RUSSIA Heading for ECONOMIC COLLAPSE Despite Vladimir Putin Stating Russia Has LOST NOTHING From War

Added: 2026-05-31

[00:00:53]Hi, welcome back to Joe Blogs. President Putin recently addressed an economic forum in Vladivostok in Russia and stated that Russia had not lost anything and will not lose anything as part of the invasion of Ukraine. And I wanted to address those comments because I think this is a good time to take a step back and have a look at exactly where we are and what Russia's situation is now compared to what it was before the invasion of Ukraine. So in this episode I'm going to look at the level of exports that Russia had in 2021 and analyze how much of those exports went to countries that are now sanctioning Russia. We'll have a look at the imports that Russia were importing from all of those countries to assess the size of the market and whether or not there is any significant losses.

[00:01:43]We'll then talk about the overseas investment that's been made into Russia and what's happened with regards to the large multinationals that have been operating and have facilities in Russia.

[00:01:53]We'll talk about the technology that Russia is using and the potential loss of all of that technology going forward.

[00:02:01]We'll discuss the brain drain, the loss of valuable people that Russia has experienced since the start of the war.

[00:02:07]We'll talk about the revenue losses that they've encountered with regards to the discounts that have had to be given to encourage countries to take more volume of oil. And then finally today, I'll wrap up with my summary and I'll give you my opinion as to whether or not I agree with President Putin that Russia have lost nothing with regards war in Ukraine or whether or not they have caused themselves some significant damage. So, before we get started on all of that, if I could ask you to give me a thumbs up at some point during this video. Please subscribe if you haven't done so already. Don't forget, I always include chapters so you can skip over sections if you don't have time to watch the entire video. And if you'd like to support the channel, please have a look below where you'll find links to YouTube Super Thanks and membership as well as buy me a coffee and Patreon. And once again, I'd just like to say thank you so much to everybody who has contributed to the channel. It really makes a big difference. It's hard making these videos on a daily basis. You have to keep going, get the motivation and it really does mean a lot to me when I see that there's a lot of people posting comments, giving me likes, watching the videos and particularly with the Super Thanks and Buy Me a Coffee, it shows that you like that particular video and really gives me that motivation to crack on and get some more of these videos made.

[00:03:19]This chart shows the breakdown of Russia's exports by country and shows the percentage exposure that Russia has to each country. As you can see, in 2021, China was Russia's largest export market accounting for around 14% of all revenue, which equated to around $69 billion. largest trading partner was the Netherlands, which accounted for around $42 billion of revenue followed by Germany, who accounted for around $30 billion, then Turkey and Belarus, who are not partaking in the sanctions, The United Kingdom, which has sanctioned Russia, accounted for over 22 billion.

[00:03:57]Italy was around 19 billion. Kazakhstan, 18 and 1/2 billion. United States, just under 18 billion. South Korea, who are also joining in the sanctions, 17 billion. Poland were at a similar level.

[00:04:11]Japan bought just under 11 billion worth of goods from Russia. France purchased just under 10 billion. Finland, a similar level. In 2021, India purchased around 9 billion dollars worth of goods, and India are not partaking in the sanctions. Belgium, which is part of the EU and therefore is part of the sanctioning block, bought around 8.7 billion dollars. Ukraine, which clearly is the most affected country by the invasion, bought over 8 billion dollars worth of goods directly from Russia.

[00:04:42]Brazil and Uzbekistan, which are not sanctioning Russia, bought around 5 billion dollars worth each. And Slovakia, which was the 20th largest trading partner with Russia in 2021, bought just over 5 billion dollars worth of goods.

[00:04:56]So, what this analysis shows us is that the countries that are now sanctioning Russia as a result of the invasion of Ukraine, represented seven of the top 10 markets and 15 of the top 20 markets for Russia in 2021.

[00:05:10]The total value of the exports to those countries was over 235 billion dollars. And when you take into account the other countries that were not included in the top 20, the total value of the exports to countries who are now sanctioning Russia equates to around 300 billion dollars. And the total value of Russia's exports in 2021 was around 490 billion dollars. So, Russia has lost around 2/3 of its export markets. So, it does seem quite a bizarre statement for President Putin to say that Russia has not lost anything at all as a result of the invasion of Ukraine because they've lost two-thirds of their export markets and seven of their top 10 biggest markets. And the problem with losing your biggest customers, whether it be for a country or a company, is that it's usually very difficult to replace them.

[00:06:07]You could obviously look to do trade with other partners to try to replace that lost revenue. But when you lose big accounts, it takes a lot of time and effort and energy to be able to replace that with lots of smaller accounts. And a lot of the countries that have sanctioned Russia are the wealthiest countries, the ones with the largest GDP. Eight of the top 10 economies in the world as measured by GDP have sanctioned Russia. So they're losing large countries with large purchasing power.

[00:06:39]So let's have a look at the same analysis for imports because all economies these days rely upon importing certain goods and products. This table shows the breakdown of the imports for Russia in 2021. And once again, you can see that China was the largest single trading partner representing around 25% of all imports. Russia's second largest trading partner was Germany, which represented around 9.4% of all imports, followed by the USA, which accounted for just under 6%, Belarus, which is not partaking in the sanctions, which represented around 5.4%, South Korea 4.5%, France 4.2%, Italy 4.1%, Japan 3.1%, Kazakhstan 2.5%, Turkey, which isn't partaking in the sanctions, was 2.2%, Poland 2%, Vietnam, which isn't partaking in the sanctions, 1.7%, United Kingdom 1.5%, India came in at a similar level but is not joining in the sanctions.

[00:07:41]Netherlands 1.5%, Ukraine 1.4% and Czech Republic, Finland, Spain and Switzerland all came in at around 1.2% of the total value of imports for Russia. So, this analysis shows us that seven of the top 10 and 15 of the top 20 countries that traded with Russia, that Russia bought imports from, are now sanctioning the country. So, they'll no longer be able to access those goods and products directly from those countries.

[00:08:13]Now, the total value of imports for Russia in 2021 was around $290 billion.

[00:08:18]So, this is a significant amount of trade.

[00:08:22]The 15 largest countries on the list represented around 45% or about 130 billion of that trade. And when you take into account the other countries that we haven't run through, the total value of the imports from countries that are now sanctioning Russia is in excess of 170 billion. So, once again, around 2/3 of all of the trade that Russia did in 2021 was with countries that it can no longer access any goods and products from. Now, Russia may be able to replace some of that trade with other countries, but there are certain goods and products that you won't be able to source from anywhere else in the world. And this is going to cause Russia a big problem going forward. So, once again, it seems a perverse statement for President Putin to be stating that Russia have lost nothing as a result of the invasion of Ukraine when the vast majority of their imports come from countries who are now sanctioning Russia.

[00:09:20]Since the breakup of the Soviet Union at the start of the 1990s, a significant amount of investment has been made directly into Russia. And a lot of that investment came directly from large multinational companies. Firstly, who saw Russia as an attractive market to sell their goods and products directly to the Russian citizens, but also companies such as Shell, BP, Exxon Mobil, who wanted to develop the raw materials and the resources that Russia had. Over the last 30 years, hundreds of billions of dollars has been invested directly into the Russian economy by these companies in conjunction with local operators. So, many of these businesses have been set up as joint ventures, and that's worked very well in terms of developing the Russian economy.

[00:10:05]However, since Russia's invasion of Ukraine, a very large number of companies have announced that they no longer want to continue doing any trade in Russia, and many have exited entirely and closed their operations. Yale School of Management have been keeping detailed records of all of the Western companies who've made these announcements. And the total number of companies who've now declared that they'll either be exiting or no longer investing into Russia is now over a thousand, and these are some of the biggest companies in the world.

[00:10:36]314 companies have stated that they are exiting entirely, which means that all of the overseas staff have been removed from the country and any employees have been laid off. 499 companies have stated that they are suspending all of their operations pending the end of the Ukraine war, which obviously is still ongoing, so these companies are still in a state of suspension. 171 companies have stated that they are scaling back their operations, and 160 companies have announced that they are postponing any future planned investment, development, or marketing whilst the war continues.

[00:11:14]So, the announcement that a lot of companies are either exiting from Russia or scaling back or stopping any of future investment will be hugely detrimental to the Russian economy.

[00:11:23]Because to have an economy that's healthy and growing, you need companies to be developing, to be growing, to be moving to the next level. Once you stop investing into your business, then you start going backwards. You become less competitive. You lose your edge against the rest of the world. So, the Russian entities are now treading water or potentially disappearing off the face of the earth. And that's bad news for the Russian economy because if you've got less people employed, if you've got less spend on marketing, if you've got less spend on construction and development, then that means that the people who are employed in those industries obviously won't be paid. But there's also the ripple effect. Because when you have an employee and you pay them, that employee will then spend money in the local economy. And that expenditure will have a multiplier effect and help to grow the economy. So, once you take out that potential multiplier effect, it has a much more damaging impact on the economy than just the removal of one person and one salary. Russia needs external investments and it also needs external expertise. So, it's not just the fact that it's losing the money value of the investments. It's also losing the initiative and the drive and the know-how and the knowledge that comes from an integrated global society. You can benefit from what's happening all around the world when those companies come to your country and set up facilities and help you learn how to do things better. As you see all of those companies exiting, it means that your economy is taking a backward step. So, once again, I don't agree with President Putin's statement that Russia have lost nothing with regards to the invasion of Ukraine. Actually, the investment in the economy and the investments in people and training and the development of businesses is one of the biggest losses that they're facing right now.

[00:13:13]One of the most serious issues that Russia is facing right now is the potential loss of technology that they will suffer by cutting their ties with a lot of developed Western countries.

[00:13:24]Microchips are are absolutely essential part of everyday living. They are going into more and more products and they're becoming more sophisticated and more advanced every single day. And Russia is not at the forefront of developing this technology. This graph shows the total volume of chips that Russia has imported in each of the last five years. You can see that in 2017 Russia imported just under 50 million chips. In 2018 it was around 70 million chips and in 2019 it was just under 80 million chips. Now, the volume of imports has been affected by the COVID pandemic. Firstly, a lot of companies closed their facilities, so there was a reduction in demand initially. And then there has been a global shortage. As we came out of the lockdowns, the demand increased dramatically and the producers just couldn't manufacture enough chips. And it's well documented that industries such as the automotive industry have had severe shortages of chips, which has affected the production of motor cars.

[00:14:24]So, we're seeing a global shortage right now, which explains partially why there's been a big reduction in the volume of chips imported into Russia because there just haven't been enough chips in the market. Now, this table shows the country of origin of the chips that Russia has been importing over the past five years. So, if you have a look at 2019, which was the last year that was entirely unaffected by the COVID pandemic, you can see that the biggest provider of microchips to Russia by a long way was Germany. Which in value terms accounted for more than all of the rest of the countries on this chart combined. The next largest supplier was Hong Kong, which obviously has very close links to China. The third largest supplier was Finland, followed by the USA, the UK, Latvia and China. So, what this analysis shows us is that the vast majority of microchips that Russia is importing are coming from the western countries who've now sanctioned them.

[00:15:17]Now, when you're talking about microchips, you need to look at the technology that sits behind those chips because the more advanced technology, the chips that can actually do more, has more functionality, are coming out of Europe and the USA. The chips that are coming from China and Hong Kong, generally speaking, are the lower level chips that can't do as much. So, even though Russia will be able to continue accessing those chips, the big question is, will those chips be able to perform as well as the chips that they've been getting from the West? And the answer to that is no. And the other issue that they have is that some of the chips that are coming directly from Hong Kong and China are being made under license from companies that own the technology in the USA and Europe. So, even if their trading partners are making chips that Russia need, they may well find that they can't actually access them because the license will state that those chips cannot be provided to Russia. So, this is going to be a massive issue for Russia because firstly, if they don't have access to those advanced chips, they won't be able to keep developing new products. But secondly, they're in danger of not being able to maintain their existing facilities if they're reliant upon these sort of chips. And this could potentially have a direct impact on the oil and gas industry, which is obviously a huge part of Russia's revenues. If they can't keep their facilities up to date and keep everything open, then they run the real risk of having breakdowns and technology issues, which could mean that they can't keep up production. So, this could be a massive issue. So, once again, I don't agree with President Putin's statement that Russia has lost nothing with regards to the sanctions that are being applied against them. This actually could be one of the biggest problems for Russia over the next few years.

[00:17:06]If you follow the channel, you'll know that there's been a lot of discussion about Russia being able to sell oil directly to India and China. And a lot of commentators have stated that if Russia can successfully increase its volumes to both of those countries and replace all of the trade that it's going to lose with the West, then overall Russia will be entirely unaffected and actually it could be a benefit to Russia. But there are a lot of question marks as to whether or not that is actually feasible for Russia to achieve.

[00:17:33]India is not connected by any sort of pipeline. So all of the oil has to be put onto ships and sent over the sea.

[00:17:40]And one of the problems that Russia's facing right now is that the insurance for shipping is predominantly covered by the Western world. So Russia is going to find it very difficult to be able to get insurance to cover the risk of anything going wrong with those cargoes. And if there was to be an oil spillage or some sort of ecological disaster, then Russia would be on the hook for all of that.

[00:18:03]But the other problem that they've got is that the ports who are receiving those ships will not be able to let those cargoes be docked and unloaded if the ships do not have the right paperwork and insurance. So that's the first challenge for Russia. The second challenge is simply finding enough ships to be able to put that oil onto because most of this oil that Russia has been selling so far has been going by pipelines over land and under sea directly to Europe. So taking out that form of transmission and replacing it with ships will need a massive volume of ships. You will need thousands and thousands of ships. And a round trip from Russia to India is going to take somewhere in the region of 50 to 70 days from when it set sail to when it comes back to the Russian ports. So in order to send one ship per day, Russia will need to have somewhere between 50 and 70 ships just to keep that one ship moving.

[00:18:57]If they want to send multiple ships, then obviously they will need multiple ships. So there's a huge logistical challenge facing Russia here. And if they don't have the ships, then obviously they'd need to invest to build new ships. That's going to take a a of capital which they don't have a lot of access to right now, and it's also going to take a long period of time to build up. But, one of the other big issues right now is that India and China are buying oil from Russia at a big discount. It's been reported that the discount has been somewhere in the region of 30%. So, that's a good deal for India and China. They're buying below market price. But, from Russia's point of view, they're obviously taking a massive hit on their revenues because they're having to give away these big discounts.

[00:19:37]Now, the G7 have just announced that they intend to impose a price cap onto Russian oil going forward. So, essentially what that would mean is that the market price for Russian oil would be set by third parties. And Russia would have to agree to that cap in order to get the shipping insurance to be able to move that cargo. If Russia doesn't agree to that, then obviously it goes back to the point I've just mentioned of not having any insurance and not having access to any of the shipping. So, it's a really big problem for Russia. So, one of the issues that Russia is facing going forward is that it may be able to sell volumes of oil directly to the rest of the world, but at a much reduced rate. So, this is going to have a massive impact on the amount of revenue that Russia is earning. So, once again here, I have to disagree with President Putin's statement that there is no impact at all on the Russian economy.

[00:20:25]He's saying, "We haven't lost anything."

[00:20:27]Well, actually, you have. You've lost billions, hundreds of billions of dollars of revenue because the only way to sell huge volumes of oil going forward will be to do it at a reduced rate.

[00:20:39]It's been reported that over 500,000 people have left Russia permanently.

[00:20:44]They have emigrated from Russia as a result of the invasion of Ukraine. And this is a big problem for Russia because the people who tend to emigrate at times like this are people who don't agree with the politics, they don't agree with what's happening, and they are the most mobile, and they're the people who are the most employable, the most intelligent. So, these are your top slice. These are the people that you really want to retain. These are your best employees. Some of them may well have been employed by overseas multinationals, and as those multinationals decided to leave, they've gone with them and taken up new roles overseas, somewhere else in Europe or the USA, or they may just be people who've decided that they don't want to be around anymore and they're going to go to another country. But either way, the brain drain is a massive problem for Russia. Because they're cutting their ties with a lot of the rest of the world, they're going to need their top people to try to develop their own resources, their own developments, their own technology. And to do that, you need your brightest sparks. You don't want them all to disappear overnight. So, it's difficult to put a dollar value onto the cost of the brain drain, but going forward, it will reduce Russia's ability to be able to come back from where it's sitting right now. So, the brain drain is a huge loss. You don't want to lose all of these valuable resources, all of your people on need right now. So, as with the other categories that we've looked at, I don't agree with President Putin's statement that Russia have lost nothing as a result of the invasion of Ukraine.

[00:22:15]So, what's the summary and conclusion today? Well, I wanted to make this video because President Putin has come out and made this statement. He's told the rest of the world that Russia has lost nothing. They've been entirely unaffected by what's happening in Ukraine. And I wanted to break it down and look at what's important to the Russian economy. And clearly the biggest single issue for Russia is the value of their exports. Their economy is entirely dependent on the export value of oil and gas. That's what's been fueling the growth of the economy for the last 10 years or so. And when you look at the breakdown of where those exports are going, the vast majority of them are going to the Western world, to the most developed countries, to the richest countries. And they're going to lose all of that trade. And Russia may well think that it can just simply replace all of that business with other countries. But the problem that they have is that the rest of the world is much smaller economically. So, in order to replace big countries, you need to find a lot of little countries. And the logistics of moving large volumes of oil and gas to a lot of small countries make it much more difficult because you're having to find more ships and more people and more docking and unloading and all of the other issues relating to that. So, replacing the pipeline supplies that Russia had been sending to Europe with shipping supplies is going to present a logistical challenge. It's going to cost a lot more in terms of investment and there's going to be just a lot more admin involved in doing it. So, it's going to be a massive task to try to replace all those big accounts with lots of small accounts. And as we discussed earlier, the magic wand solution of just sending massive volumes to China and India, again, is not as simple as it sounds because the logistics of moving the volumes is difficult. You've got shipping challenges and insurance challenges and then you've got the potential of secondary sanctions being applied against both of those countries at some point in the future. So, there are a lot of risks with replacing the Western world business with other countries. And it's exactly the same situation with regards to imports.

[00:24:18]Around 2/3 of all the goods that Russia's importing are coming from the West. And some of those goods won't be available anywhere else in the world.

[00:24:27]Some of the technology, some of the specialist items will not be available.

[00:24:32]So, Russia is basically losing out on certain things that it's got used to importing. So, they will lose out in terms of having to pay more because they're going to have to go to other suppliers. And also, they may just find they've got shortages. They just can't access those same goods. So, Russia will definitely feel an impact in terms of revenues. But I think the biggest single loss that Russia is facing relates to the future growth of the country, the technology, the brain drain, and the investment. Russia has grown rapidly over the last 30 years, partly as a result of overseas investment. They invited lots of countries and companies to come into Russia to develop businesses for them, to help them grow and learn and make things. And now a lot of those companies and countries have exited. They've walked away from Russia.

[00:25:20]And Russia's going to find it very difficult to continue growing at the same rate without those partnerships, without that investment, and without the knowledge and the expertise that they've been relying upon. So, my overall assessment here is that Russia has lost a massive amount as a result of the invasion of Ukraine. The economy is going to contract, but in terms of growth and looking forward, Russia is facing a massive challenge right now to be able to continue keeping up with all of the rest of the countries. In 2021, Russia was ranked at number 11 in global GDP terms.

[00:25:55]We've already seen that GDP fell by 4% in Q2 of 2022. It's going to fall further. It's likely that Russia will drop out of the top 20 economies in the world, and it could be a very long time before we see Russia getting anywhere near close to the top 10 again. So, hopefully you found today's video useful, informative, and thought-provoking. If you've liked what I've said, then please give me a thumbs up, and don't forget to subscribe if you haven't done so already.