Why are Russian media silent about Putin’s disastrous visit?

The fate of the war, Russia and Putin depends on the Arabs.

While the attention of the Ukrainian public is focused on bright speeches in the U.S. Congress (there is an election campaign - they speak in public and decide on everything needed, albeit at the last moment), It seems that Putin’s trip to Saudi Arabia and the United Arab Emirates were left unnoticed as well as the visit of the President of Iran to Moscow. But these are important visits both for the Kremlin, Ukraine and the United States. Because it will depend on them how long the Russian Federation will be able to terrorize Ukrainians.

Why is the Russian media so unwilling to cover the Arab voyage of its leader? Because this is a shame for the Kremlin. For a long time, they convinced everyone that travelling around the world on unannounced visits (that is, secretly), at night, asking for loans and concessions - these are all signs of a “non-sovereign” state, which is incompatible with “greatness”. And also because the visit to Arabia itself raises questions about the solvency of the Russian Federation in 2024.

The main topic of the negotiations is oil prices and related prices for gas, gasoline and the entire fuels.

According to Kirill Dmitriev, head of the Russian Direct Investment Fund, during the visit the Russian delegation intends to ask Saudi Arabia alone for 1 trillion rubles (in equivalent). He did not specify about the UAE and Iran, but there is also something to beg for there - without “parallel imports” from the UAE (smuggling of technology from the West) and weapons from Iran (re-export of technology from China), the Kremlin, in general, will not be able to fight. At least as a more or less modern country, and not in the “grandfathers” style.

But the main topic of the negotiations is oil prices and related prices for gas, gasoline and the entire fuels. This is a critically important issue for the Kremlin because their 2024 budget is calculated on the oil prices and ruble exchange rate as for October adoption.

The Russian Urals then cost, let us remember, almost $85 per barrel, and now its price is $60, and continues to fall. This is the “price ceiling” set for oil from the Russian Federation by the civilized world.

There is also Russian ESPO oil. It’s comparable in price to Brent, but it is sold mainly in Asia and in much smaller volumes because it has to be sold either to those who are willing to buy at a huge discount or to look for intermediaries who take the lion's share of the profit as an “exposure fee”.

It is assumed that licenses will “cut off” the lion’s share of “parallel imports” for the Russian Federation

Sales of “black gold” by tankers that do not pay attention to sanctions have also not pleased Russians lately. Under US pressure, insurers and intermediaries sharply lost interest in Russian oil, the price of which is above the “ceiling” ($60/barrel).

As a result of “conversations” with representatives of the U.S. State Department, the UAE also began to develop so-called “export licenses” for goods sent to Russia. To ensure that there are no products that violate sanctions or dual-use goods in exports. It is assumed that the licenses will “cut off” the lion’s share of “parallel imports” for the Russian Federation.

In exchange for concessions from the UAE and a new “oil deal” with Saudi Arabia to reduce oil production and create artificial demand in the market, the Kremlin offers the Arabs to level the Houthi pirates, who are becoming a problem for shipping in the Red Sea, as well as a put down the threat from the so-called Iranian proxies (Hezbollah, Hamas, Palestinian Islamic Jihad) in the Persian Gulf, which spoils trade for the whole world and for the Arabs too.

Putin's Arab voyage is a sign of desperation and proof that all previous negotiators failed to accommodate the Kremlin’s needs.

Low trade volume causes low demand (and prices) for oil. This is what we have been seeing for the 7th week – the falling of quotations. That is why the subsequent visit to the Kremlin by the President of Iran is important – after all, this is Putin’s main tool of blackmail for the Arab monarchies. He proposes to preserve the “privilege” for the Arab sheikhs in the form of a huge “income” from “parallel imports” and the legalization of assets, but he is also preparing a “punishment” – Iran and its aggressive puppets in the region.

Putin's Arab voyage is a sign of desperation and proof that all previous negotiators failed to accommodate the Kremlin’s needs. The 2024 Russia’s budget is simply impossible to implement without this. After all, at first, the propaganda inserted unrealistic figures into the bill (but “beautiful” for elections), and now they need to “adjust” the entire economy to their propaganda. This is called "the tail wagging the dog."

According to the latest data, almost 962 billion rubles in oil and gas dirty revenues were budgeted, which is 23% (almost a quarter!) lower than last year. And this is the current trend.

At the same time, the Kremlin is announcing an unprecedented increase in war spending for 2024. However, under the prism of falling oil prices and the steep decline of the ruble, these figures raise doubts about their realism.

The Kremlin allocated almost 5 trillion rubles or $84 billion at the current exchange rate for military needs from the 2023 budget. But these 5 trillion roubles are “only” $53.8 billion at the current exchange rate.

There is simply too much oil on the market and global production is slowing.

The next year, Russia allocated 10.8 trillion rubles in military spending. At the rate of 80 rubles/dollars. this is $135 billion, and at 100 rubles/dollar it is $108 billion, which is also a lot. But on one condition – if the ruble does not fall by half again, as in 2023. Otherwise, the amount will return to the same $50-60 billion.

These losses of this “swamp” budget can be compensated by increasing taxes, loans (which are not given abroad, but within the Russian Federation, the debt load is already at a record level) or by lowering the ruble exchange rate. The first instrument will be left for the period after the elections. The second one is almost exhausted in 2022. If the Arabs fail to “pump up” oil prices through provocations and concessions, then the solvency of the Russian Federation will be greatly undermined. All that remains is to lower the ruble exchange price.

Of course, this does not mean that the Russian Federation will run out of money at once. But taking into account the experience of the USSR after Afghanistan, the Russian Empire after 1915, and even Ivan the Terrible in the 16th century shows that the “damage to the ruble” accompanies Moscow’s military failures, the collapse of the economy and invariably leads to riots. Prigozhin has already shown the way.

The chances that the “West will abandon Ukraine” are now lower than that the ruble and oil prices will continue to fall in 2024. There is simply too much oil on the market, and global production is slowing down while the Americans are ending their political games and voting for everything important for the United States, including assistance to Ukraine. As always, at the last moment.

But the prospects for an inflated “pre-election” budget, set up for unrealistic indicators – this is a special complicated task.

Now you know why Russian media describe for the hundredth time how the Arabs met Putin, but don’t say a word about how he was farewelled. They don’t want to show failures.

Andriy Popov, unian.net