cross-posted from: https://mander.xyz/post/45242789
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Russian Railway, which operates approximately 85,000 km of railway, is going through a crisis that has prompted Russian authorities to consider exceptional measures to avoid default, according to an analysis published by Europa Liberă. ...
Russian Railways’ total debt has reached approximately 4 trillion rubles (equivalent to about USD 50–51 billion, EUR 43 billion), at a time when revenues have been affected by the slowdown in the war economy and the highest interest rates in two decades.
The company, which has approximately 700,000 employees, is heavily exposed to state-owned banks, particularly VTB, and its inability to meet its financial obligations could have a knock-on effect on the Russian banking system, several analysts warn.
“This crisis at Russian Railways is one of the factors contributing to accelerating inflation in the Russian economy,” said Russian economist Igor Lipsiț, quoted by Current Time. According to him, falling revenues, rising tariffs, and inflationary pressures directly affect the population and companies dependent on rail transport.
The war in Ukraine, a systemic shock for the rail operator
The invasion of Ukraine was a systemic shock for Russian Railways. The prioritization of military transport, imposed by the government starting in 2024, has seriously affected trade flows and the punctuality of civilian deliveries.
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In an attempt to stabilize the financial situation, the Russian government has ordered the sale of the Moscow Towers office complex, a 62-story building in the Moscow City financial district, purchased by Russian Railways in 2024 for approximately 193 billion rubles (about USD 2.4 billion), according to the Ukrainian portal UNN.
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The Moscow authorities are considering several options to support the company, including:
- increasing freight transport tariffs;
- increasing state subsidies;
- tax cuts;
- using reserve funds;
- converting part of the debt into shares, which would give state banks direct stakes in the company.
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Russian Railways is state-owned, therefore a financial collapse seems unlikely. It will be another burden on the russian state budget, though.
I see it quite likely 😁
The Russian state budget is under enormous strain alteady, oil prices plummeting, wealthfund almost used up to prop up last years budget, "war economy" down...
I mean if they continue like this it'll be 1991 all over again lol.
If anything "happens" to Russian Railways, it will probably tear the rest of the industry with it.
The linked post suggests that the state could try to sell it to the banks, but that sounds like just shifting the risk. A collapse of the banks would be even more desastrous.
Russia might also increase the prices for transport, but this will increase all prices down the line, increasing inflation even further.
And lastly, Russia can just print more money.
Which dies have its consequences too (looking at you Germany after ww1)
For that to happen the EU will have to put it on its big boy pants and put boots on the ground in Ukraine or commit to arming it fully, not just some wishy washy commitments.