The President's Daily Brief - August 31st, 2022. Were Sanctions Against Russia Effective? North Korea's Leader Contracts COVID.

Episode Date: August 31, 2022

It’s August 31st. You’re listening to the President’s Daily Brief. Your morning intel starts now. ------ It’s a Special PDB this morning. The Main Brief today and all week is chosen by you — things we’ve discussed before but updated with new information, new data, and fresh analysis. First, we are back at the ringside fight between Russia and Ukraine. Last week we used a boxing analogy to try to understand the punches being thrown, with one by America and Europe aimed at Russia’s economy. We’re of course talking about the economic sanctions. So how did that punch land? Is Russia on the economic ropes? We’ll discuss the data, plus a reminder of why this story is so important to you and your family. As always, I’m keeping an eye out for developing stories. Put these two on your radar. First, some California solar panels that just might be a win-win for everybody. Second, North Korea’s leader has COVID. That could mean bad news for our men and women in uniform. Finally, we wrap up the podcast with a question from a listener. This one about how much compassion we should have for illegal migrants. ------ Please remember to subscribe if you enjoyed this episode of the President's Daily Brief. Email: [e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

It's August 31st. You're listening to the President's Daily Brief. I'm your host and former CIA Officer Brian Dean Wright. Your morning intel starts now. It's a special PDB this morning. The main brief today and all week is chosen by you, things that we've discussed before, but updated with new information, new data, and fresh analysis. So first up this morning, we are back at the ringside fight between Russia and Ukraine. The last week we used a boxed, analogy to try to understand the punches being thrown, with one by America and Europe focused on Russia's economy. We're talking, of course, about the economic sanctions. So, how did that punch land? Is Russia on the economic ropes? We'll discuss the latest, plus a reminder of why this

story is so important to you and your family. As always, I'm keeping an eye out for developing stories. Put these two on your radar. First, some California solar panels that might just be a win-win for everybody. Second, North Korea's leader has COVID, and that means some bad news for our men and women in uniform. Finally, we wrap up the podcast with a question from a listener, this one about how much compassion we should have for illegal migrants. But first, let's get started with today's main brief. Last week, I brought you a six-month update on the war in Europe, all between Russia and Ukraine. To help us understand this complicated fight, we used the analogy of a boxing match with Russia and its coached China in one corner,

while Ukraine and the United States were in the other. So one of you all wrote in, Gerald from the St. Louis area, asking about a punch that America and Europe threw in round one. Of course, the economic sanctions against Russia. Are they working, Gerald asked, because if they are, that means the war wraps up sooner, which means you all start paying less for your natural gas and elevation. electricity, and that's just one benefit. But if those sanctions aren't working, that means that the war drags on. And everybody from America to Ukraine pays the price. So let's answer Gerald's question,

first by reminding ourselves of what a big punch we thought we threw. Starting last February, America and Europe slapped sanctions on Russia's economy, targeting their elites and their families, the banking industry, the airline industry, and most especially anything to do with the electronics industry, anything that might help build Russia's tanks and missiles. Now, we thought that our sanctions were a real knockout punch. Here's what Joe Biden said last March. Quote, as a result of our unprecedented sanctions, Russia's currency, the ruble, was almost immediately reduced to rubble. The Russian economy is on track to be cut in half, and soon it will not even rank amongst the top 20 in the world. Joe Biden was not alone in this very rosy assessment. Wall Street banks,

like J.P. Morgan and Goldman Sachs, all predicted the same. And the reason is that Moscow gets about 45% of its annual budget from oil and gas sales. And very fancy people in New York and Washington, D.C. figured that those sales would collapse. So it's been six months since, America and Europe through that big economic punch. Question of course is, did it land? Here's the data. Russia's economy will shrink by around 2% this year. Biden promised 50%.

Russia's currency, the ruble, is now at its highest level against the U.S. dollars since 2018. Biden promised rubble. Next, the Russian unemployment rate is at 3.9%. That is the lowest since it. at least 1992. Interest rates, those are now lower than they were before the war. And full-year inflation for 2022 and Russia will be around 12 to 13 percent.

That's higher than America's 8.5 percent, but only modestly so. In other words, folks, Joe Biden and Europe swung hard at Putin, and they came up short, far short of that knockout punch. So what happened? where is Russia getting all that money to prop up their economy and fuel the war? Well, it all comes down to countries doing what they want to do, not what Biden and Europe are telling them to do. First, let's talk coal purchases. Russian thermal coal was trading around $150 a ton about a month ago. Now, the equivalent out of Australia was 210 a ton. So if you are in the

market for coal, you can buy it from Russia at a discount. And I'll tell you who we'll tell you who is, and that is China. Beijing is importing record amounts of coal from Russia up 14.4% in July as compared to last July. And the reason for that is China is in the midst of a nasty heat wave and drought so they are firing up their coal plants, and that means more demand, which Russia is happy to supply. But coal is not the real economic kingmaker here. Instead, it's oil and gas. China, for instance, has increased its purchases by 40% so far this year. India has increased its purchases, too, up more than 1,700% over the past year. Indian refineries and energy companies actually got an order from the government of India

to buy more Russian oil, and that's because it's around 20 to 30% cheaper than comparable oil on the international marketplace. And by the way, the increase of Indian purchases, that's not going to go anywhere. any time soon. The state-owned Indian oil corporation signed a contract with the Russians to lock in supplies until the year 2028. Now, moving on from China and India, there is another Russian oil buyer that might surprise you, and that is Saudi Arabia. That's a bit of a head scratcher, isn't it? After all, they produce lots of oil by themselves. So here's what's going on. The Saudis are buying Russian oil because they can get it for so cheap.

and then they use that cheap stuff to fuel their power plants and such inside of the country. In turn, that frees up their own more expensive oil that they sell to America and Europe and others for a much higher price. And that makes them a very handsome profit. Plus, there's another Middle Eastern country called the United Arab Emirates that's playing a different kind of game here. For a long, long while, they've taken oil from naughty countries like Iran and Venezuela. and now Russia, and then slap a fake label on it and sell it to buyers around the world. But that's not the only gamesmanship going on here. Tankers with Russian oil will actually turn off their electronic locators

and then secretly meet up with another tanker out at sea and transfer the load. It's an expensive and risky proposition, but it allows Russian oil to be laundered as belonging to someone else. So all this is to say that Russia is making a lot of, money. In fact, Moscow is pumping almost as much oil now as it did before its invasion of Ukraine. Now, volume is down a little bit, but with oil prices up, Moscow is actually making more money. So to put numbers to that, Russia has earned $20 billion in average monthly sales this year, compared with $14 billion in 2021. Here's another example.

Russian gas giant gas prom made a record 41.75 billion in net profit in the first half of 2022. They made so much money that the board of directors recommended paying early dividends. Now, if you were scratching your head wondering why Russia can do all of this, why is the U.S. and Europe, well, why are they not stopping all the sales of Russian oil and gas? Well, that's because they can't and they won't. So they can't because Europe is still buying Russian natural gas and oil and diesel. For decades, Europe has tied itself to Russian energy. U.S. presidents like Trump and Obama both warned them about this, but they ignored these

presidents. They relentlessly mocked Trump for it. But here we are. It will take many months, if not years, before the Europeans can wean themselves off of Putin's power. Plus, America and Europe won't sanction all of Russia's oil and gas because removing Russia's 7.5 million barrels of day from the global marketplace would cause oil prices to skyrocket and economies to tank. Now, it's true that they could increase oil production, but both Biden and European leaders have actually said no way. They are embracing green energy, and they are refusing or discouraging anything that might promote the oil. and gas industry. Now, one very small caveat here. On December 5th, Europe is scheduled to phase in an

embargo on Russian oil, and that could be important, if enforced. But few oil traders and analysts think that that will actually happen. So, my friends, especially Gerald and St. Louis, there is your update on how this boxing match is going, whether or not Joe Biden landed his knockout punch with economic sanctions. The answer is quite clearly, no. Neither Biden nor European leaders landed in economic knockout. That's not to say that sanctions aren't hurting. They absolutely are. For example, there are shortages in key industries, especially for computer chips. Also, Russian airlines and the auto industry are largely frozen, but Russia has not been reduced to rubble, as Joe Biden claimed he would do, like that.

March. In fact, Russia has a counterpunch of its own. Starting today, Moscow was shutting off all remaining natural gas supplies to Europe. And we're not sure if that spigot will ever get turned back on again. The Russians say, give us a few days and we will. And we pray for that. But if not, listeners now know why. Putin is getting his money from somewhere else. He doesn't need Europe's cash. And that is not going to change anytime soon. up, ladies and gentlemen, a closer look at what's on my radar. Two quick briefs for you, one on solar panels and the other on North Korea. We'll be right back.

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First, it would increase the state's capacity to generate renewable energy. That's what makes the green people happy. Second, the canopies would reduce water evaporation. Logic says that the sun will hit the solar panels instead of the water, and voila. You have more liquid gold for both crops and people in the midst of a 25-year-old drought. And that leads us to our third goal here. The less sun that the canals receive, well, that means less growth of unwanted weeds. and other vegetation. If you have ever cleaned out an irrigation canal or a ditch, you know exactly

what I'm talking about. Those weeds clog up your canal and your pumps and cause you to lose precious water. So with luck, these solar panel shades will block the sun and stunt the weed growth. So will this idea work? Yeah, we're not sure. They are, of course, part of a pilot project, so we'll see in a few years. But a University of California study estimated that covering all of the state's public water infrastructure in this way could actually save 63 billion gallons of water annually, and that's a pretty big deal. What's critical, at least from my optic, is that California make sure that first, these solar panels do not come from China. And second, that there is a clear plan to prevent any leaching of the dangerous materials from inside those panels into the canals

below. And third, there's got to be a plan to recycle all these panels when they have expired. We can't just dump these things into landfills. But still, as we try to be open to innovative thinking, especially to protect water, this idea might be an example where we can all meet in the middle. I'll keep you posted. Finally, the leader of North Korea has COVID. Now, I know what some of you are probably thinking. This story is already boring because you are over COVID. But stick with me because I'm going to explain how this development actually could put our men and women in uniform at very grave risk. So let's get to what we know. North Korean state-run media is reporting that Kim Jong-un, the country's 38-year-old leader, has contracted COVID-19.

We don't know many details other than, quote, he has suffered in high fever in the middle of the anti-pandemic battle, end quote. It's a very North Korean language there. Anyway, so here is why we care about this story. First, North Korea has implemented some of the most extreme mitigation efforts in the world to prevent themselves from COVID. That includes a total border lockdown, nobody in and nobody out without express authorization from the government. Well, the bug got in regardless. That should teach us a lesson for the next time that Tony Fauci tells us to keep six feet apart. but second and much more importantly, North Korea is a nuclear-armed state.

They've got 30 to 40 warheads and the missiles to deliver them, including to our bases in South Korea, Japan, Guam, and maybe even here in the United States. So what happens if this guy dies? Because we know that Mr. Kim is in poor health. He is modestly obese. He's a heavy drinker, and he is a chain smoker. In other words, he's got comorbidities that suggest. an increased probability of complications.

So who takes control of those nukes if he dies? Well, we're not real sure. North Korea is a hereditary dictatorship, and that means that Kim Jong-un's grandpa was the first leader, and then his dad, and now him. But right now, the line of succession is unclear. Mr. Kim reportedly has three children with his wife, but they're fairly young.

The oldest is probably 12. And there are also other competing errors to the throne, including his younger sister. He's got some aunts and some uncles. And that means that things could get really nasty as they fight for power. Case in point. Mr. Kim ordered that his uncle be shot, actually blown apart, when he viewed that man as a threat. So I will be watching this very closely, because depending on how it progresses, we could have a very serious crisis that will require very serious American leadership. And with that, one more thing before I let you go, a listener question, as always,

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It's a brief that I've given you a few times about Cubans fleeing to America because their country is in very bad shape and it's getting worse due to electricity blackouts. So Wendy asked me, when you talk about... about the Cuban illegal migrants, Brian, I'm torn. On one hand, they should follow the rules like everybody else. But on the other, it seems like some compassion is in order. Sort of a statue of liberty-like policy. They are tired, poor, huddled masses yearning to breathe free from the commies in Havana. So what do we do? Well, Wendy, this is a brief all in of itself, but I'm going to give you a couple things to think about. First, let's talk about. First, let's talk about.

about that Statue of Liberty phrase that you mentioned. That is a line from a poem written in 1883 as a way to help raise money for the pedestal of the Statue of Liberty. Now, over the years, people have held it up as a demonstration of who we are, and sometimes even the legal foundation of our immigration policy, but that's just not true. It was a fundraising poem. All right, Wendy, let's talk about the second thing that I'd encourage you to consider. Immigration in this country has for decades been overwhelmingly about the economic value that migrants bring to our country. We need them to work in our farms, our factories, our forests, and our minds. On occasion, we embrace a type of people like the Cubans because of, well, our compassion,

for instance, refugees. But we have generally accepted those refugees in much smaller numbers and for a very short period of time, temporary, in fact. And then once their home countries deal with whatever crises, or we deal with it, they go back home. So which approach is better? Do we want a more humanitarian immigration policy like the Statue of Liberty lays out

or the one that's more self-interested, more focused on our economy? To help us with that, let's do a quick thought experiment. What does an America look like with a Statue of Liberty immigration policy? If, for instance, we open our doors to those yearning to breathe free from tyranny, we could invite the people of not just Cuba,

but Iran, 86 million people there, or Venezuela, 28 million there. Or how about this? We could welcome those poor huddled masses who are tired of being in poverty. That would be more than 200 million poor people in India alone. Sub-inherent Africa, gosh, that's at least 500 million there too. Well, I think you get the point. A Statue of Liberty immigration policy, if we really lived it, would mean a billion or more people coming to this country for,

freedom and jobs for a better life. Now, is that something that we could reasonably support? I'll let you answer that question. But as for me, I'm not inclined to embrace a fundraising poem from the 1800s as the basis of our immigration policy. That, to me, seems like a bad idea. And that, ladies and gentlemen, concludes your morning brief. As always, we close out the show reminding each other of why we are here, talking about our country and our world. It's the creed of every good spy and every smart American.

It's from John chapter 8, verse 32. And you shall know the truth. And the truth shall make you free. Good day. Some follow the noise. Bloomberg follows the money, whether it's the funds fueling AI or crypto's trillion dollar swings. There's a money side to every story.

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