29 Comments

Just one correction- Soviet corruption was never as bad as post Soviet corruption in 1990s.

Expand full comment

Agreed. I wrote about levels of corruption NOT seen in the Soviet era.

Expand full comment

My bad, I misread it.

Expand full comment

Thank you for this part. I have to re-read the part of China and the economic impacts. Tonight in the metro I will have more time. Best wishes from Paris.

Expand full comment

Thanks for all four parts. Most US media has ignored the Russian economy while breathlessly talking about every 1000 meters gained in the Donbas.

Expand full comment

Perspective is important, for sure. Russia is on the clock and time is running out. Ukraine's strategic bombing can speed the passage of time. In the meantime, it's important to minimize the casualties among the soldiers and civilians, and to reduce the damage to their country.

Ukraine would have its own economic problems if not for the 70 billion euros it's received in financial aid. This is in addition to the military aid.

Expand full comment

Don, the USA will try to rescue Russia from this fate and if successful will result in a mess and a moral quagmire. I only hope Ukraine and supporters are able to set conditions such that there is no way the USA can do so

Expand full comment

I find it preposterous to try and save Russia from this fate. They brought it to themselves, let them experience it

Expand full comment

I agree

Expand full comment

I disagree. The US is the driving force behind these sanctions.

The US has a history of military restrictions, including in Vietnam. My belief is that some of their decisions are more about incompetence, with a dose of indifference and self-interest, instead of conspiracy.

Expand full comment

Yes the USA is the driving force behind the sanctions. Perhaps I'm reading their other decisions the wrong way. Good to keep in mind that all countries act in self-interest, its just the actions of powerful countries have a bigger impact...

Expand full comment

Well this certainly was enlightening and interesting thanks Don

Expand full comment

Thanks Don for all of this! All you hear in the States about the Russian economy is how resilient it is, blah, blah, blah, ever since Tucker the Stooge pushed around a shopping cart in central Moscow. Like you said, time not on their side.

Expand full comment

You kind of buried the lead here. Whether Russia is desperately trying to beat the clock or inevitably going to grind Ukraine to dust depends on their economy and cash reserves.

As long as the lines hold as they've had, that's the real fight: whose bank can hold out the longest.

Expand full comment

My money is confidently on Ukraine.

Expand full comment

Can Ukraine survive another 2,5 years of this grueling war and taking losses they are taking?

I am afraid not

Expand full comment

One thing's for sure. This is going to be a hard winter for Russia

Expand full comment

Money matters. It really does. People complain about sanctions as slow and ineffective. They are both to an extent, but in the long term? It hurts, and it causes big problems. Since everyone is used to the "fast wars" or the wars we can ignore, people forget about how long term real wars NEED money.

Expand full comment

Montecuccoli's list of the three things needed to wage a war is occasionally quoted as a punchline, but it was in fact pretty accurate.

Expand full comment

I was amazed to read this of Russian trade now being confined to monetary systems of China. I had just previously been reading of China's devastated economy, having made inconceivable loans to countries all over the world to pay for infrastructure to fascilitate trade with China, which shrunk as the economy of China stagnated and shrunk. The loans are unrepayable for at least 18 countries, which in many cases won't even be able to maintain that infrastructure. So China's astronomical housing bubble and interminable other kinds of crisis are now reliant on their resilience and ability to endure deprivation and suffering. If Russia is dependent on them, no wonder China is rewriting maps in China's favour.

As this plays on the war of northern Europe, there is one anxiety. As China's economy fails, they have one card to play, an advanced and vast military. That similarly had been Russia's one card to play. And the impression that that can turn the tide of misfortune. China had sought to monopolize rare earths and the future of technology, by tangling up so many countries and regions with loans and deals, just as Russia tries with 'security' and Wagner.

Mimicking the west who arrive with aid to stake claim on resources.

Superpowers are hell.

Expand full comment

Don, maybe I missed it and you didn't mention that last week the Russians shot Ukrainian prisoners again. The Ukrainian Defense Ministry reported that three Ukrainian servicemen were shot in the Toretsk direction. Here is a video of the murder of a wounded prisoner (possibly an archive): https://t.me/nevzorovtv/20666.

Don, what do you think is the logic behind the systematic execution of Ukrainian prisoners of war? They want the Ukrainians to be afraid of them and abandon their positions. So that the Ukrainians kill Russians in the same way, and then the Russians are afraid to surrender, it is better to shoot yourself.

Expand full comment

Sadly, the execution of Ukrainian prisoners is not uncommon. I don't have a number on all the cases, but they're not all captured on video.

I know the Russians are told many tales of what would happen if they surrendered. I know there are a lot of Russians that shoot themselves. I am not an expert on the culture. In talking to eastern Europeans and even seeing the difference between western and eastern Germans, there are different values, some of which are consciously chosen and some are lived without thought. There are also vast difference between individuals. But this isn't something that can be changed overnight.

Expand full comment

Recently there have been news on some ‘special deals’ between Russia and India. How would that fit in the bigger picture? Thank you

Expand full comment

India buys a lot of oil from Russia and sometimes resells it at a profit on the world market. Russian trade with India doubled in 2023 and India doesn't participate in sanctions against Russia. With the trade in yuan becoming increasingly difficult, the rupee may play a bigger role in the Russia economy. As a result, Indian companies may eventually be targetted with secondary sanctions.

If you recall, smaller Chinese banks had difficulty handling large volumes of exchange. If the larger Indian banks decline to do business with Russia then the smaller Indian banks might have the same issues. A Russian institution, Sberbank, already handles 70% of the transaction between Russia and India. They already have two offices and an IT center in India. Their staff increased by 150% and 300 IT specialists were hired for the IT center.

Dealing with India, who has the 5th largest GDP, is the next challenge for the US.

Expand full comment

Thank you. Yes, it is going to be a wrestling match. India currently would do pretty much anything that helps their economy (a bit like Turkey). Maybe we can “deal them over” to our side.

Expand full comment

Oh and let me please add one massive “Thank You!” For using hotlinks instead of texting the https links out. I often use the taxt to speech feature and it was spelling them out letter by letter 😅

Expand full comment

Sorry about that.

Expand full comment

Based on prior reading on munitions consumption in this conflict those production increases given in the article seem to be inadequate for US needs if 'the ball goes up' and the US military finds itself in a serious ground war, let alone enough to supply Ukraine and increase reserves in the case that that happens.

Of course, production and storage of munitions that in some cases have fairly short shelf lives can be expensive in the short term and like any insurance the hope is that it will never be needed.

Pity that the production facilities can't be designed for 'dual use' production such that they can be converted rapidly from a civilian to a military 'product.' Not that it was quick when Singer switched from sewing machines to rifles or the locomotive foundries from locomotives to tanks, but with proper foresight it would seem to be a desirable goal.

Expand full comment

That concept was a goal after WW2 and the US went so far as to purchase factories and let them lie dormant, to be activated in case of need. But then they didn't spend any money on basic maintenance and the derelict factory program was canceled. Five year later, the Korean War broke out and it took the US two years to ramp up production for a sufficient amount of 105mm shells.

During the Cold War, money was spent on munitions and equipment. With the fall of the Soviet Union, politicians were talking about "the end of history" and the absence of world power wars. Defense industries were consolidated and stockpiles shrank.

The US could expend a huge amount of ordnance in regional wars, such as Afghanistan and Iraq, and an entire month of such activity would be equivalent to a day's worth of ammo in Ukraine. America's stockpile is not sufficient for a long term conflict with a peer or near-peer adversary. And since employment in US manufacturing shrank from 32% in 1948 to 8% in 2023, it doesn't have the capability to switch factories from civilian to military products.

Building a factory for 155mm shells isn't that difficult and the new factories use of robotics reduces the need for large numbers of employees, but one of the limiting factors is all the supplies needed to create a 155mm shell. With Europe and the US ramping up shell production at even these modest rates, there is a worldwide shortage of explosive material. The EU heavily relies on China for guncotton, rising from 12% in 2021 to 33% now, and China supplies 70% of the cotton linters which makes guncotton. Rheinmetall is trying to mitigate some of that shortage and reliance with a new factory. Also, the US and other nations are researching new types of explosives that use different source materials to diversify their munitions supply chain.

As for equipment, by the end of the war, a B24 bomber was built in two days. A Victory cargo ship in 24 hours under optimal conditions. It takes 18-24 months to build a Bradley or M1. Stockpiles are not going to increase ovenight.

So, no. The US is not ready for a world war and will not be ready for some time, even if they decided to make a policy change today. That, no doubt, has some impact on deterrence.

Expand full comment