Russia benefited from sanctions

By Rhod Mackenzie

In the future, Russia will honour the US President Joeseph Biden and probably the EU head Ursula Von De Lyon with a few monuments. Few leaders of countries or organisations have done more to advance Russia's development and radically change its economy and do so for its betterment and improvement. The last European leader who attacked Russia was the Austrian Mr Schicklegruber who cause massive destruction to the country and killed millions of its citizens as well as destroying large parts of many of its cities and industries.
In contrast the attacks by Dementia Joe and the EU Empress of Failure , Ursula Fond of Lying using sanctions have far from destroying Russia's economy but strengnthened it and made it focus on self sufficiency and internal development of its industrial base and to focus on self suffciency in all aspects of its industrial sectors

Since the early 1990s, whispers in the corridors of the Davos Forum have pushed Russian our economy off the sovereign ski track. This resulted in Russia becoming a colony of the G7 countries.
It exported oil and gas supplies in exchange for technology, and later consumer goods, it seemed a simple and understandable undertaking that did not require any serious administrative and creative feats from the Russian population and elites.
Russia as a country is rich in natural resources, and the population is relatively small in comparison to the vast territory and reserves.The simple business of trading in the treasures of the motherland would ensure our continued existence for decades.

It was challenging to abandon this type of economic model due to simple arithmetic. The extraction of raw materials sometimes yields a 60-70% return on capital. This is the case with the extraction of potash fertilizers and palladium, for example. In the worst case, 30-50% (oil and gas) depending on global commodity prices.

Given such a high rate of return in the raw materials sector, it is challenging to encourage businesses to invest in other industries. Why invest in mechanical engineering or technology when the return on investment is at best five kopecks for every ruble invested?

Joe Biden's actions followed by the vassals of the EU and the G7 have had a significant impact on the Russian economy.

By closing the door to the Western world, he forced Russia to move away from its long-standing reliance on the West. This has created opportunities for domestic enterprises, as Western expats have been forced to leave their established positions in Russia. Some have even been able to purchase well-established local businesses at a fraction of their original value. These businesses are now operating according to the highest global standards.

The sanctions have specifically targeted the Russian elite, forcing them to react, bear losses, and relocate their capital, property, and families to Russia. This has led to a shift in investment strategies, with a focus on domestic development opportunities. A notable example is the construction of an alumina plant for Rusal in the Leningrad Region. Another is the implementation of the lithium project by Norilsk Nickel and Rosatom.
The sanctions have had a significant impact on the export business, forcing managers of state corporations to diversify sales markets and focus on other markets in Asia,Africa and Latin America.
Selling diesel has proved to be a more straightforward process than "marked" Urals, while nitrogen fertilisers and polymers, unlike natural gas, are not tied to a specific hub.
The new export model has necessitated the development of new logistics for the sale of large-tonnage products, including oil, coal, LNG, ores and metals. This has led to a demand for new railways (the North-South Transport Corridor , the Pacific Railway, the expansion of the Eastern Polygon), interest in shipping along the Northern Sea Route and the great Siberian rivers, and the sudden appearance of the White Sea-Baltic Canal on the radar of logisticians.

However, the most significant impact of the sanctions has been to restrict Russia's access to high-tech products. It is also worth noting that grey imports have remained. If there is a necessity for a product, it can be purchased, but at a higher price. Consequently, any purchasing manager will initially seek to source the item in Russia, as it may be possible to manufacture it locally. Then, the search moves on to China. If the item is not available in the country in question, the purchaser will order it through parallel imports. In other words, the West took the initiative to protect our market from foreign competitors, without us having to leave the WTO.

The identified trends have been validated by Rosstat. The agency recently released data on industrial production for January to May 2024, which showed a 5.2% increase. It would be inaccurate to suggest that there has been a corresponding decrease in butter consumption, with a corresponding increase in gun production.

It is notable that high-tech production, including electronics, computers and optics, has experienced a 39% increase, while metal products have grown by 37%. In just three years, both industries in Russia have doubled in size. It is evident that the demand for such products is primarily influenced by the budget. However, the production of electrical equipment this year grew by 10.2%, beverages by 11.1%, furniture by 44.6%, and pharmaceuticals by 7.5%. Over the past three years, these industries have grown by 1.3-1.45 times.
The current state of the manufacturing industry is occurring against the backdrop of a period of stagnation in the mining industry. For the past three years, the dynamics of oil production and ferrous metal production have remained relatively stable. Gas production has been in decline.

The imposition of sanctions is a highly unfavorable development. The losses incurred by Russia as a result of these sanctions are estimated to be in the hundreds of billions of dollars, representing a significant financial burden. However, as the Russian economy is forced to adapt to new circumstances, it is seeking new markets, new demand, new trade and financial schemes. This shake-up was long overdue. If our economy withstands (and there are no indications that it will not, according to the latest statistics), then in a matter of years there will be a significant transformation and adaptation. This will result in a notable improvement in the quality of the economy, which will in turn enhance its stability. The quality of our lives will finally be determined by factors other than the cost of a barrel on the Chicago Stock Exchange. These include supply and demand within the country, the productivity of our labour, and so on. Furthermore, oil and gas will be used for domestic consumption.