cross-posted from: https://mander.xyz/post/45242789
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Russian Railway, which operates approximately 85,000 km of railway, is going through a crisis that has prompted Russian authorities to consider exceptional measures to avoid default, according to an analysis published by Europa Liberă. …
Russian Railways’ total debt has reached approximately 4 trillion rubles (equivalent to about USD 50–51 billion, EUR 43 billion), at a time when revenues have been affected by the slowdown in the war economy and the highest interest rates in two decades.
The company, which has approximately 700,000 employees, is heavily exposed to state-owned banks, particularly VTB, and its inability to meet its financial obligations could have a knock-on effect on the Russian banking system, several analysts warn.
“This crisis at Russian Railways is one of the factors contributing to accelerating inflation in the Russian economy,” said Russian economist Igor Lipsiț, quoted by Current Time. According to him, falling revenues, rising tariffs, and inflationary pressures directly affect the population and companies dependent on rail transport.
The war in Ukraine, a systemic shock for the rail operator
The invasion of Ukraine was a systemic shock for Russian Railways. The prioritization of military transport, imposed by the government starting in 2024, has seriously affected trade flows and the punctuality of civilian deliveries.
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In an attempt to stabilize the financial situation, the Russian government has ordered the sale of the Moscow Towers office complex, a 62-story building in the Moscow City financial district, purchased by Russian Railways in 2024 for approximately 193 billion rubles (about USD 2.4 billion), according to the Ukrainian portal UNN.
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The Moscow authorities are considering several options to support the company, including:
- increasing freight transport tariffs;
- increasing state subsidies;
- tax cuts;
- using reserve funds;
- converting part of the debt into shares, which would give state banks direct stakes in the company.
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The interesting part is imho the 6.7% decline is cargo volume. When you want to cover large distances over land, trains are the best solution. Russia therefore uses them a lot for freight. So they end up being a pretty good indicator for the Russian economy.
What this also does mean: Russian Railways will not invest as much into their infrastructure, because they do not have the money. This might work for some while, but there will be that bridge that needed to be replaced back in 1995. The much needed new line will not be build. Facilities will rot and disintegrate. Maintenance is not being done. Investment in new trains will be postponed. It will work for a while and then slowly start to disintegrate
I’m not going to defend anything here, but at least with the Americans, you can say their invasions serve their own self-interest. But at this point, why not just stop? Who is this serving at this point? Let’s say they get Ukraine tomorrow, then what? They’re going to need decades to recover from this.
The more I think about it, the less I understand. At least with Trump it’s simple. Use power to get more money. Destroy the EU, do what you want. Etc.
The inferiority complex of the Gremlin from the Kremlin must be nourished with megalomanic fuel.
Putins reign relies on him being perceived as a Very Strong Man who can not be defeated. If russia is defeated in a war then his image as a Very Strong Man will crumble.
In order for Putin to remain in power he has to win this war at all costs.
Because it would be a “defeat”, and after pouring so much into the war, they don’t want to seem like it was just wasted.
Maybe.
Sunk cost fallacy.And also those in power are surely still doing pretty fine.
IDK; the USA just has a longer way to go down yet, economically. Look at Russia and think: this is where we’ll be in X years if nothing changes.
Also America fights wars away from their country, not adjacent. Wars are less visible (not invisible though), affect current affairs less.
Seems like Putin doesn’t care if it is a pyrrhic victory.
Russian Railways is state-owned, therefore a financial collapse seems unlikely. It will be another burden on the russian state budget, though.
I see it quite likely 😁
The Russian state budget is under enormous strain alteady, oil prices plummeting, wealthfund almost used up to prop up last years budget, “war economy” down…
I mean if they continue like this it’ll be 1991 all over again lol.
If anything “happens” to Russian Railways, it will probably tear the rest of the industry with it.
The linked post suggests that the state could try to sell it to the banks, but that sounds like just shifting the risk. A collapse of the banks would be even more desastrous.
Russia might also increase the prices for transport, but this will increase all prices down the line, increasing inflation even further.
And lastly, Russia can just print more money.
And lastly, Russia can just print more money.
Which dies have its consequences too (looking at you Germany after ww1)
For that to happen the EU will have to put it on its big boy pants and put boots on the ground in Ukraine or commit to arming it fully, not just some wishy washy commitments.
I mean, if only Russians could somehow stop the war.
I’m not sure how to read your comment.
If you mean “If only Russia could somehow stop the war”, meaning the regime, I’m 100% with you: all they need to do is stop. Done.
If you mean Russians per se, i.e. the population - many are trying, but the dystopian lockdown is much further along over there. This article paints a pretty bleak picture.
I meant both. Of course the regime can just stop whenever they want but it’s hard to be sympathetic of all the soldiers in Ukraine actively fighting and committing all sort of atrocities. They could, you know, not go there and kill people?
What do you propose that they haven’t already tried?
Pulling out of the country they are invading seems like a good option.
Just because they werent successful, doesn’t mean they arent trying: https://www.amnesty.org/en/projects/anti-war-protest-in-russia/ https://www.aljazeera.com/news/2024/2/3/people-detained-at-russia-protest-calling-for-troops-to-return-from-ukraine https://www.opendemocracy.net/en/odr/ukraine-war-why-russians-are-not-protesting/
Every little bit helps.
The prioritization of military transport, imposed by the government starting in 2024, has seriously affected trade flows and the punctuality of civilian deliveries.
Imagine a crowd on a platform, waiting for their train to bring them to work, even later than usual, then a long freight train full of military equipment rushes by. Can’t be good for morale.
I’ll be honest, I’m not sorry
So destroying border-near railways as dual-use infrastructure hurts the ruzzian state in two ways? Sounds great!
👍
