Law, Power, and Justice

TUESDAY 20 FEBRUARY 2024

MORNING NEWS NOTES

Oh Boy:

• Russia fires North Korean missile with US parts.  The joys of capitalism.
• Source: CNN
• The Russian economy, despite much touted sanctions, is growing.
• The Russian economy is allowing Putin to move further and further into authoritarian control.  See Telegraph 2/20/24.
• “I think there was a lot of wishful thinking at the beginning of the war.”
• “I don’t see any kind of risks for the political situation because of unhappiness with the war,” says Alexandra Prokopenko, a visiting fellow on the German Council on Foreign Relations in Berlin. Before the war she advised Russia’s central bank.
• “Unfortunately, the death of Alexei Navalny shows to me that any possibility of democratic transit of power after Putin’s death is now closed because there is no such figure among the Russian opposition,” she adds.
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• “I think there was a lot of wishful thinking at the beginning of the war. Historically, there has never been an example of immediate economic catastrophe as a result of sanctions,” says Konstantin Sonin, a political economist at the University of Chicago Harris School of Public Policy.
• Waging a war requires huge amounts of money and labour, with the growth figures boosted by high military spending. The numbers show that Putin has presided over a shift to a “highly militarised economy”, Prokopenko says.
• Meanwhile, subsidised loans to businesses and people to meet strong domestic demand have also helped push up the figures.
• “All these should be served with a sauce of lax enforcement of Western sanctions and tolerance to inflation from the population and so-called technocrats,” Prokopenko adds.
• Richard Connolly, an expert on Russia’s economy at the Royal United Services Institute in London, says optimism about how hard sanctions would bite shows a lack of understanding in the West and a failure to learn from what happened in 2014 during the annexation of Crimea.
• “I think it was arrogance, I think it was also ineptitude,” says Connolly, who adds that economists should not underestimate the impacts of war-related growth.
• “A lot of people say it doesn’t count because it’s military spending. But you have to pay people to work in factories, you have to pay for all of the inputs,” he says. “While it’s true that you’re producing goods that are going to end up exploding and you’d say there’s no ultimate benefit from that, there is a benefit for the people who are paid to produce them. As a result, we’ve seen real incomes rise last year for the first time in years.”
• Meanwhile, unemployment is at a record low meaning that anyone who wants a job will find one, he adds.
• Russia has been forced to find new trading partners in response to the sanctions and now trades far more with countries including China, India and Turkey.
• “Sanctions always create winners and losers. We tend to focus on the losers but there are a lot of winners too,” Connolly says.
• Many observers argue that the absence of economic collapse in Russia reflects the slow-burn nature of sanctions, with pain being stored up for the future. Connolly is less convinced.
• He believes Russia is adapting, and so sanctions may become less effective over time.
• “They’ve [Russia] reoriented their trade flows dramatically,” says Connolly. “Even during the Cold War its biggest trade partner was Western Europe, and now it’s non-Western countries. There has never been a shift like this in Russian economic history – I don’t mean since 1991, I mean since 1500.”
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• Soldiers going to fight in Ukraine will receive huge sums of money, dwarfing what they otherwise could have earned.
• “My neighbour lost her husband and they got a really good payout for it,” says Elina. “What they ended up doing is taking that payout and going to Thailand and living there for six months afterwards. She was very proud that he died defending his country.”
• The strength of the Russian economy will only embolden Putin further, warns Connolly.
• Source: https://www.msn.com/en-us/news/world/how-the-russian-economy-allowed-putin-to-silence-navalny-forever/ar-BB1iytHD