The sale of oil fuels the Russian economy and allows you to finance the war/photo from the archive of Channel 24
In economic publications they write that Russia's default is inevitable! Bloomberg reports that the Russian government has paid back dollar debt on several ruble bonds. In the world this can be qualified as a default.
Default is inevitable
S&P downgraded Russia's ratings in foreign currency to “selective default”. So, after a month and a half of the war, our enemy is in default.
But is a default enough to destroy the aggressor economically? So, in order to bury them forever – with massive bankruptcies of enterprises, layoffs of millions, hyperinflation, poverty, hunger, in a word, so that the 90s would seem like racist years of economic stability!
The main consequence of a default is that foreign creditors stop borrowing money from the country. If its budget runs a large deficit and relies heavily on new borrowing, a default will have dire consequences for such a country. Because there will be nothing to pay state employees, the army, social and pension payments, and the like. The country will choose: either lay off everyone for whom there is not enough money, or print money. The press is always hyperinflation and a catastrophe in the economy (this is what we saw after the defaults in Zimbabwe in 2006 and in Venezuela after the default in 2017).
One default is not enough
In Russia, unfortunately, so far the budget was in surplus… In 2021, the federal budget had 25.3 trillion rubles in revenues and 24.8 trillion rubles in expenditures.
Due to sanctions and freezing of gold and foreign exchange reserves, they cannot pay their foreign debts in foreign currency. But one default on external payments is not enough for the economic destruction of Russia.
The reason for the surplus budget of the gas station country is, attention, oil and gas revenues. In 2021, there were 9.1 trillion rubles, that is, 36% of all budget revenues.
What we see in 2022:
- record oil and gas prices ;
- EU countries, despite the war in Ukraine, are in no hurry to impose an embargo on the import of oil and oil products from the aggressor. There is information that the EU countries paid the aggressor 37 billion euros for oil, gas and coal during the 40 days of this bloody war in Ukraine.
Oil embargo
For this reason If the world really wants to economically destroy the country that has unleashed a terrible war in the center of Europe, a complete embargo on the purchase of Russian oil and oil products is needed.
This will reduce their budget revenues by a third, and it will not be possible to block the hole with loans, because no one borrows from bankrupts, especially if this bankrupt is a terrorist and an aggressor! And then the printing of rubles, hyperinflation, and even greater collapse of the economy will begin.
Therefore, the default itself is a necessary, but not a sufficient condition! We need a complete rejection of the aggressor's oil and oil products by the EU countries.
This can quickly lead to catastrophic consequences for the occupier. The West must take this step for the security of the whole world!
