51 Comments
Jul 31Liked by Karl Sanchez

!Thanks for this report on Rostec: it is interesting how open the company is as per defence work production increases, and intriguing to see how discreet the Chairman takes care to be in his report to VVP

The report is encouraging, especially as regards import substitution

Chemezov spoke more freely to the RBC back in May, especially on the margins problem

– from the interview with RBC

https://www.rbc.ru/interview/economics/17/05/2024/664215389a7947dc93772782#toc-772782-9

“Rostec has been trying to position itself as a “pro-commercial state partner” for many years. But you yourself admitted that “now the state defense order prevails, at best we work at zero, if not at a loss. This is the demand of the times.” How long do you allow the state corporation to operate without profit? What is the current financial safety margin?

- Of course, we will talk about this with the Ministry of Defense and the new minister, because profitability needs to be increased. Otherwise, we won't last long. I think the minister will hear us, he is an economist.

Although in China the competitive commercial environment has reduced margins to 2%, this margin in only obtained by Rostec due to exports and civilian work at much higher, the level of investments required in Rostec’s sectors, as well as the pre dominance of Defence work means that the company wishes that Belousov is a reasonable man as far as allowing sufficient margins for re investments

— Rostec today meets 80% of the army's needs [in weapons], which are involved in the Air Defense Forces. The Ministry of Defense's task is to obtain high-quality and effective weapons; economics is the tenth thing for the military. Of course, we have accumulated a huge number of problems in this area. The profitability of our production today is only 2.28%.

- Should there be?

— At least 5%, and generally from 5 to 10%. It is difficult to develop with the current profitability rate. We create new modern equipment only if the Ministry of Defense allocates direct funding for R&D or R&D. Without this, many enterprises are in a state of "just surviving."

“Therefore, we want to meet with the new minister [of defense] and talk about calculating the cost of contracts not from the achieved cost price, but rather giving the opportunity to preserve the funds that the enterprise has saved for some period. And these funds should be used to develop production, to create new modern equipment.”

Even the Jamestown irredentists found it hard to pick holes in the report, although they did their very sullen best

https://jamestown.org/program/rostec-2023-financial-data-illustrates-state-of-russian-military-industrial-complex/

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author

Rostec will beat 2023's figures handily as its previous investments and expansion to flatten the escalation in orders curve is already over and working to bring in even more revenue. The amount of budget funding it gets wasn't disclosed, just that it's provided. I happen to know it was significant--almost a trillion rubles. So, the overall story isn't being told in these snippets--you saw how thick that annual report was sitting on the desk in front of Putin. The reworking of the supply chain to deal with import substitution and Tech Sovereignty was initially costly but will see reductions as it matures. Imagine running such a conglomerate! They aren't on the payroll, but several Deputy PMs and Ministry heads help run Rostec. There are several key organizations in Russia that deserve to be called Putin's babies with Rostec being at the top.

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Jul 31Liked by Karl Sanchez

Chemezov did mention somewhere that they are borrowing at 5/6% with the requisite State subsidies on the rates – but of course the State can also subsidise directly as you note– as per necessary in the renovation of the gunpowder works, or Gas Turbine production

The import substitution does appear to have been an extraordinary

Plus they are still exporting, less, but at good margins

That this is VVP’s baby he has made clear in the past, you have reported on this- Rostec’s careful emphasis on the social housing education employment and wage increases confirms this

I posted some links and quotes to S’s new article – which is all about the deflation of western expectations for Ukraine’s success in the war

In this context – although S does not mention this - the China peace plan and the visit by Modi to Kiev in August must be significant, as well as your recent attention to the reconstruction of the Donbass – I can see another comment forming as I write

Thank you for your work

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On India-China, you'll want to read this from today, https://www.indianpunchline.com/winds-of-change-in-india-china-relations/

No Quad would be a huge BRICS/SCO Coup.

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Jul 31Liked by Karl Sanchez

Thanks I will - One can see that Rostec is already in a position to export an arms production industry or platform, as China is with ‘the new trio’ of industries, solar, batteries and NEV’s

Once the SMO is done with

India would be the first stop

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Indonesia's president elect is visiting Russia, and he wants to further tighten relations as does Putin. Will provide a short note on the event.

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Jul 31Liked by Karl Sanchez

Very interesting news - next on the list.....

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Aug 3Liked by Karl Sanchez

Looks like I'm number 50 on the comment count.

Regarding the use of the word 'forced'. Not sure if it's a machine translation but if so it could be interpreted as 'obliged' or 'obligated'. Interesting article and comment section.

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Aug 1Liked by Karl Sanchez

Great company, great industrial and responsible conglomerate, but confused, to me, financials.

The volume of civilian production now stands at 993 billion (11,614,128,000 USD, $11.6T).

The percentage of civilian products 2023-35 percent (about a third of total revenue, which makes gross revenue 3 X 11.6 T, or $34.8 T, bigger than US GDP)

Volume of investments in 2023 527 billion rubles (USD $6,163,792,000 CAPEX).

CAD/CAM is where modern industrialization stands today. NC milling gear and robotics also make up the mix. They should have plenty of it for both mass, precision and volume manufacturing. I would like to chase that angle down some more, having started in the European Iron and Steel industry with manufacturing follow on of discrete products.

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Several months ago Putin visited a robotics plant that I reported about. I've noted how the discussions on economic matters are getting fewer and shorter. The Rostec report showed us how close Russia is to attaining 100% technological sovereignty, but that doesn't mean imports will cease. If Russia wants to grow its trade with RoW, then it must import more because it will be exporting more, and the end goal is to grow the Global Majority's overall economy.

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Aug 3Liked by Karl Sanchez

All my questions still stand. I will do homework after I return from Colorado next week.

International engineering and manufacturing of discrete products are part of my background. By the mid-nineties I had taken four weeks out of the international Time to Market cycle, which makes an impact on lifetime revenue flow per product. Russia may not have the same sensitivity, but integrating the entire cycle is important.

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Jul 31Liked by Karl Sanchez

I must thank you for your tireless work. It provides us with extensive and valuable information.

Sometimes I wonder when Putin ever sleeps. His workload is enormous. It's not just work meetings, diplomatic and representative activities. He has to study so many specialist areas and their content in order to be able to hold relevant and beneficial discussions with the individual experts. Including being able to administer everything. We know from his panel discussions that he has a wealth of factual knowledge and can speak freely on many topics without a cheat sheet. If I worked for him and had to report to him, I would never dare to come unprepared.

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He has developed an outstanding team, and he's very disciplined with his own personal schedule--eating, sleeping, exercising, etc. In one of his recent discussions, he was asked that exact question, paraphrased: How do you do it? HIs judo keeps him conditioned and can be practiced most anywhere, and he tries to get two hours-worth daily. And of course, most of life's mundane chores he doesn't need to perform. His Moscow dacha is owned by the government as are his vehicles and all that. And of course, his mental abilities are excellent. Yet, it's 100% true that Putin grew into the position as Russian President along with his one term as Prime Minister actually managing the government for that vantage point. What I see in his interactions with much younger members of government is his mentoring. He doesn't want people who will be intimidated by him; he wants people willing to tackle the challenge of working with him and the team to obtain results and solve problems.

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It's great that the growth in production of consumer goods and military equipment, unlike in the West, is feeding back into society. It's great that the 'good guys' will be able to overwhelm the rogue Empire and hopefully bring more peace in the world.

I'm not saying that Russia or China had any other choice than to respond to the provocation of the US or to emulate and overtake the West with economies based on increased energy and resource consumption. However, I will state the fact again; the increased used of finite resources and the growth in production of CHGs is accelerating the global climate crisis that China herself is already feeling the brunt of.

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Russia is very well aware of the climate crisis with all its permafrost. The plans for development of Arctic and Far Eastern regions take that into consideration when planning.

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How do mean they take the climate crisis into account? That they will have access to resources once the permafrost melts? Or that they will mitigate the climate crisis in some way?

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The main issue with permafrost loss is its effect on undermining building foundations, although there're other issues too. Such considerations are discussed in the many planning sessions I've published related to those regions which are all in the archive, and I'm certain there'll be more to come. The access to resources already exists. Building structures least harmful to the environment while extracting resources is the main concern. RusHydro, for example, does very fine, in-depth environmental studies of the watersheds it might tap for its hydroelectric projects. Today's Russia is very well aware of the calamity pollution can wreck on society as the book "Ecocide in the USSR" published in the late 1980s detailed. The national project of constructing oncological centers nationwide to combat the cancers that pollution caused is a case in point. Russia has its own version of Superfund waste cleanup sites, a program never heard anymore within the Empire although the problems still exist. You may have read Putin saying the goal of Russia's economy is to become full cycle generating as little waste as possible. There's a law stating that all manufactures must be made with end use and recycling in-built into design and material use. No western nation has anything comparable, although the German auto industry did before it was destroyed by the Outlaw US Empire.

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Harm to the environment is not the same as the climate crisis although they are of course linked. To mitigate the climate crisis is something else entirely.

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The increase in their industrial production is not taking the climate crisis into consideration when planning!

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Sorry Jo, but you're not as informed as you think you are.

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That is why I say that BRICS+ is our only hope to address the climate crisis because it will require the destruction of the rogue Empire with its war-mongering oil barons and a level of commitment and cooperation never before dreamt of let alone attempted.

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Sorry Karl, you misunderstand me. I'm not saying that Russia don't use recycling and efficient waste management etc etc etc. I'm saying that economies based on increased consumption and production ie growth are unsustainable and will accelerate global warming and all its issues.

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China's Sinopharm is also stated owned though I read they'd signed a 'cooperation pact' with convicted fraudsters Pfizer in 2023 to make 12 drugs available in China. I hope this goes the way of sanctions- whether from the US side or China's.

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Sanctions on China seem baked in given Janet Yellen's talk; banking first then the rest will follow. The west's financial system must be much worse than publicly available numbers indicate given extreme misuse of sanctions and confiscation has gone.

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The bully can no longer compete, so it uses its remaining tools of force. The 1% has a quandary on its hands--all its wealth is tied to all the debt, and for the system to get better, it needs to shed its debt meaning the 1%'s wealth. So, what we see is a policy akin to treading water--neither sink nor swim: just remain afloat. But at some point that Ponzi Scheme will collapse as they always do.

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Yes, I think there will be a financial collapse in the West. BRICS are very sensible insulating themselves, though it will still have a major effect on them.

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Hiya Karl, I totally agree with your assessment of Western Big Pharma as disease mongering profit makers. Most new drugs and treatments (bought at high mark up by the tax payer for the NHS ) have extremely limited absolute benefit and would not pass any cost benefit analysis- apart from to share holders.

I hadn't heard of Rostec.

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Well, now you have, and I hope you took the time to read over its history, for it's quite a story. While the energy sector is important, Russia's economy and military power would be moribund without Rostec or something very similar.

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I like it. Thank you. Very illuminating. :)

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Jul 30Liked by Karl Sanchez

Good stuff. 2024 probably going to be even more

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Jul 30Liked by Karl Sanchez

Thank you Karl! Impressive figures from a state-owned company that only exists for so short. A lesson for the failing free market economy that is controlled by the grabbers.

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Jul 30Liked by Karl Sanchez

While I share your enthusiasm for Russia’s economic and infrastructure progress in recent years, the claim that the USSR could have similarly or superlatively exceeded the present-day accomplishments if only it had been so wisely led is only true for a hypothetical reality that never existed. Nice to think about but could never have happened. The Bolsheviks assumed power over a nation whose industry was comparatively relatively backward, educational system in disarray with widespread illiteracy, agricultural system primitive and scarcely developed beyond serfdom while all the while fighting actual invasion for half of its first quarter-century of existence. So I accept your statement on what-could-have been as a pleasant dream; I’m glad you articulated it. Appearances not withstanding, I’m NOT a Russophile. However I think the accomplishments of the USSR are equally as historic and earth-shattering as those of its neighbor, China—even though major tragedies and mistakes occurred in both societies during the 20th century.

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As several historians have noted, Russia never entered the industrial capitalist stage except in the realm of Class where Communist Party nomenklatura became the oligarchy and the working class remained itself with a small segment of technocrats. IMO, the USSR's biggest failure was in agriculture as it was never really able to feed itself despite the awesome potential we now see being developed. Plus, the Communists never really understood markets. Illiteracy of political-economic history was very evident in the way the West was allowed to rape the state instead of develop it--what markets that were established were colonial in nature made to serve the West and not Russia. The team that developed around Putin in St. Petersburg did some homework that translated into the first series of reforms during Putin's first term. If you read Rostec's history, you'll have seen it was created in 2007 just before Putin went from president to Prime Minister where he was able to oversee its initial accumulation of Russian companies and thus rescue Russian industry and its society.

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Did the USSR have a centralised system of food distribution that led to problems? Didn't millions starve in Ukraine, on fertile land, under Stalin.

I understand that China's model of socialism works because it is not centralised; rather allows some local autonomy.

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No, the system never functioned properly, nor was the new collectivist farming system able to overcome nature and its drought which is what caused the famine. Regardless the system used, if you're dryland farming and the rains don't come, you end up with famine--even irrigation works won't help if the drought is powerful and long-lasting. What caused the Dust Bowl to occur? Too few seem to know despite its occurrence in recent US history. I highly suggest reading these: "Beyond the hundredth meridian : John Wesley Powell and the second opening of the West" and " Westward Expansion: A History of the American Frontier." The last one is quite long, while the former goes more to the heart of the issue. Researching the Great American Desert will inform you a lot of what the flyover region is like and why it's populated.

As for the current abilities of Russian agriculture, its potential is great, to the point where Russian Ag people think they have the potential to solve the world food problem, which is not so much production but distribution and getting Global South nations to stop plantation Ag in favor of Ag for local consumption. That issue is at the heart of US Colonialism in Central America as is land redistribution--the need to break up the latifundios and reinstitute the ejidos.

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Yes local regenerative, non-intensive, organic agriculture is the way to prevent dust bowls.

And if everyone was plant-based it would free up 5 billion football fields worth of land for reforestation.

https://jowaller.substack.com/p/yet-another-unsuccessful-attempt?utm_source=publication-search

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Jul 30Liked by Karl Sanchez

Very appropriate emphasis.

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Jul 30Liked by Karl Sanchez

thanks karl.. i suspect russias enemies would have this on the top of their reading list... i am surprised at how open russia is with all this information and i am not sure how prudent it is, but perhaps they are also holding info back, or altering the presentation to project a different reality... hard to know... thanks regardless..

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Jul 30·edited Jul 30Liked by Karl Sanchez

re: "250 brigades", it's a mistranslation ... It's "250 ремонтных бригад" = 250 remontnih brigad = 250 repair crews (I.e. presumably those contributed by Rostec, in contrast to MoD/Army personnel)

text source: https://rostec.ru/news/sergey-chemezov-dolozhil-prezidentu-rossii-itogi-raboty-za-2023-god/

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Thanks, the math didn't make sense, so I should've taken a deeper look into the translation. Thanks for doing that task!

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Jul 31Liked by Karl Sanchez

If the Russians did not tell the truth, where would they be?

To not do so, as per the westies, is fatal

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In the West climate change is sold (by fossil fuel and animal ag industries) as a hoax by globalists to impoverish the West and destroy its industries. In the Global Majority climate change is sold as hoax to impoverish them, to fool them into leaving their resources in the ground (to be stolen later) and to stop them growing their industries.

The climate crisis is a fact not a hoax and it is something that all of humanity will have to address, and soon, if it wants continued existence on this planet.

https://jowaller.substack.com/p/climate-change-hasnt-been-debunked?utm_source=publication-search

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Jul 31·edited Jul 31

It IS a Hoax.

Top to bottom.

1. The Climate has *always* changed...welcome to Planet Earth...

2. It has been much, MUCH warmer in the past, than now.

3. Carbon Dioxide has been much, MUCH higher in the past.

4. Carbon Dioxide is Plant Food and has NO effect on the climate (It's a trailing indicator).

5. Only Hoaxers refer to it as Climate Change (see #1) instead of Catastrophic Anthropogenic Warming so they can use standard Propaganda Techniques to conflate natural weather effects with their preferred hoax.

6. Stop posting fake science.

7. The current average temperature of Earth is less than 17 Celsius. (Ignoring that we can't ACTUALLY MAKE THAT MEASUREMENT, because Nyquist Limit)

8. The "tipping point" temperature is 60 Celsius (it's a peer reviewed paper, go look for it)

9. So the Earth is in ZERO danger from climate change.

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The climate has always changed yes. People have always died- that doesn't mean that people cannot be murdered.

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The changing continental positions certainly contributed to the various climates seen in the geologic record, and will again contribute to it as they continue to change position. The problem all too often is conflating human time scale with the geologic, humans being a mere blip at the end of the Earth's timeline. Yes, your point #9 is correct and is also true for nuclear war--Earth survived before humans and will survive when we go extinct as there's utterly nothing special about humans within Nature. We are not destined to live on as a species forever.

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I refuted all your tired old tropes put about by industry funded cliamte crisis deniers here https://jowaller.substack.com/p/climate-change-hasnt-been-debunked?utm_source=publication-search

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No.

You didn't.

Your use of denier shows how thoroughly you are duped by propaganda.

Your recycling of strawman arguments proves nothing.

Human emissions are a TINY Fraction of Natural ones..

Carbon Dioxide is Plant Food,

Nothing more.

Water drives the climate, not trace gasses.

We are a water world, Earth is just a name.

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What is revealed by the use of the moniker 'denier'?

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Arsenic is just a TINY fraction of the blood at concentrations that can kill you.

Water vapour is also a green house gas that amplifies co2 warming.

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No logic to what you say whatsoever.

Have a nice day.

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eg your statement Carbon dioxide is plant food, nothing more. It's a whole lot more than that, though not even technically food.

Carbon is the basic unit of life, there’s nothing toxic about it, it’s essential and makes plants grow for people to eat. So is water, which when vapour is also a greenhouse gas. I have nothing against water either. It’s lovely, I love drinking it. Some people seem to want to deliberately misunderstand what’s being said. Plants were not starving from lack of co2 before humans started pumping it out, they were flourishing. Imbalance of co2 does not improve crop yields overrall, they have never been worse thanks to the green revolution, intensive farming, GMOs, glyphosate and desertification.The human activities of cutting down oxygen producing, carbon dioxide receiving trees and burning them along with rocks, gas and oil from underground is changing the BALANCE of the co2 cycle.

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