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Russia’s state railway company (RZD), one of the country’s largest employers and operator of one of the world’s most extensive railway networks, is facing serious financial difficulties amid the war in Ukraine, Western sanctions, and rapidly rising financing costs.
According to an analysis published by Europa Liberă, the company, 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.
Sources cited by Reuters show that 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.
Russia's state railway company (RJD), one of the country's largest employers and operator of one of the world's most extensive railway networks, is facing serious financial difficulties amid the war in Ukraine, Western sanctions, and rapidly rising financing costs.
Fingers crossed! Whilst I wouldn't usually wish ill on many companies and even fewer railway companies, RZD collapsing is a good thing as far as the current geopolitical situation goes.
Though what, in reality, would the consequences of a “collapse” of a state company in a regime already alienated from conventional financial systems actually be?
Though what, in reality, would the consequences of a “collapse” of a state company in a regime already alienated from conventional financial systems actually be?
It would be a visible manifestation of the extreme costs on the Russian economy being imposed by the war on Ukraine. While I'm sure the Russian government would find a way round it, it will further impact living standards and the ability of government to meet its bills, so weakening Putin's control.
It would be a visible manifestation of the extreme costs on the Russian economy being imposed by the war on Ukraine. While I'm sure the Russian government would find a way round it, it will further impact living standards and the ability of government to meet its bills, so weakening Putin's control.
Russia's state railway company (RJD), one of the country's largest employers and operator of one of the world's most extensive railway networks, is facing serious financial difficulties amid the war in Ukraine, Western sanctions, and rapidly rising financing costs.
Certainly not good news but i highly doubt it would get the point that they collapse. They are one of the biggest companies in Russia so i think it would be a priority to find a solution. I also wonder what the finances of the 28 local Elektrichka train companies are. These are the train companies that provide the suburban and regional trains. They are all partially owned by RZD (normally about 50% is RZD owned) and then partially owned by the local oblast and region governments (basically their equivalents of our councils) of the areas they serve. I wonder whether RZD are considering selling a larger percentage of these companies to the local governments. That could be a way to raise more money but it does also depend on what the finances of the local governments are like.
Fingers crossed! Whilst I wouldn't usually wish ill on many companies and even fewer railway companies, RZD collapsing is a good thing as far as the current geopolitical situation goes.
RZD is an essential service. It is the main form of public transport that people all over Russia use for everything from short distance journeys to multi day long distance cross country journeys. It is crazy to wish for a company like this to fail. It would not be a good thing at all. If it actually did collapse then it would be the ordinary everyday people that would suffer. If employees lost their jobs and services were cut or stopped because it collapsed then it would affect the everyday ordinary people far more than it would ever affect the government and leaders. But anyway i very highly doubt that they will allow a company as big as RZD to actually collapse. The government will come up with some solution.
While the prospect of an internal economic collapse in Russia bringing the invasion of Ukraine to an end sounds attractive, it would have disturbing parallels with the situation the German Empire in 1918. The resultant “stab in the back” theory did a lot to further what happened 15 years later.
I take this story with a healthy dose of Siberian salt. I'm sure the Russian state media could retaliate with accounts of UK railways being hopelessly loss-making and requiring huge subsidies. In the 1980s the Deutsche Reichsbahn was hardly a money-maker but carried on regardless of financial performance.
I take this story with a healthy dose of Siberian salt. I'm sure the Russian state media could retaliate with accounts of UK railways being hopelessly loss-making and requiring huge subsidies. In the 1980s the Deutsche Reichsbahn was hardly a money-maker but carried on regardless of financial performance.
Not sure the Reichsbahn is the best comparison as virtually all of its infrastructure was on borrowed time. More interesting was the way the Bundesbahn haemorrhaged money even during the economic miracle.
While the prospect of an internal economic collapse in Russia bringing the invasion of Ukraine to an end sounds attractive, it would have disturbing parallels with the situation the German Empire in 1918. The resultant “stab in the back” theory did a lot to further what happened 15 years later.
If we're considering that particular parallel, then I suggest that the "stab in the back" equivalent was the collapse of the USSR, and therefore the collapse of Weimar equivalent was the chaos that Putin exploited to gain power.
If we're considering that particular parallel, then I suggest that the "stab in the back" equivalent was the collapse of the USSR, and therefore the collapse of Weimar equivalent was the chaos that Putin exploited to gain power.
RZD is an essential service. It is the main form of public transport that people all over Russia use for everything from short distance journeys to multi day long distance cross country journeys. It is crazy to wish for a company like this to fail. It would not be a good thing at all. If it actually did collapse then it would be the ordinary everyday people that would suffer. If employees lost their jobs and services were cut or stopped because it collapsed then it would affect the everyday ordinary people far more than it would ever affect the government and leaders.
Which is why normally I wouldn't be hopeful of a collapse. You're quite right a lot of people would suffer, significantly, if RZD did collapse because it is critical to Russia in a way that railways aren't in anywhere other than perhaps India. However considering the current situation I'm afraid to say that economic pain, including for ordinary Russians, is probably a prerequisite of getting the Russian Government to end their barbarism against Ukraine. Russia would shed no tears of we suffered some sort of collapse of a key piece of national infrastructure and I'm afraid at the moment neither would I. However...
I do agree with this point. It's highly unlikely RZD actually collapses in a catastrophic way. The Russian Government will come up with some sort of solution.
If it didn’t require the assumption that there is a logical mind at work in the White House, an attempt to depress the oil price by flooding the world with legitimate Venezuelan oil would probably damage the Russian economy far more….
The Russian rail network is critical for their war effort, so if the operator were to collapse the government would find some way of keeping the troops and supplies moving even if some other services were reduced or curtailed. It doesn't really help with ending the war other than perhaps indirectly reducing Putin's domestic support.
Internally it may well be dealt with by militarising the railways. Draft staff into a new Russian Military Railways or whatever, and internal supply is now a military requisition.
The bigger impact of financial collapse will be for foreign exchange - both cross-border traffic (although only China is a serious issue in that regard, as North Korea and Belarus will just extend credit as required, you'd imagine) and procurement from overseas. Does Russia actually need to import any equipment for it's railway?
Which is why normally I wouldn't be hopeful of a collapse. You're quite right a lot of people would suffer, significantly, if RZD did collapse because it is critical to Russia in a way that railways aren't in anywhere other than perhaps India. However considering the current situation I'm afraid to say that economic pain, including for ordinary Russians, is probably a prerequisite of getting the Russian Government to end their barbarism against Ukraine. Russia would shed no tears of we suffered some sort of collapse of a key piece of national infrastructure and I'm afraid at the moment neither would I. However...
I do agree with this point. It's highly unlikely RZD actually collapses in a catastrophic way. The Russian Government will come up with some sort of solution.
A realistic outcome is significant service cuts, withdrawal of some services and stripping stock for parts to keep others going if access to parts is becoming a problem (but like Aeroflot, they purchase from intermediaries in the Caucasus or the Middle East in some cases). They have over 200 Desiro Rus Lastochka units to service which run all around the country in different variants. Russians are quite resilient people, they just tend to get on with things. They've had such hardship in the 1990s it's not a few cut train services that will change anything. I'm sure the forum will welcome millions of Russians switching to car use and burning the ozone layer instead
Internally it may well be dealt with by militarising the railways. Draft staff into a new Russian Military Railways or whatever, and internal supply is now a military requisition.
The Armenian government has soured on Russia because Putin didn't do anything to stop Azerbaijan storming Nagorno-Karabalh and driving the Areminians out. The railway concession lasts until 2038, so the Armenian government probably wants to terminate it early. If South Caucasus Railway had to cease operations the concession would probably be nullified and the Armenian government could take the railway back without any legal problems.
The Armenian government has soured on Russia because Putin didn't do anything to stop Azerbaijan storming Nagorno-Karabalh and driving the Areminians out. The railway concession lasts until 2038, so the Armenian government probably wants to terminate it early. If South Caucasus Railway had to cease operations the concession would probably be nullified and the Armenian government could take the railway back without any legal problems.
A realistic outcome is significant service cuts, withdrawal of some services and stripping stock for parts to keep others going if access to parts is becoming a problem (but like Aeroflot, they purchase from intermediaries in the Caucasus or the Middle East in some cases). They have over 200 Desiro Rus Lastochka units to service which run all around the country in different variants. Russians are quite resilient people, they just tend to get on with things. They've had such hardship in the 1990s it's not a few cut train services that will change anything. I'm sure the forum will welcome millions of Russians switching to car use and burning the ozone layer instead
Yes, this is the problem. The Siege of Leningrad is a good demonstration of what they could endure. It's a stereotype, and I'm wary of too much geographical determinism because we still know what total war is like despite there being few people left alive to bear witness to it and there's more incentive to protect the living standards we've achieved, but I played the Metro games and was going, yeah, definitely, if anyone could put together a society in underground tunnels, it's the Russians who could do it.
Still, I think that the chaos in Iran has also shown that younger people might be the ones driving global change. The younger generation has different expectations to previous generations and has been destabilising a number of places around the world in pursuit of a better life. I doubt RZhD collapsing would wreck the Russian economy, as yeah Putin would just fall back to a military operation, but a generation which has grown up after the post-apocalyptic Yeltsin years (I was there in 97-98 and my parents also went in 92-93; that's an understatement) might think differently to even the millennial Russians.
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I was there in the spring. Despite some shocking glimpses of society outside the centre of Yerevan, the roads are fairly good and car ownership looked quite robust (at least in terms of large SUVs capable of driving over rugged ground for agricultural reasons). The local train, by contrast, was a small elektrichka that connected Gyumri and Yerevan and, while it was an amazing journey (Mount Ararat is visible part way through and only goes out of view when you turn in towards the city centre), there were few services and not many passengers.
If they can get a decent long distance coach service set up I think it would be much more economical for them and reduce the need for a train altogether.
Prior to the Ukraine incursion there was an ever increasing transit traffic from China which must have been good income stream for RZD which presumably has disappeared as a result of the sanctions.
Stalin began to consolidate his power after the death of Lenin in 1924 and by 1928 had managed to secure his position as unchallenged leader of the Soviet Union (he was arguably leader from 1922 when he became General Secretary, but Lenin was, sort of, still around and it took a while after he died for Stalin to really secure his position fully). He appointed himself Premier in 1941 but he had been unquestioned leader for many years by that point.
Jeff Hawn on Russian railways as a diagnostic indicator of broader economic crisis
ridl.io
Since the company employs over 700,000 people, these measures carry significant knock-on effects for the broader economy, especially as they coincide with rising inflation and similar work-reduction patterns in other major industries. Meanwhile, skilled workers have been lured into military service with large signing bonuses, leaving RZD short of up to 5,000 critical technicians and unable to operate as many as 200 trains per day.
Like other eastern block countries, their railway companies are major employers and an easy way to deal with the problem is to start with mass redundancy, which also means more ex-railway staff signing up to fight for their country.
Reportedly, the government is considering tax breaks, direct subsidies, and drawing on the National Wealth Fund. None of these appear viable: the National Wealth Fund is projected to be depleted by 2026−2027, while tax breaks and subsidies do nothing to boost actual freight volumes and simply add to the fiscal burden. Another idea—converting RZD debt into equity held by the state banks that provided most of the loans—would merely spread the risk...[but] when a broader financial collapse arrives, RZD will be dragged into bankruptcy carrying massive liabilities.
Forcing oligarchs to buy shares or selling the company off in pieces are also floated options, yet both risk severe social instability. The railroad remains a lifeline for much of rural Russia, and the 1990s demonstrated that oligarchs and their associates are far more likely to loot newly acquired assets than to manage them for growth.
Adding to this, 20% of their locomotives are sitting idle. It also mentions China is reluctant to invest, preferring to bypass Russia with its railways and is afraid of sanctions and fraud risks when investing in Russia. As a rail enthusiast who's amazed by the sheer size and scope of the railways in Russia, from the architechture of their stations to the length and variety of their services, it's incredibly sad to see this decline. But it doesn't seem like bankruptcy is immediate, but they can delay the inevitable.
Not mentioned either but Russia has significant gold reserves, some of the world's largest at 2330 tons. Only France, Italy, Germany and by far the US hold more.
The reality is the Russian state will not allow RZD to collapse - they will allocate funding to forestall this. Given the real issues with flights within the country at the moment, rail has become more and more vital for business and the smooth running of the country.
If rail is suspended then this is most likely to provoke an uprising as the wheels fall off the economy. From where the funding is taken is another matter entirely.
I regularly watch and read a lot on line about how Putin’s regime and the entire government apparatus are just on the verge of collapse - and have been for months. I do think this suits some people’s politics, though I need to stress I am neither a Putin apologist nor a Russophile.
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