Whatever you have heard or read regarding the alleged damage U.S.-led Western sanctions are doing to Russia’s economy, you should take them with a grain of salt.
In reality, the Russian government is doing fairly well, all things considered, and in fact, Moscow is on pace for a banner year in oil and gas sales, meaning Vladimir Putin isn’t likely to run out of money to fund his war effort in Ukraine anytime soon.
By comparison, Europe, especially, is suffering from the sanctions, while “Russia is expected to see record oil and gas earnings and a budget surplus as a result of surging oil and gas prices, which is their main export,” Information Liberation is reporting.
In an interview with NTV.de on Thursday, Janis Kluge, a researcher at the German Science and Politics Foundation, provided details about how the West’s sanctions on Russia were actually backfiring.
“Almost half of the Russian budget is based on transactions with oil and gas. The state earns enormously from production taxes and export duties. It receives the income in rubles, and the amount is determined by two factors: firstly, by energy prices on the world market and, secondly, by the exchange rate of the ruble,” Kluge told the German media outlet.
“The gas price on the spot markets has quintupled within the past year. That means Gazprom will have record revenues,” he added.
“Russia planned the national budget with a dollar-ruble exchange rate of 72, but now the ruble is around 85, much weaker, but with a view to energy exports this is an advantage,” he added.
“If we multiply the oil price by the ruble exchange rate, it shows that Moscow expected revenues of around 4,500 rubles per barrel of oil, but is getting much more, around 7,000 rubles,” Kluge said, going on to predict that Putin’s government will experience “record oil and gas revenues” that will work to offset losses from inflation and reduced domestic tax revenues while also producing a budget surplus.
And on Friday last week, Bloomberg News reported that “Russia will get an estimated $321 billion in energy exports in 2022, marking a surge of more than a third compared to last year.”
“It’s also on track for a record current-account surplus that the Institute of International Finance says may reach as high as $240 billion,” Bloomberg News added.
Meanwhile, Putin’s demand that oil and gas purchases be made in rubles appears to be working as well. Slovakia, a country that purchases roughly 85 percent of its energy from Moscow, agreed this week to begin doing so using the Russian currency.
Decisions like that one have led the ruble to rebound nicely from post-Ukraine invasion losses, and it has now even gained on the U.S. dollar and other global currencies — after Brandon, the Hapless, claimed his government’s sanctions were going to destroy Putin and Russia.
“As a result of our unprecedented sanctions, the ruble was almost immediately reduced to rubble. The Russian economy is on track to be cut in half. It was ranked the 11th biggest economy in the world before this invasion — and soon, it will not even rank among the top 20,” he claimed on March 24.
As a result of our unprecedented sanctions, the ruble was almost immediately reduced to rubble.
The Russian economy is on track to be cut in half.
It was ranked the 11th biggest economy in the world before this invasion — and soon, it will not even rank among the top 20.
— President Brandon (@POTUS) March 26, 2022
Brandon the ‘foreign policy expert’ has not been right about anything his entire political career, so being wrong about his Russian sanctions regime is not surprising.
What is shocking, however, is how little his foreign policy team really understands who they are up against.