Putin warns Russia must not fall into recession

Putin warns Russia must not fall into recession
Putin told a forum in St Petersburg, "This must not be allowed to happen." Photo: AFP
President Vladimir Putin on Friday urged officials not to let Russia fall into recession "under any circumstances," as some in his own government warned of a hit to economic growth.
Economists have warned for months of a slowdown in the Russian economy, with the country posting its slowest quarterly expansion in two years in the first quarter of 2025.
The Kremlin has said this is to be expected after two years of rapid expansion as it ramped up military expenditure to fund the Ukraine campaign, but officials including the country's economy minister have warned of pain ahead.
"Some specialists and experts are pointing to the risks of stagnation and even a recession," Putin told attendees in an address at Russia's flagship economic forum in St. Petersburg.
"This must not be allowed to happen under any circumstances."
"We need to pursue a competent, well-thought-out budgetary, tax and monetary policy," he added.
Moscow's economy grew in 2023 and 2024, despite the West's sweeping sanctions, with massive state spending on the military powering a robust expansion.
But economists have long warned that heavy public investment in the defence industry is no longer enough to keep Russia's economy growing and does not reflect a real increase in productivity. (AFP)

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Asia Times

3 hours ago

• Asia Times

Western democracies are actually pretty good at war

'They are a peaceable people but an earnest people, and they will fight, too.' — William T. Sherman I am not a military analyst or expert. Usually, I look at the world through the lens of economics, which I actually have some training in. But if you want to get a good holistic picture of the world, you need to understand at least a little bit about war and conflict. I think most pundits intuitively understand this, which is why you see them weighing in on things like the usefulness of military aid to Ukraine, or the cost-effectiveness of the F-35, or the need to establish military deterrence against China. And so I do the same, while being careful to remember that I'm not any kind of expert in the field. One of the most persistent and annoying tropes I see, in discussions about war, is the idea that autocracies are inherently tough and martial, and that democracies — especially Western democracies — are irresolute, decadent, flaccid, and generally not very good at fighting. You see this when rightists praise Russian military ads where soldiers do a bunch of push-ups, and decry the state of America's 'they/them army' in comparison. You can see it when leftists declare that America loses every war it fights (which is obviously false). The idea is ingrained in our deep history — Thucydides lamented that 'a democracy is incapable of empire', and plenty of modern people will cite autocratic Sparta's victory over democratic Athens in the Peloponnesian War.1 In fact, if you just looked at the results of the last two decades, you might be forgiven for buying the authoritarian hype. America was pushed out of Afghanistan, and its proxies quickly collapsed under the Taliban assault. Most people also say the US lost the Iraq War.2 Democratic Armenia quickly lost a war to autocratic Azerbaijan in 2020, Israel broke its teeth on Hezbollah in 2006, Russia smashed Georgia easily in 2008, and Russia easily took Crimea from Ukraine in 2014. Since the turn of the century, military victories for Western democracies have been few and far between. But over the past three years, the tide seems to have turned once more. Ukraine, astonishing the entire world, fought mighty Russia — a country four times its size and with far higher GDP per capita — to a standstill. In 2024, Israel smashed Hezbollah within just a few weeks; the Iranian-backed militia retreated from the border and its authority is now being replaced by the elected Lebanese government. And now there's the war between Israel and Iran. The war just started; all of us are still just monitoring the situation. It seems hard to think that Israel can prevail in a protracted confrontation with a nation with nine times its population and more than three times its GDP (PPP).3 But as of right now, the tiny David is smacking around the big Goliath. Israel quickly established air supremacy over much of Iran itself, despite the huge distances between the countries, using a mix of traditional aircraft and drones: Just four days into its ferocious air campaign, Israel appears to have gained a decisive edge in its escalating conflict with Iran: aerial supremacy over Iran…The Israeli military said Monday that it can now fly over the country's capital, Tehran, without facing major resistance after crippling Iran's air defenses in recent strikes, enabling Israel to hit an expanding range of targets with relative ease…Such control over Iran's skies, military analysts say, is not just a tactical advantage—it's a strategic turning point…Israel has carried out one of the most intense and far-reaching air operations in its history, targeting nuclear sites, missile launchers, airports, and senior figures in Iran's Revolutionary Guard Corps… For Israel to claim this over Iran just days after the strikes began is an impressive military accomplishment, says Michael Knights, the Bernstein Senior Fellow at The Washington Institute who specializes in Middle Eastern security. 'It's exceptional to get this level of freedom. I'm quite surprised that they've managed it,' he says[.] Israel has destroyed Iran's best fighter jets on the ground. Iran has been reduced to firing off ballistic missiles into Israeli cities in retaliation. But the strikes, while visually impressive, have not been very deadly (the Israelis all have bomb shelters). And the Israelis are managing to quickly degrade Iran's missile capabilities: Iran is firing fewer missiles at Israel each day after Israel secured dominance over Iranian skies, enabling it to destroy launchers and take out missiles before they even leave the ground…Israel said on Sunday that it had created an air corridor to Tehran. By Monday, it said its air force had complete control over the skies of Tehran…This aerial control is proving crucial. Iran fired some 200 missiles in four barrages in its first round of attacks against Israel on Friday and Saturday. But between Tuesday and Wednesday, Iran fired 60 missiles at Israel over eight different waves of strikes, at times sending fewer than a dozen at a time…Israel's aircraft and other security forces have destroyed 120 missile launchers[.] Israel hasn't yet decapitated the Iranian regime, but it's killing lots of key figures. This is a pretty stunningly bad performance for Iran — a country that is sometimes touted as a key member of a new Axis with Russia and China — against a country with the population and land area of New Jersey. Israel isn't quite Western — more than half of its population is descended from Middle Easterners — and its Prime Minister Benjamin Netanyahu has shown some authoritarian tendencies. Nor is Israel a particularly liberal state, at least as far as its treatment of the Palestinians goes. But it's a heck of a lot closer to being a 'Western democracy' than Iran is. Rumors of the weakness and decay of the West, and of the inferiority of democracies in the face of autocratic power, seem to have been at least somewhat exaggerated. What's going on? In fact, the first two decades of the 21st century may have been an aberration; democracies actually do tend to win wars more often than they lose. A quick glance at history will disabuse any neutral observer of the notion that Western-style democracies are militarily weak. Consider how France held off attacks by all of Europe for decades after its revolution, or how the Anglo-American side won both World Wars, or how Israel beat a bunch of its neighbors in a series of wars, etc. Hitler and Mussolini both loudly proclaimed that democracies were weak and decadent, yet it was they who ended up in history's graveyard. In fact, there's pretty robust evidence that democracies — at least, as we currently identify them — tend to win wars more often than autocracies do. Dobransky (2014) finds that 'democracies win the large majority (84%) of wars that they are involved in.' Reiter and Stam (2014) find the same: Analyzing all interstate wars from 1816 to 1982 with a multivariate probit model, we find that democratic initiators are significantly more likely to win wars; democratic targets are also more likely to win, though the relationship is not as strong. Mathematically, this must mean that democracies tend to defeat autocracies when the two fight, because if two autocracies or two democracies fight each other, a win for one nets out to a loss for the other. Political scientists have any number of theories to explain why this happens. One obvious possibility is that democratic countries fight fewer wars in the first place, and only tend to fight when they have a good chance of winning. This is David Lake's theory, which he calls the 'powerful pacifists' theory. Reiter and Stam, who have a book called 'Democracies at War', agree with Lake that autocracies tend to start riskier wars than democracies do. But they have very different reasons for thinking this. Lake thinks dictators tend to start wars for resources because running a dictatorship is very costly. Reiter and Stam, on the other hand, think that dictators start wars because they're more secure in their power, and thus are less afraid of the negative consequences from a war going badly. Honestly, I'm not very convinced by either of these explanations. Yes, there are some wars over economic resources — Saddam Hussein invading Iran to try to capture its oil fields in 1980 comes to mind. But I don't think most wars are mostly over treasure in the modern age. The World Wars were mostly over ideology and perceived threats rather than imperial conquests. Putin didn't invade Ukraine for money, and money has nothing to do with why Iran has been sending proxies to attack Israel for decades. Even when wars do have an economic component, the benefit of winning rarely justifies the cost of fighting in the first place — witness America's inability to extract significant value from the oil fields of Iraq. Likewise, I think it's unlikely that dictators are less afraid of losing wars. Yes, they may be better positioned to cling to power in the event of a loss, while democratic leaders will be promptly voted out of office. But the lower probability of an autocrat being tossed out of power comes with a much greater severity . A US president who loses a war might be voted out of office; when Mussolini lost a war, he ended up hanging from a gas station, riddled with bullets. So honestly, I'd be more cautious if I were a dictator. I think there's a much more obvious reason why democracies choose their wars more carefully. In general, the people who actually have to go fight a war tend to like war less than the leaders who simply order their armies forward from the safety of their bunkers. So democracies, where the people are more in control, tend to be pacifist; they only tend to fight either when they have a good chance of winning, or when their back is to the wall and they can't afford to lose. When they are finally moved to fight, the stakes tend to be high, the people tend to be united and motivated, and the cause tends to be one that draws in lots of allies. Economic factors probably play a role too. Lake thinks democracies have more economic resources to devote to war, because he believes they tend to spend more money on building up their economies, while autocracies tend to be extractive.4 This makes sense sometimes — think of how America outproduced the Axis in World War 2. On the margin, I think it makes a difference, but I'm skeptical of how much it can explain overall, because population size often differs so much between combatants that per capita GDP differences become less important. Consider Israel versus Iran — at PPP, Iran's economy is much larger, because it's a much larger country, even though it's poorer. There's another economic factor at work, which is technological advancement; having a higher per capita GDP generally means having better technology, which can be used for weaponry. Israel has a smaller economy than Iran, but because it has a richer, more technologically advanced economy, it can do a lot fancier stuff — with drones, aircraft, missile defense, precision weaponry, hacking, digital intelligence gathering, and so on. As for whether democracy actually makes a country richer and more technologically advanced, that's a topic of ongoing debate. Some people think democracy is good for growth; others think that as countries get richer, their citizenry starts to demand a transition to democracy. Other people think it's a historical accident. But whatever it is, democracies do statistically tend to be richer than autocracies, and being rich helps in war. Actually, you don't always need to be richer in order to have superior technology. Ukraine is much poorer than Russia on a per capita basis, but it has a lot of great computer programmers and engineers — it has repeatedly innovated in drone warfare during the current war, forcing Russia to scramble to keep up. Reiter and Stam also argue that the way dictatorships make decisions is not very conducive to effective war-fighting. In an op-ed written shortly after the start of the Ukraine war, they explain: [L]ike most dictators, Putin probably has some concerns about being overthrown by his own military. Dictators guard against this potential threat by centralizing military command authority and reducing the ability of lower-level commanders to take the initiative in battle… These moves may reduce an army's ability to seize power in a crisis — but also undercut the military's ability to defeat foreign foes…Putin's army today demonstrates the calcification and rigidity of a dictatorship. He appears unwilling to delegate decision-making autonomy to lower-level commanders, reducing military effectiveness… [D]ictators often surround themselves with yes-men and political cronies, who deceive or remain silent rather than tell the unvarnished truth…In contrast, democratic leaders are more likely to have the benefit of robust debate inside and outside government…Every indication is that the Russian president is isolated and getting poor information…Putin's generals and intelligence chief reportedly refused to tell him the truth before the war: that years of Russian military reform had not made substantial progress, instead producing a 'Potemkin military.' That makes lots of sense. To this I'd add the simple fact that if your country happens to have a dictator, he's probably simply more politically capable of micromanaging — and mismanaging — the military, whether or not he's doing it because he's afraid of a coup. So I'd say the three main hypotheses for why democracies tend to win more wars are: Democracies fight less, so they tend to only fight more winnable wars Democracies have better economies and technology Autocracies have structural tendencies toward military mismanagement and poor information flow Most of these make sense in explaining Ukraine's success in holding off Russia. Ukraine didn't want to fight this war, or any war; they only fought because their backs were to the wall and the survival of their nation was at stake. They have proven to be technologically innovative and resourceful, even with their much smaller economy. And their decision-making has been consistently better and quicker than that of the plodding Russians. These factors also help explain Israel's success against Iran. Israel does fight a lot of wars, but that's because it has a lot of enemies who attack it a lot; other than their slow colonization of the West Bank, Israel has no imperial designs. Iran, in contrast, is constantly meddling in conflicts all around it, supporting proxy armies in Yemen, Libya, Syria, Iraq, and Gaza. With Israel, Iran picked on someone who was able to stand up and punch it in the nose. Israel also has superior technology, better command and control, and a more unified, engaged populace. But there's one other important hypothesis for why democracies have tended to win wars — help from the United States. For about as long as democracy has been around, the US was the world's mightiest economic and technological power, capable of sending game-changing weaponry anywhere in the world. That didn't always guarantee victory, obviously — America's proxies in Vietnam and Afghanistan were so weak that they collapsed even with US supplies. And no country will be successful in war unless it makes plenty of weapons itself — as Ukraine and Israel both do. But it's undeniable that American assistance has been at least somewhat important for both Ukraine and Israel in their current conflicts. And that's a big problem right now. Because the US is no longer the world's leading economic power — at least, not by any metric that would matter in a war. And whatever remains of its technological leadership is quickly vanishing. For the first time since the Industrial Revolution, it's an autocracy — China — that commands the greatest resources. Even if the US hadn't allowed its defense-industrial base to wither, China would still manufacture as much as America and all of its democratic allies combined: Source: UN Industrial Development Organization As for technology, there are still a few areas where America is ahead, such as leading-edge computer chips and aircraft engines. But in most areas of manufacturing and software, China has caught up or almost caught up, including in AI. And in some crucial areas, like batteries and magnets, America has voluntarily forfeited and isn't even in the race. That means that if China does choose to fight America, one big traditional advantage of democracies — economic and technological supremacy — won't exist. Instead, a best-case scenario is that it would be more like World War I before the entry of the US, where Britain, France and Russia found themselves evenly matched against a somewhat autocratic but technologically and economically advanced Germany. Nor is China likely to rush clumsily into war the way Putin did. In the 20th century, China did get involved in some reckless, stupid wars — in Korea in 1950 and Vietnam in 1979, neither of which it won. But since then, China has shown extreme caution. Its leaders definitely seem determined to build up overwhelming power before taking Taiwan or other territories in Asia. If the U.S. has to fight China, it will be at a time and place of their choosing, not ours — and they will likely have most of their people unified behind the effort. This doesn't mean the democracies would have no advantage against China. The structural problems of autocracies — poor information flow, overcentralization of power, paranoid infighting — all seem present, as Xi Jinping completes his transformation of Deng Xiaoping's bureaucratic, technocratic system into something closer to a traditional dictatorship. Xi has already made a ton of mistakes, many of them related to micromanagement — Zero Covid, Belt and Road, the crackdown on IT in 2021, the real estate bust, 'wolf warrior' diplomacy, and so on. It's likely he would micromanage a war as well. Meanwhile, Xi has been purging his top military officers, many of whom he himself appointed, at a stupendous rate, for reasons unknown. So if China does fight America, it will have some of the same sorts of disadvantages that Russia has with Putin. But it's far from clear whether these would be enough to overcome China's massive manufacturing advantage. Democracy is a lot tougher than people give it credit for, but it's not magic. 1 Though note that Sparta itself was promptly defeated by Thebes, which had transitioned to democratic rule several years earlier. 2 This is clearly false. The US didn't just overthrow Saddam with ease; it also defeated Sunni and Shia militias alike, and then defeated ISIS. The regime that the US set up in Saddam's wake is still in control in Iraq, and is still friendly to the US By every conceivable past and present definition of what it means to 'win' a war, the US won the Iraq War. However, the victory didn't benefit the US strategically — it diminished America's geopolitical standing and broke the global norm of non-aggression that the US had championed since World War 2, paving the way for Russia's invasion of Ukraine. So the Iraq War is a demonstration of the fact that victory in war isn't always worth fighting the war in the first place. In contrast, the Afghanistan War was a loss for the US, but Al Qaeda was effectively destroyed, Osama bin Laden and all other 9/11 planners were captured or killed, and the Taliban were neutralized as a strategic threat. 3 PPP is probably better than market exchange rates when comparing economies for military purposes, since most military goods — especially soldiers' salaries and provisions — are produced domestically rather than acquired on world markets. This is especially true for Iran, which is under international sanctions. 4 This is a key implication of Selectorate Theory, which is popular among political scientists. This article was first published on Noah Smith's Noahpinion Substack and is republished with kind permission. Become a Noahopinion subscriber here.

HKFP

8 hours ago

• HKFP

Taiwan pursues homegrown Chinese spies as Beijing intensifies espionage

Taiwan is vetting hundreds of thousands of military service members, public school teachers and civil servants in a bid to root out potential homegrown Chinese sympathisers, as Beijing intensifies espionage on the island. Alarm is growing in Taiwan over the extent of China's infiltration on the self-ruled island, which Beijing claims is part of its territory and has threatened to seize by force. Prosecutors last week charged four recently expelled members of the ruling Democratic Progressive Party — including a former staffer in President Lai Ching-te's office — for sharing state secrets with Beijing. While Taipei and Beijing have spied on each other for decades, analysts warn the threat to Taiwan is more serious given the risk of a Chinese attack. The main targets of Chinese infiltration have been retired and active members of the military, persuaded by money, blackmail or pro-China ideology. Lai, an outspoken defender of Taiwan's sovereignty and loathed by Beijing, has branded China a 'foreign hostile force' and sought to raise public awareness about Chinese actions he says threaten national security. After a sharp rise in the number of people prosecuted for spying for China in recent years, the government is trying to identify people within its own departments, military and public schools with a possible allegiance to Beijing. Anyone on the public service payroll found with Chinese residence or other identification cards risks losing their Taiwanese household registration, effectively their citizenship. 'The reason we started to survey (for Chinese IDs) is because China uses this way to coerce Taiwanese people, to penetrate our system, especially the public service,' DPP lawmaker Wang Ting-yu told AFP. 'The threat is getting worse and worse and we have to deal with that.' 'Cleanse the population' In the first round held recently, 371,203 people, or nearly all of those surveyed, signed statements declaring they did not hold any Chinese ID documents prohibited by Taiwanese law. Two people admitted having Chinese ID cards and 75 having residence permits, which were annulled, Taiwan's top policy body on China, the Mainland Affairs Council, said. The second round of vetting is underway, but the government has said the general public will not be targeted. Concern over Taiwanese people holding Chinese ID documents flared after a YouTube video last year alleged there were tens of thousands of cases. A senior Taiwanese security official said recently China was issuing ID papers to a growing number of people from Taiwan, but it was 'difficult to estimate' how many or track down offenders without Beijing's cooperation. 'The idea is to define Taiwanese citizens as Chinese citizens under their legal framework,' the official said. Legal scholar Su Yen-tu said there were limits on the government's 'investigatory power' to find out who held Chinese ID cards in Taiwan. If Taiwanese people did not voluntarily disclose the information, 'there's not much the government can do,' said Su, a research professor at Academia Sinica. Collecting records was still 'potentially useful', Jamestown Foundation president Peter Mattis told AFP, particularly if someone under investigation in the future is found to have lied about their documents. Taiwan has also asked around 10,000 Chinese spouses and their China-born children for proof they have given up their Chinese household registration, a decades-old requirement under Taiwanese law. 'It's a fight every day' The notices sparked criticism that the government was being heavyhanded, but Wang said stricter enforcement was needed because some 'new immigrants' from China had spied for Beijing and interfered in Taiwan's elections. 'I personally feel that it's a bit disturbing for the people,' said Li I-ching, a 23-year-old graduate student in Taipei, who was born in China to a Chinese mother and a Taiwanese father. Like many others, Li has to obtain evidence from China that she no longer holds permanent residence status. The Beijing-friendly main opposition Kuomintang party (KMT) has accused the government of conducting 'loyalty' tests. 'At a time when our country is facing so many difficulties… the government is only thinking about how to cleanse the population,' said KMT lawmaker Chen Yu-jen. The dispute between Taiwan and China dates back to 1949 when Chiang Kai-shek's nationalist forces lost the Chinese civil war to Mao Zedong's communist fighters and fled to the island. China has vowed to annex Taiwan and in recent years has ramped up its military pressure on the island. Taiwan says China also uses disinformation, cyberattacks and espionage to weaken its defences. 'It's a fight every day for the Taiwanese against this sort of stuff,' said Mark Harrison, a senior lecturer in Chinese studies at the University of Tasmania. 'I think their democracy has tremendous integrity, but it does have to be defended, and when you defend something, it certainly generates a lot of discourse, a lot of debate.'

RTHK

12 hours ago

• RTHK

US stocks end week mostly lower

US stocks end week mostly lower Analysts pointed to a pullback in some chip companies and uncertainty over the Middle East. Photo: AFP Wall Street stocks mostly fell on Friday amid weakness in some semiconductor shares as markets weighed the latest developments in the ongoing war between Iran and Israel. Markets rose after US President Donald Trump's remarks on Thursday on the Middle East, allowing for up to two weeks before possible US military action against Iran. But on Friday afternoon, Trump expressed doubt that European powers would be able to help end the Iran-Israel war, telling reporters, "Europe is not going to be able to help in this." The Dow Jones finished up 0.1 percent at 42,206. But the S&P 500 shed 0.2 percent to 5,967, while the Nasdaq fell 0.5 percent to 19,447. Adam Sarhan of 50 Park Investments described the market as on edge in anticipation of new headlines on trade actions or the Middle East. "We have a situation where tensions in the Middle East missiles are still firing, there's no ceasefire and there's a fear that the US may be involved," Sarhan said. In light of uncertainty on Iran and other areas, "investors are de-risking, they're selling stocks ahead of the weekend," Sarhan said. Fed governor Christopher Waller told CNBC that central banks should "look through tariff effects on inflation" and focus instead on the underlying trend in price increases. The Fed earlier this week voted to keep interest rates unchanged, as Fed Chair Jerome Powell said the central bank could wait to see if Trump's tariffs revive inflation. Among individual companies, Kroger jumped nearly 10 percent after the supermarket chain raised its sales forecast. However the company refrained from lifting other projections, saying the macroeconomic environment remains "uncertain." CarMax surged 6.6 percent after reporting a jump in quarterly profits as the company's CEO pointed to a "very large and fragmented" used car market that "positions us to continue to drive sales, gain market share and deliver significantly year-over-year earnings growth for years to come." (AFP)