, or 88% of the planned deficit for the entire year.

At the same time, for the whole of 2023, the Russian Federation was supposed to go into minus 2.9 trillion rubles. (38.3 billion dollars), but only in January and February of the coming 2023, the "hole" amounted to 2.58 trillion rubles. (34 billion dollars).

Russia's expenses for the war in Ukraine are simply colossal. Since Putin was preparing to occupy Ukraine in just a few days, and the war he unleashed is now in its second year, they were clearly not ready for such a turn of events. Just one massive missile attack on civilian cities in Ukraine with the aim of simply intimidating the population of Ukraine, since it makes no sense from a military point of view, costs Russia from 400 to 700 million dollars. At the same time, in Russia itself, the bulk of the population lives near the poverty line.

It is quite logical that for the first time in many months in Russia, according to Rosstat, debts arose on the salaries of state employees. The growth was 1400%. However, Putin and his propagandists, albeit already in a low voice, insist that everything is going according to plan. Putin already hopes only for a miracle and for his own, now past luck.

https://my.ua/news/cluster/2023-03-10-biudzhetnyi-krizis-nastig-rossiiu-defitsit-prodolzhaetsia-vtoroi-mesiats-biudzhetnikam-zaderzhivaiut-zarplaty
https://borgexpert.com/ru/news/kse-institute-defytsyt-federalnoho-biudzheta-rf-vyrastet-v-3-4-raza-v-2023-hodu

[Theones]

sanctions are not going to work! that is for sure At some point both the countries have to sit together to find a way out
War wont work - sanctions won't work.

The sanctions imposed against Russia are working and continue to gain momentum, regardless of the fact that someone tries to ignore them or downplay their effect. According to experts, in 2023 the annual budget deficit of the Russian Federation will increase by 3-4 times compared to last year. In addition, the National Wealth Fund may be exhausted before the end of 2023.
Already in February 2023, the federal budget deficit of Russia amounted to 820 billion rubles, and in the first two months of the year the total amount was 2.6 trillion rubles, or 88% of the planned deficit for the entire year.

At the same time, for the whole of 2023, the Russian Federation was supposed to go into minus 2.9 trillion rubles. (38.3 billion dollars), but only in January and February of the coming 2023, the "hole" amounted to 2.58 trillion rubles. (34 billion dollars).

Russia's expenses for the war in Ukraine are simply colossal. Since Putin was preparing to occupy Ukraine in just a few days, and the war he unleashed is now in its second year, they were clearly not ready for such a turn of events. Just one massive missile attack on civilian cities in Ukraine with the aim of simply intimidating the population of Ukraine, since it makes no sense from a military point of view, costs Russia from 400 to 700 million dollars. At the same time, in Russia itself, the bulk of the population lives near the poverty line.

It is quite logical that for the first time in many months in Russia, according to Rosstat, debts arose on the salaries of state employees. The growth was 1400%. However, Putin and his propagandists, albeit already in a low voice, insist that everything is going according to plan. Putin already hopes only for a miracle and for his own, now past luck.

https://my.ua/news/cluster/2023-03-10-biudzhetnyi-krizis-nastig-rossiiu-defitsit-prodolzhaetsia-vtoroi-mesiats-biudzhetnikam-zaderzhivaiut-zarplaty
https://borgexpert.com/ru/news/kse-institute-defytsyt-federalnoho-biudzheta-rf-vyrastet-v-3-4-raza-v-2023-hodu

Last year when Russia attacked Ukraine there were rumors that Russian economy will collapse.
But nothing has happened and Russia continue to grow with a more bigger plan. Russia has always been brutal and they will keep doing that in future and keep surviving because they have the strongest army.

[Argoo]

Last year when Russia attacked Ukraine there were rumors that Russian economy will collapse.
But nothing has happened and Russia continue to grow with a more bigger plan. Russia has always been brutal and they will keep doing that in future and keep surviving because they have the strongest army.

During the year of the war in Ukraine, Russia lost almost all of its regular army and most of its weapons.

According to the Armed Forces of Ukraine, to date, Russia has lost 160,540 of its servicemen killed, 3,484 tanks, 6,789 armored vehicles, 2,519 artillery systems, 304 aircraft, 289 helicopters, 495 MLRS, 260 air defense systems, 5,367 various vehicles, as  other weapons. Since September, due to heavy losses, from 300 to 500 thousand people have been mobilized in Russia. The Armed Forces of Ukraine repel more than a hundred Russian attacks a day, but the front is almost motionless. The increase in the number of unprepared mobilized only increased the number of Russian losses, which often amount to more than a thousand invaders per day. In Russia, there is an acute shortage of middle command personnel and even small arms.

There was a photo of the dead Russians, who have recently been sent on the attack with ordinary wooden sticks. This is what a strong "second army of the world" is.

[Synchronice]

sanctions are not going to work! that is for sure At some point both the countries have to sit together to find a way out
War wont work - sanctions won't work.

If sanctions don't work, then congrats to Putin. It's double win for him if sanctions really don't work because it will make Russia stronger and Europe weaker and who knows, maybe Russian soldiers conquer Germany again.
But reality is that Russian trolls and bots are hired to say that sanctions don't work, sanctions only harm Europe, Russians are doing better, etc in order to manipulate people. Their aim is to cause protests inside European countries and by doing so, push European people to make protests against Russian sanctions and demand their cancelation.