US Project to Destroy the Russian State - the US View of Progress

I have already noted how Russia assesses the effectiveness of the US economic blockade.  Here I note, and 'mark up', the US's own assessment of the effectiveness of the US domestic laws put in place to try to form an economic blockade on Russia. While the US calls them 'sanctions' to imply they have a legal mandate outside the territory of the US, in fact they don't. The only legal Internationally recognised sanctions are those passed by the United Nations Security Council.

Russia, of course disagrees with the US Government assessment. The Russian Foreign Minister succinctly sums it up this way:

"Of course, we have all we need to defend our national interests. We will use it fully if needed. Those using the language of sanctions to talk to Russia should understand that thus far we have shown restraint in our response to these acts of economic aggression, but that our patience has its limits.

They failed to tear our economy to shreds as Barack Obama passionately wished some time ago. And they will not be able to do so. All that they intended to provoke in Russia has now started to hit home. A number of European countries are seeing price spikes, drops in revenues and the exhaustion of energy resources. Political experts have spoken of the growing dangers of a social explosion.

The usual blessings of civilisation are turning into a privilege for Europeans. This is the price that ordinary citizens must pay for the Russophobic attitudes of their politicians.

But this is what’s happening in the West. In Russia, we will build up our economic and technological sovereignty and chart alternative financial and logistic networks to service our international trade. We will continue to strengthen our cooperation with our partners in Asia, the Middle East, Africa, and Latin America who, just like us, are in favour of equal cooperation and against the politicisation of trade."
Sergey Lavrov 8 October 2022

I have argued that the US operation against Russia is largely about destroying Europe as a trade competitor for the USA, and bringing down the value of the dollar in order to make US exports cheaper to overseas customers, as well as devalue the vast debt US owes to the world. They are also a 'maximum pressure' device to try to achieve unilateral advantages in critically important weapons control talks.

Here is how the Americans see the effectiveness of their project to destroy the viability of the Russian State (and thereby create an extraordinarily dangerous threat to the world):

Sanctions are working because Russia can't access modern tech to 'quickly' end the conflict

Sanctions are working because Russia has less money

Sanctions are working because Russia can't access imports from normal (non sanctioning) countries

Global consequences of the USA blockade on Russia

Russian financial institutions find it difficult to raise capital on international markets

Russia's blocked access to SWIFT makes Russian banks unimportant in the global payment system

Russia has been 'denied' unspecified resources required to fight NATO proxy army 

Russia has lost a large market for energy

38 of the 193 countries of the world cooperate with the US and European blockade

Russia has insufficient access to semiconductors necessary for weapons

The US expects oil prices to remain under a buyer imposed price 'cap'

Turkey will continue to accept USA directing Turkey's relationship with Russia

https://www.state.gov/special-online-briefing-with-ambassador-james-obrien-head-of-the-office-of-sanctions-coordination/

Special Online Briefing with Ambassador James O’Brien, Head of the Office of Sanctions Coordination

Special Briefing
December 15, 2022

Russia can't access modern tech to 'quickly' end the conflict

"Now, two other things I want to touch on. Do we think sanctions are working? And the answer here is yes. The key thing is to frame properly how sanctions work, and I want to make three points on this. The first is we see that sanctions hurt Russia on the battlefield. Russia is fighting a static and slow-moving war. It lacks modern communications, optics, precision material, and drones needed to fight in a quick way, and in large part this is because Russia has left itself vulnerable to export controls and sanctions. So it’s forced to use old equipment, old missiles, misuse naval missiles for warfare, and in other ways fight in ways that are not how a modern military would carry out a conflict like this".

Rebuttal: Russia is fighting a slow war by design. The aim is to lose as few Russian military as possible.imit damage to civilian infrastructure on new Russian territory yet to be fully controlled. The US has now deliberately protracted the conflict by supplying weapons to replace Ukraines exhausted stocks, ending the earlier promsiing negotiated settlement. The Russian communications optic etc are more than adequate, and the old equipment it uses, mainly artillery, is target corrected by using cheap drones. Russia accumulated a massive store of ammunition and other material to fight the West at the time of the cold war. It is using it now. 'Quantity has a quality of it's own', as one commentator recently said.Most importantly, Russia has advanced missiles and missile defences - some (especially air defense and hypersonic missiles) better than the US. It chooses to use cheap Geran drones for precision strikes because they are cheap and effective.Now that Russia is forced into the position of having to end the war by military and technological means, it will wait until the destruction of the power distribution system is complete and the West has received millions of Ukrainian refugees before moving onto the stage of militarily ending the conflict. It will likely do this with massive military intervention when the ground has frozen sufficiently. So much for the effect of sanctions on Russia's ability to prosecute a conflict.

Russia has less money

"The second point is that because of sanctions, Russia has much less money to make up for its failings. We’ve already seen that Russia entered this war with a substantial surplus in its bank accounts. The state had $640 billion in a surplus; 300 billion of that has been frozen and is inaccessible, and we see Russia burning through the remaining amount. We think it’s spent well above 80 billion in just the first months of this war. And I’d add to this, now you see cuts in their budget. You see they have lost their most valuable resource – maybe as many as 900,000 Russians have fled the country in response to the mobilization, the sanctions, and the war. And in general they’re much less able to produce at home what they need in order to fight the war most effectively. They also cannot import what they most need, so even if they are making some money from sales of commodities such as oil or gas or food and fertilizer, they’re unable to buy many of the items they need to fight a modern war. So as of September, their semiconductor imports were down 70 percent."

Rebuttal: Its true that there have been shortages of equipment at the troop level - lack of some uniform items and insufficient 'consumables' such as medicines, for example. The Russian President acknowledged this on December 9th 2022, noting that the problem was acute at the start of the mobilisation, and it persists, but is now largely under control as local production is sped up. As for semiconductors, the military semiconductors Russia uses don't need to be high end - in fact the hostile environments they have to work in (temperature extremes from -55°C to 125°C) prohibit the use of more delicate high end advanced semiconductors. It seems Russia has long produced its own.

"The result of all this means that over the next years, Russia’s economy will just shrink and fall further and further behind. We estimate that by the next few years, Russia’s economy will be at least 16 percent smaller than it would have been without the war, and by 2030 it’ll be 20 percent smaller than it would have been. And that’s less money for research and development, for procurement, for recruitment, for all of the things that are needed in order to have a modern economy and to be able to carry out Putin’s imperial project."

Rebuttal: There is no "imperial project". This fiction is an American government propaganda invention. The Russian President dealt with Mr. O'Brien's economic and domestic arguments quite recently:
"The GDP for this year is predicted to fall about 2.5 percent. So there will be a decline, as I already mentioned in public. True, recently I spoke about 2.9 percent, but the latest forecasts put it at a bit less – 2.5 percent. Of course, this is also a decline, but not the crushing 20 percent that many Western, and frankly, our experts forecasted at the time when the collective West hit us with the economic war. Moreover, in the third quarter, the economic dynamics already showed slight growth after the minimal figures of the second quarter.

After a serious surge in March-April, the level of prices has actually remained the same since May, while the Russian ruble has become one of the world’s strongest currencies since the start of the year.

We achieved this result by making decisions to regulate the capital drain, convert payments for gas into rubles, actively use national currencies in trade with our partners, but primarily, of course, by pursuing a responsible fiscal policy.

Russia’s public finances remain stable. In January-November of this year, the federal budget was executed with a surplus of 560 billion rubles, and the consolidated budget with a surplus of 1.451 trillion rubles.

At the same time, in the current and next year, we expect a federal budget deficit of about 2 percent of the GDP, and this will be the best result among the G20 countries. I won’t cite examples at this point. Experts are well aware of the figures on other G20 countries.

Moreover, the budget for the next three years provides for a gradual reduction of the deficit to less than one percent of the GDP in 2025.

We will retain our responsible fiscal and macro-economic policy, which will guarantee not only the full funding of social commitments but also the resolution of new tasks facing the country in the next three years.

I would like to emphasise that this policy is important not only for countering current challenges but also in the long-term perspective. We will adhere to this policy, focusing our attention on turning it primarily into a firm foundation of economic growth for years ahead.

When we discussed the economic situation in the world, we set two main goals for this year: to reduce poverty and inequality, and to continue the development policy. Everyone knows that sanctions are being imposed on us, and that we will certainly only move forward relying above all on our own reserves and resources.

Therefore, an important decision was made on monthly payments to families with children aged 8 to 17 years. This decision directly influenced more than 5 million children. This was followed by the advanced indexation of the subsistence minimum, the minimum wage and pension increases of 10 percent. As a result, the poverty rate fell to 10.5 percent in the third quarter. Of course, this is a small drop, but a drop still. The incomes of the poorest part of the population also grew by 27.8 percent in nominal terms – in nominal terms, I want to emphasise this and say again that we are talking about people with the lowest incomes, – which helped to reduce the level of inequality a little.

We have kept all the main state programmes, continued to upgrade primary healthcare, relocate people from emergency housing, repair existing and build new roads, eliminate landfills and sites of accumulated environmental damage, build new schools, cultural centres, rural libraries and much more.

Moreover, new programmes have been launched, such as the overhaul of schools. This and next year alone, about 3,000 schools will be repaired across Russia.

Tools such as infrastructure budget loans and bonds have been made available, which will help the Russian regions attract more than 300 billion rubles this year.

We have support programmes and mechanisms for preferential and family mortgages. Loans worth 1.7 trillion rubles were issued under both programmes. As a result, hundreds of thousands of Russian families have improved their living conditions, and construction as sector has become a driver of the Russian economy: up 5.8 percent in ten months. It is expected that this year will be the most successful, a record year for domestic housing construction. We will sum up the final figures a little later. Mr Khusnullin reported to me these figures yesterday or the day before yesterday, and they are impressive. Let’s look at the final results.

We will continue developing our country regardless of any foreign pressure. Moreover, we will certainly become stronger, carry out entirely new projects, upgrade Russia’s technology levels and ensure economic, financial, technological and personnel sovereignty.

At today’s meeting, and in my speech, I would like to outline six key tasks for 2023 the resolution of which will allow us to move successfully towards reaching our national goals up to 2030..." etc
Vladimir Putin 15 December 2022

Russia can't buy it's needs from normal (non-sanctioning) countries

"And then the next thing I want to address in the impact is that this – that Russia does try to evade the sanctions. It seeks to use proxy companies in other countries. It seeks to buy equipment that is technically allowed, and then repurpose it for military purposes. Our message is very clear: to any private company, if you provide material support to Russia in evading the sanctions, you are vulnerable to sanctions yourself.

We’ve been carrying that message to the private sectors not only in the partners, the three dozen or so countries who are openly part of our coalition, but to the private sectors in China, Turkey, India, and elsewhere. And we see that those companies there, many of the large, legitimate companies, they understand and they respect the reach of the sanctions. This makes it – makes Russia depend upon either new or unreliable vendors. It’s very hard to run a modern economy in that way.

I’m happy to take more questions on this, but the friction and the uncertainty that have been introduced into Russia’s economy by their efforts to evade sanctions are attacks on everything they do. So they have fewer resources and it’s more expensive and more difficult for them to do the things they try to do."

Rebuttal: Of course the American government tries to make other countries obey US domestic laws using threats and blackmail. Other countries don't 'respect' the sanctions in the moral approval sense; they show the same respect you show an aggressive dog - fear of what it will do to you. How big is the problem? Is there are real problem for Russia? We don't know because Russia has been shut out of the SWIFT system of international payments. And SWIFT records who paid what to whom when, and how much. Russia is also starting to do bilateral trade using domestic currencies, as well as 'goods in kind' swaps. And Customs border data is generally too broadly categorised to reveal much useful details.

Global consequences of the USA blockade on Russia

"The final point I want to make is about the global consequences of this war. We are attempting to allow Russia to continue as a supplier of commodities that are important around the globe. So we have an oil price cap now in place. This allows Russian oil to be sold to the Global South. Europe and the U.S. will no longer import Russian oil, but other countries can. We also do not sanction exports of Russian food and fertilizer, and this is a crucial point.

Rebuttal: First, the framing of US "allowing" Russia to supply commodities is a propaganda trope. It is part of the very long-standing psychological aggression against Russian self image. Stemming from US foreign policy to "dominate" Russia militarily, economically, politically, culturally, this technique uses patronising language and belittling to "show" Russia that the relationship between USA and Russia is one of both master and slave, and adult and child. The Russians are obviously well aware of this, and largely ignore the childish insults. In fact, if anything, they regard these public antics as a sign of weakness (the Americans are all politeness and smiles behind closed doors).

Oil will find a market at market prices. US is a nett oil importer, and if it thinks it can dictate prices it is delusional. The majority of the world will import Russian oil, probably at a discount. If anyone has the power to 'allow' or 'not allow' someone oil, it is Russia. At this date, Russia has not decided whether it will allow Europe to have Russian pipeline oil.

As for fertiliser, the USA's vassal states have put every impediment in the way of Russia giving Africa so-called 'sanctioned' fertiliser for free. Details of this latest and particularly odious act of western hypocrisy is here.

"Russia’s exports of food are tracking with pre-war levels, and we are working to remove any impediment – whether it’s caused by Russia’s own export ban, which took up several months this year, or with restrictions on Ukrainian grain, also one of the top five suppliers of grain to the Global South. So we are working to be sure that food and fertilizer are able to reach global markets, and that’s true with the UN-backed Black Sea Initiative. As recently as October it was exporting approximately 5 million tons of Ukrainian grain to global markets. It’s been restricted a little bit recently; we’d like to see it get back up to that level. Also the direct exports to the European Union through the solidarity lanes have allowed Ukraine to export another 2 and a half or perhaps now 3 or 4 million tons of grain onto global markets.

Rebuttal: Russia is a member of the global SWIFT system, and the follows SWIFT rules. It has been blocked by USA for not following USA's 'rules', which the USA invented. In short, it has been 'punished' for not 'obeying USA. O'Brien's sophistry doesn't change anything. Russia is establishing additional means of interbank communication. To that extent, SWIFT itself is marginally devalued. All countries have seen what the USA has done to Russia. Therefore, fearing what USA may suddenly decide to do to them on some fabricated pretext, they will be open to other bank communication systems that Russia and other major players may co-develop. In the same way, they will be interested in participating in "global markets" outside the reach of the USA and it's European vassals. Russia is moving in this direction, and the 'sanctions' are a perverse incentive to accelerate the process.

Rebuttal: Any country in the free global community can transact with Rosbank, or any other Russian bank for that matter, so long as payment does not need intermediation by an American or European bank. Yes, Russian banks certainly do use the exemptions for the named commodities to send goods via the US or European banking system. But major exports involving Europe - gas and oil - no longer touch the European banking system, as they have to be paid in rubles, not dollars. It is possible that at some future point all transactions with Russian banks made by 'unfriendly' countries (USA and it's vassals) will have to be in rubles, and therefore go nowhere near the so-called 'global' financial system. In this case, the banking sanctions will be on USA and the West, cover all banks, and Russia might well give no exemptions. The greatest danger for Mr. O'Brien is that Russia chooses not to sell fertiliser, oil, gas, coal, minerals (including uranium), and grains, oilseeds and pulses to any unfriendly country. In other words, a blockade on the West.

Rebuttal: Facts on the ground demonstrate that Russia is successfully prosecuting it's plan to expel the NATO proxy army from the East Ukrainian territories that voted to join the Russian Federation and complete it's plan to incorporate these territories into the Russian Federation. Once again, the context of that struggle is the desire by Russia to complete this task with a minimum of loss of manpower, and a minimum amount of damage tot the citizens and infrastructure in that region.

Rebuttal: Russia has certainly lost it's historic and major market in the west. But they are clearly well on the way to selling similar volumes to the East instead.

Rebuttal: It appears that Russia is able to produce the sort of robust lower level semiconductors needed for battlefield weapons. For example, the anti missile ground-to-air defense missiles can reach 4,000 kilometers an hour in flight. Obviously the semiconductors they use, while not high end, are highly reliable under the extreme of cold and heat (they are also used in Syria) of front-line deployment.

"Again, I think with the ninth package and with some coordination, we’ll also be able to look at some of these networks, because many of the purchases are allowed by the sanctions up till now. But now we’ll be in a position to take a new look at the businesses that are attempting to help Russia in the way that you reported."

"Yeah, we’re concerned with any sort of effort to help Russia evade the sanctions. So we have imposed additional sanctions on Iranian entities that have provided military equipment to Russia, also on some front companies, and on Russian entities involved in not necessarily that route but with the Iranian support to Russia. I think our message is very clear: any involvement in this kind of sanctions evasion is going to produce long-lasting and very, very harsh sanctions on the entities involved and on the governments that support them. So it is an area where we’re watching carefully, both that route but just generally the Iranian-Russian connection as we go forward."

Comment: Iran is subject to very heavy United Nations sanctions, These are set to expire soon. In fact, the prohibition on buying and selling military equipment has already expired. Russia is now able to sell military aircraft to Iran, which it is doing, as well as ground to air defensive missile complexes, such the S300. Russia, should it wish, can buy military equipment from Iran - missiles, drones, and so forth. It is none of the US government's business. Of course, the US will continue it's sanctions on both Iran and Russia. This is baked in the cake. Iran and Saudi Arabia are rumoured to be starting

"We have been extremely clear with both the Turkish Government and with Turkish private sector that we expect compliance with the sanctions. We have seen the Turkish private sector be very clear on this and largely in compliance. What I anticipate over the next months are a couple of things. One, we’ll continue to engage closely with the Turkish authorities and with the private sector so that we see compliance, and when there’s a lack of compliance there will be some action taken. Sometimes that action is additional sanctions for material support of sanctions evasion; sometimes it’s other steps that stop the offending behavior. The – and we’ll keep working in that way."

The US expects oil prices to remain under a buyer imposed price 'cap'

"What we anticipate is that China, India, and Turkey, as major buyers of Russian oil, will negotiate very good prices for themselves and be – the volume sold to them will come in under the price cap, so it would be in compliance even if the countries do not join formally the price cap coalition. And that’s an example of the kind of way we see this moving forward."

Turkey will continue to accept USA directing Turkey's relationship with Russia

"And certainly, as our sanctions evolve and we begin to anticipate or adjust to the way Russia attempts to gather more resources for this war, that will mean that we’ll continue consultations with Turkey, and it [Turkey] may have to modify some of its plans for continued engagement with Russia.

...Turkey plays a number of important roles in different facets of this conflict, and as always with Turkey, we have very open and frank exchanges and we’re very clear that where our interests require us to enforce our sanctions we will, and we will impose sanctions as needed. That’s just a part of having a working relationship with an important partner. So yeah, it affects the relationship, but it’s just part of working together closely as we do."

Comment: Turkey has a foot in both camps. It is a master at getting most of what it wants from both relationships. O'Brien's expectation is likely largely realisitic.

USA will continue to censor Russian voices and support suppression of freedom of speech while claiming it doesn't

"So I think the way I’d prefer to answer this is a slightly different way. So we have very strict rules about not penalizing people for beliefs or speech, but where we see actions that support this illegal and criminal war, then we will provide for sanctions. So what you’ve seen already is in some of the near abroad or in countries around the periphery of this conflict, we have taken aim at Russian-backed operations, including a cyber operation in Moldova. And I think you can expect us to look more carefully at the way Russia attempts to influence public debate and politics in a number of countries going forward."

Rebuttal: Russian comment and news sources Strategic culture and South Front are banned in USA,  evidence is mounting that Twitter worked with the US FBI to ban discourse and dialogue on Russia and the Ukraine conflict on the Twitter social meia platform, and the US mainstream media are little more than propaganda arms of the US government when it come to discussion of geopolitics. Yes, the USA Government censors free speech.

US sanctions on Russian officials have significance

"But the important thing is to highlight the criminality and violence that’s intrinsic to this war. So just today we designated 29 Russian governors because they are a part of the war machine. We have designated before, I think, virtually all members of the Duma and many Russian officials who are involved in the illegal effort to annex Ukrainian territory. And we’ll continue to designate, sanction people based on their behavior, which more and more of the Russian political class is showing that it is violating basic rules of the international system. And we will designate them for that. So it’s the behavior that will matter, and especially any behavior that supports the war and the attempted annexation of Ukrainian territory."

Comment: these restrictions have as much practical significance as the reciprocating restrictions Russia placed on US officials. None.

Treasury Further Constrains Russia’s Financial Services Sector