Russia Brushes off Trump’s Threats:

Can the country’s economy withstand another year of the conflict without seeking peace or is it a House of Cards?

“We don’t see anything new here”, Kremlin spokesman Dmitry Peskov said a day after Trump warned that he would increase economic sanctions on Russia if the country doesn’t come to the table to negotiate peace with Ukraine.

While the country has expended enormous financial and human resources on the war in Ukraine, Putin’s inside circles believe the country can last more than another year of fighting in Ukraine.

“We have imbalances and inflation, but it’s not so acute to demand the stop of all hostilities,” said Vasily Kashin director of the Department for World Economy and International Affairs at the Moscow-based Higher School of Economics. “We are in a position to press on with our demands…and if Ukraine’s defense continues to collapse as it is now. It would be wiser for the other side to agree to our terms.” — Wall Street Journal, January 24, 2025

Is this a Russian ruse of strength or can Russia’s economy and military continue to weather another year of offensive measures in Eastern Ukraine and counteroffensives in Kursk?

Let’s look at the numbers for some insights:

·               700,000 Russian war casualties to date — WSJ, January 2025

·               21% interest rates in Russia — Euro News, December 2024

·               9.5% inflation rates in Russia — Reuters, December 2024

·               2.5% GDP growth in 2025 in Russia — Newsweek, January 13, 2025

·               71% increase in corporate debt now $415 billion or 19.4% GDP — Newsweek, January 13, 2025

·               Starting sign-on bonus of $8,500 for every new Russian recruit — The Bell, October 2024

·               $250 billion in forced bank loans to government contractors, many with bad credit — Newsweek, January 13, 2025

·               Reliance on 12,000 North Korean troops to bolster Russia’s armed forces with likely more on the way

Craig Kennedy, former Morgan Stanley Banker, was the first to report in his Substack article, Navigating Russia on January 10, 2025, that Russians are using off-budget loans to finance the war. His analysis was subsequently picked up by the Financial Times and Newsweek. According to Kennedy, 50% of Russia’s war expenditures are being funded by these forced bank loans, and the country is creating preconditions for a systematic credit crisis.

How can the United States and Europe help Russia closer to falling off this financial cliff?

According to the Financial Times, this can be done by denying Russia sources of external funds.

The Trump Administration could help the Russian economy and government towards bankruptcy by doing the following actions:

·               Continue to deny Russia access to the $350 billion in seized assets

·               Work with countries like Saudia Arabia to dump oil onto the global markets reducing the price of oil and gas — Russia’s primary export

·               Tighten sanctions on Russia’s oil and gas exports

·               Continue to increase weapons deliveries to Ukraine forcing Russia to spend even more on the war effort

·               The United States bankrupted the Soviet Union during the Reagan era of the 1980s. It’s time to turn back to that tried and tested method to bankrupt Russia and force it to sue for peace.

These are the kinds of policies AmUkrPac will be advocating for with Congress and the Trump Administration.

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