A lot of Russo-Ukraine War news bubbled up last week when every other damn thing was happening, so here’s a roundup, much (but not all) from Suchomimus. Plus some bits on Russia’s economy and their continuing friction with various neighbors.
“Storm Shadow and Ukrainian-produced cruise missiles hit a train yard in Yasynuvyata, the officer Headquarters of the 8th Guards Combined Arms Army plus drones destroy oil depot in Luhansk. Multiple impacts are seen–at least EIGHT missiles hit the train yard. Many more targeted the office headquarters. Six drones impacted the oil depot….One of Ukraine’s biggest missile strikes of the war so far.”
Usual Reporting From Ukraine caveats apply.
Russia economy meltdown as metal production plummets 23% and recession fears soar…
The Russian economy is on the brink of recession, with several key sectors showing dwindling productivity, according to analysis. Alexander Kolyandr from the Center for European Policy Analysis took to X to explain that the country’s manufacturing sector was “losing its mojo”, even in military production.
“The country is in a state of stagflation,” the Centre for Macroeconomic Analysis and Short-Term Forecasting (TsMAKP). “Economic dynamics are declining rapidly, and there is a risk of a technical recession in the second and third quarters, but inflation remains high.”
It’s been less than three weeks since the central bank — supposedly independent from government control — symbolically lowered interest rates: from 21% to 20%. In doing so, it fulfilled a long-standing demand from the Kremlin. It was the first rate cut since September 2022, the year of Russia’s invasion of Ukraine. This marked a break from a long cycle of interest rate hikes aimed at curbing rising prices.
The situation, however, remains dire. Official inflation still hovers around 10% year-on-year, although several independent institutes estimate the real figure to be above 15%. With military spending still running wild, “risks remain skewed towards inflation,” warned Nabiullina. “Our rate cut approach requires greater caution.”
The contradiction facing the central bank is a true reflection of the current state of the Russian economy, which has long dropped out of the world’s top 10 in terms of size. By now, even the Kremlin is beginning to acknowledge the obvious: that the economic boom driven by the war industry is coming to an end and that the savings made before the war are no longer enough.
Maxim Oreshkin, economic advisor to the all-powerful Presidential Executive Office, declared that the emperor has no clothes just before the St. Petersburg Forum: “The model that ensured growth in recent years has largely reached its limit […] We need to advance — not forward, but upward: to the next technological and organizational level.”
This followed on the heels of the Russian shootdown of an Azerbaijani plane last year, and there’s evidently no love lost between Putin and Azerbaijani president Ilham Aliyev. “The Azerbaijani political scientist and member of parliament Rasim Muzabekov says Baku no longer sees Moscow as an external power in a position to dictate the rules in the Caucasus. He told DW that Azerbaijan had begun to develop its own military and energy infrastructures, and that this, in turn, had annoyed the Kremlin.” No doubt. That’s what happens when you invade much smaller nations on your periphery and get bogged down in a quagmire.
These are just the developments I thought worth highlighting. If you know of others, feel free to share them in the comments below.