Beleaguered

Earlier this week, Vladimir Putin announced “partial mobilization” of military reserves. In all, according to the Russian defense minister, the order will raise 300,000 more soldiers for the Russian army.

The announcement might sound like the mad rant of the village fool. But the village fool has his finger on the nuclear trigger. Putin declared Russia will use every means at her disposal to “defend” herself. The threat is very thinly veiled.

Over the last few months, Western military analysts have been grappling with battlefield scenarios where desperate Russians use chemical or tactical nuclear weapons. None of those scenarios are comforting, especially for the Ukrainians. Their nation could be obliterated by nuclear arms.

The week preceding Putin’s saber-ratting speech was not encouraging for the beleaguered regime he imagines to command.

In a quick and entirely unexpected offensive, Ukrainian armed forces took back 11,000 square kilometers from Russian occupation. In disorganized retreat, Russian forces left behind large stocks of war material.

Against that backdrop, Putin traveled to Samarkand for a summit meeting with leaders he considered his allies. He might have expected endorsement for his war. He did not get that.

Both China’s Xi and India’s Modi, in the politest terms, expressed their discomfort with Putin’s war. Kazakhstan was boldly outspoken, fearing Russian victory in Ukraine could encourage the old imperial power to encroach on the former Soviet Asiatic republics.

Speaking from his capital, Turkey’s Erdogan speculated Putin was ready to end the aggression against Ukraine. Only Iran remains silent on Russia’s invasion of its peaceful neighbor. But then Tehran is looking to sell Moscow a lot of drones, technology so important in the modern battlefield but which the crusty Russian generals had failed to appreciate.

Seven months since the invasion started, Russia lost thousands of tanks and armored vehicles in Ukraine. Her Black Sea fleet and air force were crippled by surprisingly sophisticated missile strikes. Putin’s tin can army is running short of resources for battle.

There were reports Russia is seeking to purchase ammunition from North Korea, of all places. This week, Pyongyang announced it has never planned on sending arms and ammunition to the Russians.

In his speech, Putin announced that a referendum on joining the Russian Federation will be held in the Ukrainian regions occupied by Putin’s troops. This is obviously a ploy to incredibly declare occupied parts of Ukraine as Russian territory.

A day after Putin’s speech, flights out of Russia sold out. Cars jammed border crossings to Finland and Georgia. Protestors jammed the streets of Russian cities.

Putin’s problem is not manpower. It is morale.

Decision point

In a few days, the decision point will be reached. The Tariff Commission will have to decide on the matter of continuing or ending the “safeguard measures” imposed on cement imported into our market.

In 2013, imported cement had nearly zero market share. In 2019, when the safeguard measures were imposed, 17.31 percent of the cement we consume was imported. Today, imported cement enjoys a 24.02 percent market share in the country. Nearly all of the cement we import comes from Vietnam.

The “safeguard measures” (in the form of higher tariffs) were imposed on imported cement on the representation of local cement manufacturers. Local manufacturers claimed unchecked importation of the commodity presented an existential threat to our cement producers. Billions in investment, thousands of jobs and billions in taxes could be lost if cement importation was not discouraged.

On the same representation, additional anti-dumping measures were introduced. Local cement manufacturers claim that Vietnamese cement exports were priced below their domestic costs, constituting unfair trade practice.

As a remnant of Vietnam’s former centrally-planned economy, the Vietnamese Cement Industry Corporation (VICEM) directs much of her cement industry. This state-run corporation acts as a trade association, a government unit and a cement producer all in one with at least 12 plants under its control, including Vietnam-based plants of multinational firms. This enables it to control prices, access cheap raw materials and insert subsidies where needed.

Even without enjoying subsidies and centralized direction, Vietnamese cement production has a number of structural advantages over Filipino manufacturers struggling to compete against imported cement.

Vietnamese industry enjoys vastly cheaper power rates. Cement production is energy intensive.

Wages in Vietnam are substantially lower than ours. A cheap food price regime allows Vietnam to keep its wage rates competitive.

With state-directed investments, Vietnam’s cement production capacity is expected to surge in the next few years as its manufacturing firms increase production. This happens even as Vietnam has a surplus in cement. We can therefore expect cement imports from Vietnam to increase in the coming period until domestic demand in that country rises to meet existing capacity.

In the interim, however, unbridled imports could erase our own cement production capacity by undermining the viability of our own manufacturers. Should any of our cement plants shut down in the face of mitigated imports, the loss could be permanent.

Higher tariffs and other “safeguard measures” in the interim, however, will force higher prices on our consumers. That means new infrastructure will be more expensive for us, government being the largest consumer of the product.

The Tariff Commission faces a complex economic equation that includes near-term and longer-term calculation about what is good for our economy. Its final decision on the continuation or termination of “safeguard measures” will have repercussions on consumer interest and the fate of domestic industry.

The two considerations are at odds.