Russia’s Wartime Economic Controls

On 6 July 2022, Russia rushed through 2 bills to introduce special economic measures in Russia to support its war on Ukraine.

As mentioned in my post regarding the mechanics of black market, during war, the country’s machineries are geared towards producing tools of war and for the military needs. Production of citizens’ basic goods are lowered to a minimum, and rather than an open trade in the white market, such items are now allocated instead. Your toilet paper is nothing compared to the AK47 which could have killed one more enemy.

We have now seen Russia move to the next stage of economic measures of using the citizens’ tools of production to support its economic needs. In a war, other than military might, the backend support is equally important. War competes not only the might of each other’s soldiers and weapons, but also the competition of resources. Food, oil, tools of production, number of citizens etc are all factors which determine how long and how much you can fight. War expends huge amount of resources, hence the side which exhaust their resources first will lose. Often times the winner will also need much time to recover, even if the winner swallow all the resources of the loser whole. As we can see from this Russia-Ukraine war, the war is fought not only on the physical front, but also on the economic, media, technological and political front.

Russia is known for its production of oil and food, and the government’s absolute control over the country. If Russia’s government passes a law, the chances of the people openly rebelling and refusing to cooperate is low, unlike what we often see in the Western countries of people protesting against the government’s policies. On the surface, Russia’s oil can power up the industries and support not only the war but the daily running and production of the country, and its food production is at least able to stop its citizens from starving. Despite what the media harping on Russia losing the war, Russia is actually not losing. In the worst case scenario where Russia is isolated, it can survive on its own. But of course, its progress will be hindered greatly and that is what it does not want.

That is why a certain enemy of Russia is trying to bring the price of oil down. When the price of oil drops, the resources which Russia’s oil can exchange falls, damaging its already suffering economy. With OPEC refusing to increase its supply to bring down the price, the sudden death of its Secretary-General may ease off this tension. As we have already seen, price of oil has now broke down the $100 barrier. With the West trying to support Ukraine by sending in weapons, 2 sides of this war has been drawn up, with each side trying to outlast the other and with all the countries in between trying their best to reap off as much benefits as they can. India benefits from the cheap oil that Russia sells to it, China gains access to central Asia (which is under Russia’s influence) to further its One Belt One Road initiative.

In politics, every country has its own agenda to achieve at the expense of others. There are no true allies nor true enemies, only mutual benefits or conflict of interests.

To cope with the West sanctions, Russia followed the way of China by trying to develop its own capabilities. What could be bought easily in the past now has to be produced on their own. For example, its semi-conductor industry is actively recruiting people all over the world who can bring along their skills and expertise. In return for long hours of work (since Russia need to level up as fast as they can), recruited personnel are given a very good expat package which also includes taking care of their family members should everyone relocates. For the average salaryman, this represents a very good opportunity to earn their first pot of gold. It is not everyday that one gets this kind of opportunity.

While not all of us have the luxury of just packing up and relocating to another country, and not everyone is ok to work in a country like Russia, but to those who can, it may prove to be a very worthwhile experience – in terms of personal and work experience and in terms of financial gains.

We are living in quite turbulent times, although admittedly for many of us in the developed countries, things are still quite sheltered. But just because we do not have bombs and bullets raining down on us does not mean that we are perfectly safe. People are dying a slow death from inflation, the gradually worsening economy as well as the pandemic. With the political arena in a mess and the economic outlook being so uncertain, this may very well be our chance to climb up to the next level of the social ladder.

Each recession is the reshufflement of cards for the big players. Each major war also reshuffles the power of each country. Who goes into decline, who grabs further power all depends on how each country, company or the individual plays their cards. We will not know who will come up on top, nor do we know if there will be a sudden u-turn which changes everything. Hence, do not put all your eggs into one basket. Nothing is for certain, yet at the same time you have to think of what you can do to make use of this situation.

Showing 1 - 3 out of 3

Page 1 out of 1

- Resources Price
Share this article!

Leave a Reply

Your email address will not be published. Required fields are marked *