Subtitles section Play video Print subtitles On 24th of February 2022, Russia sent over 180K of its forces to invade Ukraine. The Kremlin was preparing for this war since 2006. Hundreds of billions of dollars were spent on modernizing the Russian military, stabilizing the economy and expanding Russia's influence all over the world. The only thing that was left was for Putin was to give the order to attack and wait for the good news. The next Day Putin Arrives at Kiev, gives a victory speech and Russia checkmates the west before they even realize what just happen. But something went wrong! In fact, a lot of things went wrong! Ukraine aimed at winning the information war by controlling the storyline, used US intelligence to prevent Russia from taking over Kiev and pushed the entire world to cut ties with Russia, and it worked. Companies literally started leaving Russia. BMW stops making cars in Russia. Ikea sold its factories and left the country. Google, IBM, Airbnb, Netflix, PayPal, Samsung, Starbucks, Visa, Mastercard, Coco cola all left Russia overnight. Russian banks were thrown away from the international financial system and you could no longer send money to Russia or from Russia. Experts predicted that Russia's economy will collapse. That's worse than a depression, leave alone a recession. United states launched a series of financial attacks on the ruble. Ruble lost half of its value and jumped from 70 rubles per dollars to 140 rubles per dollar. Overnight as if the entire world declared a war against Russia and everyone predicted that Russia will collapse in a matter of a few months. So the question is - what is the state of Russia's economy now? Why Russia hasn't collapsed yet? and how long can it stand the western sanctions before Russia as a state collapses and turns into many small puppet states? How Russian Protected It's Currency United State's first objective was to crush the Russian currency, because if you crash the currency, it will create a chaos in the economy and will crash everything else like a domino effect. US restricted Russian government from acquiring foreign currency, pressured US companies to leave the country and the entire world wanted to sell everything they had inside the country and leave which means, selling all of their Russian rubles and buying dollars. The Russian ruble began trading at half of its price. The way currencies usually work is that, supply and demand determine the price. If people suddenly start selling their rubles, it will start declining and at some point people can lose faith in the currency and it will turn into hyperinflation as it was the case with Germany after world war 1 or Zimbabwe in 2006. However, that did not happen to Russia because thats exactly what US did back in 2014 when Russia annexed Crimea, so this time Russia was ready. It saved up over 630 billion dollars in foreign reserves that if everyone starts selling rubles, the Russian central bank can step in and artificially create enough demand for the ruble that it won't collapse. And since all western companies began leaving Russia one by one and Russia was restricted from the global financial system, Russia took countermeasures and restricted foreign speculators from shorting or trading the Russian ruble. Russia also restricted foreign currency inside the country. First of all, you could no longer withdraw US dollars or Euros from ATMs. You could no longer send them outside Russia since Russia was kicked out of SWIFT, and you couldn't even keep them in your bank account since Russian banks imposed a 12 percent fee for keeping foreign currency in your account. So, everyone had to sell their dollars and euros if they wanted to preserve their money which created an a huge demand for the Ruble. Whatever foreign currency that businesses inside Russia would receive would automatically be exchanged to ruble, at least 80 percent of them which boosted the demand for Russian rubles which made the Russian ruble the best performing currency in the world. That's how Russia saved its currency! - Russia is turning into a landlocked country But that was just the beginning because the worse was yet to come! Russia's invasion of Ukraine is about to make Russia a land-lock country. Wait a second. Isn't Russia the largest country in the word? Doesn't Russia has the largest access to the oceans? Well, that's both yes and no. Russia's geography is both its strength and weakness. Almost all of Russia's population is located in the western side of the country. So its ports in the East at Vladivostok are worthless since Vladivostok is an 9 hour flight from Moscow. So, delivering everything from Vladivostok to Western Side of Russia is a nightmare. In fact, the entire region is underdeveloped. It doesnt even have a proper infrastructure. In the north, the situation isn't any better. Its freezing for most of the year and ships can't go through and there aren't any major cities because the cold wether just makes it unbearable to live there. That's why Peter the great waged a war against the Swedish empire to annex Saint Petersburg and instantly made it the new capital of Russia. This new city had access to the Baltic sea and Russia finally could trade with Europe. But Russia was still at the mercy of Sweden since it could easily block Russian ships when crossing the Danish route. Its for this exact reason, Russia has always kept a good relationship with Sweden. But as wise man one said: never put all of your eggs in one basket! Thats why Russia began looking for alternative ways to trade with the world. The only option that was left was by crossing the Bosphorus strait to access the Mediterranean sea but that it was controlled by the ottoman empire, that's why the Russian empire was in a constant war with the Ottomans. Fast forward to 2022, its controlled by Turkey which is a NATO member. Which mea ns that Sweden joining Nato literally makes Russia dependent on NATO to have access to the oceans! NATO can now block Russian ships which will significantly limit Russia's trades which can cripple the Russian economy. And if Ukraine wins this war, Russia will have to give up Crimea which will limit Russia's power in the Black sea making the largest country in the world LANDLOCKED. - China and India won't replace Europe But that's not even the biggest problem. Russia's entire economy is about supplying Europe with raw materials such as oil, gas, wood and everything else that western Europe needs to keep their industries running. Without affordable gas, German factories for example won't survive. Prior to the February 2022, almost half of Europe's entire gas supplies were coming from Russia. Russia spent dozens of billions of dollars building these pipelines and now Russia has stopped supplying Europe with gas to pressure Europe to turn against Ukraine, however it had failed miserably. Europe is now spending billions of dollars to diversify its energy sources and signed multi billion dollar deals with other gas exporting countries such as Qatar, which means that, even if the war stops, regardless of who wins the war, Russia will no longer be able to sell its oil and gas to Europe as it did in the past which will significantly reduce its budget. Of course its trying to sell its oil and gas to China and India. The truth is that, they will not replace Europe for 2 reasons. First of all, China and India don't pay the premium that Europe use to pay for the Russian gas. Secondly, Russia doesnt have the resources to build so many pipelines again to China that it had spent decades building them to Europe. So no matter how the war in Ukraine ends, Russia's economy is Doomed. Even if Russia annexes the entire Ukraine, it will have an entirely damaged country that needs rebuilding and as you have guessed, this war has squeezed all Russia's resources which means a period of political and financial instability is waiting for Russia regardless of how the conflict ends. Russia's entire economy is dependent on high tech imports. It can't manufacture cars without western equipments, it can't build planes, it cant produce smartphones or computer chips, it can't build civilian planes. Russia is just becoming more and more dependent on China since it has no other option. China is buying its oil to fill the government's budget and replacing everything else that Russia now can't acquire from the west. It's turning Russia into becoming China's puppet. And most importantly it lost its image as the second most powerful military. Russia might have never been the second most powerful military but it successfully projected itself as if it was capable of competing with the US military. However United State's much superior weapons pushed many countries to dump Russian weapons and start purchasing US made weapons. This War will most likely leave Russia with a crippled economy that needs decades and trillions of dollars to bring it back to the pre-war condition, putting and end to Russia's ambitious to ever become a global superpower. Thanks for watching and see you in the next one.