Time Is On Our Side

Time is on our side is the idea constantly used throughout history with which the promoters of wars convince critics and skeptics about the advantages of their strategy. It does not matter that the initial phase of the conflict was a failure or that the enemy did not fall apart as expected. You just have to wait. Time plays against the enemy. So it’s no surprise that the Kremlin has laced its inability to meet its military goals with a promise to just be patient.

Vladimir Putin was convinced that the invasion of Ukraine would be completed in a matter of days and that the majority of Ukrainians would welcome Russian troops in various parts of the country. He thought that the Ukrainian Army would not measure up, as happened in 2014. He assumed that the Western world would not agree on a response strategy due to the dependence on Russian oil and gas in countries like Germany. The invasion was a dramatic card that many senior Russian officials did not think would happen, but Putin was sure the time had come to end kyiv’s rapprochement with the EU forever.

All those premises turned out to be false. From the first month, Moscow was forced to focus its military offensive on the eastern part of Ukraine.

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In a political system as centralized as Russia’s, there is no center of power that can no longer measure up to Putin, but can even put pressure on him effectively. This does not prevent business sectors – the so-called oligarchs – and leaders of the United Russia party from approaching the Kremlin to raise the economic difficulties created by the sanctions approved by the US and the EU and ask when the objectives that allow ending the war will be achieved. .

The answer they receive is made up of two parts: the war will be long, so they can forget about a diplomatic channel that hastens the end of the conflict, and Russia’s rivals will give in sooner because of the economic price they will have to pay for the effects of the same sanctions that they have adopted.

Putin believes that “the West will end up exhausted”, a billionaire who knows what the Kremlin thinks has told journalist Catherine Belton of The Washington Post. Belton is the author of the book ‘Putin’s Men’, a chronicle of the Russian president’s twenty years in power, and has good sources among the businessmen who have survived his government and those who had to flee the country . Putin maintains that European governments are vulnerable to the trends of his public opinion, alarmed by economic prospects, and its electoral consequences, a situation in which he does not find himself.

The sharp drop in exports of wheat and fertilizers, of which Russia and Ukraine are major exporters, affects the whole world, but especially the countries of Africa and Asia. Institutions such as the UN World Food Program fear that tens of millions of people will suffer from famine in the coming months due to the increase in prices of basic foods. This crisis could eventually cause an increase in migratory flows from Third World countries to Europe, and that is the lever that the Russian Government hopes will occur and that could benefit Western governments as a threat.



Other Kremlin sources offered a similar message about alleged official optimism to the independent Russian outlet Meduza in late May. “Sooner or soonerEurope will get tired of helping (Ukraine). All that is money and weapons that they need for themselves. Around the fall, they will have to negotiate (with Russia) on gas and oil before the cold weather arrives.”

The recent EU agreement that vetoes the importation of Russian oil products refutes this idea for the time being. By the end of this year, the embargo will have affected 90% of that trade. Russia will thus lose its main client. At the beginning of 2021, half of those exports went to EU countries (and 31% to China). The income that the state receives from oil and gas accounts for 36% of the 2021 federal budget. Obviously, Moscow has begun to look for alternative markets.

You will not get the same funds. Official data reveals that the barrel of the Urals was sold at a price that is 32% lower to that of Brent crude between mid-April and mid-May. This discount is essential to convince other customers to increase their quota, as is the case in India. The Indians already increased their share of Iranian oil when that country suffered from US and European sanctions and also benefited from significant price reductions.

Seizure could cost 10,000 million dollars annually to Russia starting in 2023, according to a calculation by Bloomberg. That will not spell Moscow’s ruin, but it will severely affect state revenues. A Reuters analysis raise that figure to 40,000 million.

A fact not often mentioned is that this year’s Russian budget was approved with an estimate of the average price of a barrel from the Urals $44 a barrel. Even with the impact of sanctions and war, that’s well below the current price of that crude of around $73. Before ordering the invasion, Putin believed that the state of Russian finances would allow him to take the hit.

The debate on the impact of the sanctions was conditioned from the outset by the triumphalism of the declarations of European and North American leaders. “As a result of our sanctions of which there are no precedents, the ruble has been reduced to rubble”, Joe Biden boasted a month after the beginning of the invasion making a pun on the words ‘ruble’ and ‘rubble’. Clever but ultimately false. The Russian economy is also not going to be cut in half, as he said.

The monetary measures agreed by the central bank –increasing interest rates and forcing exporting companies to convert 80% of their foreign currency into Russian currency– caused the ruble to recover all the value it lost in the first few weeks. The strengthening of the currency has reached such a level that the bank was later able to reduce interest rates from 17% to 14%.

The governor of the central bank, Elvira Nabiullina, communicated at the end of April to the Russian deputies that the sanctions will cause serious damage to the Russian economy this year with a forecast drop in GDP of between 8% and 10% – a percentage similar to that calculated by the IMF – and that the effects will last in the future: “The termination of long-term economic relations (with Western countries) will have a negative impact”.

Nabiullina, a respected technocrat who has Putin’s confidence, did not want to be clearly optimistic or deny the uncertainty in which the country’s economy will move: “The question is how long these difficulties will persist and whether companies will be able to quickly find new suppliers and if they will be able to replace the missing links in the production chain”.

Many Russian companies were fully connected to the global economy and now have serious problems finding spare parts and essential elements of their production, as well as financial services, on which they previously depended from abroad.

There is no doubt that Europe and the US are already paying a significant bill for the economic situation created by the invasion in the form of inflation, rising energy costs and falling forecast growth. The paradox has occurred that the countries that approved the economic punishment also receive a part of the wave of negative effects. This has happened because never before have sanctions been imposed on such a large economy with immense natural resources. The idea that the punishment would force Putin to his knees in a matter of months was unrealistic.

Sanctions always have a cumulative effect and, as was seen in the case of Iran, they do not usually have dramatic consequences in the short and medium term. If the punished country has an authoritarian regime that is not going to lose the elections or control the political scene, its leaders will not change their policy, because they will think that their personal survival is not at risk.

The future is by definition unpredictable and wars elevate that impression to the category of an unquestionable idea. It is also the weapon with which the most powerful governments warn their citizens that straying from the official line will only produce more economic damage or national embarrassment that no one would be willing to accept.

It is easier to announce that time is running against the enemy. “Whoever controls the past controls the future”, says the well-known phrase from the novel ‘1984’, by George Orwell. In times of war, a government has much more incentive to assure the people that it controls the future.



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