Russia's national treasury is in urgent need, and Putin urgently needs China's help to pull it out, but he must first understand a truth — "there is no such thing as a free lunch in the world."

In recent times, under severe external circumstances, the energy exports, which are a key pillar of Russia's economy, have finally encountered major problems. As a result, Russia has once again focused its attention on energy cooperation between China and Russia.

[Three months ago, Russia's national treasury lit up with a 'red light.']

Putin himself has said that energy cooperation is the "locomotive" driving the development of Sino-Russian relations, and oil exports and pipeline gas supplies are without a doubt the mainstays.

Under current conditions of significant fluctuations in the international energy market, Russia's energy export situation is extremely severe.

In this context, the head of Russia's Energy Ministry, Tsvyelyov, met with the Chinese ambassador to Russia to conduct in-depth discussions on key issues in Sino-Russian energy cooperation, involving expanding Russia's supply to China, the development of natural gas transportation infrastructure, and the implementation of energy cooperation projects, hoping to further expand bilateral interaction in relevant fields.

Here, we cannot help but mention that two months ago, Tsvyelyov visited China and also discussed similar topics with his Chinese counterparts. This shows that the Russian side has been concerned about this issue for some time now, likely wanting China to help pull Russia out in energy cooperation.

In March this year, due to falling oil prices, Russia's lifeline — energy exports — fell into difficulties, and the national treasury lit up with an urgent red light, with fiscal deficits continuously expanding, and state fund reserves being insufficient to cover expenses, plummeting to their lowest level since inception.

[Russian energy minister discusses expanding bilateral energy cooperation with China]

At that time, in order to boost confidence and save the situation, the Putin government used the "final" reserves of ruble funds from the bank, resulting in a reduction of nearly half in the ruble reserves held by the Ministry of Finance in credit institutions within just two months, shrinking from ten trillion to below six trillion rubles.

However, this did not fundamentally solve the problem. If oil prices continue to fall, Russia will still need to use its own funds to fill the deficit. But after years of Western encirclement, Russia's National Wealth Fund has reached historically low levels of available liquid funds, making this approach only a temporary fix at best.

Further down the line, Russia may even have to urgently implement budget tightening measures.

Last December, the governor of the Central Bank of Russia warned that the national economy had reached the "limit of production capacity," and if things continued like this, Russia would face a "stagflation crisis."

On top of internal troubles, there are external threats. "OPEC+" has announced a significant increase in production, marking the third consecutive time.

Some analysts believe that this move by "OPEC+" aims to reclaim market share and impose constraints on export countries deemed to be "overproducing," such as Russia and Iraq, thereby consolidating its influence in the global market.

This is not good news for Russia, but there isn't much they can do about it.

[Three months ago, the Putin government used its "final reserves"]

"OPEC+" is never a monolithic bloc, and there are competitions among its members. Russia opposes the production increase, but this decision is strongly pushed by Saudi Arabia, and the Putin government is powerless to change anything.

Initially, Russia hoped that the normalization of US-Russia relations and the rapid conclusion of a peace agreement between Ukraine and Russia would quickly improve its external environment.

At that time, there was no shortage of optimistic voices in Russia, believing that as long as the financial sanctions imposed by the US and Europe were lifted one after another, Russia's economy would soon recover, and the current problems would no longer be problems.

However, this is not something that can happen overnight. The rapprochement between the US and Russia is progressing steadily, but the US remains tight-lipped, not imposing new sanctions for now, yet retaining existing containment measures.

In fact, the US has left itself a backdoor to interfere in international oil prices when necessary, precisely targeting Russia's energy export economy to force the Putin government to make concessions during the Ukraine negotiations that the US desires.

[The Putin government originally hoped that changes in the Ukraine situation would improve the external environment.]

Although the US has never publicly threatened to use this unconventional means, Russia will not take it lightly. Dealing with unpredictable America, always preparing for the worst-case scenario is never wrong.

Meanwhile, Europe, Russia's former main energy trading partner, is launching a new round of sanctions. Moreover, don't forget that the Ukraine peace talks have stalled. Overall, Russia's external environment hasn't improved much; it remains as it was.

In short, Russia cannot solve its problems with a swift and decisive action. External environmental variables, while theoretically capable of having an immediate impact on the Russian economy, are beyond Russia's unilateral control.

Counting on these variables to address the pressing issues at hand is simply unrealistic.

[Russia wants to continue opening up the Chinese market to stabilize its national economy]

To extinguish the "red lights" in its national economy, the Putin government must look towards the "eastward" strategy, especially cooperation with China.

Moreover, Russia must act swiftly. The mainstay of Sino-Russian economic relations is energy cooperation, usually conducted through long-term contracts, which are less affected by short-term fluctuations in the international market.

However, Russia is not the only energy partner of China, and we are also consolidating our diversified layout.

The Putin government must understand this point — there is still significant potential in the Chinese market, but other competitors are also eyeing this opportunity. To expand exports to China, Russia must first consider what kind of terms it can offer. Sino-Russian energy trade benefits both sides mutually, and thus should follow the basic laws of economic relations.

Original source: https://www.toutiao.com/article/7515008571453571636/

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