If Vladimir Putin expected the Western propaganda campaign to ease after his speech this week in which Russia announced Russia was ready to accept four Ukrainian regions as new republics in Russia and ordered a partial military mobilization, he is sorely disappointed today. There have been many reports claiming that the Russian stock market is collapsing and Russian men of military age are fleeing the country in droves.
The reality is that the reaction in Russia has been more positive than negative. Are there protests? Yes. There have been some arrests, but the protests have not been called off.
Western sources have been circulating videos on social media showing lines of cars trying to get out of Russia and lines of young men at airports seeking safe haven abroad. It is the truth? There are other videos showing queues forming outside military recruitment offices in Russia.
So, let’s look at the economic data. Consider the claim that the Russian economy is collapsing:
Russian stock markets crashed on Wednesday after President Vladimir Putin announced a partial mobilization to support his campaign in Ukraine. . . . After months of defying Western sanctions, Russia’s economy is now showing signs of a significant slowdown as declining energy exports to Europe lead to lower profits.
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Is it true? Not really. If we follow this logic, does the 20% drop in the US stock market since November 2021 signal the end of America? Here are the facts about the Russian stock market:
The ruble-based index MOEX Russia closed 2.8% higher at 2,190 on Thursday, retreating slightly after a 12.3% drop in the past two sessions, as investors eyed corporate news on further escalation of the war in Ukraine and new threats to the West. This week, President Putin ordered the country’s first military mobilization since World War II and underlined Russia’s readiness to use its nuclear arsenal after he announced plans to formally annex four Ukrainian territories in a referendum scheduled for this weekend. Annexation is seen by many as a serious means of escalation, giving the Kremlin a reason to consider Ukraine’s recent counterattack as an aggression on Russian territory with Western weapons. On the corporate front, Gazprom shares rose 8% as its board announced an interim dividend of RUB 51 per share on the way to a record profit in the first half of 2022. Banks also booked gains after the central bank said it was extending measures to ease reserve requirements.
What about the ruble? If there really was an exodus of Russians fleeing to the West and Asian countries, these people would need foreign currency. Why? Because a Russian ruble will not buy a cup of coffee in Finland, Sweden, or Germany. This means that the demand for foreign currency should increase significantly, which means that the price of the ruble should have fallen. It wasn’t. Check out this chart:
The price of the ruble has remained unchanged since the end of July. The ruble rate was not fast today.
The Russian ruble stood at 60 to the dollar in September, staying well above the level before Russia’s invasion of Ukraine and consolidating its rebound from record lows of 150 hit in March, supported by tight capital controls and trade imbalances. Higher energy and commodity prices since the start of the war boosted export earnings and relative demand for the ruble at a time when import activity collapsed due to sanctions. In addition, monetary authorities imposed high fees and negative interest rates on currencies from “unfriendly” countries. The differences are reflected in the widest current account surplus recorded at $70.1 billion in the 2nd quarter, compared to $17.3 billion in the corresponding period of the previous year. The ruble’s strength withstood the CBR, reducing borrowing costs to below pre-invasion levels, amid persistent weekly deflation readings and calls from central bank and State Duma policymakers to devalue the ruble. .
I think Putin’s speech this week may hurt his popularity, but the opposition political parties are unlikely to get much of a boost. Putin appeals to Russian patriotism, and it remains strong in Russia. It is also important to point out that the limited mobilization announced by Putin only affects men and women serving in the Russian reserves. He is not going to invade universities and dragoon students into the army. The use of reserve personnel means that the training cycle for the reinforcements will be completed by the end of the year, if not sooner.
Let me conclude by giving you some hysterical headlights heralding the impending doom of Putin and Russia:
Putin’s losses in Asia are greater than in Ukraine
Putin’s war against Ukraine is coming to an end
Putin’s call to enlist the Russians will require weapons that Moscow does not have, the NATO chief said
Putin was so upset by these developments that he said in a speech today marking the 1,160th anniversary of Russia’s statehood (read that correctly, over 1,000 years):
For more than a millennium, our nationhood has survived many eras, including the tragedies of cruel enemy invasions, divisions and feuds, but each of these difficult periods always ended with the rebirth of the Motherland. The heroic generations of our people overcame difficulties and adversities, passed tests. They created and expanded the greatness of our Motherland and covered their names with glory.
We remember and cherish these truly great people: Rurik and Prophetic Oleg, Princess Olga and Svyatoslav Igorevich, Prince Vladimir and Yaroslav the Wise, Vladimir Monomakh and Alexander Nevsky, Dmitry Donskoy and Sergius of Radonezh, Ivan III and Ivan the Terrible, Yermak, Minin. and Pozharsky, Dezhnev and Bering, Peter the Great and Catherine the Great, Lomonosov and Pushkin, Suvorov and Ushakov, Alexander II the Liberator and Alexander III the Peacemaker, Brusilov and Denikin, Zhukov and Rokossovsky, Kurchatov, Korolev and Gagarin.
These and many other of our countrymen were larger than life, complex and sometimes controversial historical figures. Some of them saw the future of Russia differently and were even on opposite sides of the barricades. You know, when I was creating this text, I wrote and crossed out such words as Nicholas II, Lenin, Stalin. Obviously, not enough time has passed since then, from a historical perspective, for us to be able to provide comprehensive and objective assessments free from the pressure of ongoing political events.
However, all of them, including statesmen, workers, warriors, pioneers, scientists, ascetics and saints, and most importantly, all our people, made Russia a great global power and determined its future. . . .
Being part of a diverse Russian civilization means happiness, but, I repeat, it also means responsibility and duty. Our civilization is different. It has its own way and there is not an iota of arrogance or superiority in it. This civilization of ours is important to us.
And we will fight for our Motherland, for our homeland, which is only one, for our independence and sovereignty, for our culture and traditions. We will support and defend it on behalf of our ancestors and descendants for the sake of Russia, its great history and great future.
Russians have had some ups and downs more than most countries except China. But this does not sound like a frightened leader who believes that his back is against the wall and that Russia is facing another defeat.