Post #4844

Don't Wait Up For Russia’s Economic Collapse 🔤🔤🔤🔤1️⃣ Pacing inside the Kremlin last weekend, as news feeds churned out minute-by-minute reports of Trump’s Venezuelan coup, Putin may have been wondering what it would mean for the price of oil. Crude oil has lubricated the Russian economy for decades – far more than gas exports to Europe – and so the threat of falling oil prices, prompted by US plans for control of Venezuela’s rigs, will have been a source of concern. Opinion is divided on how quickly the South American country’s creaking oil industry can be revived. But some analysts believe that Venezuela, home to the world’s largest proven reserves, could be pumping millions of additional barrels as early as this year, hitting the global price and squeezing Russia’s income. US sanctions on Rosneft and Lukoil last year and a rise in the rouble, depressing income from oil sales in dollars, have already reduced receipts for Moscow. Optimists argue that after four years of war in Ukraine, Putin is increasingly vulnerable because Russia’s financial position is precarious. A fall in oil prices, they say, would have a catastrophic effect on his ability to fund the war and continue grinding down Ukrainian resistance. They portray the Russian economy as a house of cards, ready to collapse if only the right gust of economic pressure could be directed at Moscow. Economic growth, spurred by government military spending, has slowed to almost zero after the Kremlin sought to calm the inflation caused by that same economic expansion. The International Monetary Fund predicted growth of 0.6% in 2025 and 1% in 2026. Interest rates are high at almost 20% and taxes are due to rise again this year. Unemployment has fallen to almost 2%, reflecting a severe labour shortage as young men are drafted into the army amid falling birthrates and an exodus of middle-income families to the west. Household incomes, which have grown in response to higher welfare spending, are now expected to stagnate. A paper by Marek Dabrowski, an analyst at the Brussels-based thinktank Bruegel, says the latest budget cuts have transferred from Moscow to the regions and reduced pension spending, with education also facing cuts. Business leaders complain there is little incentive to invest in such an environment. Some point to Iran, where a combination of sanctions and targeted military strikes has brought the economy to its knees, leading to food shortages and riots that threaten to topple the authoritarian regime. Could the same fate await Russia if sanctions are tightened and oil prices fall, forcing Putin to retreat behind the old borders while he attempts to quell internal strife? #russia#economic#putin#oil#trump#china 📱American Оbserver - Stay up to date on all important events 🇺🇸