Latest Ukraine/Russia Thread

[zazen]

On 10/21/2025 at 8:34 PM, Breakingthewall said:

The discrepancy between 13.9 billion and 50.7 billion rubles results from different accounting standards (RSBU vs IFRS).

The profit collapse doesn’t mean the company is “collapsing,” but it does show serious profitability pressure: revenues are rising, but so are costs, debt servicing, and capital expenses.

The decline likely reflects higher interest rates, currency volatility, war-related logistics issues, and heavy capital investment.

RZD has launched a massive investment program (≈ 1.4–1.5 trillion rubles for 2024), which reduces short-term profit but supports infrastructure goals.

From my Chat GPT research also:

''The drop in rail freight mostly signals that:

- Civilian and manufacturing sectors are weakening.

- Some export routes (coal, metals, fertilizer) have bottlenecks.

- Energy exports remain the government’s priority and are insulated by pipelines and the shadow fleet system.

The state is cannibalizing profitability of its infrastructure to sustain war and social stability. RZD remains solvent because it can borrow from state banks and get subsidies — profitability is optional in a command economy.

In a Western market, a 90 % profit drop would threaten bankruptcy. In Russia, it’s more like a political tax: the railway is an arm of the government, not an independent business.

This kind of profit compression is showing up across the Russian state sector: Gazprom, RZD, Rosseti (electric grid), and others. They’re all being converted from enterprises that generate surplus into instruments that absorb pressure.
That’s how an authoritarian war economy survives: it trades profit for control.''

On 10/22/2025 at 7:59 AM, BlueOak said:

Now, what does a collapse mean? No fuel on the front. Breakaway Russian regions. Internal conflict. You may think the Russians will tolerate war, not when they are starving and homeless they won't. When they can't pay their soldiers, you think there are soldiers there keen to be fighting? They are there for the huge windfalls they were promised and are now not receiving already.  Not when there is no money to draw from the bank and everything costs a fortune.

That's when the government collapses, as you can't pay the police or services or army. There are multiple independence movements in Russia ready to break. China is keeping the economy afloat, but its still going downward because it can't carry the entirety of its country on its back.

There's a difference between collapse and austerity measures or adaptions to pressure. The pressure isn't denied - the idea of collapse being inevitable is, to the point of no Russian state existing or regions breaking away. Bonuses doesn't mean no money left to pay for the army, police and other vital functions. It takes a lot to get to that point.

Regional issues are buffered by the state -  even if regionally they are functionally bankrupt or squeezed, they can be kept afloat through subsidies in a command economy which Russia is running.  There's more risk of stagnation and slow decline of living standards especially unequally as rural regions don't get priority - but nothing close to mass famine or being frozen to death to the point people revolt. That won't happen in a resource rich country as long as things are managed well enough logistically.

 Succession is highly unlikely:

''The USSR was a union of republics, each with its own government, military units, and legal right to leave. That’s what made dissolution possible.
The Russian Federation, by contrast, is unitary in practice:

-No republic has independent control of its borders or military.

-All governors are appointed or tightly controlled by the Kremlin.

-Security services (FSB, Rosgvardia, etc.) are centrally loyal and heavily funded.

In short: there are no “independent parts” to break away. Any independence movements are tiny, fragmented, and heavily infiltrated by the FSB.

Russia spends roughly 40% of its national budget on defense, internal security, and intelligence. Rosgvardia alone numbers over 300,000—essentially a national gendarmerie to crush domestic uprisings. Regional elites know that any hint of secession would mean immediate arrest, replacement, or military intervention. This isn’t a free-market democracy but a centralized security state.''

 

If things continue down the same path like you said - things will rot to the point of possible collapse sure. But that negates the human element of actually responding to pressure and doing something to adapt to it as to bend rather than break under pressure - just as Ukraine showed their adaptability through innovative use of drones. 

A lot of the same points (about Russia’s finances) can be made about the West who have much higher public debt than Russia and who similarly have rural dissatisfaction against urbanites and Western capitals where wealth and power is concentrated, to the point we have populism in much of the West. We also get similar doomerism collapse narratives these days because of it. This has been a major driver of Brexit, flirtations of Frexit, and why we may see Scotland break way from the UK before we see Russia break up:

The West is financialized much more than Russia who have hard assets the world needs - hence why even a US ally like Japan is saying it will do what's in its interest (purchase Russian energy): https://www.reuters.com/business/energy/japan-act-national-interest-russian-energy-says-industry-minister-2025-10-21/ Japan's debt to GDP is 250% and it still hasn't collapsed because its managed it through various means - pointing out that collapse isn't always inevitable, neither is it for the West despite signs of strain.

Chat GPT comparison:

''Russia can “cannibalize itself” far longer than the West can print itself out of trouble — because its system was never built on trust-based debt in the first place.

Here’s the sober comparison:

Russia

- Public debt: ~18% of GDP — among the lowest in the world.

- Foreign debt exposure: minimal, since sanctions cut it off from Western markets.

- Central Bank reserves: ~$580B (even with $300B frozen abroad, the rest is in gold/yuan).

- Gold reserves: ~$150B — the 5th largest globally, and growing.

- Fiscal deficit: 2–3% of GDP (manageable given oil revenue).

- Domestic financing: self-contained — state banks can print liquidity, and Moscow can simply decree bond purchases or order “voluntary contributions” from oligarchs.

That’s what “self-cannibalization” means in practice — the state can eat its internal capital base, squeeze the oligarchs, raid the wealth fund, monetize deficits, and reorient resources without the system collapsing. Painful? Yes. Fatal? Not unless the state loses control of violence or legitimacy.

United States (and the West generally)

- U.S. public debt: >125% of GDP and climbing.

- EU average: ~85–90%, with countries like Italy at ~140%.

- Fiscal deficits: ~6–7% in the U.S., worsening under rising interest costs.

- Dependency: the system depends on global trust in Western credit and the dollar.

- Constraint: can’t “self-cannibalize” without triggering a currency or bond crisis — because the system is the debt.

So ironically, the very thing the West calls “resilience” — a consumption-based, debt-financed economy — makes it far more brittle in a long attritional squeeze. Russia’s model is crude, but self-sufficient. The West’s is sophisticated, but trust-dependent.

🔄 Who has more room?

Russia has more physical resilience (energy, food, low debt, centralized control).
The West has more financial resilience (liquidity, global trust, network power).

But in a world where trust is eroding and blocs are forming, Russia’s primitive robustness outlasts the West’s paper flexibility.''

One of many actions that erodes trust in the Western financial system are actions like seizing and using Russian assets that the EU is going to vote on this week - beside weaponizing the system itself against others who are trying to extricate themselves out of it by building a alternative ie BRICS. Again - our discussion about systems and the global order in which these conflicts have emerged due to pressures within that order. Even UK's top army officer Lord Richards (who said Ukraine can't win) mentioned how ''the rest'' is rising against the West because of its history and current abuses of its power in this system and ''world order''.

Even the Belgium PM warned of the risks of using these assets as it is Belgium who holds them in the Euroclear system - they take on the risk as their the ones holding the bag:

This is the EU's built in contradiction on display. National interests are sub-ordinate to the supra-national political entity of the EU - hence internal tensions over funding, quotas etc. Spain is being finger wagged for not holding up its NATO commitment in spending now. Romania and Hungary just had Russian linked facilities sabotaged yet no article 5 has been triggered - very fishy: EU member countries energy security can be sabotaged (Nordstream aside) and nothing happens (including investigations shutdown) but a non-EU country gets its ass licked and pampered at the expense of EU members - this is like a Israel-America dynamic occurring.

A financialized system relies on faith and trust - something the West is abusing, the rest of the world is watching and hedging against. Once the alternative matures, we will see a slow decline in Western financial hegemony via de-dollarization. Right now the system and alternatives are in their infancy - still, people are jumping ship looking for a stable dingy (Bitcoin, Gold for example) not to risk being on the titanic.

Looking at it at from a systems level and why this global order is the cause of so much dis-order we see today: just take China as a example. They were accepted and integrated into it via the WTO in 2001 - they built themselves and re-invested their gains to develop whilst benefiting Western corps and sending cheap goods to subsidize a Western lifestyle that bought these goods with pieces of paper (Dollars) that are en-trusted with ''perceived'' value rather than the real value of those tangible goods: the difference between wealth (real resources, tangibles, food) vs money (financialization, intangible, the menu and not the food).  This is the exorbitant privilege of the reserve currency slowly on its way out due to its very abuse.

What happened in this system that benefited both parties? China got too big that it started threatening the dominance of those atop that system - not threatening them in any real sense - just their dominance. This is why US foreign policy started shifting in tone with Obama's ''Pivot to Asia'' in 2011, becoming more concrete from 2015 and in 2018 resulting in the first tariffs and tech restrictions under Trump. Biden added to this with semi-conductor bans which is essentially the oxygen of the modern world - as good as a blockade. Bi-partisan containment policy rather than one of competing against them. China has only retaliated in a concrete way now with its rare earth restrictions against Trump adding to this containment policy.

The point is - Russia and China are too big to ignore, yet too big to allow within the system as ''equals'' as they threaten the dominance of those on top of it. Beside the trust deficit of a post soviet collapse - Russia would never be allowed to share space within EU for the same reasons - elbow space wouldn’t want to be shared with such a large bloke who’d eat up more of the food and dictate table etiquette (rules). It used to be UK-France-Germany that dominated the EU but now it is solely France-German interests that are prioritized. Hence, a new system and world order (multi-polar) is looking to be made.

12 hours ago, BlueOak said:

Russia has FINALLY had its oil industry sanctioned by the US, yesterday. Which is only going to accelerate this.

Refined exports were hit due to Ukraine's drones, but that wasn't and isn't enough to break Russia's war machine funding - because crude oil is the bulk of their exports (70%) and not refined oil processed in refineries being hit. Hence the need to now sanction even those (crude) exports - which will be worked around using the shadow fleet system already in place. Ghost protocol:

Energy bound for damaged or offline refineries can be re-routed towards crude exports, sent off to refine at refineries (in Belarus or Kazakhstan for example) and sent back to be used domestically to cover domestic shortage. Refineries out of reach of drone range can also be used instead in central Russia/Siberia etc. This is why the drone tactic of repeatedly hitting refineries isn't a knock out punch in the way its portrayed in the media - not enough to break Russia at least. Adaptions happen and countries are more resilient than they seem - just like how the world got through COVID time shocks and supply chain restrains - things are eventually worked through and around.

Edited 19 hours ago by zazen

[zazen]

As I was saying above - these moves will bend, not break Russia.

https://www.politico.eu/article/donald-trump-sanctions-russian-oil-europe-lukoil-rosneft/

From politico: “For Moscow, the new sanctions will mean immediate pain, but are unlikely to curtail its war effort in Ukraine.”

And then Germany expecting to be exempt from these sanctions:

“We assume that the measures taken by the United States … are not intended to target Rosneft’s subsidiaries in Germany, which are held in trust by the German states,” said a spokesperson for the German economy ministry.”

Rules for me not for theee

https://www.ft.com/content/0d9a5946-1cb6-4c0b-aa5b-7f5383dedef7

Sober watch/listen.