"WE ARE LIVING IN YOUR FUTURE"

10 April 2023

                          Artist's vision for St Persburg

    

Doing a catch-up on the effects of Western companies quitting Russia.

IKEA quit Russia six months ago and the existing Russian management simply took over the business and have renamed it, but this time prices are lower and the profits stay in Russia. Sweden's loss, they are ideology-bound.

Similarly, before the SMO, the biggest car producer in Russia was Renault. Well now same story: it's been taken over by local management and the supply chains for parts and assemblies from the West have been replaced by supply chains from China. China now has a big interest in the Russian Motor Industry and as we know is already the dominant player in the future Electric Vehicle.

After an initial rise in inflation and anxiety, especially for those living near the border, now things in Russia have quietened down and the war is not the dominant subject of conversation.

Inflation is back under control, interest rates have fallen back to 7.5% (they initially shot up to 20%), Swift has gone but it's been replaced so transfers are no problem. Efficient management of interest rates in service to the money supply, inflation and FX rates by the Russian Central Bank.

Russia is the world's number one agricultural producer, but the West has been cut out of its markets... 

...we can conclude that sanctions have failed and indeed backfired  Sanctions were the west's one chance to hammer the Russian economy and they were wasted on this pointless war over a piece of land called Ukraine that is not of any strategic value to America. 

The result is that sanctions will be well nigh impossible to make work against the real potential enemy which is China : victim economies now know what to expect and have re-jigged themselves to mitigate the effects of sanctions and to conserve their capital which may be stored in western economies. I imagine central banks and corporations are quitting the Eurodollar.

Same for energy, with India just signing a long-term oil deal for price security.

Same for commodities: cut out.

And the eu's Von delayan goes to Moscow to threaten and warn Putin. How smart is that?

The Russian government's economic plan apparently sees Russia as an industrial and construction(*) powerhouse, with the share of GDP from these sectors going from a third to a half ... which sounds like China's plan too.

The West's pivot to Asia should have been an economic success for us, but was not properly managed. Europe's share of world GDP has been shrinking and de-dollarisation is underway. The sanctions were a great success for Russia it seems. Now there is a new Iron Curtain containing and shuttering the West, and the West's (America's) pivot has military objectives to dominate, rather than cooperate. Compare this with China: China is mainly interested in money and its objectives rely on the success of its Belt and Road strategy.

When Russians visiting London or Paris or New York return home to Moscow or St Petersburg, they are relieved to be back in a situation of personal security and technological advance (and it's the same for expats who have quit America and Europe, everything in EurAsia is convenient and automated) and cleanliness on the streets, and much lower levels of stress than life in Western capital cities these days. 

Those Russians who remember the Soviet Union and have travelled, think that the EU today resembles the Soviet Union of Yesteryear.

There's one Russian commentator quoted as saying "we live in your future"... he means if we in Europe are that lucky! But really what he means is that the West is no longer a model for Russians. Just thinking about beautiful Russian women: these women are no longer interested in talking to "American boy".

So anyway visitors are surprised to find how well organised is Russia, and Moscow and St Petersburg in particular. And Russians are not much interested in the American way of life anymore.