Ukraine Wants You To Boycott Russia. Meanwhile, Ukraine Makes Billions.

The world is still digesting the impact of massive economic sanctions imposed by the U.S. and EU on Russia because of the Russian invasion of Ukraine. The amounts involved are in the hundreds of billions of dollars (Russia’s reserve position prior to the invasion was about $620 billion and over half of that is currently frozen in U.S. banks).

Still, the economic impact will ultimately be measured in trillions of dollars. The U.S., EU, and Russia could all suffer recessions this year or early next year. Since their combined GDP is over $50 trillion, even a 2% recession amounts to a $1 trillion decline in output of goods and services.

A global recession could be far worse than that. The losers in the U.S., UK, EU and Russia are clear. Even Japan and China could suffer in a global recession.

Are there any winners?

It turns out that one of the big economic winners is Ukraine, according to this article.

Despite the sanctions, the natural gas pipelines that run from Russia to the rest of Europe pass through Ukraine. Those pipelines are running at full capacity; there has been no shutdown in energy deliveries from Russia to Europe despite the clamor about sanctions.

When natural gas moves from Russia through Ukrainian pipelines, Ukraine charges a transit fee. Those fees run about $2 billion per year. Russia is still paying them and Ukraine still collects.

Meanwhile, the transit fees are going up because the price of natural gas is going up also. Ironically, Russia is also making billions of dollars because it is still being paid by Germany and others for the natural gas being delivered.

So, while you fill up your car with gas at $5.00 per gallon or higher, just remember that Ukraine and Russia are still making billions off of energy sales even as they fight a brutal war.

Kinetic war is obviously destructive. It turns out the economic war is destructive also. But we’re doing more destruction to our own economy and citizens than we are to the Russians.

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