Russia is the ninth least indebted country in the world: The Russian central bank raised its key interest rate to 20% from 9.5% – February 28, 2022,
From an economics perspective, it’s pretty obvious why Vladimir Putin decided to invade Ukraine. First and foremost in most Western Countries, there’s currently a demand to end Fossil fuels, this dedication by Progressive politicians has led to ADDITIONAL regulations and taxes on fossil fuel companies, these taxes and regulations have benefited OPEC countries, Russia and China economically because North American fossil fuel companies can’t realistically compete.
Russia: National debt from 2016 to 2026(in billion U.S. dollars) | statista.com
Add to this the reality that Russia is the ninth least indebted country in the world and you’ll start to see the thinking behind Putin’s invasion of Ukraine. Now, the truth of the matter is that Ukraine would be wise to simply fight back, even if Russia does win and take over Ukraine, moving forward, Russia will find it very difficult to find money to fund its expansion, because the sanctions by the global powers revolve around denying the Russian credit.
Debt to GDP Ratio by Country 2022 | worldpopulationreview.com
Russia’s debt ratio is one of the lowest in the world at 19.48% of its GDP. Russia is the ninth least indebted country in the world. Russia’s debt is currently at a total of over 14 billion руб ($216 billion USD). Most of Russia’s external debt is private.
In response to denying Russia credit, Russia has threatened the world with nuclear weapons. Is this threat real? I don’t know, but if you look at the economics of the Russian invasion of Ukraine, I wouldn’t put it past them, because if this invasion of Ukraine by Russia turns out to be a complete failure, Putin risks looking very weak not only to his own people but also on the global stage.
Just so I’m clear, as of today’s date, destroying the Russian economy would be easy to do for the United States and Canada, both countries have the ability to be energy independent, the problem is merely the politics, of both nations. But things could change, depending on what moves the Russian government decides to take.
For the Russian people, most of whom are NOT in debt, 20% on your money sounds pretty good, the Russian ruble is declining in value, but that also could equate to Russian assets being viewed as very cheap and very beneficial to Risk tolerant investors. The good thing about not being in debt in that much debt, is what you can do, that other nations can’t do.
Sure America can borrow money until the cows come home, but the return on investment for debtors is less and less as the debt servicing costs become increasingly problematic. The variable in all of this is ofcourse property rights in Russia, Left-Wing countries are often property rights abusers, so the Russian desperation to save its economy might be viewed by investors as not worth the risk. Most investors are well aware of Mikhail Khodorkovsky and what happened to his property.
Again property rights in what is imagined to be communist countries are problematic, in China, investors are willing to take more risks because of the sheer size of the Chinese economy, Russia, on the other hand, has a rather small economy which means taking a risk on Russia, would put you in the spotlight of the Russian watchdogs. From an economics standpoint, I imagine that Russia wants to take Ukraine as quickly as possible.
Will Russia use Nuclear weapons? Well if it does, it runs a very serious risk of losing everything at that point. Because now they’re putting the entire world at risk.
Interesting times ahead!