“How America took out the Nord Stream pipeline”

Gazprom, Russian gas monopoly, has on Kremlin’s orders first threatened to, and then suspended gas supplies to Europe in an attempt to blackmail it to stop supporting Ukraine under a threat of, as they put it, “freezing Europe”. In the process unilaterally breaking existing delivery contracts. There were no Western sanctions targeting Russian gas - it was entirely a political operation initiated by Russian government, “weaponizing energy supplies” as it often referred to, in the course of hybrid war.

Kremlin has miscalculated - Europe was able to largely avoid the intended crisis, while simultaneously Gazprom lost its largest market. The pivot from Russian supplies did come at a significant cost though.

Now that the Western sanctions are strangling Russian economy - if Gazprom wanted to come back to European market - they would be first greeted by billions of dollars of contract charges in arbitration courts.

It has long became obvious that Gazprom will likely attempt to use claims of force majeure to try to avoid financial penalties. And as it became customary for Russia - start preparing fertile ground in the courts of public opinion by planting various stories misdirecting the blame and muddying the waters.

> Kremlin has miscalculated

Europe has also had a very mild winter, so luck played a nontrivial role.

> Now that the Western sanctions are strangling Russian economy

I'm very curious about how Western sanctions are affecting the Russian economy (I understand that you're speaking narrowly to Gazprom, but I'm asking about the Russian economy more broadly). My understanding is that Putin has spent the better part of the last decade immunizing the Russian economy from Western sanctions, and that this project has largely succeeded--that Russian oil sales are still making plenty of money to finance his invasion, etc. Can anyone elucidate?

Russian attempts to withstand the economic pressure of sanctions have been successful insofar as to prevent a collapse, but the pressure is crushing on all aspects of the economy, as well as any hopes for Russia for economic and industrial development. Brain drain, loss of foreign investment, technology imports, diminishing consumer activity, falling real estate markets - are just some of the headwinds that are in effect outside the energy sanctions.

The budget revenue deficit for just the January of this year exceeds the deficit for the entirety of 2022. Russia has reserves that it can employ for the time being to mitigate some of the damage, but they are not bottomless. If the pace of losses continues in a similar manner - most of the reserves will be exhausted by years end.

After that - one might expect the usual tools to be employed - cutting budgets to pay for civil workers (everyone other than security), pensions etc, attempts to raise money from already struggling businesses via wartime taxes, issuance of wartime bonds to population to borrow cash, and if all fails - start printing money to plug the budgetary shortfalls, and the resulting inflation.