Funding the Russo/Ukrainian War Is Bad Economics for Everyone!

by | Mar 23, 2023 | , ,

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President Zelenskyy says the Russo/Ukrainian War won’t end until God punishes Russia and all former Ukrainian territory is restored to Ukraine. That’s pretty bold talk for a guy that doesn’t have ten cents in his pocket that’s his, and Joe Biden says America will support Ukraine “as long as it takes.”

More blather from a former actor who has no trouble spending billions of American dollars and demanding more to attain his goals and another stupid piece of blather from what has to be the dumbest man to ever sit in the White House. Carter, HW Bush, W Bush, and Obama can fight over who belongs in second place.

Let’s stop being stupid. This Russo/Ukrainian War will have to be settled via negotiations, or eventually, Ukraine will most likely lose because the rest of the world will tire of the cost and consequences of supporting Ukraine. But can Russia afford to continue this insanity for a few more years? We’ll come back to that.

While all that may take years ⏤ if a conservative gets into office in 2024, this “as long as it takes” support may end on January 20th, 2025, which I think Putin is hoping for.

But I also think a new administration just can’t walk away, and Putin needs to know it, and all parties need to make sure there’s one absolute crystal clear truth. This must end! And it must end through a settlement where everyone will have to win, and everyone will have to lose.

While there’s talk China will offer a plan, I think that’s like asking the Pharisees and the Sadducees if they thought Christ was a heretic. So, it seems that no one has a plan to put forth, so I guess it’s up to me. Imagine that.

Here is the plan. I think this is the only settlement that can work, or one very similar, and it must start with a cease-fire.

> Eastern Ukraine was overall pro-Russian from the beginning, so they will agree some part of Eastern Ukraine, already conquered, will officially become part of Russia. The borders can be negotiated.

> Russia will officially agree to respect those borders and the borders of all their independent neighbors, even those not members of NATO. (I don’t give much hope Russia will honor any agreement with no consequences for bad behavior.)

> All sanctions will be removed!

> Ukraine and Moldova will become part of NATO if they wish, and NATO will “officially” agree not to move any further East. (Belarus has been playing footsie with Russia over this, so let them live with it.)

> Russia will recompense Ukraine one trillion dollars to rebuild the cities and infrastructure they’ve destroyed, estimated to cost between 300 and 400 billion dollars.

> 400 billion going directly to the Ukraine government.

> 600 billion going to dedicated Retirement and Health Care funds.

> Russia will offer Western Europe natural gas at a reduced negotiated guaranteed rate for five years. All energy sales to Europe will have a negotiated deductible percentage going to Ukraine as the source for the trillion-dollar settlement. That amount will be deducted by the purchasers and will be delivered, per ratio, to the Ukraine government and the Health and Retirement funds. That deduction will end with the settlement of the trillion dollars, but that settlement must be fulfilled within ten years.

> Russia will give Kaliningrad back to Poland, and Poland will allot a payment agreed upon with Russia through mandatory binding arbitration if necessary. That money will go to Ukraine as part of the trillion-dollar settlement divided according to the agreement.

Some might think this is too easy on Russia, and those who will believe this is too harsh. Still, the fact is Russia will be able to walk away without being totally humiliated or completely bankrupted, and the cost of reparations would not come directly out of their coffers. In 2022 the E.U. paid Russia 16 billion dollars for energy (over six trillion rubles), and that was with sanctions. That number will grow rapidly after sanctions are lifted.

A dollar is worth a little over 75 rubles. A trillion U.S. dollars would translate as 76,015,000,000,000 rubles. That’s 76 trillion rubles! Russia doesn’t have that kind of money, and please keep this in mind. Russia is not a natural capital-generating nation, and neither are Iran and China, prominent Russian allies, who are benefiting from all this at Russia’s expense. We’ll come back to that also.

I don’t care what happens to Russia. Russia has been a vile, murderous, insane nation for over a hundred years, slaughtering tens of millions of innocent people and funding violence worldwide. The entire history of Russia for the last hundred years has been a history so vile as to make any sane person sick to their stomach. But demanding perfection is always a mistake.

The best we can hope for is the most acceptable imperfection, so the cost of reparations must be negotiable. Otherwise, it could trigger a bigger problem, as did the reparations inflicted on Germany by the Versailles treaty at the end of WWI. But that number must still be significant enough to stop much of Russia’s militarization and troublemaking worldwide. And Russia would agree to that; why? We’ll come back to that.

There will be those who think Ukraine should have more, but the fact is that Ukrainian corruption brought this into being. They brought this on themselves by lining their pockets instead of arming the nation. That, along with the stupid energy policies of European countries, the E.U., and Biden’s insane energy policies, all predicated on the falsehood of catastrophic climate change, formerly global warming. But since the CO2 emissions have been going up and the world’s temperature hasn’t, it’s now climate change. That sent the price of energy skyrocketing, and that funded Putin’s invasion.

I don’t care what happens to Ukraine or, for that matter, Europe. We don’t need them, they need us, yet they’ve been arrogant and stupid, looking down their noses at America forever. Despite the fact they’re not all speaking German because of America, and now they’re suffering the consequences for their “green” insanity, Germany is the lead actor in that insanity.

For over 100 years, America has spilled untold gallons of American blood and wasted billions of American dollars to save Europe, and we need to stop it. We’re giving security and money to people who don’t even like us, and would happily turn on us. As Senator Kennedy asks: Why are we giving money to countries that hate America? They should be able to hate us for free.

Up to this point, there are only two major winners. Some minor winners, and some lesser winners. The major winners are China and, to a smaller degree, India. Those, to an even lesser degree, are the former Soviet Republics bordering Russia, China, and Iran. Of all of them, only India is a legitimate capital generator because they’ve abandoned central planning to a large degree. Now they’re building their own aircraft carriers and have decided to create their own military-industrial complex manufacturing their military equipment in the country. Russia has been their primary supplier for many years, mostly to be able to defend against China. But that will change, and soon, they won’t need Russia except for energy supplies, which they can acquire from the Middle East.

China is getting a significant discount on the energy they’re buying from Russia, and Iran is selling arms to Russia. Both are finding ways around American sanctions in the process. China is now saying they’re going to sell military equipment to Russia. I have as little confidence in their equipment as I do in Russian equipment, and they’re still worried about more American sanctions. I think trade with communist China was a door that should have never been opened in the first place. It needs to be closed permanently ⏤ since trade with America has been funding their militarization and international troublemaking.

The former Soviet Republics are now far less dependent on Russia economically, much less intimidated militarily, and are creating their own economic trade deals, less concerned whether or not Russia likes it. Much of it is with China.

Now, that brings us back to all that stuff I said we’d come back to, and all of it’s about economics. Russian economics. Russia needs out.

One of Russia’s benefits was they had little debt, but that’s changing as they’re going to be operating at a deficit, and the regional budgets are suffering. The industry is suffering due to sanctions, and local shops and businesses are closing or operating at less than the former capacity as Putin shifts the burden of all this to Russian society. 

Spending on military and security services will grow from 24 percent of the budget spending projected for 2022 to almost 33 percent in 2023 (9.5 trillion rubles). Spending on the economy will decrease compared to that in 2022, and the small increase in social spending will be eaten up by inflation.

The cost of Putin’s imperial ambitions are expanding way beyond anything they expected or could afford. He’s tapping their National Welfare Fund, which had been growing, and among other things, pays retirement benefits, but if this continues:

The primary way to finance the budget deficit is now domestic borrowing. After all, if the MinFin continues using the liquid part of the NWF (7.6 trillion rubles) to finance the deficit, that source will likely be exhausted in three to four years.

Russia’s annual budget is between 300 and 400 billion dollars, and Putin spent a quarter of that on this war. He doesn’t have the demographics or industry to fight this war, so he’s recruiting from other nations like Syria and Iran, and this puts all these “allies” in a position to demand funds from Putin he can’t afford. This war is costing Russia ten billion dollars a month, and that bill is getting harder to pay, and it’s going to go up.

Putin does have foreign exchange reserves of “nearly $549 billion. About half of that total has been frozen by foreign countries friendly to Ukraine“, but Russia may use the rest to “continue fueling its military offensive.” Again, this war is costing Russia ten billion dollars a month; they’re facing dropping revenue, deficit spending, welfare and retirement needs, and demographic losses as people are fleeing Russia in droves, and Putin has to see the disastrous long-term consequences of all that.

Here’s the bottom line. Putin needs out, Ukraine must abandon any hope of continuing this war, and the rest of us want them to go away quietly into the night. More and more prominent political figures in America are now as opposed to all this as I was from the beginning. This whole mess isn’t our fault, and it isn’t our responsibility. It is a great distraction, though.

In the end, no matter what happens, Russia will now be a second-rate thug that will be taken advantage of by China, India, and just about everyone else. And I think it’s a very good possibility Putin will be found dead somewhere, having “committed suicide.” Historically, failure isn’t appreciated, approved of, or tolerated in the Russian hierarchy, especially failure from an ex-KGB thug who thinks he’s a Czar.

Rich Kozlovich

Rich Kozlovich has been a writing partner with Dr. Jay Lehr, who has now passed, for many years dealing with environmental issues and more. Rich, in order to honor our friend, Jay Lehr, is pleased to be able to continue writing for America Out Loud as a regular contributor.

Rich is a forty-year veteran of the structural pest control industry, having served for over 25 years on many industry association boards dealing with the regulations and legislation that impact those who manufacture, distribute and apply pesticides and fertilizers. He’s now the publisher of Paradigms and Demographics, which he calls a not-for-profit passion. His blog motto is, "Everything is to be Questioned."

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2 months ago

I typically am in agreement with comments and essays on this site but this one is well off the mark. This writer is obviously all about the Benjamin’s and he may well be accurate with his calculations of the wars cost but that is just a component of a much larger issue. He has belittling words for Zelinskyy and his countrymen who may well be the most courageous on the planet. The author apparently is without concern for the human cost of the suffering the Russians have visited upon the Ukrainians. It’s one thing for the Russians to cough up the rubles to rebuild what they’ve destroyed (unlikely) but what about the infinite cost of lives, health, livelihood, and trauma caused by Russian predations? I’m old enough to remember a time when the Russians / soviets were the living embodiment of an “Evil Empire”. This act of barbarism needs to be addressed in a manner that will cause the Russians to never even consider invading another sovereign country for the next 100 years. The Ukrainians with our help and of the other western nations that have taken up the cause are administering the justice that is well deserved.

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