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The first explanation that comes to mind is the level of education, but strangely enough, this is the least important factor. Of course, not having to explain basic concepts to your interlocutor makes the conversation much easier, but even very educated people are often extremely inflexible and dogmatic. The second line of explanation is the level of plasticity of consciousness. The ability to separate personal emotion from abstract arguments, desired developments from objectively observed ones, and to look at a situation from different angles. It is more important than education, but it is not the main thing either.

I came to the conclusion that the most important thing is an organic (not requiring significant effort of will) ability to separate the general from the particular, narratives from facts, hypotheses from experiments proving them, arguments of the first order from the second and third. To realize that different explanations of the same phenomenon in different paradigms do not necessarily contradict each other. I don’t know what to call all this properly. Hygiene/structure of thinking is too vague. Following the laws of formal logic/scientific methodology – too narrow. However, it’s worth emphasizing that knowledge of typical logical errors and organic avoidance of them are different things. About as much as knowledge of musical notation is not equal to having a musical ear.

If for some unknown (probably neuro-physiological) reasons the opponents think in a structured/hygienic way, a meaningful discussion is possible even between representatives of very different views. If for some unknown reasons structured thinking (not to be confused with knowledge of methodology and academic education) is not organic for a person (does not mean impossible, it is just connected with great efforts of will and suppression of emotions), then the discussion is much more likely to descend into slogans and labels.

By chance, these two effects overlapped in Russia 2024. Inflation 2024 was 9.5% real GDP growth of 4.3%. In other words, nominal GDP in 2024 grew by 15%. In 2024, the Ministry of Finance placed OFZs at 14-15% per annum on average and up to 17% per annum at the peak. But this is the cost of new debt. However, given that a significant part of the existing debt was borrowed before the war at lower rates, servicing the entire amount of government debt in 2024 cost the budget barely 8% p.a. in rubles on average (This on the entire amount, including external and non-marketable, on OFZs should be slightly higher on average).

According to the results of adding these two trends, at the end of 2023 the government debt amounted to 25.5 trillion with GDP of 171 trillion or 14.9% of GDP, and at the end of 2024 the government debt was 28.5 trillion with GDP of 201 trillion or 14.2% of GDP (depending on the calculation methodology, the absolute amount of debt and the ratio to GDP may change slightly, but the ratio between 2024 and 2023 will not change). Thus, despite the growth in absolute terms, in 2024 Russia’s government debt to GDP ratio decreased. I’m not kidding, I was surprised myself.

It is clear that 2025 will be worse in most of the above parameters and debt to GDP will increase. It is also clear that in 3-5 years the budget will pay for what happened in 2024 with a relatively higher debt service rate on average than the current cost of borrowing. The anomaly described is not random celestial manna, but a balance in which the budget in the moment has simultaneously received bonuses for its prudent policies in the past and borrowed something from the future. All of this is understandable, but it does not make the observation any less surprising.

As usual, we did not express most of the theses with which the article argues and which are (indirectly) attributed to our report. We did not call on the Russian Ministry of Finance to do anything, and in no way argue that uncontrolled increase in the national debt has many negative effects. Moreover, I personally believe that the Ministry of Finance is doing the right thing by not forcing borrowing as long as there are reserves and other opportunities to cover the deficit. Our thesis was that when and if the Ministry of Finance needs a sharp increase in domestic borrowing, it can easily raise the necessary money and wage war for many years covering the budget deficit only from this source. Such a decision will have its own price and negative economic consequences. Who would argue. But we have not discussed the issue of price and consequences, but only the principal possibility of such a decision in the horizon of the next few years.

As far as the main content of the article is concerned, it contains many quite correct and obvious theses, which would be strange to argue with.
The only thing that causes bewilderment is the author’s manipulation when, trying to justify that for countries of a certain level of development it is safe to have a domestic public debt of no more than 20% of GDP, he cites a very strange and extremely biased selection of countries, which includes, for example, Turkey and Argentina – countries with high inflation, which have experienced serious devaluations and defaults in recent years, and therefore are completely incomparable with current Russia in terms of domestic borrowing, and even for some reason Romania, which is in no way comparable to Russia in terms of the situation in the area of borrowing.

However, in this list the author for some reason forgets about Brazil, which is identical with Russia in most parameters and is always the first candidate for correct inter-country comparisons of Russia. Brazil’s domestic public debt is more than 70% of GDP. The author also “ignores” let’s say India, which, despite the limited convertibility of the rupee, has a domestic public debt in the neighborhood of 60% of GDP, or let’s say the Philippines. If you choose countries that are just convenient to justify the necessary thesis, I can easily find a larger selection of developing countries with internal government debt of more than 50% of GDP than the author.

Yes, comparing Russia with developed countries in terms of government debt is a bit of a stretch. However, the author for some reason contrasts a not quite correct comparison, the limitations of which are clear, with a blatant manipulation in the form of an extremely biased sample of countries.

Apart from this point, I repeat once again, the article is quite reasonable and does not contradict our theses in any way. The author focuses on the issue of the consequences of increasing the national debt and in many respects he is right; for our analysis only the principal possibility of such an increase is important as a factor in financing the war in Ukraine. “And the fact that we will have to pay later, so, understand, it’s later.”

The question whether Finland would be independent was decided not by the heroism of Finnish soldiers in cold trenches, but by the conversation of three elderly men at a breakfast meeting held in Tehran on December 1, 1943. Anyone interested can read the verbatim transcript of this luncheon. I recommend doing so in the fuller English version.

If by the time of the breakfast in Teheran and other similar events Finland had not been in a state of war with the USSR and England, its chances of being Sovietized as a result of the breakfast would have been many times less than they actually were. The role of the American diplomats and Roosevelt personally in the success of this breakfast for Finland far exceeds the role of the heroism of all the Finnish military combined. If we go into alternative-historical scenarios, in which the breakfast in Tehran might not have taken place, the future of Finland was still determined by the balance between the great powers. If Germany and the USSR were not at war with each other, then the fate of Finland would depend on the agreements between Hitler and Stalin. If Germany had quickly defeated the USSR – on Hitler or the willingness of the Americans to get involved in the war in Europe.

There are only two points in real history where the heroism of the Finnish army had any impact on the future of that country. These are the failed for the USSR and very successful for the Finns military operations of the winter of 1939/40 and the summer of 1944. Had the Soviet army reached Helsinki in either of these two operations, it would have been much more difficult to prevent the Sovietization of Finland. However, even both of these successes did not guarantee Finland’s independence, but only increased the chances of a successful outcome for the Finns, just as the failure of the Finnish army at these two points did not rule out the possibility that the postwar napkin exchange could have turned out well for Finland.

In the current political context, it is more important to discuss not the successes of the Finnish military, but the decision of Finnish politicians not to give Stalin the territories he demanded in November 1939. There is no doubt that Stalin in principle would have wanted to annex/sovietize Finland, just as Putin in principle would have wanted to annex Belarus or Kazakhstan. However, there is a big difference between “wanting in principle” and “making it a concrete objective in the coming months”.

In the specific situation of the Soviet-Finnish negotiations of November 1939, Finland was initially given different conditions than the Baltic States. In the fall of 1939, the Finnish government had only the concrete question of shifting the border on the Karelian Isthmus. (Diplomatic correspondence is a strict and easily accessible source). The next stage of liquidation of Finnish independence was probably planned after that, but the realization of this stage completely depended on the global arrangements between the great powers. And the probability that Finnish independence would have been liquidated before June 1941 after the Soviet-Finnish war was practically no different from the probability of Sovietization in case the Finns simply ceded their territories in 1939.

If Stalin was willing to sovietize Finland at any cost, why wasn’t it completely conquered in 1940? As of early March 1940, the Mannerheim Line had been breached, with the Finnish military command reporting that further resistance was impossible. The Red Army’s vastly superior forces had nothing to prevent them from reaching Helsinki.

Why did Stalin stop? Was he horrified by the losses of Soviet soldiers? Or did he marvel at the Finnish heroism? Or maybe he still considered the risks of Anglo-French intervention too high? Especially against the background of the “strange war” in the West. By the way, if the Finns had held out a month longer, the war could easily have ended with the loss of Finnish independence. After the Germans landed in Norway on April 9, and especially after May 10, Stalin’s fears were removed, and his hands were untied. Sometimes military successes can lead to the opposite of the desired result.

And after Finland entered the war on the losing side in 1941 for the sake of regaining lost territories, the real chances of Finland being sovietized increased dramatically and depended not at all on past heroic successes, but on Stalin’s agreements with the Anglo-Americans. I know that in June 1941 Stalin was the first to bomb Finland, but how to react is always your choice. It was enough to wait 1-2 weeks and Stalin himself would have humiliatingly come running to apologize. If we look for points where the future of Finland really depended on the Finns themselves, the main such point was the achievement of a separate peace with the Allies in 1941-1942. During this period, Stalin would have gladly accepted such a peace, and perhaps even agreed to return the territories.

Thus, it is very likely that Finland could have given Stalin the territories he demanded in 1939 without a fight and remained neutral at the end of World War II. It is no less likely that Finland could have even kept the said territories in time to change sides in 1941-42 Instead, in real history it lost more territories than they had originally asked for, and many times more dead as a percentage of the population than Great Britain or the USA lost during the World War II. Oh, and sensitive reparations on top of that. And we must not forget that despite all these casualties, a particular breakfast of 3 elderly men could still have turned out unfavorably for the Finns.

I realize that Finnish politicians and historians have to explain the mass sacrifices somehow, and the construct “but we defended our independence” is quite suitable for that. However, if we look at this story sensibly, the final result depended little on the success of the Finnish army, moderately on the decisions of Finnish politicians and strongly on the global situation. And a sensible analyst will see in the described events not the history of heroic resistance, but the history of political mismanagement and vain sacrifices.

The enlarged government has two piles of real money.

The first is the Central Bank’s reserves, the unarrested part of which consists of physical gold by 2/3. The liquid part of the SWF is an accounting record of how much of the physical CB reserves belong to the government and how much to the CB itself. The principles of this accounting allocation can be arbitrarily changed at any time. Therefore, to analyze the sustainability of the regime, one should pay attention only to how much money is left in the Central Bank and pay minimal attention to how much of this money is accounted for in the liquid part of the SWF. If gold prices were not rising, the Central Bank’s reserves would be shrinking. But gold is growing in price and therefore the size of the Central Bank’s coffers in dollars is still increasing, even though the National Wealth Fund is shrinking. There is also the so-called illiquid part of the National Wealth Fund, which does not lie in the Central Bank, and of which two years ago about 1.5 trillion, and now about 1 trillion, is placed on deposits in banks. This is the only real, not accounting part of the NWF that makes sense to discuss.

The second pot of real money is the very same government funds in accounts in the banking system. Let me try to explain how they work. Let’s imagine that you are a crazy pedant and you plan all your expenses a year in advance. As the money comes in, you put them on stacks, wrap them in papers and on one you write “for electricity in June”, on the other “to buy oil on Thursday”, on the third “to pay for car repairs”. It may happen that the repair of the car was delayed, there was no oil on Thursday, and you were too lazy to go to pay for electricity. Physically, the money was left lying in the cube. If you suddenly have an urgent, not planned in the budget, expense, you can give the money for the repair of the car for an urgent appointment at the dentist, planning to pay for the repair of the car from the money for electricity in July, payment for which you will pull a little and then pay from something else next. If you look at such transactions from the point of view of the budget, they don’t make more money. But if you look from a treasury execution perspective, you have physical money in the moment to pay for anything.

The government has thousands of similar stacks of “for such and such an expense” paper, only not physical, but in the form of balances in accounts in the banking system. Some of that money is the balances of the Treasury itself. Some are balances in the accounts of various budgetary institutions, funds, etc. etc. etc. The balances cannot be zero, but their necessary size is a moot point. In business, large treasury balances would be called inefficient financial management.

About 2-3 years ago, I pointed out that government funds in the banking system account for a fantastic 7% of GDP. If, for the sake of order, we subtract from them the very deposits from the illiquid part of the National Wealth Fund, then in any case we got more than 6% of GDP. I thought that this is a lot and decided to see what the Japanese have with similar indicators. It turned out that the Japanese government somehow manages its budget expenditures with balances of less than 2% of GDP, the US government with balances of 2.1% of GDP, Canada with 2.3% of GDP, and even the Nigerian government is able to manage with 3.7% of GDP of public funds in the banking system.

If the budget does not converge but there are large balances, within certain limits, it is possible to cover unforeseen expenditures by reducing balances to the minimum required level. If we consider Nigeria’s level as the minimum necessary level, 2-3 years ago, the excess funds of the government in the banking system exceeded 3% of GDP. That is, they were approximately equal to the liquid part of the NWF in terms of amount. But, unlike the FNB, this was real money, not an accounting fiction. Moreover, unlike the NWF money, financing expenditures by reducing treasury balances does not increase M2 and does not accelerate inflation. I have repeatedly said that such significant balances in the banking system are a hidden reserve of the government and should be monitored, but journalists preferred to discuss the change in the accounting fiction of the National Wealth Fund rather than the real money in the banks.
This year the budget deficit has grown unplanned and what do we see? On 01.07.2024, the state funds in the accounts in the banking system amounted to 12.6 trillion, and on 01.07.2025 – 10.9 trillion. And this is a nominal amount, while nominal GDP has grown by almost 15% over the year (nominal GDP growth = real GDP growth + inflation). So, year over year, the balances have shrunk by 1.1% of GDP. That leaves just over 5% of GDP, of which 0.5% of GDP is deposits from the illiquid part of the SWF. In other words, if we consider Nigeria’s level of financial management achievable, the balances contain another 1.5% of GDP of the money stock. If we go as far as the US level, the entire 3% of GDP.

If I were “witnessing the imminent collapse of the Russian economy”, I would be pedaling this very topic as much as possible right now. The real budget reserves have actually shrunk. However, apparently, the desire to understand the real state of affairs is not compatible with being in the abovementioned sect.

I will not argue with the FT figures themselves, as the figure used in the article seems to me deliberately incorrect, for the following reasons:

a) A tanker carrying oil from Ust-Luga to Rotterdam obviously carries more Russian oil per unit of time than a tanker carrying oil from Ust-Luga to Mumbai. We have never denied that lengthening logistics increases Russian costs;

b) The importance of the 6-month horizon is questionable. We were already well aware of tanker downtime in the first months after the sanctions were imposed. Adapting to new conditions takes time and it makes sense to look at changes over a longer horizon.

c) The sampling and correctness of data on such a sensitive indicator as Russian (!) oil shipments is questionable. While preparing this post we found out that tankers under US sanctions tend to hide all information about themselves much more often than tankers under EU sanctions only (almost 50% vs. about 15%). And these 50% hide data even on such innocuous and easily ascertainable circumstances as the location of tankers and their visits to ports. Data on how much, and most importantly whose oil a tanker is carrying is much more sensitive for the owners and practically unverifiable. It is known that a significant part of Russian oil is transported under the guise of non-Russian oil. Therefore, I highly doubt the veracity of the data on this indicator in the Kapler database, as well as the representativeness of the sample available to researchers.

With this in mind, we decided to compare the FT conclusions with publicly available and easily verifiable data on tanker visits to ports and distance traveled per year (where such data are available). The figures are shown in the attached graphs.

Summary conclusions:

а) During the first year after a tanker is added to the US sanctions lists, the activity of its movements does decrease significantly, but after one year it recovers to a level roughly corresponding to the level before the sanctions were imposed;

б) after the tanker is included in the sanctions lists, the share of Russian ports in the geography of its movements increases significantly.

When reviewing the tables, please note that: a) data are available only for about half of the tankers under U.S. sanctions, and there are reasons to believe that tankers whose information is not available have something to hide. I.e. the impact of sanctions on their transportation volume is presumably smaller; b) we only have data by year and for the first 6 months of 2025, and sanctions were imposed in different months of the year. We need to be careful both about the month of sanctions and the need to double the last column for comparability.

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In 1998, Venezuela produced 3.2 mbd (Russia produced 6 mbd that year). That year oil prices in constant dollars were the lowest in the history of the industry. Russia was in the midst of a severe crisis. However, Venezuela’s production specifically grew 10% that year, and 1.5 times in the previous 5 years. During this period of prosperity, part of production was controlled by the state monopoly PDVSA, and part by foreign oil companies, which were given technically more complicated and expensive fields to develop.

The industry grew rapidly, but in December 1998 Hugo Chavez came to power. During his election campaign he promised to take money to fulfill his social promises from the greedy oil companies and immediately started to fulfill his promises by slashing the salaries of PDVSA’s management, engineers and skilled workers. Oil workers do get a lot of money even by the standards of developed countries, let alone Venezuela, and the industry is predominantly state-owned and employs a lot of people. Chavez did not think about the fact that such specialists can easily find jobs in other countries.

The first significant decline in production after a decade of growth was due to strikes by oil workers. As part of their suppression, PDVSA laid off 12,000 highly skilled employees, who were replaced by politically loyal lumpen. History does not tell us how many were fired on their own.

The price was a drop in production from 3.2 to 2.3 million barrels per day by 2003 (Russia was already producing 8.5 mbd that year). However, it was the mid-2000s and oil prices were breaking records. Foreign oil companies were racing against the clock to increase production. As a result, by 2007-2008, at the peak of prices, production almost returned back to 3 mbd due to the actions of foreign oil companies.

What happened next? That’s right! Chavez started to change the taxation terms of foreign oil companies (mostly those that were working under PSAs and protected from tax rate changes by international arbitration agreements). He did it in a clumsy manner, without observing the minimum decency. As a result, investment in new fields has stopped, and in some places production has declined even at existing fields. This was simply due to administrative disorganization. Since 2007, the production of Western oil companies has been declining, and over the next 10 years it will go to zero.

And all would be fine. Even without foreign investors and qualified management at oil prices observed over the last 25 years, PDVSA could well maintain production. After all, they somehow managed to increase production at 5 times lower prices in 1998.

But then the most amazing mechanism of deliberate destruction of the hen that lays the golden eggs came into play. Chavez and Maduro consistently reduced investments in the oil industry. They needed money for social security, so they redistributed it from the fat oilmen. As a result, state investment in the industry for 20 years was about half the minimum required to simply reproduce current production levels.

A number of processes, including oil production, have such an unusual property: if you do not invest in the development of new fields for a long time, the old ones will run out sooner or later. A lot of time can pass between the time you stopped investing and the time when everything stopped. Specifically in the oil industry, even decades, but no matter how long the rope twists, the end is known. By 2019, when the Americans imposed their sanctions the collapse of the industry was successfully completed by their own forces. In 1998 Venezuela produced 3.2 mbd and Russia 6 mbd. In 2019 – 0.9 mbd and 11.2 mbd respectively.

The current (15 years old) economic crisis in Venezuela did not come from dictatorship, corruption or quarrel with the Americans. On the contrary, the crisis, production cuts and American sanctions had the same causes: idiocy, socialism and, anti-colonialism.

In order for Venezuela to increase oil production, it is not enough to simply lift American sanctions. First, it is necessary to change the government (and ideally the population), then to beg the vile colonizers for a long time to deign to return to the exploitation of Venezuela’s natural resources. And if the colonizers can be persuaded to shoulder this heavy burden again, it will take years, if not decades, of upfront investment. The industry has been ruined for too long, and it will take just as long to rebuild.

On August 6, Donald Trump signed an executive order imposing trade restrictions on India over its purchases of Russian oil. It is an additional duty of 25% on the entire range of goods of Indian imports to the US except for some items like humanitarian goods. The tariff comes into effect on August 27. In case of continued purchases of Russian oil, the tariff may increase up to 50%. In addition, tariffs of 10-25%, which have nothing to do with Russia and were introduced as part of Trump’s general campaign to increase customs tariffs for all countries, came into force against India on August 7. Thus, the final duty on most Indian goods could reach 50% by the end of August and 75% at the end of September. This is the first time the US is imposing sanctions against a formally neutral country not for its domestic policies but for its foreign economic ties with a third state. The decree is formulated in such a way that India becomes the first, but potentially not the last link in the new logic of sanctions pressure: not only against those who violate the rules, but also against those who refuse to apply them. What are the consequences of these actions by the Trump administration? To begin with, a few facts about India’s economy that are important to understand the context of what is happening.

India is a country with a large foreign trade deficit, ranking 3rd-4th in the world by this measure. The foreign trade deficit hovers around $100 billion and is firmly linked to oil prices. India is the world’s second largest oil importer after China, the country imports about 85% of its consumption. During periods of high oil prices, India’s foreign trade deficit increases significantly. Oil imports in value terms fluctuate between 110 and 180 billion dollars, i.e. they exceed the size of the foreign trade deficit and are its main factor. The negative foreign trade balance and its dependence on energy have been discussed for many years as India’s most important economic problems. According to various reports, between 20% and 40% of India’s oil imports today come from Russia.

Paradoxically, at the same time India is the largest exporter of oil products. The country has an excess of refining capacity. Some of the imported oil is refined and exported. These exports increased significantly in 2023, because before the war Russia exported more oil products and less crude oil, and due to the EU ban on imports of Russian oil products and low profitability of their supplies to other markets, the share of crude oil in the structure of Russian exports increased and the share of oil products decreased. Part of Russian oil is now refined in India and floats back to the EU in the form of diesel and gasoline.

The US is India’s largest foreign trade partner, accounting for 16-18% of India’s exports worth over 100 billion a year and 8-10% of India’s imports. Until 2025, the average Indian tariff rate for US goods was 13-15%, while the average effective US tariff rate for India was 2-3.5% according to various estimates. Till July 2025, negotiations were on for an increase in US tariffs between 10% and 25%. And if the figures in this range were in principle compatible with the preservation of a noticeable part of India’s exports to the United States, the cumulative rate of 50%, not to mention 75%, is essentially prohibitive and could really cost India tens of billions of dollars in reduced exports.

Dmitry Nekrasov, [14/08/2025 10:57 am]

The rumors circulating against this background about the suspension of Russian oil purchases by Indian refineries are either information noise or a belated attempt by the Indians to make a demonstrative gesture in favor of Trump. First of all, Indian refineries, as a rule, did not formally buy Russian oil anyway. It was supplied there through intermediaries mostly under the guise of oil from third countries. Secondly, it is hard for me to imagine how the US can control what kind of oil a particular Indian refinery actually buys. At the level of CIA intelligence, maybe. At the level of evidence recognized by courts and diplomats – hardly. Therefore, the refinery can declare anything and even demonstrate the relevant papers. But whether such a statement will have an impact on the real processes is a big question.

I am inclined to believe that India has already refused to fulfill the American demands, although it cannot be ruled out that some compromises and softening of the positions of the parties are possible in the future. In theory, such a situation may even improve the terms of Russian oil sales to India. Previously, Indian buyers of Russian oil considered their risks based on the uncertainty of their own government’s position. Now the Indian government has indicated its position on compliance with sanctions. This means that the risks of interaction with Russian counterparties for Indian businessmen have decreased, and with them the discounts should also decrease over time. However, we may not know about other components of the situation and agreements between Russian and Indian oil companies.

A more important consequence of Trump’s actions is that the issue of sanctions against Russia has shifted from a situation in which sanctions are the West’s business and developing countries remain neutral, to a situation in which the West’s sanctions policy has become an issue of confrontation between the West and a group of large developing countries. Trump has forced China and into India to take a stand on this issue, and that stand is not easily withdrawn. This will have long-lasting consequences for other similar situations and countries like Brazil. At the same time, Trump is promoting greater consolidation of India’s position with that of China and Russia. Is the game worth the candle?

The final question worth discussing in this regard is: what is Trump trying to pressure India for anyway? Suppose I am wrong and the Indian government not only agrees to stop importing Russian oil, but also finds itself in a position to do so. What are the possible consequences of such a decision? As likely as possible, the only such consequence would be a reorientation of the Indian portion of Russian oil exports to China.

Russia exports 7 million barrels a day, China imports 12.5 million barrels. Thus, it is able to buy Russian oil practically twice. China already buys 50% of Russian exports, and it is not that difficult to move to buying 80% of Russian oil. Some part of Russian supplies to India can be reoriented to Africa and South Asia. But this is not necessary, China alone is enough. This will cost Russian oil companies additional losses on logistics, measured in 2-3 dollars per barrel, and some one-step losses associated with the reorganization of logistics. According to the maximum estimates, the additional losses of the Russian oil industry will reach 1.5-2 billion dollars a year. This does not look like a serious blow to Putin and is certainly not worth destroying relations with a giant like India.

It is difficult to accurately estimate the benefits to the Indian economy from Russian oil purchases. In any case, we are talking about billions of dollars a year, but noticeably less than 10 billion. (The loss to Russian exporters from selling oil to India instead of the EU is much greater than the gain to Indian importers. Transportation of oil from the Baltic Sea to India, taking into account all sorts of schemes, insurance and legal infrastructure can reach up to $5-7 per barrel. But these are additional costs caused by the lengthening of the transportation shoulder. India gets nothing from them. The actual discount to the world price, which Indian importers gain, usually does not exceed 1-2 dollars per barrel. With imports of 700-800 million barrels of Russian oil per year, the total discount for oil received by India hardly exceeds $1.6 billion per year. In addition, there is a gain from exports of oil products, a noticeable increase in exports to Russia, and perhaps something else small). Regardless of the method of calculating the benefits of trade with Russia for the Indian economy, they are in any case significantly less than the potential losses from U.S. sanctions. However, the benefits from Russian oil purchases are already present today, and they are highly concentrated in a group of Indian officials and oilmen, while the real losses from U.S. sanctions are likely to be much smaller than the potential losses and will be spread across a wide range of economic actors. Therefore, it is not obvious which of the possible solutions enjoys greater lobbying support in the country.

It is now logical to discuss three questions. The first one is: is the Indian government, for all its will, capable of stopping Russian oil imports, while the American government is capable of levying a 75% duty on imports from India? Today, we can see with our own eyes quite a few results of sanctions and tariff policies. Despite all the sanctions, anything, including dual-use goods, are massively imported from the EU to Russia. Russian oil overflows into the sea and is imported into the EU under the guise of Persian Gulf oil. Part of Chinese exports to the US went the way of Belarusian squid and are mass imported under the guise of goods from Vietnam or Indonesia. And these are examples of rich countries, with low corruption, developed institutions, sincere desire of the government to enforce sanctions and support of the policy by the majority of the population.

Given all this, it is doubtful that the Indian government could easily stop importing Russian oil, which brings its beneficiaries billions of dollars a year, even if it wanted to. But neither the government nor the public wants this solution, and sabotage at all levels is inevitable. To ban oil imports from a particular country, it is not enough just to sign a decree to that effect. It is necessary to create an apparatus capable of controlling the origin of the cargo, tracing the chains of intermediaries, identifying ship flags, insurance, transit routes and financial schemes.

Already today, most Russian oil reaches India through chains that do not formally look Russian. Often these are blends transshipped through the UAE or Singapore on behalf of companies registered in third countries. In fact, this is Russian oil, but legally it is not. In order to trace such supplies, it is necessary to have a developed and motivated bureaucracy, transparent procedures, and strict control.

In Indian conditions, it is much easier to imagine that Russian oil that has passed through a chain of intermediaries will continue to be imported, for example, under the guise of oil from Iraq, which has a similar chemical composition. The paperwork would be in order, but the official who conducts the inspection would lack competence and motivation. This official is opposed by highly professionalized cadres eager to earn their personal millions. In the end, even if India formally declares a ban on Russian oil purchases and signs the relevant regulations, this is unlikely to stop the real supplies.

One could argue that India was once able to refuse to import oil from Iran, which is argued by figures on the fall in Iran’s oil production during the relevant period. However, there is another point of view, according to which imports from Iran have decreased but not stopped. Its supporters believe that Iran’s oil production could not have actually fallen as significantly as is commonly believed. I will not judge who is right, but the very fact that estimates differ by hundreds of thousands of barrels per day illustrates that even specialists find it difficult to understand the scale and direction of real commodity flows.

It should be noted that before Trump introduced the tariff in question, it seemed very likely that India would let Trump save face and declare that it would stop buying Russian oil, after which an endless game of “you keep buying” – “no, it’s not us, here are the papers” would begin. However, events took a different course. The situation with the tariff levied on India’s exports to the US is no simpler. As much as a third of these exports are for various services from IT to call centers. Services are not yet subject to the tariffs imposed by Trump, but if they are, there is nothing easier than changing the country of origin of the services through a third-country firm. The next most important export item is jewelry. Compared to most other commodity groups, jewelry is much easier to implement any gray solutions from smuggling to a formal change of the country of origin. As it is, gray schemes are actually used in this industry in India more often than in others. In addition, India exports to the USA various goods which, de facto, are on the global market of communicating vessels and at minimal discounts can be redirected to other countries, while other exporters of similar products will take India’s place on the American market.

There are only three significant items of Indian exports that will be really hit hard by Trump’s tariffs. These are pharmaceuticals, engineering and electrical products. But they collectively account for less than 20% of India’s exports to the US, and even in these sectors, some of the goods will still be able to go the way of Belarusian squid. So, looking at the situation in detail, Trump is demanding things from the Indian government that it may be fundamentally incapable of doing, threatening a much smaller loss than it appears at first glance. The second issue worth discussing is the possible political consequences of Trump’s actions.

Trump has presented New Delhi with a choice from which the Indian government has deliberately avoided over the past three years, during which it has not complied with anti-Russian sanctions but has also not expressed support for Russia’s position in the Ukraine crisis.

If it were possible to get the Indian government behind the scenes to make some kind of decision or just a declarative statement on Russian oil, Trump could make it look like a diplomatic victory and PM Modi could save face, because he never promised to behave differently or support aggression. The situation will look completely different if Modi does the same actions under direct public pressure from the US in the style of the myth of colonial dictatorship. This is against the backdrop of Modi’s nationalistic image and the domestic political debate on India’s role in the world and its strategic autonomy.

The very fact of imposing tariffs in this style has radically reduced the likelihood of even symbolic concessions from India. And although the top officials of the Indian government have not yet expressed their refusal to comply with Trump’s demands in such a radical and unambiguous manner as the Chinese leadership has done, the public statements of Indian politicians and second-tier officials have been quite hawkish. And Modi’s phone call with Putin on strategic partnership the day after the tariff was imposed was an obvious political demonstration.

The rumors circulating against this background about Indian refineries suspending purchases of Russian oil are either information noise or a belated attempt by the Indians to make a demonstrative gesture in favor of Trump. First of all, Indian refineries, as a rule, did not formally buy Russian oil anyway. It was supplied there through intermediaries mostly under the guise of oil from third countries. Secondly, it is hard for me to imagine how the US can control what kind of oil a particular Indian refinery actually buys. At the level of CIA intelligence, maybe. At the level of evidence recognized by courts and diplomats – hardly. Therefore, the refinery can declare anything and even demonstrate the relevant papers. But whether such a statement will have an impact on the real processes is a big question.

I am inclined to believe that India has already refused to fulfill the American demands, although it cannot be ruled out that some compromises and softening of the positions of the parties are possible in the future. In theory, such a situation may even improve the terms of Russian oil sales to India. Previously, Indian buyers of Russian oil considered their risks based on the uncertainty of their own government’s position. Now the Indian government has indicated its position on compliance with sanctions. This means that the risks of interaction with Russian counterparties for Indian businessmen have decreased, and with them the discounts should also decrease over time. However, we may not know about other components of the situation and agreements between Russian and Indian oil companies.

A more important consequence of Trump’s actions is that the issue of sanctions against Russia has shifted from a situation in which sanctions are the West’s business and developing countries remain neutral, to a situation in which the West’s sanctions policy has become an issue of confrontation between the West and a group of large developing countries. Trump has forced China and into India to take a stand on this issue, and that stand is not easily withdrawn. This will have long-lasting consequences for other similar situations and countries like Brazil. At the same time, Trump is promoting greater consolidation of India’s position with that of China and Russia. Is the game worth the candle?

The final question worth discussing in this regard is: what is Trump trying to pressure India for anyway? Suppose I am wrong and the Indian government not only agrees to stop importing Russian oil, but also finds itself in a position to do so. What are the possible consequences of such a decision? As likely as possible, the only such consequence would be a reorientation of the Indian portion of Russian oil exports to China.

Russia exports 7 million barrels a day, China imports 12.5 million barrels. Thus, it is able to buy Russian oil practically twice. China already buys 50% of Russian exports, and it is not that difficult to move to buying 80% of Russian oil. Some part of Russian supplies to India can be reoriented to Africa and South Asia. But this is not necessary, China alone is enough. This will cost Russian oil companies additional losses on logistics, measured in 2-3 dollars per barrel, and some one-step losses associated with the reorganization of logistics. According to the maximum estimates, the additional losses of the Russian oil industry will reach 1.5-2 billion dollars a year. This does not look like a serious blow to Putin and is certainly not worth destroying relations with a giant like India.

What was the disposition before this story?

1. Trump could not do anything significant in purely economic terms. All significant sanctions against Russia were implemented back in 2022 and Trump, to use his own metaphor, simply has “no cards”.
2. Trying to tell the broader Western electorate the reality of the effectiveness of sanctions faces roughly the same limitations as trying to tell the masses of Russians the real history of World War II and the USSR’s role in it. The reality contrasts too much with the self-concept of “we are great” (in the case of the west economically) and with established historical stereotypes (Russia has been economically weak in various historical episodes). Therefore, despite the lack of noticeable results of the sanctions policy, the population of Western countries was successfully sold PR that there are economic cards against Russia and “we are about to catch up”. This could be continued almost indefinitely.
3. India and China kept the opportunity to adhere to neutrality in words, while continuing to make profitable geshefts with Russia in deed.
4. The idea of 500% duties and other examples of refined insanity were discussed in public. Most of them are simply unrealizable, although in some places even dangerous for the world economy. While such proposals were obviously insane, PR was built around them in the spirit that Trump was afraid to take “real, decisive measures” proposed by “real friends of Ukraine.”

What could Trump do in such a disposition?

1. Do nothing, continuing to throw around promises of “now I’m going to give it to them” and including hundreds of tankers in the sanctions lists that have no effect on anything.
2. To get a declarative statement from India, Turkey or someone else in this vein, which could be made to look like a great diplomatic victory. I personally didn’t rule out that India could formally declare something to help Trump save face by in fact continuing to buy Russian oil. Frankly, I don’t think that even if the Indian government wants to stop importing Russian oil, it is capable of doing so even in theory. The Indian state is too weak and corrupt, and we see how sanctions are elementary and massively circumvented even in developed countries. So publicly the Indian authorities could say anything and even honestly try to do something, without actually changing anything.
3. Change the rhetoric to recognize the weakness of economic leverage against Russia and call for a common sense approach to things. Realism, pragmatism and abrupt change of position to the opposite is quite organic for Trump. There were sub-options: a) Let the most active friends of Ukraine take responsibility for the implementation of their ideas and politically kill themselves, and “wash their hands of it”; b) Demonstrate the absurdity of these ideas publicly, there are plenty of arguments, and the authors of these initiatives are hardly really so crazy that they developed them for any other purpose than domestic political PR; c) Say that there are no economic cards, but instead the U.S. is ready to put tomahawks, or something else on a purely forceful line.

   Instead of all these more or less logical options, Trump: A) Forced not only China (whose position was hardly doubted by anyone), but also India to send the U.S. and its sanctions far away with an open text. B) Made a directly unfriendly move against India, the economic consequences of which will be much less than the political ones. And did it in its own version of a bet, taking full responsibility for the outcome.

These actions will trigger three lines of consequences.

1. The actual conditions of Russian oil sales to China and India have slightly improved. Previously, private counterparties to Russian sellers viewed their risks based on the uncertain position of their own governments. Now both governments have explicitly and unequivocally stated that they are not subject to these sanctions. This means that the risks of cooperation with Russian counterparties for the Chinese and Indians have directly decreased, and with them, in fact, the discounts will decrease.
2. India was forced to publicly choose a side, and after that it was ostentatiously punished in the scenery of the myth of colonial dictatorship. It is hard to think of anything as conducive to BRICS consolidation.
3. Most importantly. These steps have moved the global situation around sanctions from a regime in which sanctions are the business of the west and developing countries remain neutral. To a situation where the sanctions policies of the west become a matter of confrontation between the west and a group of major developing countries. China and India have been forced to express a position that is not easily withdrawn. I think this will have long-lasting consequences for other similar situations and countries like Brazil.

I honestly can’t understand why all this was done and what other results besides the above can be achieved by such methods.

In 1941-45 we were defending our own land-houses-families, not squeezing-destroying-killing someone else’s. Afghan 10-year meaningless losses are already MULTIPLE times inferior to the current 3-year losses. Moreover, then the nightmare of the war spread across the USSR only by sealed zinc coffins and horrible rumors, and now it is 24/7 on the screens of smartphones. And that 10 years of Afghanistan is almost unanimously mentioned by historians as one of the most important reasons for the collapse of the USSR.

No matter how stable and monolithic the system may seem from the outside, it is not from any good life that you will not spin every month such a growing flow of criminal cases against your own people. And their own with each month more and more high-ranking.

In the meantime, in just one morning, a residential building in Astrakhan collapsed in the country (even without any bombing), Aeroflot lay in IT-paralysis, and the million-strong city of Krasnoyarsk was without Internet for the third day.

Or “Important Stories” writes that the families of those killed in the war have begun to “throw away” their coffins en masse, declaring those killed as deserters/missing in action. The AP has already allegedly 40,000 such complaints, and the journalists have studied 50 cases by name.

Somehow it seems to me that in another six months, the vast majority in Russia won’t care how the “SWO” ends, where the border will be, or whether Ukraine joins NATO. And the longer the war goes on, the harder it will be for Putin to pass off the outcome as a victory. Perhaps no one believes in victory even now. Apparently, the chief bandit senses this and is dragging out negotiations in the hope that the front will collapse on the other side.

So the moment when the continuation of war for Putin’s power becomes riskier than peace may come. And sooner than it seems now. True, along with repression and purging of the top brass. So the regime becomes insecure and unpredictable. And from the shots of the Council of Ministers meeting in February 2022, three years later, there are more and more similarities with the “Congress of Winners” of 1934.

— Dmitry Alexandrovich, what question do you get asked most often? / What question has already gotten on your nerves?

— “When Putin runs out of money for the war.” From the first days of the war, I said that it would be very long, and with the current intensity of the war, never. And reality has been confirming my predictions for more than three years now. The very fact of formulating such a question immediately transfers the question from the plane of discussing objective economic processes to the plane of politics or even beliefs and myths.

— Why does this happen?

Most readers of economic statements do not need objective information about the economy at all. They are either rooting for one side or the other and are looking only for information that confirms that their team is winning. Information that makes them doubt their team’s victory is considered enemy propaganda or disinformation. Although, it would seem that truthful information, whatever it is, is useful, since it allows them to make optimal decisions.

Most readers are not interested in the economy itself. They buy fears or hopes. There are many sellers of these goods in the market in the wrapper of economic analysis. But this has nothing to do with the economy at all. This is psychotherapy or infogypsyism.

Other readers are not able to perceive complex constructions due to their cognitive skills. The more correctly you express yourself (and in our industry, correctness is expressed by the number of reservations), the more comments you will get about how you are “dodging” or “casting a shadow over the fence.” And if you focus on such an audience and reduce correctness in order to “simply answer a simple question,” justified criticism of the incorrectness of the statement is inevitable.

The problem with this communication is that the labeling of genres in non-academic economic analytics in the era of social networks has not yet been established. Those who came to a psychotherapist, and those who came to cheer for their team, and those who came to the circus and those who are really interested in economic processes, read the same content and comment on the statements of the same author.  

— What question interests you most now and why?

— If we talk about the Russian economy, it is the question of how soft or hard its landing will be. In 2023-2024, the economy was booming. All capacities and resources that were not used before the war were used. By the summer of 2024, the economy approached overheating, unemployment is close to 2%, literally all the main funds that actually exist are used.

Such overheating is generally a normal situation at the end of a cycle. A boom cannot last forever. And the restructuring of the “boom period equilibrium” to the “normal period equilibrium” is often accompanied by a multitude of crisis phenomena. From mass bankruptcies to a reduction in employment and GDP.

As for the Russian economy, it is not yet clear whether this will be a recession or whether it will fluctuate around zero for several quarters. So far, everything looks more like a relatively soft landing. But this is not certain.

Final conclusions can be made when inflation and the real value of money return to some reasonable values. For example, inflation of 7% with a rate of 12% or something like that. Until inflation has decreased, the rate cannot be reduced quickly. And the rate determines the real cost of money for business (i.e. the cost of borrowing minus inflation). If the Central Bank rate is 20%, then real loans from the bank to a business can cost a specific business 30%, with inflation of 10%, this means the real cost of money for this business is 20%. 

In this situation, even companies with a healthy business model and moderate debt load can have growing problems. Let’s say someone has a stable return on assets after deducting inflation of 10%, and it hasn’t changed. This business has been living for a long time with a real value of money of 5%. In this situation, it could easily afford to increase assets by increasing debt, earning additional income. And its debt is, say, 70% of assets, which is safe in a normal situation. And then bang! And the real value of money (after deducting inflation) for it became 20%. This means it started losing money.

 Such a business may survive two years of such a rate, and if the situation normalizes, it will then float. But it will definitely not survive five years. When the business formed its debt burden, it did not expect that what happened would happen. The longer we remain in conditions of extremely high real rates, the more risks of a debt crisis accumulate. Moreover, a debt crisis not only in relation to over-indebted businesses, but also to quite healthy companies. This is why we will be able to finally understand how soft the landing was only after inflation and real rates normalize. Or we will understand that we have slid into stable stagflation.

But these questions have little to do with whether there will be enough money for a war for the next 2-3 years. And even with the hardest landing, there will inevitably be enough

— What do the parameters of a “hard landing” look like for an ordinary person? Draw a worst-case scenario and estimate its probability.

— We are not talking about a serious crisis, but about the rate of deceleration when exiting the boom phase. The average person will not feel much. Unemployment will be slightly higher, income growth will be slightly slower. Someone individual, of course, may end up unemployed, but on average unemployment will remain extremely low. The differences between a hard landing and a soft one will be felt more by businessmen than ordinary people. There will be more bankruptcies, less profits.

— Two weeks have passed since the SPIEF, and there is still no recession. That is, Reshetnikov, who articulated this word there, will not receive a reprimand for panicking, nor a bonus?

— What is a recession? Formally, it is two quarters of GDP decline in a row. Two quarters must pass to record a recession. How can we talk about a recession based on a statement by one official two weeks later? Our media regularly picks on individual words. Last year, I laughed a lot when everyone ran to discuss “stagflation” literally without a break after discussing “overheating.” There is no stagflation immediately after overheating. Several quarters must pass. The same is now with a recession. It takes at least six months to record it.

— “According to the figures, we have a cooling… according to the feelings of business, we are already, it seems to me, on the verge of a recession,” Reshetnikov said. “From now on, everything depends on our decisions.” What is already clear about their decisions, so that they don’t freeze, as Siluanov with his “cooling”, Nabiullina with his “getting out of overheating”, Kostin with his “icing” in the business environment and Vedyakhin from Sber with his danger of hypothermia if the key rate is not reduced to 12-14% say in chorus? Who are they waving flags at?

– They say this primarily to each other. People exchange information. This is not for Putin, and not for the general public. Business captains, officials and economists have gathered. They talk about real problems of the economy. They exchange views and information in order to adjust decisions. Their own and others.

Every time journalists start discussing what the Central Bank or the Ministry of Finance said or did for PR and “to send a signal to the public,” my hair stands on end. Most economic publications and statements by officials are made to inform economic agents (not to be confused with the general public) about current processes and the regulator’s intentions. The better such information is accessible and the better its exchange is organized, the more effective decisions economic agents make, and therefore the more effective the economy. In some places, PR and influencing the general public may be a secondary goal. In some exceptional cases, even the main goal. However, the overwhelming majority of statements, discussions and statistical publications are not addressed to the general public. They are for businessmen and professional economists.

And the discussion about whether there is a “cooling” or a recession is primarily professional. The Russian monetary authorities are faced with a key question – are we pursuing an excessively tough monetary policy, or one that is adequate to the situation. And what are the risks of each decision.

I don’t remember who, but they came up with a very successful metaphor, comparing a high rate to a course of antibiotics, and inflation to an infection. There is an antibiotic, but no one really knows how many doses it takes to kill the corresponding bacteria. If we take it for too long, we will simply cause the body additional, unjustified damage. If we stop taking it too early, the inflation bacteria will return as a relapse and it will turn out that all the costs of the high rates of the last year have gone down the drain. And there are no instructions. No one has ever been treated with such strong antibiotics under war and sanctions. So they think about what is the optimal length of antibiotic treatment.

There are different opinions and both sides are scaring each other with different risks. Horror stories are told by those who believe that the Central Bank has become carried away by antibiotics, and by those who are afraid of early termination of therapy. A high rate for a long time increases the risks of a serious debt crisis, too rapid a reduction – the risks of falling back into the inflationary spiral, which was barely knocked down.

— So what do you propose to do with the rate: raise or lower it? Here is a proposal from Vedyakhin – a 12% rate.

The rate can be moved. With a rate of 20%, we have a lot of steps down, but also up. If I were them, I would stick to the current level at least until the inflation data for October comes out. But there is room for compromise, to lower the percentage, or even by two.

The economic bloc of the government in the Russian Federation is competent, so I think that a hypothetical Nabiullina considers plus or minus the same way as I do. However, there is also lobbying pressure from business captains. All sorts of Chemezovs simply lobby for lower rates by virtue of their position. And not only Chemezovs, but also private businesses from the real sector. The cost of capital directly affects their personal income. The higher the real cost of capital, the lower the income of Deripaska, Mordashov and everyone else. All these people are interested in a low rate. They have their own lobbying opportunities. It is quite possible that Nabiullina last time reduced the rate not because she really believes that a reduction today is useful for the economy, but because there is lobbying pressure. The Central Bank is in the conditions of inter-apparatus wars, where something is constantly happening.

– So comrade Reshetnikov was disingenuous when he said that “everything depends on their decisions”? What decisions does Putin’s economic team have in store so that the people will continue to endure and remain silent?

– From an economic point of view, the people have nothing to “endure.” Incomes are growing and the last couple of years have been the most successful for the economy and the population in more than 10 years. People are silent, and not for economic reasons.

– You mentioned the effective manager Chemezov. He met with Putin here not long ago. He reported on the growth of production of armored vehicles, artillery and aircraft weapons. But there are downsides. It was possible to completely replace Western components only in 25% of cases, and enterprises are cutting staff due to losses. Is this a problem for the economy?

– I did not call Chemezov effective. This is in relation to our conversation about the base rate. It is clear that it affects the profitability of Chemezov’s enterprises. But I think that he was complaining not about the rate, but about the cost of production of the enterprises entrusted to him. If we talk about the entire economy, in the long term, of course, its militarization does not lead to anything good. With the end of the war, the volume of weapons production will fall. But while the war is going on, I do not believe that such enterprises will close. No one will allow this. They can throw in money from the budget. Chemezov will simply, by virtue of his position, arrange this Yaroslavna’s lamentation about losses, so that they will throw in some money. This does not mean that the losses are necessarily true. And it certainly does not mean that the enterprises will stop for the reasons described by Chemezov.

– Another stupid question. Have the Kremlin’s benefits from the twelve-day war between Iran and Israel been exhausted? Were there any at all?

— It had a rather limited impact on the Russian Federation. If the situation had degenerated into actual mining of the Strait of Hormuz, it would have led to something in the moment. But these would still be local things. The state of the modern oil industry is such that there are flexible opportunities to increase production. First of all, shale oil in the US. And not only there. I do not believe in the possibility of a scenario where oil prices will be extremely high for three years. Yes, in the moment, the markets can drive the price up sharply. But short-term price fluctuations will not have a strong impact on Russia.

— How can we understand the speed at which the most banal food is becoming more expensive in the Russian Federation. For example, potatoes? For those who do not earn money from war and the death of their loved ones, what kind of real inflation should we prepare for by the end of 2025?

— Discussions about some mythical “real inflation” are exactly from the realm of psychotherapy and a lack of desire to understand the structure of the economy, which we talked about at the beginning. I have not seen a single case where anyone has convincingly caught Rosstat red-handed when calculating the CPI using the methodology by which it calculates it. And the methodology is public and generally complies with international standards. If desired and with the resources, anyone can try to take measurements using it and compare the results obtained with Rosstat’s.

One can argue about how correctly this methodology reflects the increase in prices for the consumption of the average Russian. Probably not completely. Another methodology can be proposed. In principle, depending on the choice of goods and their share in the basket, one can calculate a million different inflations in Russia at 3% and 50%, and each of them will be quite correct and real in accordance with the chosen methodology.

Rosstat honestly calculates the CPI, according to the methodology it has outlined. With all the possible questions about this methodology, this indicator fully reflects the situation in the economy according to the trend. This indicator is now about 10%, if the trends do not change by the end of the year it will be 7-8%. But this is also not accurate.

As for the rate of “rise in price of common food,” I will give the following example about the currently fashionable potatoes.

According to Rosstat tables, at the end of 2010, potatoes cost 28.94 per kg. And at the end of 2020 … 29.15 per kg. From 2010 to 2020, accumulated inflation in Russia amounted to more than 90%, i.e. on average, all goods, even according to official data, have doubled in price. However, potato prices have not increased for 10 years in a row, and in some years they have even decreased significantly.

The fact that the price of potatoes has been unchanged for 10 years and that in some years it has dropped by tens of percent, did not attract the attention of ordinary people, although such behavior of prices for one of the basic products for Russia is much more abnormal than a one-time increase by tens of percent. The ten-year (!) invariability of prices for potatoes is surprising from all points of view, but ordinary people do not know how to notice such things.

Ordinary people and journalists always pay attention to the growth of prices of a particular product today. Be it butter, potatoes or whatever is growing today. And based on the noticeable growth of prices for a particular product, they draw conclusions about the general dynamics of food prices. And the prices of individual food products are very volatile, and some grow strongly even if the prices of other products are falling. That is why ordinary people always overestimate the level of inflation. This is a cognitive distortion.

This does not deny the rise in food prices, but it is less than it seems. For example, prices for butter have risen all over the world, not just in Russia.

— Starting from July 7, the Russian financial authorities will begin daily net sales of foreign currency in the amount of about 10 billion rubles to weaken the ruble, which has strengthened by 45% against the dollar since the beginning of the year. If you were Nabiullina, would you do the same? How will this affect ordinary citizens?

— I do not quite understand why the state needs to sell currency in the current situation on the currency market. I would not do that. Perhaps they will adjust their decision.

— Can you explain from an economic point of view why Trump did not strangle Putin and his economy? Before his election, there was a lot of noise about him either forcing Ukraine to surrender or knocking out all of Putin’s teeth. Today, there is neither one nor the other. Fairy tales about him ending the war in three days, in a couple of weeks, in 100 days have remained fairy tales. Now Putin has returned to his original dream of “all the goals of the special operation will be achieved” in their last telephone conversation.

— Trump simply has no cards, to use his words. All measures of any significance for the Russian economy were adopted in the spring of 2022. There are simply no new sanctions of any significance that will affect the Russian economy, and not individuals, physically. I am talking about economic measures, not a naval blockade.

They should learn to implement at least some of the ones already introduced. I recently published an article in the Moscow Times about the “shadow fleet.” During the war, the US and EU authorities imposed sanctions on 587 Russian cargo ships. Modern shipping is quite transparent. There are several publicly available specialized online resources that allow you to see the current location, history of actions, and planned route of each specific vessel. Something like a flight radar with airplanes, but with tankers.

We decided to check what happened to the ships on the sanctions list. In short, only 5 ships out of 587 have been arrested. Another 16 have stopped navigating for various reasons. Some are under repair, one is partially sunk, at least two have been converted into floating storage facilities, and it is not entirely clear why some have been stopped. In any case, the number of ships affected by sanctions is no less than 5 and no more than 12 out of 587.

The vast majority of vessels under sanctions continue to transport along their usual routes. They are not hiding from anyone, any reader can find out their location and route from home using vesselfinder.com. All the tables of vessels in the article are posted in the public domain. I urge anyone to check and see for themselves.

However, all the world media write about how many new ships were for some reason included in the sanctions lists, and not about the fact that the ships on these lists are not noticed and calmly continue to transport Russian oil.

— Senator Lindsey Graham told ABC News in an interview that Donald Trump believes it is time to introduce a bill to Congress to tighten sanctions against Russia. According to the senator, the bill will be passed “after the July holidays.” He added that the law will affect countries that buy products from Russia and do not help Ukraine. A 500% duty will be imposed on these countries…

— I will comment on this for the 501st time. China and India are the largest oil importers in the world. China imports 12.5 million barrels per day. Russia currently exports about 7 million per day. (both oil + oil products) China already buys half of Russian oil, and can buy it all, almost twice as much. If China continues to buy Russian oil, any other countries do not matter.

A natural experiment has just been conducted to see how far the US is prepared to go in its trade war with China. It turned out that the US is not prepared to impose even a 30% tariff on many goods. Because it harms the American economy itself. The import of those Chinese goods on which 145% duties were imposed has already fallen to almost zero. For them, there is no difference between a 145% or 500% duty. Both are essentially prohibitive barriers. And after this experiment, do you think China will be afraid of 500% duties? And I will repeat once again that China is capable of buying all of Russia’s oil twice.

— At the end of May, everyone was writing that the Russian Armed Forces had seized a large deposit of something priceless in Donbas. So Washington no longer needs a raw materials deal with Kiev? Can Trump negotiate with another Vladimir?

— In addition to how many useful resources are in the ground, it is important how much it costs to extract this natural resource from the ground and what is the cost of money in this region. Developing a deposit is a multi-decade project. You conduct exploration, dig, then build factories. This takes many years. The cost of money over time affects all of this. There was never any economic logic to Trump’s deal with Ukraine. It’s just PR. Ukraine has no natural resources that are worth such a discussion. Given the cost of money at which investors are willing to invest in a project in Ukraine, given the high cost of extracting minerals from the ground that are actually there, almost any projects to extract them are unprofitable and pointless.  

The development of such deposits may make sense for some other reasons. For example, providing the necessary resources for military purposes. But from an economic point of view, there are no natural resources worth talking about in Ukraine. This is PR again. The reality of such a project would be affected by 30 years of normal life in Ukraine. Where there is no war. Where all court decisions are carried out. And where investors feel protected, and money is given at a small interest rate.

– Ok. Now to the EU. The US lifted sanctions from the Paks NPP project in Hungary. To whom is this a message and about what?

– I am not aware of this story. But how can one consider actions on a multi-billion dollar project, in which there are a lot of interested parties, including very serious people, as a message to someone? This is the view of the media. A nuclear power plant costs billions of dollars. Sometimes 30-40 or even 60 billion. And if sanctions are lifted from such a project, it means that very serious people agreed on this as part of long-term serious negotiations. This is not a message to the public. We agreed because it is profitable for someone. Period.

— Correct me, but as I understood your point of view from your previous statements, there is now more market economy in the Russian Federation than in the EU. Do you really think so, or is this some kind of trolling? You are a person with a sense of humor.

— Yes, this is a controversial idea. I am not insisting on it, but there is the following logic. The level of regulation is sometimes more important than the nature of ownership. Let’s assume that some industry belongs to private players, but at the same time it is heavily regulated by the state, like European banks, for example, and its efficiency is reduced simply because of regulation. At the same time, there may be Russian banks next to each other, owned primarily by the state, but in competition with each other, and not as strictly regulated as the activities of private European banks. And you may end up with state-owned, but less regulated banks, being more efficient than private ones, but too burdened with compliance.

It is not so important to you who owns what. It is important to you that it works effectively and that the economy is rich. Excessive regulation, and in a number of EU industries regulation is many times greater than Russian regulation, can reduce efficiency more than ownership. That was my idea. I am in no way ready to absolutize it and say that the entire EU economy is inferior to the Russian one in this respect. However, in some places we already see how excessive regulation makes the EU uncompetitive with the US in many industries or even with Russia in some.

What will happen if the sanctions are lifted and which ones need to be lifted first? Which sanctions does Putin want lifted?

The seizure of the Central Bank’s assets in the EU is the most serious blow. Russia has lost more money due to the seizure of the Central Bank’s assets than it has spent on the war over the years. Their return would be the most important component of easing the sanctions. But this is unlikely; most likely, a significant part will ultimately be used to cover Ukraine’s debts to the West itself.

The second most important factor of sanctions is the very fact of being under US sanctions. Because of it, Russian trade even with third countries bears additional costs on money transfers and infrastructure. We described their scale in detail in the CASE report on mechanisms for circumventing sanctions. They will not exist if the US lifts financial sanctions.

A notable sanction, the abolition of which would be useful for the Russian economy, is the EU’s refusal to purchase Russian oil. And if anything is to be abolished, it will be the first one. The situation when a Russian tanker from Ust-Luga goes not to Hamburg but to Bombay, and then the same oil, processed in India into diesel fuel, sails back to Hamburg is simply abnormal. This is a fantastic idiocy for which both Russia and Europe are paying. Before the war, Russia exported about the same amount of oil products as crude oil. They went to Europe. Now Russia exports more crude oil. The place of Russian refiners for the EU has been taken by Indian refineries. And if this structure, when the left foot is scratching the right ear, is abolished, then Russia would win. This is an important issue for Putin. He will strive for this within the framework of the agreements on Ukraine.

As for non-oil products… Before the war, the EU was Russia’s main trading partner. And this was not so much due to politics as it was to logistics. Convenient. Now, China has taken the place of Russia’s main partner. Due to this restructuring, many in the Russian Federation have incurred costs in order to change suppliers and technology partners from European to Chinese. Even if the sanctions are lifted tomorrow, not everyone will make this transition back and not completely. At least based on geopolitical risks, and over time due to the habituation factor.

Therefore, apart from the Central Bank assets, US financial sanctions and the possibility of selling hydrocarbons to the EU, there is no particular point for Putin to seek the lifting of other sanctions. This is all secondary.

– In Europe, they constantly guess how many years it will take for Putin to attack the Baltic countries, Finland or Poland. How would you answer this question if we tried to calculate how much it would cost the Kremlin to prepare for such an adventure and the consequences of starting this adventure?

– (Long pause) It is difficult for me to imagine such a strange future. Although I am a poor political forecaster. If my forecasts on the economy have mostly come true over the past few years, then on political issues I have often been wrong. I did not expect either an attack on Ukraine or that Zelensky would resist for so long. All my assumptions on this topic turned out to be wrong.

You ask how much the war will cost, but wars are different. An attack on the Baltics is absurd given the NATO umbrella. We have just been shown again what happens when the US air force operates. Given their military capabilities, they will simply destroy Russian conventional weapons. However, Russia also has nuclear weapons, which is why I believe such a war is impossible. But I repeat that my predictions about the war in the past were unfounded.

— You worked both in the Federal Tax Service and in the Presidential Administration. What do you regret when you think back to that work? Is there something you did that you now think you shouldn’t have done, or is there something you didn’t do but could have done and now regret?

I have nothing to be ashamed of. I did what I thought was good for the country at the time.

– What did you do then that you are proud of today?

Considering what the economic potential, which was created in some places with my modest participation, is spent on, it is also somehow strange to be proud today.

– Do the guys from the FSB often remind you of themselves? If it is not a secret, then how?

There were a couple of strange episodes. I won’t say which ones. I don’t want to wake up trouble while it’s relatively quiet.

2. The other day, a sect of witnesses to the imminent collapse of the Russian economy attacked me with reports about the catastrophic growth of wage arrears in Russia. Not only “witnesses of the imminent collapse” or the Ukrainian media, but also the most loyalist sources like TASS or Parlamentskaya Gazeta, as well as many smaller publications, noted the increase in overdue wages. According to reports, wage arrears in April 2025 rose by as much as 34 million rubles and almost reached one and a half billion rubles. And if we compare it with February 2024, the growth of arrears will be 4 times. Isn’t that terrible?

Labor remuneration in Russia accounts for more than 40% of GDP. That is, more than 80 trillion rubles a year. That’s about 7 trillion a month. All right, the data on arrears are not collected on all labor remuneration, but only on wages at large and medium-sized enterprises. Let it be 4 trillion per month. So the current wage arrears in Russia is something around one month’s wages for one out of every 2,700 employed people. One out of every 120,000 Russian workers added to the “army” of overdue wages during April.

The sheer scale of this arrears is commensurate with the wage payment problems at one single company in the top five hundred on the Forbes list. It’s beyond any conceivable margin of error of observation. It’s just white noise. And it’s obvious to anyone with a modicum of knowledge of the subject and a modicum of numeracy. But they make news out of it Carl.

How does it happen? A journalist somewhere, let’s say, in TASS sees the letters “wage arrears increased by…” and decides that this news will be of interest to consumers. It seems that even a journalist should realize that amounts expressed in millions of rubles by definition cannot say anything important about a two hundred trillion dollar economy, but they simply do not go into the meaning of the numbers. Letters are enough. At the next iteration, other publications see the TASS news about the growth of wage arrears and accompany it with the narrative they want: “the Russian economy is about to go to hell”, “evil capitalists are oppressing the working people” or “the State Department has again disrupted the delivery of wages to Russian workers”. And then this data is discussed in social networks by the public, which seems to be interested in the economy (although I can’t imagine how you can be interested in the economy if you can’t understand the difference between millions and trillions).

Specifically on the indicator of overdue wage arrears in the Russian Federation, such “news” appears at least for the third time in my memory. At this level of error there are constant strong fluctuations. If the arrears are decreasing, no one is interested. If it grows, it is new news for the fish in the aquarium. The first time I explained to a journalist that the infopod about the growth of overdue rates was white noise even before the war. Years later, before another interview on the same topic, I wrote to the editorial office in advance that the proposed infopod did not make sense. However, the questions I was asked did not change my message.

If we look more broadly, nearly half of the economic indicators in the field of media attention are deeply secondary and unimportant, while some more important ones are simply not known to journalists and therefore are not discussed.

3. Some time ago, I had a working discussion with a journalist who presented data from my own research in a not very correct and highly simplified form. It was on the verge of losing its meaning. I explained that it was incorrect and if I did not add caveats, it was highly likely that my theses would be misinterpreted. I was reasonably argued that no one would understand my presentation, and that the professional competence of a journalist is to convey my content to a wide range of viewers in an adapted form.

And I conceded then. It is true that I do sometimes make things difficult, and the man does have a professional journalistic approach. But after I was once again written about the growth of wage arrears, for some reason I remembered the lady tour guide from the Louvre. And I began to think about a magic wand that could, like the Louvre, isolate all “them” in a specially arranged info-ghetto, thus saving the info-Aryans from the crush and white noise.

After all, “they” don’t really need information. Just to take a picture of Mono Lisa with an iPhone.

📌Khodorkovsky criticized the West for its unwillingness to use force to contain Russia: “Military force can only be countered by military force. Tanks can only be stopped by military force. I’m sorry, I have no other answer.” In his opinion, Donald Trump’s actions on peace talks with Russia are the result of the Joe Biden administration’s abandonment of its strategy to change Putin’s regime. According to one of the founders of the Anti-War Committee, sanctions in their current form are ineffective.

📌Khodorkovsky also spoke out against blocking pro-Putin channels: “Leave these propagandists on YouTube — it gives us an opportunity to work with Russian society.” He recalled how in the 1970s, the West was not afraid to engage in dialogue with civil society in the USSR — “that is exactly what is needed today.”

📌 Economist Vladislav Inozemtsev suggested that Russia’s integration into the EU could become a new national idea after Putin’s departure. He said that in the 1990s, the West made a mistake by not starting Russia’s integration: “Russians traded their freedom to Putin for sausage. We must say: now give up your sovereignty to Europe in exchange for much greater rights.” According to him, the European Union is a community that knows how to digest empires.

📌Former Ukrainian prisoners of war attended the conference. Participants in the defense of Mariupol spoke about torture in Russian prisons, ranging from needles under their fingernails to systematic beatings. According to them, the Russian Red Cross did not help in any way. One of the prisoners noted that he was ready to testify in defense of some prison staff at a possible trial: “Not all of them were executioners.” Former prisoners of war also recounted how Russia sent mobilized soldiers to their deaths in order to identify Ukrainian firing points.

🤡The State Duma has already accused Inozemtsev and Gudkov of attempting to “blow up Russia from within.” Vasily Piskarev, head of the commission on foreign interference, believes (https://t.me/komisgd/887) that the proposal to work out a scenario for European integration is an attempt to “destabilize society” and “inspire a new Maidan.” “They and their hostile curators are increasingly detached from reality and losing touch with the true mood of the Russian people,” Piskarev concluded.

There are not as few people on the verge of “illegal” status in Europe as it might seem against the backdrop of the visa-free “near abroad” or in comparison with the flow of Ukrainian refugees. There are at least tens of thousands of people. The population of Koblenz or Grenoble, for example.

– None of these people are fugitive oligarchs or spies. Here is a sociological profile of our new emigration. Oligarchs and spies arrive with completely different passports (unfortunately, this idea is still new to the Eurocrats).

– All of them could potentially be deprived of access to opening bank accounts, traveling, and other basic civil rights granted on the basis of an ID document with a single stroke of a pen from Moscow.

– Even without attempting to recreate the institution of “Nansen passports 2.0” on a full scale, but merely optimizing the existing mechanisms (at a cosmetic level, so to speak), this problem can be completely solved. For everyone, not just Russians.

– This is not only an act of humanism, but also a huge saving of bureaucratic and financial resources for the EU itself and the migration authorities of the participating countries (we explain in detail why).

We presented all this recently at the PACE in Strasbourg. Next in line are the European Parliament and Brussels.

PS: And yes, you have to admit that compared to “sitting on suitcases,” the metaphor “Russians from the cloud” is at least beautiful))))

Today, six meetings were held in the Parliamentary Assembly of the Council of Europe with the three largest factions in PACE (EPP, https://ru.wikipedia.org/wiki/%D0%95%D0%B2%D1%80%D0%BE%D0%BF%D0%B5%D0%B9%D1%81%D0%BA%D0%B0%D1%8F_%D0%BD%D0%B0%D1%80%D0%BE%D0%B4%D0%BD%D0%B0%D1%8F_%D0%BF%D0%B0%D1%80%D1%82%D0%B8%D1%8F) ALDE, (https://en.wikipedia.org/wiki/Alliance_of_Liberals_and_Democrats_for_Europe_in_the_Parliamentary_Assembly_of_the_Council_of_Europe) SOC, (https://en.wikipedia.org/wiki/Socialists,_Democrats_and_Greens_Group) separately – with the French delegation + with special rapporteur G. Papandreou + with PACE President Theodoros Rousopoulos.

We presented a new report (https://case-center.org/ru/reports/) by CASE on passports, including for anti-war Russians in Europe. We agreed on how to proceed on this issue and on sanctions in several working groups focusing on specific areas.

And I hope there will be progress on the third topic—support for independent media is being actively discussed in Europe.

Stay tuned!😏

I think the relevance of this research is obvious to everyone. Unfortunately, the Lukashenkoization of Russia continues unabated, with no end in sight — which means that hundreds of thousands of Russians who left after February 24 could find themselves in the same position as Belarusians, whose expired passports are turning into pumpkins. Moreover, the exodus has not stopped, but only slowed down: from Russia to neighboring visa-free countries, and from there further west, or even directly to the West.

The main task, apart from analyzing the data, was simply to compile an overview of the situation in 27 European countries. After all, anyone who has had to deal with customs and visa statistics/legislation knows how varied they are in format and quality from country to country, even within the EU.

In the report, we have compiled all existing formats of such documents in tables and infographic maps, with a brief description of the conditions, brief statistics on the number of documents issued and refusals, and an assessment of the difficulty of obtaining them.

At the same time, we looked into the profile of Russians who already need or may soon need such documents: which countries they are spread across, their gender, age, education, how much they earn, and under what conditions they would consider returning to Russia.

Main conclusions: Although such passports would be much “cheaper” and more convenient not only for the political emigrants themselves, but also for the host countries (compared to launching ‘classic’ asylum procedures for tens of thousands of additional people), there is no point in counting on “new Nansen passports.” We need to use what we have, trying to improve it and make it available to more Russians. This is much more realistic.

At the same time, half of those surveyed are already experiencing significant difficulties in extending their residence permits. And the majority of respondents are willing to consider alternative mechanisms for living in the EU — even to the point of becoming illegal immigrants.

P.S. Tomorrow I will be in Strasbourg all day for meetings with delegations, factions, and PACE leadership. We will discuss this report there and convey our proposals, of course.

Theoretically, the probability of detecting goods undesirable for import into Russia could be higher if the number of commodity positions controlled by customs officers were reduced from tens of thousands to just tens. It is theoretically possible to train customs officers to visually detect dozens of items. However, the number of controlled items increases from year to year, making the probability of detecting really important goods vanishingly small.

If insignificant risks of crossing the EU-Russia border seem unacceptable to the importer of dual-use products, he can legally send such products to China or Turkey, from where they will be transported to Russia without the slightest problem. It should be recognized, of course, that such risks and costs of transportation turned out to be unacceptable for exporters of such strategically important goods prohibited for export to Russia as lingerie, handbags and cosmetics. Their supplies to Russia have indeed decreased. However, importers of products needed by the Russian army are much more tolerant of costs and risks.

I would like to draw special attention to the following observation. When talking to respondents on a variety of topics related to the movement of goods across borders, almost none of them mentioned the difficulties caused by the actions of official organizations and services of Western countries. The actions of such agencies were not mentioned as a significant problem by any respondent, and some did not mention them at all.

The real problems of the respondents were most often caused by the actions of private producers, who in good faith and in good faith prevented the shipment of their own products to Russia. If a supplier, especially a non-alternative supplier of complex mechanisms, all consumers of which are known, starts to make active efforts to control the real “end use” of the products shipped, then bypassing their efforts becomes much more expensive than simply importing dual-use products from the EU to Russia.

At a high level of active integrity of the supplier, the importer acts approximately as follows. Somewhere, in Kazakhstan or Turkey, a machine or a part that is really used by a real manufacturer in this country “breaks down”. The breakdown looks realistic. The machine/part is actually imported into Kazakhstan or Turkey and all customs duties and VAT are officially paid. (According to one respondent, offsetting incoming VAT and depreciation, which is actually paid by the end buyer from Russia, is a standard fee for a manufacture that acts as an intermediary and orders parts on its own behalf).

The new part is then physically shipped to Russia under the guise of scrap metal, while the factory in the transit country continues to operate the allegedly broken part.

If the supplier shows the highest possible level of active integrity, and the machine or part is numbered or can be easily identified in another way, then the following scheme is implemented. The old part or machine on the production line in notional Kazakhstan or Turkey is dismantled and exported to Russia as scrap metal. The new one is installed on the production line under the full control of the supplier.

There are cases when the supplier actively controls even the dismantling of old parts, and the importer is powerless. In some situations it is really impossible to bypass sanctions, despite all the ingenuity of Russian importers. However, all such cases of which we are aware are the result of a consistent and expensive policy of individual Western companies. In other cases, where Western producers simply turn a blind eye to where their products are actually going, there are usually no serious obstacles to sending them to Russia.

According to respondents in our limited sample, the willingness of Western companies to actively enforce sanctions depends little on the country in which they are located, or even on the industry. In one and the same EU country, in one and the same industry, a company that is actively interested in the end use of its own products and a company that deliberately turns a blind eye to such use can coexist.

This whole story is another illustration of the consequences of shifting the control of sanctions enforcement from bureaucracy to business. This problem is discussed in detail in the main text of the report, a link to which I will once again duplicate.

Image 2: The Shift to “Friendly” Currencies

The second image shows the rapid transformation of Russia’s foreign trade payments with China and other “friendly” countries.

Before the war, over 70% of Russia-China transactions were conducted in dollars and euros.

By 2022-2023, the share of yuan transactions skyrocketed, and by 2024, 95% of all settlements were made in rubles and yuan, with a growing share of mirror schemes.
Similar trends emerged in CIS countries, Turkey, the UAE, and other friendly nations, with over 80% of Russia’s total foreign trade in 2024 conducted in rubles and alternative currencies.

Image 3: The Future of Russia’s Hidden Payment System

The third image illustrates a possible future scenario if current trends continue.
VTB Bank, under comprehensive Western sanctions, has gained a competitive advantage as the only Russian bank allowed to open a branch in China.

Chinese companies freely open yuan and ruble accounts at VTB, shielded from Western oversight (since VTB is cut off from SWIFT).

As a result, sanctions have effectively turned VTB into a near-monopoly in Russia-China transactions.

VTB is expanding into other Kremlin-aligned countries, including India, Vietnam, Angola, and all CIS nations, with a new branch planned in Iran.

If this trend persists, a significant share of trade settlements between sanctioned countries (Iran, African nations, China) may be conducted in rubles within VTB’s system, bypassing Western financial oversight entirely.

These findings are based on our latest report: “International Settlements Under Sanctions” – uncovering how Russia has built a parallel financial system beyond Western control.

Risks range from a fall in the price of the natural resource in question, to political, military and especially corruption risks. The level of all these risks and the cost of money in Ukraine even before 2014 was so high that the development of most of the natural resources discussed by Trump was not economically feasible. Today, the situation has not improved in the least.

At a cost of money of 30% (and this is a very optimistic minimum for investments of this kind in Ukraine) 100 dollars of net profit received in 5 years cost today 27 dollars, 100 dollars of net profit in 10 years cost today 7.25 dollars. And the terms of development of most fields are measured in decades. At a cost of money of 50%, which can really attract investors to a topic with so many different risks, 100 dollars of net profit after ten years is worth today 1.73 dollars.

In other words, if in the Ukrainian land lie resources with a stock exchange value of 500 billion dollars today, the cost of production of which is 300 billion dollars, and the average production period is 20 years, then do not be surprised that the market value of all this today, calculated by Western auditors according to all the rules, will be noticeably lower than 10 billion dollars.

Most investors find it hard to believe that the risk level in Ukraine will radically decrease in the next 5-10 years. The least fantastic option for such a reduction is the appointment of a colonial administration of Western officials in Ukraine. The next most fantastic is an alien invasion. And investors who come to such an auction tomorrow will be interested not in the image of “beautiful Ukraine of the future”, but in the risks on the near horizon.

Given all of the above, at such an imaginary auction for the sale of rights under the “Trump agreement” there can be no talk of 500 billion, 100 billion, or even 50 billion dollars. If pure market players pursuing strictly economic goals were involved in the auction, I would be very surprised if even $10 billion of live money could be raised for all the rights under the agreement today.

Of course, even at the most honest auction, Ukrainian businessmen will buy some assets for next to nothing. Simply because these businessmen are used to the Ukrainian level of risks and know how to work with it. No one will buy most of them. These resources are priceless – in the sense that no one needs them for free.

Of course, we can assume that in addition to investors pursuing purely economic interests, players guided by “strategic” interests may enter such an auction. From China to Gulf sovereign funds. Any arguments about “strategic security” are obviously irrational from the economic point of view. It is difficult to assess the degree of such irrationality, and it is always a speculative assessment. Nevertheless, it is probably possible to assume that if everything is sold as a single lot, some strategic player could spend tens of billions “to have it and not let others get it. However, all this is almost a fantasy.

I don’t know whether Trump’s “offer” should be considered a conscious political move that would allow Zelensky to be accused of being uncooperative and disrupting negotiations. Or whether, in Trump’s logic, the presence of American-developed deposits on the territory of some country looks like the only “real” guarantee of such a country’s security: American assets will be more willingly defended by the United States than other people’s principles.

But I do not have the slightest doubt that the “net present value” of any rights to all possible Ukrainian natural resources here and now is measured in units, in a very lucky scenario tens of billions of dollars, and not at all the figures that the public is passionately discussing.