The Russian President has steered his country into a budget emergency.
(Photo: dpa)
And they do work: the often criticized sanctions imposed by the West against the aggressor Russia. Vladimir Putin repeatedly claims that the punitive measures will not harm his country. But there are these small but significant pieces of evidence that the Russian President is not too particular about the truth.
The Kremlin now has to dig deep into the pockets of its Gazprom group to close the ever-growing budget gaps. For the first time, the gas giant has to pay out a half-yearly dividend, most of which goes to the majority owner: the state. And it is also higher than any distribution from the group before.
Putin’s comments are window dressing: he pretends that the largest country in the world can easily afford the war in Ukraine. And he already acted as if the sanctions could not harm Russia when Gazprom’s record dividend for 2021 was generously waived at the end of June.
What was supposed to appear strong to the outside world was nothing but a deception: no dividends were paid, which private Gazprom shareholders would have received as well.
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Rather, the Russian pseudo-parliament, the Duma, passed a special levy for Gazprom, a Russian excess profit tax for the country’s most powerful corporation. Gazprom had to pay the amount that would otherwise have been paid as dividends directly to the state as taxes – without sharing corporate profits with investors.
Putin’s trick is counterproductive: If Russia wants to break away from the “hostile” West and direct its gas flows away from Europe and towards China, Gazprom itself urgently needs the profits it has made in times of record gas prices. According to analyst estimates, the group needs 100 to 150 billion dollars to build new pipelines to the east.
Putin knows nothing about economics
Now it’s taking its toll on Putin for never having understood anything about business and business. Its war has left the country in dire straits, scaring off even local investors and draining large amounts of liquidity from the country.
Now he is trying to plug the holes according to the “left pocket – right pocket” principle. But this is nothing more than a sleight of hand that only postpones rather than solves Russia’s problems. And the longer the construction of the pipeline to China takes, the further the path to the supposedly safe shore becomes.
More: Gazprom pays record dividends – mainly to the state.