To be fair, I haven't given it a great deal of thought, well, when do I ever, but it seems to me that we owe 'Vlad the Impaler' a debt of gratitude. Happily, it is nowhere near the size of his own debts which are beyond colossal. But 'Vlad', with all the short-term cunning and long-term stupidity that you would expect from an ex-KGB thug who's only in it for personal power and personal wealth, has done us all an immense favour by invading the Ukraine. This action has brought about a tit-for-tat exchange of economic sanctions which, whilst it has some ill-effects on us, has hit Russia straight in the solar plexus, and has done so at exactly the very worst possible time.
For obscure reasons that only the future history books will eventually uncover, the Saudis have decided to repeat their exercise, first executed in the mid-'80s, of allowing the price of oil to drop for which I canonly say, "شكرا جزيلا لك". (That's Arabic for 'Thank you very much', honestly, my linguistic skills are tremendous.) Alas, for poor (and I do mean 'poor' as in damn near broke) Mother Russia that is a catastrophe because, as a result of Vlad's short-sighted policy of depending utterly on his oil and gas reserves, the drop in revenues means that he has to start digging into his foreign currency reserves.
As A E-P explains with much more authority than I can muster, Vlad's entire policy of 'strutting his hour upon the stage' instead of sticking to the much harder task of dragging Russia into the 21st century by building a modern, balanced economy, means that Russia is now facing a repeat of the implosion that destroyed the old Soviet Union:
"Russia is already in a perfect storm," said Lubomir Mitov, Moscow chief for the Institute of International Finance. "Rich Russians are converting as many roubles as they can into foreign currencies and storing the money in vaults. There is chronic capital flight of 4pc to 5pc of GDP each year but this is no longer covered by the current account surplus, and now sanctions have caused foreign capital to turn negative, too."
"The financing gap has reached 3pc of GDP, and they have to repay $150bn in principal to foreign creditors over the next 12 months. It will be very dangerous if reserves fall below $330bn," he said.
"The benign outcome is a return to the stagnation of the Brezhnev era [Застой in Russian] in the early 1980s, without a financial collapse. The bad outcome could be a lot worse," he said.
My other reason for gratitude to Vlad is that a great deal of the collateral damage from a Russian implosion will be felt in the EU. Already, the effects of the sanctions are hitting Germany whose economy has shuddered, if not to a halt, then to a severe slow down. The French, too, are weeping buckets because Vlad slapped on sanctions against French agricultural products and we all know, do we not, that French farmers can cut up exceedingly rough when their earnings are hit. So all in all, this piles yet more pressure on the euro zone nations to make up their minds whether they are going to go into full financial and political union or whether they are going to fall apart.
Yes, I know, we will be caught in the back-draft and it will be painful but if over the next few months it is very obvious that our troubles all stem from European troubles then I hope that even the British electorate will decide that they would rather have a Tory government to steer the country through it than a Labour one led by the 'Milipede'.
