How Much Longer Can  War Prop Up Russia's Economy?|WSJ - video Dailymotion

Abdullah Afridi

Russia’s economy appears to be thriving after more than three years of war with Ukraine and huge military expenses. As President Trump threatens to turn up the economic pressure with more tariffs and secondary sanctions to push Moscow to a ceasefire, how long can Vladimir Putin’s economy continue to thrive?  WSJ explains how Russia’s economy has been able to hold on and what are the risks ahead.   Chapters: 0:00 Russia’s war economy 0:30 High spending and sanctions 1:53 Economic reorientation  2:49 Reserves and oil 3:23 Trump’s threats and other indicators 4:33 The risks Why the next few months will be critical in the Russia-Ukraine War:     • Why Russia Is Doubling...    News Explainers Some days the high-speed news cycle can bring more questions than answers. WSJ’s news explainers break down the day's biggest stories into bite-size pieces to help you make sense of the news.  #Russia #Ukraine #WSJ

Transcript

00:00Despite more than three years of war, huge military expenses and waves of sanctions,

00:06Russia's economy appears to be thriving.

00:12But as President Trump threatens harsh economic sanctions...

00:15We just don't see any progress being made.

00:18...and cracks begin to show how long can it last.

00:21War has been a huge stimulus for the Russian economy, but they can't continue doing this forever.

00:26The reality is they're likely to run out of money.

00:31Since launching its full-scale invasion of Ukraine, Moscow has ramped up its military spending.

00:35If we go back to 2022, Russian defence spending was about $50 billion a year.

00:42They are now spending close to $150 billion a year on their military.

00:49As the war continues, President Trump has vowed to turn up the economic pressure on Moscow,

00:53threatening tariffs and secondary sanctions if a ceasefire isn't reached.

00:58Russia could be so rich right now. Instead they spend all their money on war.

01:04They spend everything on war and killing people and it doesn't make sense.

01:08But Russia has shown it can adapt to economic pressure.

01:11Since launching its full-scale invasion of Ukraine, it has become the most sanctioned major economy on the planet.

01:17We had statements from Western leaders like turning the ruble to rubble.

01:22This was intended to bring the Russian economy to a complete halt.

01:26It was meant to make the continuation of the war completely unpalatable.

01:31Despite this, in 2024, Russia's economy outpaced the growth of most advanced nations, including the US.

01:38There was a deep economic contraction in 2022. It was 2% of GDP.

01:44And by the way, that's about the same as the impact of Covid on the Russian economy.

01:48But what's interesting is that they bounced back very, very quickly.

01:52Analysts say Russia was able to avoid the impact of current sanctions by reorienting its economy.

01:58The EU was lost as an export market almost entirely.

02:02The two big export markets for Russia are China and India.

02:06Effectively, they have reorientated towards the export of fuels to China and India.

02:11Because that reorientation was possible, that's one of the reasons the sanctions haven't really bit in as much as we might expect.

02:19In addition, Moscow turned its economic focus on supplying its war effort in Ukraine,

02:24with even the most unlikely companies focusing on war.

02:27Russian state TV broadcasts a segment about a bread factory that swapped dough for drones.

02:35They're spending a tremendous amount of money on armaments.

02:39So this being the expansion of the military-industrial complex, that's hoovered up labour.

02:45So we've seen unemployment in Russia actually fall to a 30-year low.

02:49Russia has largely been able to sustain these high levels of spending thanks to its oil and gas sector,

02:55which makes up around 20% of Russia's GDP.

02:58But analysts warn this can't last forever.

03:01By rights, Russia should have a budget surplus at the moment.

03:04That surplus should be going into their national wealth fund.

03:07What we've seen is that they're spending far more than they're bringing in.

03:11And the way they are supplementing that is by running down their remaining reserves.

03:17So at the present burn rate, we see them running out at about 2030.

03:23With President Trump threatening to come down hard on Russia,

03:26concerns are growing that this could have far-reaching consequences.

03:31There's been a suggestion of 100% secondary tariffs.

03:35So those who buy from Russia, say buy Russian oil, would be hit with tariffs entering the US market.

03:42China and India are the main buyers of Russian oil.

03:45They collectively account for almost half of Russian exports.

03:49Let's imagine if they were to stop buying Russian oil completely.

03:53That would be catastrophic for the Russian economy.

03:56Russia looks to oil and gas receipts for anything from a third to half of its annual budget.

04:01More broadly, this would create a tremendous oil shock in the world.

04:05So the price of oil would rocket.

04:08It could be recession-inducing.

04:10Trump's threats also come as cracks in Russia's economy are beginning to show.

04:16Now, inflation has been high, but wage inflation has been even higher.

04:20So if anything, the standard of living of Russians has improved.

04:25The problem, of course, is that this is not sustainable.

04:29That eventually Russia is going to hit the fiscal buffers.

04:33Despite the economic risks, experts believe Russian President Vladimir Putin

04:37remains committed to his goal of seizing as much of Ukraine as possible.

04:41And that Russia will try to sustain its military economy for years to come

04:45as it eyes conflicts beyond Ukraine.

04:48If you look at Russian defence expenditure, 2025 is likely to be a peak.

04:54But that's on the basis that at some point there will be a ceasefire.

04:57At that point, we'd expect the pen spending to moderate.

05:01But we don't see spending going back to the 2022 or 2021 level.

05:06It's going to stay elevated.

05:08Russia would say that it still faces threats.

05:12It would argue that NATO is a threat, so they need to be prepared.

05:15I think they do understand that at some point this war will have to come to an end.

05:19But of course, politically, Russia is going to seek to do that on its own terms.

05:31I think we've set a point.

05:33I'm going to make軍 добр to bless 계 Acts 5 and on our shared stories.

05:36But I think once it's been coloca'd,

05:38I have to get first a point.

05:40See if we want to tell ITFá winter.

05:41Let's do it again, start sharing.

05:44I have seen the return on Twitter.

05:45This review, sometimes YouTube has appunt and it can take care of it as well.

05:46But there's a lot of people who've invested many different efforts.

05:48If any changes bite through the Japanисle,

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05:52The Japan news creed here Paprika is different.

05:54The Japan comEVER,

05:56is the the Japan with the JapanShape of Europe,

05:57the Japan country leading nationwide.

How Much Longer Can War Prop Up Russia's Economy?|WSJ

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