Ben Aris: Russia could pay off its entire external debt tomorrow, in cash

By Ben Aris, Intellinews, 3/30/24

Russia external debt has been falling steadily and reached $326.6bn in December 2023, compared with $322.3bn in the previous quarter and $383.6bn at the end of 2022. It could pay the entire amount off tomorrow – in cash. (chart)

The Kremlin has been paying off its external debt. Low external debt means Russia doesn’t need to tap international capital markets so is not vulnerable to any sort of sanctions on bond issues, which are easy to apply and enforce.

Coupled with Russia’s strong current account surplus, which was up to $5.2bn in February from $4.5bn in January, thanks to high oil prices, Russia can fund itself easily on this profit. (chart)

At the same time gross international reserves have been rising and are now hovering around $600bn at the end of the first quarter. Half of these reserves are frozen. About $150bn are in monetary gold (up from $135bn pre-war) and the rest in yuan.

Even counting out the frozen funds, Russia can cover its external debt dollar for dollar with cash, whereas everyone in the West is massively leveraged, including the Ukraine where the debt-to-GDP ratio is almost at 100%.

It is these rock-solid fundamentals – no one else in world has even remotely similar metrics – which is the essence of Putin’s Fiscal Fortress. It is a ridiculously strong basis, which means even if the West manages to reduce Russia income from oil and gas exports, it will still have a massive amount of wiggle room.

And its ongoing commodity exports to the global south mean that it will continue to enjoy the raw materials subsidy for its economy. Because of their external debt (USA, Italy, much of G7, everyone in Africa and even China) everyone else is a lot more vulnerable to a global slow down. Russia is probably currently the least vulnerable on a macro fundamentals basis.

Russia’s external debt $bn

Russia’s current account $bn

Having said that, MinFin is increasingly turning to the OFZ domestic T-bill market to fund the deficit – expected to be RUB1.6 trillion year, down from RUB3.4 trillion last year, or 0.8% of GDP and 1.9% of GDP respectively.

Pre-war MinFin used to issue around RUB2 trillion (c$20bn) of OFZ a year, and most of them on a very long maturity of up to 20 years. Yields on these bonds were a hansom 6-7% and foreign investors poured in to buy billions of dollars’ worth.

Post-war of course those foreigners have left with non-rez share falling from a peak of c34% to c7% now. (chart) Moreover, the cost of this borrowing has gone up as yields have risen to c14%. So, this is relatively expensive borrowing.

Moreover, the volumes issued have gone up dramatically. In an underreported story Siluanov said at the start of last year MinFin planned to issue about RUB1.5 trillion of OFZ but ended up issuing RUB2.5 trillion. (It would have been more, but oil prices recovered in Q4).

The plan for this year, at the start of last year, was also for RUB1.5 trillion, but in December Siluanov was already talking about RUB4 trillion – that is almost double pre-war levels. And the $3-6bn of annual Eurobond issues has also obviously stopped.

The total outstanding OFZ has doubled to cRUB20 trillion (chart) since the pandemic started when Russia spent around 3% of GDP on economic relief (globally a very low level). You can see issues jumped again since the war started and total outstanding is now cRUB20 trillion (c$200bn). So, the debt situation is not quite as rosy as first appears.

Still, even $200bn worth of outstanding domestic debt is not bad at all. Firstly there is a pool of some RUB19 trillion of liquidity in the banking sector so again all this debt can be covered in cash by domestic resources.

Secondly, £200bn is about 10% of GDP, so even this borrowing is extremely modest by developed economy standards and easily managed.

Tarik Cyril Amar: How America’s top spymaster sees the world and why it’s so disappointing

By Tarik Cyril Amar, RT, 3/30/24

William J. Burns has published a long piece in Foreign Affairs under the title ‘Spycraft and Statecraft. Transforming the CIA for an Age of Competition’. This is an essay likely to be read with great attention, maybe even parsed, not only by an American elite audience, but also abroad, in, say, Moscow, Beijing, and New Delhi, for several reasons. Burns is, of course, the head of the CIA as well as an acknowledged heavyweight of US geopolitics – in the state and deep-state versions. [https://www.foreignaffairs.com/united-states/cia-spycraft-and-statecraft-william-burns]

Few publications rival Foreign Affairs’ cachet as a US establishment forum and mouthpiece. While Burns’ peg is a plea to appreciate the importance of human intelligence agents, his agenda is much broader: In effect, what he has released is a set of strategic policy recommendations, embedded in a global tour d’horizon. And, last but not least, Burns is, of course, not the sole author. Even if he should have penned every line himself, this is a programmatic declaration from a powerful faction of the American “siloviki,” the men (and women) wielding the still gargantuan hard power of the US empire.

By the way, whether he has noticed or not, Burns’ intervention cannot but bring to mind another intelligent spy chief loyally serving a declining empire. Yury Andropov, former head of the KGB (and then, for a brief period, the whole Soviet Union) would have agreed with his CIA counterpart on the importance of “human assets,” especially in an age of technological progress, and he would also have appreciated the expansive sweep of Burns’ vision. Indeed, with Burns putting himself so front-and-center, one cannot help but wonder if he is not also, tentatively, preparing the ground for reaching for the presidency one day. After all, in the US, George Bush senior famously went from head of the CIA to head of it all, too.

There is no doubt that this CIA director is a smart and experienced man principally capable of realism, unlike all too many others in the current American elite. Famously, he warned in 2008, when serving as ambassador to Moscow, that “Ukrainian entry into NATO is the brightest of all redlines for the Russian elite (not just Putin).” That makes the glaring flaws in this big-picture survey all the more remarkable.

Burns is, obviously, correct when he observes that the US – and the world as a whole – is facing a historically rare moment of “profound” change in the global order. And – with one exception which we will return to – it would be unproductive, perhaps even a little churlish, to quibble over his ideologically biased terminology. His mislabeling of Russia as “revanchist,” for instance, has a petty ring to it. “Resurgent” would be a more civil as well as more truthful term, capturing the fact that the country is simply returning to its normal international minimum status (for at least the last three hundred years), namely that of a second-to-none great power.

Yet Burns’ agenda is more important than his terminology. While it may be complex, parts of it are as clear as can be: He is eager (perhaps desperate) to prevent Washington from ending its massive aid for Ukraine – a battle he is likely to lose. In the Middle East, he wants to focus Western aggression on Iran. He may get his will there, but that won’t be a winning strategy because, in part thanks to multipolar trend setters, such as the Shanghai Cooperation Organization and BRICS, Iran’s escape from the isolation that the US has long imposed on it is already inevitable.

Regarding China, Burns’ real target is a competing faction of American hawks, namely those who argue that, bluntly put, Washington should write off its losses in Ukraine and concentrate all its firepower on China. Burns wants to persuade his readers that the US can have both its big fight against China and its proxy war against Russia.

He is also engaged in a massive act of CIA boosterism, clearly aiming to increase the clout of the already inordinately powerful state-within-a-state he happens to run himself. And last but not least, the spy-in-chief has unearthed one of the oldest tricks in the subversion and destabilization playbook: Announcing loudly that his CIA is on a recruiting spree in Russia, he seeks to promote a little paranoia in Moscow. Good luck attempting to pull that one on the country that gave us the term “agentura.” Moreover, after the horrific terror attack on Crocus City Hall in Moscow, it is fair to assume that Burns regrets having boasted about the CIA expanding its “work” in Russia. Not a good look, not at all.

What matters more, though, than his verbal sallies and his intriguingly straightforward, even blunt aims, are three astonishingly crude errors: First, Burns insists on reading the emerging outcome of the war in Ukraine as a “failure on many levels,” for Russia, revealing its, as he believes, economic, political, and military weakness. Yet, as the acknowledged American economist James K. Galbraith has recently reiterated, the West’s economic war on Russia has backfired. The Russian economy is now stronger, more resilient, and independent of the West than never before.

As to the military, Burns for instance, gleefully counts the tanks that Russia has lost and fails to note the ones it is building at a rapid rate not matched anywhere inside NATO. In general, he fails to mention just how worried scores of Western experts have come to be, realizing that Moscow is overseeing a massive and effective expansion of military production. A curious oversight for an intelligence professional. He also seems to miss just how desperate Ukraine’s situation has become on the ground.

And politics – really? The man who serves Joe Biden, most likely soon to be replaced by Donald Trump, is spotting lack of popularity and fragility in Moscow, and his key piece of evidence is Prigozhin and his doomed mutiny? This part of Burns’ article is so detached from reality that one wonders if this is still the same person reporting on Russian red lines in 2008. The larger point he cannot grasp is that, historically, Russia has a pattern of starting wars on the wrong foot – to then learn, mobilize, focus, and win.

Burns’ second severe mistake is his argument that, ultimately, only China can pose a serious challenge to the US. This is staggeringly shortsighted for two reasons: First, Russia has just shown that it can defeat the West in a proxy war. Once that victory will be complete, a declining but still important part of the American empire, NATO/EU-Europe will have to deal with the after-effects (no, not Russian invasion, but political backlash, fracturing, and instability). If Burns thinks that blowback in Europe is no serious threat to US interests, one can only envy his nonchalance.

Secondly, his entire premise is perfectly misguided: It makes no sense to divide the Russian and the Chinese potentials analytically because they are now closely linked in reality. It is, among other things, exactly a US attempt to knock out Russia first to then deal with China that has just failed. Instead, their partnership has become more solid.

And error number three is, perhaps, even odder: As mentioned above, Burns’ language is a curious hybrid between an analytical and an intemperate idiom. A sophisticated reader can only wince in vicarious embarrassment at hearing a CIA director complain of others’ “brutish” behavior. What’s worse: the tub-thumping or the stones-and-glasshouse cringe? Mostly, though, this does not matter.

Yet there is one case where these fits of verbal coarseness betray something even worse than rhetorical bravado: Describing Hamas’ 7 October assault as “butchery,” Burns finds nothing but an “intense ground campaign” on Israel’s side. Let’s set aside that this expression is a despicable euphemism, when much of the world rightly sees a genocide taking place in Gaza, with US support. It also bespeaks an astounding failure of the strategic imagination: In the same essay, Burns notes correctly that the weight of the Global South is increasing, and that, in essence, the great powers will have to compete for allegiances that are no longer, as he puts is, “monogamous.” Good luck then putting America’s bizarre come-what-may loyalty to Israel first. A CIA director at least should still be able to distinguish between the national interests of his own country and the demands of Tel Aviv.

Burns’ multipronged strike in the realm of elite public debate leaves an unpleasant aftertaste. It is genuinely disappointing to see so much heavy-handed rhetoric and such basic errors of analysis from one of the less deluded members of the American establishment. It is also puzzling. Burns is not amateurish like Antony Blinken or a fanatic without self-awareness, such as Victoria Nuland. Yet here he is, putting his name to a text that often seems sloppy and transparent in its simple and short-sighted motivations. Has the US establishment decayed so badly that even its best and brightest now come across as sadly unimpressive?

Yahoo News: Putin-Loving Texas Man [Russell Bentley] Abducted in Eastern Ukraine—Allegedly by Russian Troops

Not sure what to make of this. – Natylie

By Allison Quinn, Yahoo News, 4/17/24

The tragicomic tale of a down-on-his-luck Texan who reinvented himself as a renegade war hero in a fake Russian republic took an unexpected turn this week when he was allegedly abducted by Russian troops—after apparently being accused of being a CIA spy.

Russell Bentley, also known as “Texas,” is perhaps the last person one would expect to have pulled off cunning spycraft for the nearly 10 years he’s been living among Russian fighters in Ukraine’s occupied Donetsk region. A Dallas native with a conviction on drug charges back home, Bentley briefly seized international headlines back in 2014 when he was spotted in a cowboy hat with Russian fighters and spewing Kremlin propaganda about “Nazis” in Ukraine. He obtained Russian citizenship in 2020 after remodeling himself as a combat-vet-turned-“journalist” for Kremlin-controlled media.

News of his disappearance earlier this month largely went under the radar until his wife, Lyudmila Bentley, went public Tuesday with claims he’d been snatched and taken hostage by Russian troops.

“Russell was brutally detained on April 8,” Lyudmila Bentley wrote in a statement on Telegram. “I CALL ON EVERYONE to do EVERYTHING POSSIBLE to save my husband, our ‘Texas,’” she said, describing him as a “friend of Donbass and Russia.”

“Perhaps, there is not much time,” she said.

Russian propagandists have claimed Bentley vanished after approaching the site of recent shelling or mortar strikes, and one independent Russian news site said he’d been taking pictures of the damaged buildings. That detail led to a flurry of conspiracy theories about Bentley potentially being a mole.

On Wednesday, Bentley’s friends sought to quash those rumors, with his self-proclaimed “brother-in-arms,” identified only as Vasily, releasing a video appealing to Bentley’s captors to free him and noting that he was only trying to show the world what is happening in the region.

Bentley’s wife also acknowledged rumors that he had been “filming something on his phone.” After finding Bentley’s phone smashed, she wrote, she was able to check it later, saying, “I didn’t find ANY PHOTOS or VIDEOS.”

Graham Phillips, another Westerner who linked up with Russian forces in eastern Ukraine and knew Bentley, issued his own statement Wednesday noting that “a small but active part of the Russian community is already writing against Texas, such as that he was an ‘American spy,’ etc.”

Bizarrely, after writing that such claims are “nonsense” and unfair since Bentley isn’t around to defend himself, Phillips himself went on to subtly trash the Texan native for filming military activity, calling it “illegal and suspicious” to do so.

But, he said, “I am hoping for the best, that our Texas is alive and well.”

Intellinews: Russian patriotism reaches an all time high – poll

Intellinews, 3/31/24

Patriotism in Russia is at an all-time high, according to a recent poll conducted by the Russian Public Opinion Research Center (VTsIOM) published on March 29.

An overwhelming majority (94%) of Russians identify themselves as “patriots of the country.” The figure includes 62% who declare their patriotism as absolute, marking a significant uptick of 10 percentage points from a similar poll a year earlier.

According to the report, the surge in patriotic sentiment has been unprecedented, tracing its origins back to the autumn of 2014 following Russia’s annexation of the Crimea, which was widely welcomed by the Russian public.

Since then, the proportion of “absolute” patriots has substantially overtaken those who consider their patriotism to be moderate, with 48% in the former category and 36% in the latter.

“The level of patriotism among Russians is higher than ever: today, 94% of our fellow citizens consider themselves patriots, including 62% who are absolute patriots, an all-time high since data began to be collected,” VTsIOM said in its report, cited by TASS.

The survey revealed respondents made a deep connection between patriotism and familial bonds, a sense of belonging, and cherished moments with loved ones. The concept of “homeland” (rodinina) extends beyond Russia’s mere geographical confines and also encapsulating concepts like “haven of safety” and “joy.”

The participants of the survey articulated their love for Russia as a blend of pride, defence, contribution to its development and a profound understanding of its rich history and culture.

“You know someone loves their country if they try to be a decent, responsible, honest and loyal person,” the report says.

In a parallel survey and in the wake of President Vladimir Putin’s recent landslide results in the presidential elections, polls reveal that the respondents continue to place substantial trust and confidence in the president, with figures oscillating between 81% and 84%, according to VTsIOM.

“When asked about their trust in Putin, 84% of respondents answered positively, marking a marginal increase of 1 percentage point since March 10. Furthermore, a similar percentage of the population, 84%, affirm their belief in Putin’s effective leadership as the head of state,” VTsIOM said.

Putin declared a sweeping victory in the country’s presidential election on March 15-17, taking an unbelievable 87% of the vote on a record turnout.

However, the pollster found a slight dip in trust towards Putin, with 80.7% of participants expressing a positive outlook, a decrease of 0.3 percentage points in a poll of 1,600 adult residents conducted between March 18 and 24, in the midst of which Russia was struck by a brutal terrorist attack on the Crocus City Hall shopping mall on March 22 that saw over 140 people die. Nevertheless, the president’s approval rating remains steady at 78.9%, VTsIOM said.

The government under Putin also received mixed reviews, with a 58% approval rating for the government’s job performance, down 3 percentage points from the previous survey a month earlier. Prime Minister Mikhail Mishustin’s approval stood at 56%, reflecting a 3 percentage point decrease.

The poll found that the ruling United Russia party enjoyed a 52% support level, witnessing a slight increase of 1 percentage point. Other parties, including the Communist Party of the Russian Federation (KPRF) and the Liberal Democratic Party of Russia (LDPR), saw minor fluctuations in their support levels.

Individual party leaders received varied levels of trust, with KPRF’s Gennady Zyuganov and A Just Russia-For Truth’s Sergey Mironov seeing increases in trust levels, while New People’s Alexey Nechayev experienced a decline.

Brendan Cole: Putin Issues Urgent Russian Ship Decree

By Brendan Cole, Newsweek, 4/15/24

Vladimir Putin has ordered his prime minister to create a shipbuilding plan for the next decade within two months, after one of his officials lamented how western sanctions had hampered a large civic fleet from being built.

Western-led sanctions imposed since Putin’s full-scale invasion of Ukraine have included cutting the supply of foreign technology crucial for Russia’s military as well as its industry and manufacturing sectors.

Head of Russia’s Fisheries Agency, Ilya Shestakov, told Putin last week that only 22 out 105 fishing vessels planned in a state program had been built so far because sanctions had choked the supply of “actively used” western technologies.

The Central Research Institute “Kurs”, said that 84 percent of Russian ships under construction at the end of last year might not be delivered and 28 out of 49 vessels scheduled for delivery in the coming year needed redesigning, Russian government newspaper Rossiyskaya Gazeta reported.

While an order published on the Kremlin website on April 10 does not directly mention western sanctions, it says a plan must ensure the financial and technical competitiveness of vessels built at Russian shipyards, “including measures to ensure the development and production of the most significant ship components.”

The plan must pay special attention to the construction of ships that “export deliveries of Russian products” until 2035.

Read full article here.

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