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Author Topic: Does war help the Russian economy?  (Read 491 times)

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Online Tom Cat

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Does war help the Russian economy?
« on: October 02, 2015, 02:12:40 PM »
It's often stated the United states needs war to keep the economy going.
For those of you that have a good understanding of Russian economics,
Is there a connection to Russia's involvement in Syria and the possibility of this helping to stimulate their economy?
Don't shoot the messenger, links to articles posted, don't necessarily reflect my personal opinion.

Offline msmoby

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Re: Does war help the Russian economy?
« Reply #1 on: October 02, 2015, 03:04:12 PM »
It's often stated the United states needs war to keep the economy going.
For those of you that have a good understanding of Russian economics,
Is there a connection to Russia's involvement in Syria and the possibility of this helping to stimulate their economy?

Nope, just further deflect public opinion and take their minds off the economy

Offline Manny

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Re: Does war help the Russian economy?
« Reply #2 on: October 02, 2015, 03:33:33 PM »
Is there a connection to Russia's involvement in Syria and the possibility of this helping to stimulate their economy?

No. The economies are quite different. Russia doesn't have Zillions of debt it needs to offset with wars and exporting dollars.

Think of the two economies like the tortoise and the hare.


Online andrewfi

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Re: Does war help the Russian economy?
« Reply #3 on: October 02, 2015, 03:47:17 PM »
It's often stated the United states needs war to keep the economy going.
For those of you that have a good understanding of Russian economics,
Is there a connection to Russia's involvement in Syria and the possibility of this helping to stimulate their economy?

The benefit to the economy comes from the consumption of materiel - it doesn't have to be used, just paid for, stored and then written off. Killing other people is just a way of writing off the stock purchased.

Is there a benefit to the Russian economy from Syria? I doubt it is to any significant degree because it is not adding to the consumption of goods to a great degree. A few bombs isn't going to make much difference to the balance of payments. The planes will go back to Russia in 3 or 4 months and wages and many other consumption expenditures would have been incurred whether in Russia or Syria.

The US situation is a matter of structure and scale. The military/industrial complex in the US is HUGE. The proportion of GDP is currently around 3.5% for publicly admitted spending, a fall from early 2000's when it was around 4.5%. But the money amount is vast. Russia is currently spending about 4.5% of its GDP on military but the money amount is tiny compared to the US. Also, spending in Russia is much less of a boondoggle than in the US. Projects are not parceled out to suit congressmen and their voters.

On a broader note, it is undoubtedly the case that the current developments of the military are serving to stimulate the economy. For example, the Russians are working on jet turbine development. They lack development in certain classes of turbine. The military has started development on this neglected area, the reason why they have restarted serial production of one of their older long range bombers, and it is expected that this will result in new engine types for civilian aircraft currently in development resulting in medium sized airliners that are engine competitive with those from the west - right now they are not.
Also, state spending has what is called a Multiplier Effect within the economy. Every ruble spent by the government has a greater than 1 ruble effect upon the economy. CLICK HERE!

So, any increased spending by the government will have a beneficial effect upon the national economy. But Syria, on its own, no, nothing that anyone will notice. More the other way round. Budgets within the military will be consumed possibly forcing economies on other operations. It has been reported, for example, that some of the officers vacationing in Ukraine have been replaced by more junior, less capable men as the more experienced holidaymakers are needed elsewhere.
A side benefit will be that as Russian machines are proven in battle to be effective and thus much more economical (lower cost and actually functional) than equipment from the US then sales for those items will increase. Russia is already (IIRC) the second largest arms exporter. As is usual, combat proven equipment tends to see sales increases as a result of having been proven under fire.

"For what else is the life of man but a kind of play in which men in various costumes perform until the director motions them offstage?" -Erasmus

Online Tom Cat

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Re: Does war help the Russian economy?
« Reply #4 on: October 02, 2015, 04:07:14 PM »
I would think there is an upside for the Russians to showcase their weapons,possibly creating a larger market.

Making a good show in Syria, could enable Russia to even take away some of the United states arms markets.

Maybe it's a small percentage of the economy, but if Russian weapons are proven superior, it might be possible other Russian products might be looked at as a better choice.
Don't shoot the messenger, links to articles posted, don't necessarily reflect my personal opinion.

Offline Manny

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Re: Does war help the Russian economy?
« Reply #5 on: October 02, 2015, 04:16:55 PM »
In many ways, Syria is a practice session on the world stage.

Some may buy Russian arms or technology, America will see they have some capability and be less inclined to engage with them directly in the future. I dont see a direct economic benefit, but for PR (which the western media are typing and filing copy 24/7 to discredit) these actions have value. Apart from being morally right.

Offline WestCoast

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Re: Does war help the Russian economy?
« Reply #6 on: October 02, 2015, 04:22:50 PM »
It's often stated the United states needs war to keep the economy going.
For those of you that have a good understanding of Russian economics,
Is there a connection to Russia's involvement in Syria and the possibility of this helping to stimulate their economy?

There's a possibility that Russia's involvement in Syria will help the Russian economy. It really depends on whether or not Russia spends more in Syria than it can sell to Syria and others. Russia is the worlds #2 arms supplier, behind the US but well ahead of #3 China.

Will Russia be able to sell lots of military equipment to Iran and other countries to offset what it's spending in its military offensive in Syria? Russia has already sold an updated S-300 missile system to Iran, presumably to keep countries such as Israel and the US from bombing the hell out of Iranian nuke production sites.

Russia's in partnership with India to produce a 5th generation fighter jet. Last reports are that there are production problems. Delivery dates for the fighter are currently set for sometime in 2017.

As Manny says the 2 economies are like the turtle and hare. Russia's economy is inextricably linked to the prices of oil and natural gas which are currently half of what they were 18 months ago. Sanctions have also had an affect on the Russian economy so naturally Russia's economy is in a slowdown. These two factors have led to a sluggish economy that is likely in or will soon be in recession. What this means is that every little bit of foreign revenue Russia gets could help.

The US economy, the haven for global companies in the time of recession, is still growing and at least 8 times the size of the Russian economy. The US economy will outpace the Russian economy for at least the next few years and as long as oil and gas prices remain low. 
Ipsa scientia potestas est. Knowledge itself is power.   Sir Francis Bacon

Online Tom Cat

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Re: Does war help the Russian economy?
« Reply #7 on: October 08, 2015, 09:11:01 AM »
From what I have been reading, Russia might be gaining quite a bit from military action in Syria
One could list several ways Russia has already benefited. :nod:

Russia Is Turning the Corner on Sanctions

http://russia-insider.com/en/business/russia-turning-corner-sanctions/ri10359
Don't shoot the messenger, links to articles posted, don't necessarily reflect my personal opinion.

Online Tom Cat

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Re: Does war help the Russian economy?
« Reply #8 on: October 08, 2015, 09:19:16 AM »
It's possible that the Russian economy was in much better shape than the western media portrays.

Syrian Campaign Nails Myths About Russia’s Economy

http://russia-insider.com/en/syrian-campaign-nails-myths-about-russias-economy/ri10335
Don't shoot the messenger, links to articles posted, don't necessarily reflect my personal opinion.

Online andrewfi

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Re: Does war help the Russian economy?
« Reply #9 on: October 08, 2015, 11:01:25 AM »
While one can point at, for example, arms sales the incremental benefit is small. They ain't going to double their sales for example. Against that one has the cost of the war. If we assume a net profit of say 10% then the Russians will have to sell 260 cruise missiles just to recoup the money from the firework party the other night. Not many buyers in that kind of volume!

The thing is that the U.S DOES benefit from perpetual war, or at least a part of it does. The Russian and U.S economies are very different beasts though. You see the U.S benefits by forced sales of weaponry, they also get paid for their wars by 'grateful' allies. However the biggy is that US warfare is funded by debt and by exported dollars, and, as I have said many times before, as long as one keeps the exported dollars out of the national economy then everything is just fine (or seems to be so) Bottom line, for the time being 'The World' pays for US military and the people who fight the wars, own the businesses that make the weapons and those who depend upon and supply those people and businesses all benefit from US wars.

Russia has tiny amounts of debt and does not export its rubles. That structural difference makes all the difference. That is why, up-thread I noted correctly, that if there was a net benefit to Russia it would be small.

The article by Alexander Mercouris in Russia Insider was interesting, it raised some interesting points and I, for one, had not previously given the matter much thought, but yes, they are doing HUGE amounts of stuff - not just military, indeed the military budget is relatively small compared to the US. Mercouris' article did not, as I recall, look at actual numbers, probably because the piece was a kind of 'light-bulb moment'. There is obviously a benefit from the devaluation of the ruble, that has for sure had a positive effect on infrastructure spending but this rapid infrastructure stuff was going on well before the west declared war on Russia. They are doing stuff that would be big for almost all countries even if there was just ONE such project, but the Russians have been popping them up one after the other after the other.

"For what else is the life of man but a kind of play in which men in various costumes perform until the director motions them offstage?" -Erasmus

Online Tom Cat

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Re: Does war help the Russian economy?
« Reply #10 on: November 18, 2015, 01:13:03 PM »
It's looking more and more like Putin and Russia will benefit greatly from their military involvement. :coffeeread:

Paris Changes Everything: Putin's 'Strategic Blunder' in Syria May Be a Boon for Investors

http://russia-insider.com/en/politics/paris-changes-everything-putins-strategic-blunder-syria-may-be-boon-investors/ri11248
Don't shoot the messenger, links to articles posted, don't necessarily reflect my personal opinion.

Offline msmoby

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Re: Does war help the Russian economy?
« Reply #11 on: December 14, 2015, 01:41:44 AM »
It has been reported, for example, that some of the officers vacationing in Ukraine have been replaced by more junior, less capable men as the more experienced holidaymakers are needed elsewhere.

does the Kremlin know you are admitting what they continue to deny... :coffeeread: