Articles like these are a good example that while Russia often tries to downplay or outright deny the sanctions have any effect on them, they do work. This is only one specific example with a specific plane model, but their whole airline industry is facing similar issues on many fronts. Many repairs that used to be business as usual are now either prohibitively expensive or downright impossible due to the sanctions. Similar problems exist across a wide range of industries in Russia. There's a reason why they closed off their stock market, they can't afford to let the full impact be visible.
The point of modern sanctions is not that it makes import impossible (look at Russian circumvention for dual-use military technologies), but that it makes import at whole-economy scale more expensive and unreliable.
And ultimately that's what imposes economic costs.
It'll be curious how much of the gap is filled by substitute Chinese goods. (E.g. the domestic CFM-alternative engine projects [0])
With the wrinkle that Russia and China are united by their geopolitical opponents more than their friendship, and Xi doesn't seem thrilled about shackling the Chinese economy to the consequences of Russian war.
Foreigners are not allowed to sell on the Russian stock market from the Russian side [0] and they're generally not allowed to buy from the sanctions side. This means that as a foreign investor you're barred from trading in any useful meaning of the word. Buy and hold in the hopes that you might be able to maybe some day sell, whether that's in a year, ten years, or a hundred, is not really a viable strategy. That's also the reason why investment and asset management companies of all sizes are trying to find their exits from the Russian market, see for example Van Eck [1], just the latest addition in a long line of many:
> Regulatory and market conditions do not currently permit the Funds to conduct transactions in the local Russian market.
The post you are quoting did not say they closed the stock market. They said they “closed off” the stock market, which implies denying access to certain classes of investors.
That said, I’m not finding anything about Russia prohibiting foreign investment, but I am finding a lot about sanctions prohibiting dollar and Euro investment in Russia.
Good point. Worth noting that the Russian newspaper reporting this, Kommersant, is the most liberal/independent of the three business dailies in the country and is sort of the Babylon Bee of Russia, if the BB wasn’t satire: it spells its name with pre-Revolution Cyrillic and uses creative neologisms, wordplay, metaphors, and legally imposed euphemisms in its stories to maintain a degree of independence in periods of severe state censorship
The sanctions don't have a goal. So anyone can say anything. Besides Air Transport is a small ass part of GDP. Their MIL complex is on over drive, more than compensating for whatever hits the other sectors are taking. Their GDP is growing faster that all other major Western Economies. The US & EU are not serious about winning this war, mostly because they don't have confidence in themselves that they can.
> Their GDP is growing faster that all other major Western Economies
Growth that depends entirely on government spending can only last so long... First you blow all your reserves, then if/when you start printing money and hyperinflation kicks in even if the nominal GDP in the domestic currency appears to be rising, real GDP falls fast.
Because Russia's essentially a petro-state, they had sizable cash reserves with which to prop up their economy. Now you can see with the price of the Ruble that they've run out of the will to prop it up using foreign reserves (probably running low on foreign currency) and most estimates of their economic growth is that it'll stall or they'll see a recession for 2024 and beyond.
> The US & EU are not serious about winning this war, mostly because they don't have confidence in themselves that they can.
You're right that the west isn't serious. It's not that they don't think we can, it's that they're afraid the slightest hit to our living standards will erode support. While they might be right, we're sleepwalking into an even worse scenario...
What? The EU and US aren’t in the war at all. We’re almost 3 years into Russia being unable to conquer a country 1/3 their size right on their border.
On top of all the damage done to them, and their advanced EW capabilities that have been captured and sent for analysis in the US, and exact knowledge of things like Kinzhal, the lost flag ships and submarine, the modern sea drones - this war is a disaster for Russia.
The US and EU aren’t even involved and Ukraine is holding its ground. Russia is doing so poorly that they’re not even considered a threat anymore in the West.
Their “GDP” numbers belie systemic economic weaknesses that show up when they have to BARTER for food. That’s how worthless their currency is.
Russia is basically completely pathetic at this point - they can terrorize countries that share a land border with them but can’t project power even past Ukraine.
They had to import starving North Koreans with antique shells and Iranian RC toys. Some superpower.
The US and EU don’t care about the war in the same way someone with a Ferrari doesn’t have to race someone with a Honda Civic - because they’re not a threat. Let the person in the Honda rev their engine and scream that they’d win - they’re just stupid. They look stupid.
They’ve lost what, 500k soldiers? They’re so much weaker than the Soviet Union it’s laughable.
The rest of the world disrespects them so much that they had $300B worth of Russian assets outside their country - and they were all seized. That was half their famed “sanction proofing”! What are they going to do about it? Nothing.
They have “hot” GDP based on faux demand for wartime goods - as they trade Rubles for oranges because nobody wants their currency. Does that sound viable to you? Laughable.
This will be Europe’s first post-War test of security integrity.
My suspicion is it will fail—that Europe as a single force, versus collection of countries crowded on a continent, is an American invention, and without American strength will dissolve divided. But my hope is it will succeed.
There's an argument that the US did everything to prevent Europe from coalescing into a single force and only want Europe to be a single market, not much more, for instance by convincing Eastern European countries to trust their protective umbrella rather than the French-German domination.
They are pretty half arsed in terms of getting Russia to withdraw. Now if they blockaded Russia's oil exports that could bankrupt them but the whole policy from the start seems to be drip feed everything so Russia wins slowly.
I guess we don’t say that USA had “sanctions” against the Soviet Union, but there was a monumental improvement in economic relations after the Soviet Union collapsed, no? So we have a direct example from history from the same region.
I would say that Vietnam also shows that economic relations can improve a lot even without a fundamental change in the regime.
China is also an example where economic relations improved.
I don’t see any reason to think that sanctions can’t be lifted. But it may require a complete collapse of Putins regime/party for it to happen on a short timescale. Is there any reason to think USA wouldn’t be willing to open up to a new leadership if they have a radically different attitude and pull out of Ukraine?
If Russia turns into something like North Korea or Iran, then yeah, the outlook is not good. But why should it be?
From a game theoretical point of view: I don’t think any leader of any country wants to end up like North Korea, so the precedent being set is good.
What is "the fleet"? This hits different companies in different ways. S7 which prior to the war was a very well received and modern airline has a meaningful number of those. For S7 31 out of 39 planes (with those engines) are out of service or about to go out of service. The total fleet today is only around 85 planes depending on how you count, and most of the planes that were ordered are not being produced for S7 at the moment. That's a pretty significant blow to the airline.
They didn’t mention of Boeing fleet but the situation is supposedly the same. Together, while only small percentage, they are more efficient, can transport more, go farther, need less maintenance, so more desirable.
Belsat's article[1] is a bit more detailed and I found this fragment interesting:
>According to Andrei Kramarenko, a leading expert at the Institute of Transport Economics of the Higher School of Economics, passenger traffic in Russia has almost stopped growing due to insufficient supply. In September, Russia's Ministry of Transport revised its annual forecast to last year's level of 103 million passengers carried by aircraft.
>Seat occupancy on Russian passenger planes this summer reached 93-95 percent. The expert believes that the situation will fail to improve next year, which may prompt airlines to simultaneously reduce average annual flight times and maximize redistribution of their share of seat supply toward the summer when effective demand and ticket margins are several times higher.
So basically it seems that their airlines are stretched thin.
The comment you replied to says that they can’t meet demand due to insufficient supply (due to grounded aircraft). Very high occupancy is consistent with that. If Delta suddenly had half as many aircraft they would always be full too.
At this point, what would Russia have to do to get back onside with the rest of the world? Obviously, ending the conflict with Ukraine is the first step, but what else would they need to do? How long would it take for them to get out of the doghouse, so to speak?
But that would imply Russia becoming a neo-colony of the US, like the two mentioned countries. Which I don't think would ever happen, I think Russia would chose MAD over that if forced to make that choice. Russia under Yeytsin was already drifting towards becoming something like that, and has been firmly going in the other direction ever since
Readit News
And ultimately that's what imposes economic costs.
It'll be curious how much of the gap is filled by substitute Chinese goods. (E.g. the domestic CFM-alternative engine projects [0])
With the wrinkle that Russia and China are united by their geopolitical opponents more than their friendship, and Xi doesn't seem thrilled about shackling the Chinese economy to the consequences of Russian war.
[0] https://en.m.wikipedia.org/wiki/ACAE_CJ-1000A
Dead Comment
> Regulatory and market conditions do not currently permit the Funds to conduct transactions in the local Russian market.
[0] https://www.reuters.com/business/finance/limited-russian-sto...
[1] https://www.vaneck.com/us/en/blogs/emerging-markets-equity/r...
That said, I’m not finding anything about Russia prohibiting foreign investment, but I am finding a lot about sanctions prohibiting dollar and Euro investment in Russia.
https://www.xe.com/currencycharts/?from=USD&to=RUB&view=5Y
Growth that depends entirely on government spending can only last so long... First you blow all your reserves, then if/when you start printing money and hyperinflation kicks in even if the nominal GDP in the domestic currency appears to be rising, real GDP falls fast.
Because Russia's essentially a petro-state, they had sizable cash reserves with which to prop up their economy. Now you can see with the price of the Ruble that they've run out of the will to prop it up using foreign reserves (probably running low on foreign currency) and most estimates of their economic growth is that it'll stall or they'll see a recession for 2024 and beyond.
> The US & EU are not serious about winning this war, mostly because they don't have confidence in themselves that they can.
You're right that the west isn't serious. It's not that they don't think we can, it's that they're afraid the slightest hit to our living standards will erode support. While they might be right, we're sleepwalking into an even worse scenario...
You missed the goal of sanctions on Russia?
> MIL complex is on over drive
This is correct. The Russian economy is doing fine.
> mostly because they don't have confidence in themselves that they can
This is wrong. It’s a resource-commitment problem. Not one of capabilities or confidence.
On top of all the damage done to them, and their advanced EW capabilities that have been captured and sent for analysis in the US, and exact knowledge of things like Kinzhal, the lost flag ships and submarine, the modern sea drones - this war is a disaster for Russia.
The US and EU aren’t even involved and Ukraine is holding its ground. Russia is doing so poorly that they’re not even considered a threat anymore in the West.
Their “GDP” numbers belie systemic economic weaknesses that show up when they have to BARTER for food. That’s how worthless their currency is.
Russia is basically completely pathetic at this point - they can terrorize countries that share a land border with them but can’t project power even past Ukraine.
They had to import starving North Koreans with antique shells and Iranian RC toys. Some superpower.
The US and EU don’t care about the war in the same way someone with a Ferrari doesn’t have to race someone with a Honda Civic - because they’re not a threat. Let the person in the Honda rev their engine and scream that they’d win - they’re just stupid. They look stupid.
They’ve lost what, 500k soldiers? They’re so much weaker than the Soviet Union it’s laughable.
The rest of the world disrespects them so much that they had $300B worth of Russian assets outside their country - and they were all seized. That was half their famed “sanction proofing”! What are they going to do about it? Nothing.
They have “hot” GDP based on faux demand for wartime goods - as they trade Rubles for oranges because nobody wants their currency. Does that sound viable to you? Laughable.
Deleted Comment
This will be Europe’s first post-War test of security integrity.
My suspicion is it will fail—that Europe as a single force, versus collection of countries crowded on a continent, is an American invention, and without American strength will dissolve divided. But my hope is it will succeed.
Source on that? No documented cases in history of U.S. sanctions ever ending.
(Which is why from a game theoretic point of view the only winning move is import substitution, not kowtowing to whatever terrorist demands.)
Sanctions on Iran were relaxed in exchange for partial cooperation: https://en.wikipedia.org/wiki/International_sanctions_agains...
I would say that Vietnam also shows that economic relations can improve a lot even without a fundamental change in the regime.
China is also an example where economic relations improved.
I don’t see any reason to think that sanctions can’t be lifted. But it may require a complete collapse of Putins regime/party for it to happen on a short timescale. Is there any reason to think USA wouldn’t be willing to open up to a new leadership if they have a radically different attitude and pull out of Ukraine?
If Russia turns into something like North Korea or Iran, then yeah, the outlook is not good. But why should it be?
From a game theoretical point of view: I don’t think any leader of any country wants to end up like North Korea, so the precedent being set is good.
>According to Andrei Kramarenko, a leading expert at the Institute of Transport Economics of the Higher School of Economics, passenger traffic in Russia has almost stopped growing due to insufficient supply. In September, Russia's Ministry of Transport revised its annual forecast to last year's level of 103 million passengers carried by aircraft.
>Seat occupancy on Russian passenger planes this summer reached 93-95 percent. The expert believes that the situation will fail to improve next year, which may prompt airlines to simultaneously reduce average annual flight times and maximize redistribution of their share of seat supply toward the summer when effective demand and ticket margins are several times higher.
So basically it seems that their airlines are stretched thin.
[1] - https://en.belsat.eu/83600150/russia-half-of-airbus-a320-and...
Unconditional surrender, with a complete cultural restructure and admitting to the atrocities, and prosecuting everyone responsible is a good start.
But of course, that won't happen anytime soon.