FNPR Newsletter. September 20, 2022


September 20, 2022

Over 200 days have passed since the beginning of the special military operation of the Russian armed forces on the territory of Ukraine. Much has happened over the summer months, which I would like to inform you about.

In our view, they passed without noticeable negative consequences for the labour market and the situation of Russian workers. The unemployment rate in Russia remains at historical lows within the range of 3.9-4.5%. Deflation which began in May amounted to -0.52% in August. According to state statistics, inflation is slowing down and its annual rate is now expected at 12.4%. Against this background, year-to-date growth in median wages of Russian workers amounted to +11%, while real cash incomes decreased by 1.9%. There are no serious disruptions in the key sectors of economy. As a matter of fact, coal mining, IT and communications, agriculture and construction showed a marked increase of 16 to 28%.

The situation in the consumer market remains stable. Agricultural work has been highly successful; the grain harvest was one of the highest in decades. Seasonal food prices have decreased slightly. New supply chains for imported goods are being established, purchase of housing is on the rise, and demand for cars is gradually recovering.

According to recent sociological studies, public support for the special operation in Russia remains at a very high level reaching 70-73% (according to the All-Russian Public Opinion Research Centre as of September 6, 2022), while 79% of Russians approve of President Putin's performance.

As of the beginning of August, the Russian budget was executed with a surplus of 481.9 billion roubles (approx. 8 billion US dollars); oil and gas revenues increased by 58% as a result of price rises on the world market because of the sanctions imposed against Russia.

As is well known, two options for oil and gas delivery from Russia are available – under long-term contracts or through the free market. Contract prices are fixed according to the agreement between seller and buyer for its entire duration. At present, contract prices compare very favourably to those on the market (ten times lower). As for the contracts, Russia fulfils all its obligations in full if payment is made in roubles (I wrote about this in a previous information letter). Buyers who refuse to pay in roubles can purchase oil and gas on the free market, where the price is determined by demand. This is exactly the reason for the sharp growth of the wholesale price for electricity in some European countries (up to ten times) that refused to buy Russian gas for roubles. Despite continuous efforts by a number of countries to develop "green energy", it is still impossible to replace traditional hydrocarbons or nuclear power.

European intentions to urgently find hydrocarbon suppliers other than nearby Russia also proved to be impracticable. In these circumstances, European officials are trying to invent new levers aimed to limit prices for Russian energy resources, such as "price ceilings". Obviously, these ideas have nothing to do with the principles of free trade and cannot be accepted by Russian companies.

The disputes over the use of Nord Stream and Nord Stream-2 pipelines taking place in Germany are causing sincere bewilderment in Russia, since the closure of small and medium-sized enterprises in that country is becoming widespread precisely because of the rapid growth of prices for gas and electricity, which leads to aggravation of the social situation and street protests. Similar developments have been observed in other European countries.

We are extremely concerned about the increasing supply of lethal weapons to the nationalist Kiev regime from the West, which is gradually turning the local conflict into a global one.

The reckless behaviour of Kiev regime in relation to the Zaporozhye nuclear power plant, which cannot be described otherwise than nuclear blackmail, has caused particular tension in recent months. Europe's largest (the world's third) nuclear power plant was put into operation in the mid-90s and has six water-to-water power reactors with a nominal capacity of 1000 MW each. The Russian armed forces took control of the station in March 2022. Since then, Ukrainian troops have been shelling radiation-hazardous facilities adjacent to the station. Hits of large-calibre shells into power units have been recorded. According to the simulated evolution of the radiation situation at the station in the event of an accident, published by the Ukrainian media, several countries of Europe, the Dnieper River and the Black Sea will be in the affected area. Contamination of the Mediterranean Sea is not ruled out, too. Despite the great danger of shelling the power plant, the Ukrainian army was doing so even during the stay of the IAEA Director General and inspectors there. The IAEA proposals made after their visit to the plant came as quite a surprise as they did not contain constructive proposals to ensure its security, based on the real situation in the region under control of the Russian armed forces.

The support of Kiev regime with arms and money, with the aid of private military companies and mercenaries, as well as the direct involvement of special services from the United States, Great Britain and some other countries, lead to an inevitable aggravation of the military situation in the combat zone. As you know, there was no mobilisation in Russia, martial law was not declared. The special military operation is carried out by 15% of the peacetime army. Together with the People's militia and volunteer units, including private military companies also taking part in the operation, the allied forces (as they are commonly called in the Russian media) are noticeably inferior in numbers to the Ukrainian troops opposing them.

However, this numerical superiority does not give a decisive advantage. As the events of early September show, when the Ukrainian military leaders decided to launch an offensive, their advance resulted in heavy loss of life unacceptable to any civilized society, even as ideology-driven as the Ukrainian one.

In the territories occupied by Ukrainian neo-Nazis in the first week of September, mass persecution of local residents for cooperation with pro-Russian administrations began; local activists engaged in humanitarian aid were arrested and tortured, as well as school teachers who have decided to start teaching from Russian textbooks.

All these events once again show the essence of the Kiev nationalist regime which, since 2014, has unleashed a blatant genocide against its own citizens who do not share the Nazi ideology.

The special military operation in the territory of Ukraine continues. Its objective — to liberate the population of the Donbass from intimidation, violence and extermination by the Kiev regime and to create conditions that guarantee the security of Russia — remains relevant. As President Putin said at the recent summit of the Shanghai Cooperation Organisation in Samarkand, the plan of the special military operation in Ukraine is not subject to adjustment.

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