[CliffFletcher]

Originally Posted by afc wimbledon

If Ukraine can continue to denude Russia's troops and AFV's at its current rate while the sanctions continue to destroy the Russian economy then Russia's collapse is all but ensured…

Unfortunately, sanctions aren’t destroying the Russian economy. Much of the world is still trading freely with Russia, and acting as middlemen for energy sales back to the West.

Yet over the following year, despite the repeated tightening of Western sanctions, Russia’s economy recovered its poise. The imf expects it to grow by 0.7% this year—on a par with France, and even as the British and German economies shrink. The hope that the state of Russia’s economy will provide any sort of constraint on the war has faded...

…Russia continues to import almost as much as it did before the invasion. New trading partners have sprung up to replace the West. China now sells twice as much to Russia as it did in 2019. “Parallel” imports—unauthorised sales from the West to Russia via a third country of everything from fizzy drinks to computer chips—have soared. In 2022 imports from the eu to Armenia mysteriously doubled, even as Armenian exports to Russia tripled. Serbia’s exports of phones to Russia rose from $8,518 in 2021 to $37m in 2022. Shipments of washing machines from Kazakhstan to Russia rose from zero in 2021 to nearly 100,000 units last year…

Lower hydrocarbon sales mean lower government revenues. In 2022 the Russian government ran a deficit of about 3trn roubles ($37bn), or 2% of gdp. This year it is planning something similar, but actual spending and taxation data so far this year make that look optimistic. A deficit in the range of at least 10trn roubles, as much as 5% of gdp, looks likelier—high by Russian standards.

All the same, the Russian state has plenty of options to fund itself. Russia’s sovereign-wealth fund still has about $150bn (about 10% of gdp), even after being drained of about $30bn last year. The government could also issue more debt. Last year’s bumper exports have left big Russian energy firms with lots of cash they must stash somewhere. Those firms, which are largely state-owned anyway, could also be hit with a windfall tax, as they were last year. And Russian financial institutions hold sufficient assets to cover 10trn-rouble deficits for 25 years–a huge resource the government might seek to tap in some way. Richard Connolly, an expert on the Russian economy at rusi, a think-tank, says, “The government can always fund itself by taking money from big companies.”

Money, in other words, will not be a severe constraint on the war effort. Demands on the budget for this purpose are in any case modest. Our best guess, based on comparing actual spending figures with what was budgeted before the war, is that Russia’s assault on Ukraine is currently costing it about 5trn roubles a year, or 3% of gdp–less than America spent on the Korean war.

https://www.economist.com/briefing/2...re-intense-one

Nonetheless, the sanctions are biting enough that Russia would struggle to ramp up its war effort. So barring a collapse of morale of the Russian army - a real possibility, but one which is less likely if they adopt a strictly defensive posture - it’s looking like a stalemate will settle in over the next 12 months.