Posted on 06/26/2022 1:31:16 AM PDT by UMCRevMom@aol.com
The newest car model unveiled by Russia's biggest auto manufacturer earlier this month is generating buzz, but not necessarily for the right reasons. The buzz about AvtoVAZ's Lada Granta Classic -- priced to sell at 678,300 rubles ($12,500) -- is about what it doesn't have: No airbags. No antilock brakes. No electronic stability system. No pretensioners to make the seat belts work properly. No GPS. An engine that complies with emissions standards from 26 years ago.
THE REASON FOR ALL THIS?
Western sanctions, imposed to punish Russia for its invasion of Ukraine, that have disrupted imports and roiled supply chains where crucial foreign parts and goods came from.
Not just the butt of Russian jokes, the new Lada is the latest in a growing number of examples showing the staggering transformation that Russia's economy is grappling with, on a scale not seen in at least a generation.
Smartphones aren't working properly. Food packaging has to be printed without labels. Clothing factories can't find buttons to sew on shirts.
The Kremlin is betting that fiscal and industrial policies will help the economy withstand the shocks and substitute missing imports with homegrown Russian versions.
President Vladimir Putin alluded to this wager last week during what used to be Russia's marquee annual investors' event, though he asserted that his government has already had considerable success in softening the blow.
"The economic blitzkrieg launched against Russia has failed," Putin told an audience at the St. Petersburg International Economic Forum that was substantially smaller than previous years.
Russian policy makers are hoping that appeals to nationalism have girded the populace for hardship and that consumers will be willing to tighten their belts without losing patience with the war, about to enter its fifth month following the February invasion.
But some pragmatic voices have spoken up publicly, warning that those who are hoping that Russia will replicate some of the success it had after a first set of Western sanctions was imposed as punishment for the 2014 seizure of Ukraine's Crimean Peninsula are unrealistic.
"Replacing everything is senseless, economically impractical, and simply impossible," said Sergei Chemezov, a longtime confidant of Putin and now head of the state-owned defense conglomerate Rostec.
"Not a single developed country in the world does this. Isolation, including technological isolation, and attempting to do everything on your own is a road to nowhere," he wrote in a June 15 opinion column.
Chemezov also dinged Russian policy makers, saying that more should have been done to diversify and deepen the country's economy.
"Russia was expecting something like this and to a large extent had time to prepare," he wrote. "Of course, there can be no illusions here. We did not manage to do everything -- there was too little time, because the same path took decades for Western countries."
Longtime Russia analysts said the economy is not on the verge of outright collapse, like what happened after the 1991 Soviet breakup.
"But we're talking about a return to the Brezhnev era, where modernization stops and it's this stasis-type of situation with lifestyles [and] people have few choices," said Chris Weafer, founder of the consultancy group Macro-Advisory, referring to the period under Soviet leader Leonid Brezhnev in the 1970s when the Soviet economy stagnated.
"The economy's now going into a twilight zone," he said.
GUNS AND BUTTER
After Russia occupied Crimea in 2014, Western nations sought to punish Moscow by imposing a raft of sanctions, targeting key companies and also influential individuals in and close to the government.
In response, Putin imposed bans on Western foods like apples, dairy, and more, and the government sought to reengineer the economy wholesale, to make it less dependent on imports. He also continued backing fiscal policies that turned the country's sovereign wealth fund into one of the world's largest.
For things like some food items, it arguably worked. Artisanal cheese makers, for example, not only managed to replace imports of Italian Parmesan, but drew powerful praise from some food critics.
For things like military and defense technology, not much changed. Russia's military industrial complex, heir to Soviet-era planning, continued to produce planes and tanks, many of which are being deployed -- and destroyed -- in the Ukraine war. Russian defense plants lost access to some of Ukraine's military manufacturers, but it wasn't a sea-change loss.
For many other sectors of the economy, not much changed either: Imports continued as before, along with trade and integration with the global economy.
That included computer chips, for which Russia has no domestic manufacturing capacity. And it included the IT and high-tech sectors, which rely heavily on the coding, programmers, and software prowess of the West to stay current.
The Russian government ordered state agencies to stop using foreign software -- Microsoft Office, for example -- in 2015, the year after the seizure of Crimea. Four years later, 90 percent of the software use by state firms was still foreign-sourced.
"They can make basic food items, and they can send rockets to space, but they really haven't created the middle industries -- for making cars, for example. That middle bit of the economy is still missing," Weafer said.
Following the February 24 invasion, Western nations bludgeoned the Russian economy with a set of unprecedented sanctions.
The most extreme predictions for how much the Russian economy will contract this year are around 12-15 percent. More modest estimates say it will be between 7-9 percent. But still, even Russian economists say it will be severe.
"The current recession is of a transformational, structural nature and will be bigger in scale and length in all scenarios" than the last one, Russian central bank researchers said in a report released in April, referring to the downturn caused by the COVID-19 pandemic.
In the aftermath, scores of Western companies either paused their operations in Russia or pulled out altogether.
That has exposed major holes in Russian domestic manufacturing capabilities and supply chain disruptions.
The paper industry, for example, was unable to meet demand for bleached paper supplies, and packaging manufacturers said they were unable to obtain inks used in printing packaging. The company that took over the McDonald's franchise in Russia reopened its flagship restaurant in Moscow, but hamburgers and french fry wrappers were blank.
"All of our wood is Russian, but bleaching chemicals were imported. Now, producers are switching to alternative suppliers, developing their own chemicals, but this also takes time. In the food industry, raw materials are domestic, and the usual foreign packaging urgently needs to be replaced," Elvira Nabiullina, the head of the central bank, told lawmakers on April 21.
"And all this takes time," she said.
Putin addressed the question of the domestic packaging industry during a panel discussion at the St. Petersburg forum, downplaying the issue when presented by the moderator with a juice box that was white because of a lack of ink.
"What's most important for us?" he asked. "To be independent, sovereign, and to ensure our future development now, for coming generations? Or to have packaging today?"
Buttons used in clothing were another example where foreign supply chains had been disrupted, Nabiullina pointed out.
Smartphones, too. Tech giant Apple has pulled out of Russia, meaning fans of the iPhone or similarly popular devices will be hard-pressed to download operating system updates or even buy apps through the Apple store.
Users of Samsung smartphones have also reported major problems, according to the newspaper Izvestia. You can't activate a new Samsung phone within Russia because you need a SIM card from a country for which the smartphone was released.
IMPORT SUBSTITUTION, PARALLEL IMPORTS
Other industries facing major disruptions include car manufacturing, which employs around 600,000 people nationwide, and is one of the country's biggest private employers.
Avtovaz, which until recently was controlled by France's Renault Group, has instituted sporadic work stoppages and furloughs in some locations.
The stripped-down Lada Granta that was announced earlier this month wasn't a brand-new design: Such a model had been in limited production since 2011. But the removal of standard safety equipment like airbags, as a result of Western sanctions, surprised many observers, and drew mockery online.
"If sanctions remain what they are, the gap between Russia's economy and the rest of the world will only get wider and wider," Weafer said. "The Russian people in the future will be driving a Lada, while people in the West will be sitting in driverless cars."
Volkswagen Group announced in March that it was suspending production at two Russian assembly plants. This week, the company offered buyout packages to employees at a Nizhny Novgorod plant, in an effort to cut labor costs -- the first known effort by any automobile manufacturer within Russia as a result of Western sanctions.
'BESIEGED FORTRESS'
Even some defense facilities have stumbled in their production, exposing holes in where military manufacturers source some of their parts. Two plants specializing in the manufacture and repair of tanks -- Uralvagonzavod and the Chelyabinsk Tractor Plant -- were forced to suspend work due to the lack of foreign components.
Some economists share Putin's optimism that Russian ingenuity, and alternative markets like China and India, which have declined to sign on to Western sanctions, will allow the economy to withstand the body blow.
Lawmakers and policy makers, meanwhile, have scrambled to try to erect a parallel framework and rebuild supply chains before shortages become permanent, or lead to wider shutdowns.
Major online marketplaces -- Yandex, Wildberries, Ozon -- have moved to build new supply chains for so-called parallel imports, essentially replacing retailers and shippers that have opted, or been forced, to withdraw from Russia.
On June 22, Russia's upper house of parliament passed legislation that aims to protect parallel importers from legal liability for violations of copyright or trademark infringement.
Still, some top business leaders, like German Gref, the CEO of banking giant Sberbank, warned that without a fundamental overhaul, Russia's economy will require a decade to return to its 2021 levels.
Even if a cease-fire or truce is reached in Ukraine, Russia would still face a "besieged fortress" phenomenon, economist Yevgeny Gontmakher predicted.
"In this scenario, too, the economy would become more primitive and focus only on supporting military production," he said in a May 31 research note.
"External conditions have changed for a long time indeed, if not forever," Nabiullina said at the St. Petersburg forum, not long after Putin's speech. "It's obvious to everyone that it won't be as it was before."
“Used to be 10-15lbs”
Maybe at idle but not with rpms.
Why do cars in Russia need airbags and ABS? Russians don’t bother to wear seatbelts anyway. Many taxis have the seatbelts disabled. Taxi and limo drivers take it as a personal affront if you want to wear seatbelts while they are driving.
Mine failed probably cuz I didn’t use them very often.
“Russia earned what is very likely a record 93 billion euros(about $97 million) in revenue from exports of oil, gas and coal in the first 100 days of the country’s invasion of Ukraine”
I am NOT an expert, BUT... check out the rationale presented in this article:
“Russia is ready to sell crude oil at pretty much any price, but only to friendly countries, Energy Minister Nikolay Shulginov told Russian news agency Interfax.
Commenting on oil price forecasts, Shulginov said that these will need to be revised soon in light of the changes in the geopolitical and economic situation. He added that while a price range of between $80 and $150 per barrel of crude was possible, Russia was ready to sell its oil at any price range because its priority was to keep its oil industry going.
“A price range of $80 to $150 per barrel is generally possible,” Shulginov told Interfax, “but it is not our job to play guesswork with prices. Our job is to ensure the continue operation of the oil industry. We are ready to sell friendly countries oil and oil products at any price range.”
Separately, commenting on news about foreign companies’ exit from the Russian energy industry, Shulginov said this exit is, for now, hypothetical. These companies, he said, would first need to find a buyer for their Russian business.The minister’s statement suggests sanctions, although not directly targeting Russia’s oil industry, are beginning to bite. With lower sales due to the sanctions, Russia may soon need to start shutting down wells because it is running out of storage space, and new facilities are being built with haste.
The limited storage capacity has been a problem for a while but has only come into the spotlight now that Russian oil cargos are being shunned by Western buyers. According to the International Energy Agency, Western sanctions could reduce Russian exports by some 3 million barrels daily this quarter.
This would mean a 3-million-bpd shortfall in global supply with no immediate replacement. Also, if fuel exports are included, the shortfall could become even greater, as OPEC’s secretary-general warned the EU this week during talks in Vienna.”
https://oilprice.com/Energy/Crude-Oil/Russia-Ready-To-Sell-Oil-At-Any-Price.html
“90% of the mandated crap from DC to the Car Manufacturers contribute very little to actual function.”
“Such as”
Well for one: Gov’t mandated Required EPA Standards
CHECK OUT THIS ARTICLE:
Can E15 Gasoline Really Damage Your Engine?
https://www.popularmechanics.com/cars/hybrid-electric/a6244/e15-gasoline-damage-engine/
Most people realize that all of us burn gasohol—a mixture of gasoline and alcohol—in our cars. Just about every gallon of gas pumped today contains as much as 10 percent domestically produced ethanol. Gummed-up fuel systems, damaged tanks and phase separation caused by stray moisture infiltrating fuel systems have plagued many consumers since this mixture debuted, and the problems will only get worse if government policy to increase the proportion of ethanol to gasoline is implemented.
Don’t get me wrong: Gasoline diluted with ethanol is a perfectly acceptable motor fuel when it’s stored properly, dispensed promptly and burned in vehicles and power equipment designed to handle it. Which, unfortunately, is not always the case.
Not a mandate on car manufacturers
“Not a mandate on car manufacturers”
Well, Why Biden is allowing more ethanol in gasoline
The Biden administration says it will suspend a federal rule that bars higher levels of ethanol in gasoline during the summer
April 12, 2022
WASHINGTON — The Biden administration says it will suspend a federal rule that bars higher levels of ethanol in gasoline during the summer. The move, which President Joe Biden was set to announce during a Tuesday visit to Iowa, is intended to tamp down prices at the pump that have spiked during Russia’s war with Ukraine. Iowa is a key producer of the corn-based fuel additive.
A look at how that the decision to authorize year-round use of so-called E15 will impact gas supplies, prices and the environment.
WHAT ACTION IS BIDEN TAKING?
“Most gasoline sold in the U.S. is blended with 10% ethanol. At Biden’s direction, the Environmental Protection Agency will issue an emergency waiver to allow widespread sale of 15% ethanol blend that is usually prohibited between June 1 and Sept. 15 because of concerns that it adds to smog in high temperatures.
Senior Biden administration officials said the move will save drivers an average of 10 cents per gallon at 2,300 gas stations that sell E15, as the high-blend ethanol is known. Those stations are mostly in the Midwest and the South, including Texas, according to industry groups.”
https://abcnews.go.com/Business/wireStory/explainer-biden-allowing-ethanol-gasoline-84036558
Also, The Shocking Truth About America’s Ethanol Law
“This argument over the virtues and evils of ethanol focuses on one particular law: the Renewable Fuel Standard (RFS), which requires that gasoline manufacturers purchase large and, until this year, ever-growing amounts of ethanol, which they then blend into the nation’s fuel supply. (True insiders will protest that gas companies can buy renewable fuel credits, called RINs, instead of ethanol, but the ethanol-boosting effect is the same in either case. So we’ll stay away from that rabbit hole.) As you might expect, corn farmers and ethanol producers helped push this law through Congress.
Does Your Gas Tank Hold Enough Food To Feed 22 People?
If you oppose government interventions in the free market, as Cruz does, the RFS is an outrage. “End the Ethanol Rip-Off,” wrote author Robert Bryce in The New York Times last year. He pointed out that a gallon of ethanol delivers only two-thirds as much energy as a gallon of pure petroleum-based gasoline, and as a result, we’re paying about twice as much for that ethanol, per unit of energy, as for petroleum-derived gasoline. The loser, he says, is the American consumer, to the tune of about $10 billion each year.”
https://www.npr.org/sections/thesalt/2016/02/10/466010209/the-shocking-truth-about-americas-ethanol-law-it-doesnt-matter-for-now
Me: “Not a mandate on car manufacturers”
You: Well, Why Biden is allowing more ethanol in gasoline
Not a mandate on car manufactures.
ADDENDUM: STATUTORY AUTHORITIES TITLES 23 and 49, UNITED STATES CODE
-https://www.nhtsa.gov/laws-regulations/statutory-authorities
-Motor Vehicle Safety - May 2013
-Highway Safety - May 2013
PART C - Information, Standards, and Requirements - May 2013
FIXING AMERICA’S SURFACE TRANSPORTATION ACT (FAST Act)
- The Fixing America’s Surface Transportation Act, or “FAST Act,” was signed into law on December 4, 2015. The FAST Act authorized $2.7 billion in funding for the Section 402 Highway Safety Programs and Section 405 National Priority Safety Programs for fiscal years 2016 through 2020.
MOVING AHEAD FOR PROGRESS IN THE 21ST CENTURY ACT
MAP-21, as enacted (July 6, 2012; P.L. 112-141) (Text, PDF) (the PDF version totals 584 pages)
-Highway Safety Provisions (for reading or copying — counting the first page of MAP-21 as page #1 — see pages 328 - 353 of the PDF)
-Open container, repeat offenders, and adjustments to highway safety penalty provisions (for reading or copying, see pages 152 – 156 of the PDF)
-Extension of NHTSA’s Highway Safety Programs — through fiscal year 2012 (for reading, see pages 577 – 578 of the PDF; for copying [due to a glitch in the document], copy pages 981 – 982 of the PDF)
-Motor Vehicle Safety Provisions (for reading or copying — counting the first page of MAP-21 as page #1, see pages 353 - 372 of the PDF)
-Motorcoach Safety (for reading, see pages 405 – 411 of the PDF; for copying [due to a glitch in the document], copy pages 809 – 815 of the PDF)
-Intelligent Transportation Systems (ITS) Research (for reading, see pages 493 – 501 of the PDF; for copying [due to a glitch in the document], copy pages 897 – 905 of the PDF)
MOTOR VEHICLE SAFETY - May 2008
- Authority to Promulgate Safety Standards for Retrofitting Commercial Motor Vehicles and Equipment (HTML, PDF)
- National Driver Register - May 2006 (HTML | PDF)
HIGHWAY SAFETY - May 2008
PART C - Information, Standards, and Requirements - May 2008
Safe, Accountable, Flexible, Efficient Transportation Equity Act (SAFETEA)
- SAFETEA-LU, as enacted (Aug. 10, 2005; P.L. 109-59) (HTML, PDF)
- Motor Vehicle Safety Provisions (HTML, PDF)
- Highway Safety Provisions (HTML, PDF)
LOL!!! Yes, let's Hope!
And, in the summer, every decent hill had two or three overheated cars on it. And when it was REALLY hot, even on a flat road.
I plugged it with a golf tee.
The sanction war is hurting us and, especially, Europe much worse than Russia. It's debatable whether Russia is being hurt at all.
The sanction war has bene another failed policy of the Biden regime. Yet, you seem to want to embrace it. Well, conservatives should be vehemently opposing the sanction war. The well-being of Americans takes priority over waging an economic war with Russia over a war in Ukraine that absolutely NOTHING to do with our national security.
I agree with war. However, I don’t want to be an isolationist while people are killed by a Putin & his “mythical kingdom!”
The Russian people do not want war & have protested all over Russia. Mother are converging on the Kremlin. The soldiers don’t want to invade ‘Ukraine’. The young conscripts were lied to by their superiors & not allowed to turn back when they reached the Ukrainian border. The Russian professional soldiers refused to go fight in Ukraine under the loop-hole of it NOT being declared a war but only a “Special Military Operation”!
Putin has been merciless toward both the Russian & Ukrainian people!
It’s a surprise any of us made it out of childhood.😜
It’s only liquid when it’s melted.😏
Hmm he looks kinda pasty white.🤔
There’s not enough metal in a modern car to make very many soup cans.🤔
Russia can either produce this domestically or get it from China. Russia is a bad guy (they are Communist) but don’t underestimate them.
I was just surfing the net somehow I came across this article & thought it would add to topic discussion:
MAJOR RUSSIAN INDUSTRIES BREAK DOWN UNDER WEIGHT OF SANCTIONS
Andrea Peters
The World Socialist Web Site
https://www.wsws.org/en/articles/2022/06/08/drjx-j08.html?fbclid=IwAR3PlFrs_ZtLGDiAh3j5HtLBY9R43CY5RHgot1w8rsW_z5cWBzcE_cKiqzg
7 June 2022
Key sectors of Russian industry are breaking down under the weight of import and export bans, deficits of spare parts and materials, the closure of foreign markets and the freezing of financial transactions. Reports are emerging of problems in everything from trucking to the production of milk cartons, as companies struggle to sustain operations.
On Tuesday, Russian lead producers announced they are in danger of shuttering factories due to the absence of overseas buyers and a decline in domestic demand fueled in large part by a sharp contraction in the auto industry. Even with some enterprises having already cut production by 30 percent over the last several months, warehouses are full with unsold lead.
European consumers previously accounted for nearly 50 percent of all Russian lead sales, and they have effectively been absent from the market since March due to logistical and financial problems brought on by Western sanction. As of July 10, EU purchases of Russian lead will be entirely prohibited. Lead companies also say they are encountering major obstacles getting the government licenses necessary to divert production to Asian countries.
At an industry-wide conference held on June 7, Russian freight companies declared they are at risk of bankruptcy due to a steep decline in prices, high costs for replacement parts, and an inability to purchase new vehicles from foreign suppliers. In April, the EU barred the country’s trucks from entering its soil.
Domestic demand is down, too. Between March and June 1, corporations saw freight prices drop by 13.2 percent on average for the top 100 destinations, with some major routes experiencing two to three times that decline. The fee charged for transporting goods between Moscow and Saint Petersburg, Russia’s two largest cities, fell by 34.4 percent during those three months. Whereas previously, 1 million Russian trucks made 300,000 daily shipments, now 1.1 million trucks are making just 180,000. Air cargo is also down.
The government is aware of the problem, with the minister of transport acknowledging in May that sanctions “practically broke all the logistics in the country.” It has made grants and low-cost loans available, but companies say that is not enough. They need help with the cost of fuel, and they are overburdened by taxes. In addition, while the ministry of industry and trade has approved “parallel imports”—branded goods that are brought into the country without the permission of the trademark owner—of Scania and Volvo products, they have not done so for Mercedes, MAN, Iveco, DAF and Isuzu. As a result, the rubber necessary for truck repairs is, for instance, in short supply, reports news outlet RBK.
Russia’s ports are also in crisis. In March, cargo turnover in Saint Petersburg, one of the country’s largest harbors, fell by 41 percent in absolute volume. The government has responded by cutting rental rates that shippers have to pay for the use of port facilities, but experts say that without an increase in demand the problem cannot be overcome.
There are ongoing discussions over the creation of new maritime links between domestic and international ports, including some in Iran. But putting such plans into action requires significant investments, as well as time, because in many cases the infrastructure to send or receive the kinds of cargo that would be borne by Russian ships does not currently exist. A looming EU and UK ban on insuring Russian maritime transport will further complicate the situation.
The auto industry also continues to suffer from the pullout of foreign car producers and a major shortfall of materials, particularly electronic components. Rosstat, Russia’s central statistical agency, announced Wednesday that auto production fell by nearly half between January and April. This is the steepest drop witnessed in any sector. In April of this year, Russian automakers produced 85.4 percent fewer cars than they did at the same time in 2021. “At the moment, only two enterprises produce cars more or less stably—the Ulyanovsk UAZ and the Tula plant Haval,” reported Izvestiia on June 6.
In an interview with Ridus.ru, industry expert Sergei Aslanyan explained the depth of the crisis. “We don’t have electronics factories, we don’t have anything to make an engine out of. We have ‘Niva,’ which is 45 years old, 20 percent consists of imports,” he said referring to one model produced by Russian manufacturer Lada. But, he added, “It has pistons and piston rings from the American corporation Federal Mogul. And now we will even have nothing to assemble the Niva from. What are we going to make air bag systems from? Who will present us with an airbag? Nobody. We don’t even have bearings.”
The prospect that a nationwide import substitution program, which the Kremlin is pushing, will fill the gaps is a pipedream, argue experts. “Even the Soviet archaic Moskvich [car model] cannot be revived today. Where can I get it? It disappeared a long time ago. I’m afraid that even the documentation can only be found in the museum. It is impossible to breathe life into the dead,” Yang Heitzeer, vice president of the National Automobile Union, told Ridus.ru.
The data, computing, and telecommunications industries, which sustain all sectors of the economy, are now without the semiconductors, microchips and servers they need to operate and expand. Home-grown companies have not been able to match the memory, processing and bandwith capacities of foreign-made producers. These are in high demand because overseas corporations are no longer providing cloud services to Russian firms.
In Tatarstan, with a population of more than 3.8 million, the Ministry of Digital Development had to scrap plans to extend 4G/LTE to 61 cities and instead was only able to provide the service to 30 new places. It simply lacked the materials necessary. A similar problem occurred in Saratov Oblast, home to 2.4 million people.
In late May, the Russian Steel Association told the government that it is confronting difficulties due to a steep fall in domestic demand and the strength of the ruble. In addition, with the EU having banned imports, producers have been forced to “sell goods at a discount, and in some cases even below cost” to China and other Asian countries, Russian Steel’s head Alexei Sentyurin explained.
Its members will suffer major losses and have to cut production, the organization said, unless the government reduces its tax burden and works to devalue the ruble. “Ferrous metallurgy enterprises face serious risks of staff reductions,” adds news outlet RBK based on its discussion with Sentyurin.
Russian agriculture is facing problems too because of its heavy reliance on imported seeds, which in some cases account for the majority or even the entirety of the product it uses—for instance, sunflowers (70-77 percent) and sugar beets (100 percent). While experts say an immediate crisis has been forestalled because the industry built up seed reserves, what will happen next year is unclear.
Yevgenii Ivanov of the Institute for Agricultural Market Studies explained to Zol.ru, “As a rule, all companies in the world that deal with sugar beet seeds grow them in northern Italy and southern France. In Russia, only some areas near Sochi and in the Crimea are suitable for these purposes.” Crimea, however, is at the center of the war in Ukraine, and Kiev began cutting off water supplies to the region, which lacks adequate resources of its own, even prior to the Russian invasion. But, as Ivanov noted, “it is impossible to grow sugar beet there without irrigation.”
The forestry industry is also running into difficulties. The head of the Khanty-Mansi autonomous region has been receiving large numbers of complaints from timber companies about the fact that due to export bans they have nowhere to sell their goods. Former major markets, such as Uzbekistan, are now closed.
There are concerns over the supply of bacteria for the fermentation of goods like yogurt and kefir, because Russian milk-product producers import 80 percent of what they need. For some time, there was a deficit of milk in stores in parts of the country because the Finnish carton maker that Russian producers relied on pulled out. The elevator industry is also having manufacturing problems.
Even the Russian oil and gas industry, which is posting record profits despite EU and US import bans due to surging energy prices and increased demand from China, India and elsewhere, is limited by the fact that it has lost access to imported technology, software, and human capital that it needs to develop new wells and gas fields in previously untapped places, like, for instance, the Barents Sea. Without a solution to this, as well as the construction of new pipelines to Asian markets, it will struggle to sustain itself and grow.
The Russian government is trying to cover up the depth of the crisis, claiming that unemployment, allegedly at just 4 percent, is the lowest ever, that its programs will reduce poverty in 2022 and its economic policies secure the real incomes of the population. President Putin declared on Tuesday that inflation is being brought under control.
The Kremlin is deeply concerned that popular anger over the collapse of the economy will not just be directed against the West for its punishing sanctions, but at the state for its disastrous invasion of Ukraine and the miserable consequences of 30 years of capitalist restoration. But the manipulation of jobless numbers, raises for government employees that amount to a couple hundred dollars a year, and false claims about the prices of essentials goods and services cannot change the reality facing the Russian working class.
For its part, the US and its NATO allies are celebrating the destruction of Russia. Media accounts in the Western press generally note with barely suppressed delight the deepening crisis.
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