today i wanted to talk about ukraine from an economic point of view
now all the strategic issue that has been in most of my updates stands
the russians still need to plug those geographic gateways that allow access to their territory
so they still need to get all of ukraine and then continue on and the russian population is
still dying out and this is their last chance to do so although that's true all of that stands but
there's an economic issue underlying it that is worth exploring because it means that the russians
are going to be a little bit more brutal than they would otherwise need to be ukraine in many ways
is like the american midwest it has a big river going through its most productive territories
so in the united states that's the mississippi allows for all of the grain and soy producing
states to export their stuff at low cost out to new orleans in um in ukraine it's the nipper
serves the same purpose everything goes down the river and is ultimately repackaged
at odessa for shipment to the wider world that means that from uh an american economic point of
view ukraine makes sense for russia it doesn't work that way russia only has one river that
flows south that is the volga and it dead ends in the caspian sea which is a landlocked lake
the north flowing rivers the ob for example uh have a different problem uh one they float
the arctic and no one lives there so any sort of shipment is very roundabout two
in winter the rivers flow from the mouth to the source rather than the other way around and when
your river is flowing into ice it breaks up the ice it pushes the ice ahead of it until there's
too much ice and then the ice gets by its mere weight gets pushed down to the river bed and
it forms an ice dam ice dams can last long time and you get massive floods as the river
overflows its banks and it does this in russia every fall moving into winter all winter long and
then especially in the spring melt because then it melts from the source to the mouth
instead of the other way around and the water has nowhere to go so most of the floodplains
in most of the world are used for agriculture in russia not necessarily because it's a death trap
there's actually a bit of a competition among the folks in the russian military about who gets to
go out and use 500 pound bombs on the ice dams to try to free up the rivers now what this means in
the terms of the russian empire and you do need to think of russia as an empire it expands and
expands expands until it hits those gateways and all the countries that it expands through
are occupied peoples that's that's an empire that's not a republic that's not a democracy
it means that russia knows that its internal distribution is crap and russia knows it can't
sell any excess production to the wider world because it's hard to get it out
but ukraine can ukraine is the most productive land in the russian sphere of influence they have
huge agricultural surpluses a fair number of metals some coal uh other chemicals and
it can all get out easily and once it's to the black sea you can go to turkey or through the
turkish strikes to europe and the wider world for russia it's never been that easy so ukraine has
always been a territory that the russians have grabbed onto very tightly and now that
ukraine is making a reasonable go at being independent and maybe even doing well in the
war the russians feel they have to destroy all of that so the civilian infrastructure
obliteration strategy that the russians started about six weeks ago is is continuing uh we know
that what happened in bucha with the atrocities there have been replicated in at least 70 places
in other places that the russians occupy they're in the process of doing that in miracle right now
the infrastructure is going to go because if the infrastructure goes then a modern industrialized
society can't exist and ultimately that is like a secondary goal for the russians compared to the
security stuff but it's very very much front of mind okay that's everything for me until next time
so two things from this number one there will be no peace talks that matter
because the russians aren't interested and second ukraine is not the end of the story
the russians are going to push past ukraine into a number of other countries uh to their west
which is going to generate a conflict with nato at some point and we can talk about what that's
going to look like we can talk about what the native countries are doing to try to stop it
but this is what at stake here we're talking about the russians needing to get under their
thumb at least another 140 million people the first 50 million just happened to be ukrainian
and in the case of the russians remember their demographic started collapsing 30 years ago
so the younger and their educational system collapsed at the same time so the youngest
group of people who actually have a skill set are now in their late 50s putin's pushing 70
and the only people at the end of the soviet era who really understood what was going on
were the the fsb the kgb agents because they had been in charge of the light
system where for gorbachev trying to go and drop off putin is an extension of that line
well if you combine the demographic problem with the information vacuum
there's only like 150 people left in russia who are in their political elite
this this is their this is their last window from any number of measures and so no may 9th
it's going to be a nice little party they're going to have they're going to celebrate but
they're not going to stop the war they're going to keep pushing and pushing and pushing and we are
now in an artillery conflict and that is something where russian equipment and training actually does
very well from a human point of view it's horrific but in terms of military capacity we're in a stage
of the war now that is actually playing to the russian strengths one of the features of the new
sanctions programs is the russians have a hard time spending whatever hard currency they earn
they can't do it through normal means they have to like get physical cash and transfer it and
doing that for imports that come in the numbers of you know billions of dollars a month that's
difficult so the russians are already facing that cash crunch even with oil still coming on
coming out i'm far more concerned about the broader international implications for us having
the largest oil interruption ever but remember the russians see this as an existential crisis
this war had to happen and nato had to resist it so i don't want to say anything like it's going
according to plan because that's that's not what i'm after here but this is something that has been
inevitable for a long time and now it's imminent now we're here and for the russians it's not about
money and if there's one thing that binds all the russian citizens together it's a celebration of
privation this this is not a country that is in the indian or the british or the american
tradition where economics trumps politics other way around security is always paramount
the russians they've expanded a lot of output to new fields since 1990 most of that work was done
by either bp or the western oil services firms they're all gone now
so you should expect the remaining russian output to steadily decline over the course of the next
couple of years anyway so for example the sackland projects that the chinese are really interested in
they're the most advanced projects in the world to produce oil and natural gas for a pipe and
natural gas for lmg they're all going to get shut down this year not because of backed up
pipes but because the people who know how to operate them are leaving so four to five
million barrels a day going west to europe goes offline in a couple months another two or three
million barrels a day from eastern siberia most of which goes to china goes off this year next
zero year zero four one four zero
you