Comment by JohnJamesRambo | Hacker News Reader

Comment by JohnJamesRambo | Hacker News Reader

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> In late February, following the ruble's initial tumble and four days after the invasion of Ukraine began on Feb 24, Russia more than doubled the country's key interest rate to a whopping 20% from a prior 9.5%. Since then, the currency's value has improved to the point that it's lowered the interest rate three times to reach 11% in late May.

> Russia is the world's largest exporter of gas and the second-largest exporter of oil. Its primary customer? The European Union, which has been buying billions of dollars worth of Russian energy per week while simultaneously trying to punish it with sanctions. That's put the EU in an awkward spot – it has now sent exponentially more money to Russia in oil, gas and coal purchases than it has sent Ukraine in aid, which has helped fill the Kremlin's war chest. And with Brent crude prices 60% higher than they were this time last year, even though many Western countries have curbed their Russian oil buying, Moscow is still making a record profit.

It’s more complicated than those blurbs though. Also while the ruble may be artificially strong it doesn’t mean everything is going great in Russia, far from it.

https://www.cnbc.com/amp/2022/06/23/russias-ruble-is-at-stro...

It’s a weird trick. Russia has more money but they can’t import anything so it keeps piling up. Their economy is shrinking +10% yoy because they cannot import the parts necessary to run a modern economy

Surely China and India are willing to sell those parts to Russia.. for the right price.

China and India don’t e.g. make the equipment needed to keep Russian fossil fuel extraction working in the medium term.

> willing to sell those parts to Russia

Not sure about this, it's not about will, it's about not being thrown in a sanction package youself.

It's not like the US/EU can just sanction China and India on top of the Russian and Iranian sanctions. All that would do is make those countries more economically connected than ever before, and creating an alternative for smaller sanctioned countries like Syria and Venezuela, making all sanctions useless.

They would risk their biggest market with potential for growth for a tiny market that is shrinking further. Also, China may not like NATO, but they are not great fans of the war in Ukraine either.

Where does China and india sell its stuff to?

They both rely on oil and gas so aren't willing to negotiate on that, but they are dependent on the west for trade so will play ball.

> Where does China and india sell its stuff to?

True, but this works in reverse as well. Where does the US/Europe get their stuff from?

Obviously western society won't collapse due to the lack of Chinese merchandise, but it will have a huge effect.

Which is exactly where this is all heading.

The threat of sanctions seems to be greater than actual sanctions, if the past four months are anything to go by.

If anything, the sanctions that were imposed on Russia only served to illustrate the above, and may serve as incentive to other dictatorial hopefuls.

The parts in question (semi coonductors, oil services equipment, jet engine parts) are not manufactured in India or china.

Not sure what your point is. Countries can perfectly export manufactured parts that they import from elsewhere.

Again, this comes at a cost, which while prohibitive to some is not an issue for Russia, sitting on a pile of cash as they are.

It’s not just the parts though, it’s the expertise. Boeing has maintenance systems and programs that Russia does not have access to. The parts and schedules and materials are not really pirateable. The package needed is a combination of a part, a trained worker to do a job, a set of custom monitors/tools to do the maintenance (all owned and leased out by the US cos), and the custom parts themself. What Russia is doing right now is canabalizing their planes for used parts, which can only get you so far. Oil services is much more complicated and they’re production is going to decrease say 20% yoy for a long time as the oil services firms like schlumberger have withdrawn. I worked at an startup digitizing industrial maintenance SOPs for aerospace, oil services and manufacturing and have dealt with this extensively.

Aha! That would mean the reason is the strength of the economy!

- Russia is the world's largest exporter of gas and oil.

- Gas and oil prices go up.

- Russias economy is stronger

If you have a river and block it with a dam water keeps piling up. Assuming there is now more water because there is more coming from the mountain would be ignoring the dam.

The amount of currency depends both on the stuff people buy from you (money flowing down from the mountain) and on the stuff you buy from people (money flowing through the dam).

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