Ukraine Thread

[Philippus Flavius Homovallumus]

The ruble appears to be having issues. Interest rate jacked up to 17% and it's still in free fall. It's December 16th, and Putin may still be a fascist, but he's a fascist in charge of a crumbling economy. Low oil prices have Russia burning through their foreign reserves. So, umm, yeah fracking!?!

While it might be fun to watch Putin squirm, I have a feeling this is going to get ugly.

Off-shore wells in the Gulf of Mexico ftw?

Sanctions do have an effect.

Problem is this is a world economy so sanctions are a case of cutting off ones own nose.

Mind you this is also a preview of what will happen when more nations go nuclear power. The oil producing nations will then have to value add to their products whilst experiencing an economic crunch.

It's not entirely true that sanctions have had no effect - the reciprocal tit-for tat has isolated Russia's other sectors from important markets in Europe and the US - this has driven up prices for commodities whilst reducing the profits of domestic producers (because they can only sell domestically) and that has helped to drive inflation - that has resulted in a punitive rate rise and now we are starting to see Capital Flight.

So sanctions have had an effect - they have reduced the ability of Russia to respond to the drop in oil prices.

Edit: And I missed my overall point.

Viz. Russia is one country (albeit a large one) and no where near the size of Europe and the US - so it hurts Russia more than us.

Even so, it looks like Russia has about ten months of reserves before they get into real trouble. That means Putin has about six to nine months to solve his problem, or for the price of oil to rise.

So the question is how much the Ukrainian military can dig in before the winter is over. Around February or March the rebels are likely to try a new offensive. If Russia is by then less keen to finance them then the Ukrainians may be able to hold ground long enough to break the offensive. If Ukraine goes on offensive then they'll lose, but if they don't then the Rebellion may run out of steam. Sooner or later rebel infrastructure will start to break down unless they can get a real economy going, and with only Russia to export to they may have no one to sell to when Russia is broke.

Of course, Putin may run the opposite calculation - if Russia's economy is tanking he will want to divert attention from that or find a way to blame the West - backing the Rebel offensive will trigger more sanctions and give him at least a semi-plausible cover for Russia's economic ills.

All of which means things are getting a lot worse for everyone before they get better.