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Archive for Economy, Business, Investment, Trade

Interfax: Ulyukayev: GDP likely to decline in 2015 if low oil prices persist

Alexei Ulyukayev file photo

MOSCOW. Oct 24 (Interfax) – If current prices for oil persist in 2015, Russian GDP, retail trade, real incomes and investment will all decline, Ulyukayev said at a business breakfast hosted by Rossiiskaya Gazeta.” “If the current price of oil persists, then as soon as this year there will be practically no growth in real

Finance Minister: Russia Needs Backup Budget For Worst-Case Scenario

Anton Siluanov file photo

(Moscow Times – themoscowtimes.com – Delphine d’Amora – October 24, 2014) Russia must create a contingency budget to counter the threat that Western sanctions, economic stagnation and low oil prices will dash the country’s hopes of restoring growth in the near term, Finance Minister Anton Siluanov said Friday. “A budget cannot constantly have expenses that

RIA Novosti: Western sanctions increase Russians’ fears over economy – poll

File Photo of Cash, Coins, Line Graph

(RIA Novosti – Moscow, October 23, 2014) Russians have become more worried about the state of their country’s financial system after the introduction of Western sanctions, but at the same time the economic situation has not yet compelled Russians to massively change their spending behaviour, according to research conducted in October by Russia’s National Agency

Putin’s Nevsky-Stolypin tandem

File Photo of Vladimir Putin at Desk

(Business New Europe – bne.eu – Chris Weafer – October 24, 2014) Chris Weafer is Senior Partner at Macro-Advisory, which offers bespoke Russia-CIS consulting. Many of the headlines about Russia in recent months have quite rightly focused on the geopolitical risks and the sanctions impact on the economy. To that has recently been added the

Interfax: Western sanctions only united Russian society – Naryshkin

Russian Duma Building

CHERKESSK. Oct 21 (Interfax) – The sanctions imposed by Western countries against Russia have united Russians, said State Duma Speaker Sergei Naryshkin. Speaking at a meeting with members of the Karachay-Cherkessia People’s Assembly on Tuesday, he said that Western partners have been putting pressure on Russia, in particular, by introducing a number of sanctions, including

Putin’s import substitution policy is working

Grain file photo

(Business New Europe – bne.eu – October 21, 2014) When Russian President Vladimir Putin cut off European Union imports of agricultural products earlier this year, one of the rationales was to give a boost to the badly underdeveloped domestic sector – and it seems to working. September’s retail and investment numbers were down but agricultural

Specter of ’98 Default Haunts Russians as Ruble Weakens

File Photo of Cash, Coins, Line Graph

(Moscow Times – themoscowtimes.com – Howard Amos – October 18, 2014) As the Russian ruble plunges to repeated record lows and the Central Bank ramps up market interventions to defend it, few want to mention Aug. 17, 1998. On that day, amid budgetary chaos and dwindling foreign currency reserves, Russia abandoned its support of the

Russia Sanctions Update series

Truck at Russian Border Crossing

Paul Backer, an American attorney based in Moscow, recently has offered the following original contributions to the JRL on the subject of sanctions and the response by business and legal counsel. Backer, pbacker@skalalaw.com, is with Skalaw Law, online at skalalaw.com. Part I: Russia sanctions: implementing client sanctions policies – Sept. 26, 2014 Part II: Russian companies’ failures

Interfax: “Novak: oil price drop no ‘tragedy'”

Oil Well file photo

(Interfax – October 17, 2014) The current decline in oil prices is no tragedy, Russian Energy Minister Alexander Novak said, adding that the average annual price of oil needs to be considered. “The price reached $120 per barrel at the beginning of the year, and averaged $100 per barrel in the three preceding years. If

Russia Beyond the Headlines: Ruble devaluation compensates for loss of oil revenue

File Photo of Cash, Coins, Line Graph

(Russia Beyond the Headlines – rbth.ru – Maria Karnaukh, special to RBTH – October 17, 2014) Falling oil prices – and the falling ruble – have different consequences for the budget and consumers Oil prices – and the Russian ruble – continue to sink. As of Oct. 16, the price of a barrel of Brent

Interfax: Russians feel no effect from Western sanctions, think Russian economy may benefit – poll

Truck at Russian Border Crossing

(Interfax – October 17, 2014) Most Russians claim they have felt no effect from Western sanctions and expect that the sanctions will be good for the national economy, sociologists have told Interfax. A relative majority (41 percent) of 1,630 respondents polled by Levada Center in 134 populated localities in 46 regions in September said the

Back-of-envelope estimate of cost to Russia of Ukraine crisis is $100 billion in 2014

Ukraine Map and Flag

(Business New Europe – bne.eu – Timothy Ash of Standard Bank – October 15, 2014) Russia’s foreign minister, Sergey Lavrov, this week estimated that the crisis in Ukraine would likely cost the German economy €40bn this year, and a further €50bn in 2015 – presumably through lost exports, and a broader disruption to the German

RIA Novosti: Putin Limits Foreign Capital’s Participation in Russian Media: Government

File Photo of Cash, Coins, Line Graph

MOSCOW, October 15 (RIA Novosti) – Russian President Vladimir Putin has signed a law reducing the possible share of foreign stockholders in the Russian media to 20 percent, says the corresponding document published on the Russian government’s official legal information web portal Wednesday. “Unless otherwise stipulated by an international treaty … a Russian legal entity

Interfax: Russia remains open to free trade zone with EU, Lavrov says

Sergei Lavrov file photo

(Interfax – Moscow, October 14, 2014) There is no alternative to improving relations between Russia and the EU and Russia is ready to discuss the creation of a free trade zone with the EU, Russian Foreign Minister Sergey Lavrov has said. “I believe that no clear-headed person in Europe will argue with the fact that

Russians Lose Faith in Banks as Ruble Falls and Sanctions Bite

VTB Bank Facade file photo

(Moscow Times – themoscowtimes.com – Delphine d’Amora – October 16, 2014) Consumer confidence in Russia’s financial system is falling, with half of Russians saying they don’t trust banks and are using such services less, in a troubling signal for a system under pressure from Western sanctions and more sensitive than ever to outflows of depositors,

Experts Divided Over Whether Sanctions Against Russia Are Working

File Photo of Cash, Coins, Line Graph

(Voice of America – Andre de Nesnera – October 15, 2014) After several rounds of international sanctions against Russia for its annexation of Ukraine’s Crimean peninsula in March and support of pro-Russian separatists in eastern Ukraine, experts are divided over whether they are working. “It depends on what your understanding of the purpose of sanctions

Putin Immune to Economic Decline – So Far

File Photo of Cash, Coins, Line Graph

(Moscow Times – themoscowtimes.com – Ivan Nechepurenko – October 16, 2014) Most of Russia’s indicators of economic health have plummeted this year. Inflation last month was at its highest level in three years, capital outflow this year is expected to exceed $100 billion, the ruble has lost almost 20 percent of its value since January,

RIA Novosti: Moscow Says Has Every Right to Introduce Sanctions Against US, But Chooses Not to

File Photo of Vladimir Putin and Barack Obama Seated with Flags Behind

VIENNA, October 16 (RIA Novosti) – Amid numerous US sanctions against Russia, Moscow has every right to begin introducing sanctions against the United States, but chooses not to follow this path, Russian Deputy Foreign Minister told RIA Novosti. “This is a reflexive, instincts-based reaction of Washington on what does not fit into the American idea

Most Russians Think Western Sanctions Will Boost Nation’s Economy

Truck at Russian Border Crossing

(Moscow Times – themoscowtimes.com – Delphine d’Amora – October 16, 2014) Despite an economic slump and rising inflation, the majority of Russians believe that Western sanctions and Russia’s retaliatory ban on food imports will actually help the economy, a poll published Thursday showed. Only 25 percent of respondents expect sanctions to damage the Russian economy,

Russian central bank plays it cool as ruble falls to historic low

Cash, Calculator, Pen

(Business New Europe – bne.eu – October 16, 2014) The ruble dropped to another historic low on October 15, passing the RUB41 per dollar mark in morning trading, but analysts said Russia’s central bank is not panicking because ruble weakness is bolstering manufacturing growth and budget revenues. “The CBR is not panicking either in terms

Interfax: Chief of staff says businessman’s arrest damaging Russia’s investment climate

File Photo of Sergei Ivanov, adapted from defense.gov image

(Interfax – October 15, 2014) Kremlin chief of staff Sergey Ivanov has said that the house arrest of billionaire businessman Vladimir Yevtushenkov is damaging Russia’s investment climate. In an interview with popular pro-Kremlin tabloid Komsomolskaya Pravda, which was quoted by Interfax news agency, Ivanov said that “I agree, this [the arrest of Yevtushenkov] is having

De-Modernization and Degradation-A Net Assessment of Russia’s Domestic Situation Since the Start of 2014

Kremlin and Saint Basil's File Photo

(Eurasia Daily Monitor: Volume 11, Issue 181 – Pavel K. Baev – Jamestown Foundation – jamestown.org – October 14, 2014) Considering Russia’s shocking transformation in the course of just half a year, it is easy to forget that last February the country was united in the joy of hosting the Sochi Winter Olympic games. The

Gref: Central Bank ruble policy ‘optimal’

Russian Central Bank file photo

MOSCOW. Oct 14 (Interfax) – The Central Bank of Russia’s ruble exchange rate policy is “optimal,” Sberbank of Russia (MOEX: SBER) President and CEO German Gref said. “The policy that the Central Bank is pursuing is, in my view, optimal from the standpoint of managing the exchange rate. The economy is self-tuning, because the processes

Fears of a Russian credit crunch greatly exaggerated, say analysts

File Photo of Cash, Coins, Line Graph

(Business New Europe – bne.eu – October 14, 2014) On paper, Russian companies have huge foreign debts, and no way of refinancing them because sanctions effectively close Western capital markets to Russian borrowers. But with much of Russian corporate foreign debt in fact hidden equity investments from offshore zones, the figures seem much worse than

Interfax: Russia will protect itself from Western sanctions by long-term measures, says Lavrov

Sergei Lavrov file photo

(Interfax – October 14, 2014) Russia will use long-term measures to protect itself from Western sanctions, Russian Foreign Minister Sergei Lavrov has said. “We will certainly adopt all the measures needed to protect ourselves from unlawful restrictions. You are aware of the resources that are being allocated for these purposes. Beyond any doubt, it will

Putin Deals China Winning Hand as Sanctions Power Rival

China Map

(Bloomberg – boomberg.com – Henry Meyer, Evgenia Pismennaya – October 13, 2014) Defying his former enemies in the U.S. and Europe may force Vladimir Putin to aid the ascent of his biggest rival in the east. Isolated over Ukraine, Russia is relying on China for the investment it needs to avert a recession, three people

Russians account decline in ruble exchange rate to international developments – poll

File Photo of Cash, Coins, Line Graph

(Interfax – October 12, 2014) Over half of Russians (61 percent) admit that fluctuations in the exchange rate of the ruble have a certain impact on their lives while 13 percent don’t notice any impact, a Public Opinion fund poll indicates. In the opinion of 62 percent of respondents a stronger ruble is better for

Russia Spending $6 Billion Not Enough to Stop Ruble Rout on Oil

File Photo of Cash, Coins, Line Graph

(Bloomberg – bloomberg.com – Vladimir Kuznetsov – October 13, 2014) The ruble extended its longest losing streak in more than a year as $6 billion of Russian currency interventions failed to stem the depreciation amid tumbling oil prices. The ruble weakened 0.6 percent versus the dollar-euro basket to 45.3423 by 5:15 p.m. in Moscow, taking

Russia Can’t Escape Historical Retrospection in Crisis

File Photo of Cash, Coins, Line Graph

(Blooomberg – bloomberg.com – Ye Xie and Elena Popina – October 9, 2014) As Russia starts burning through foreign reserves in a bid to defend the ruble, flashbacks to the country’s 1998 devaluation and default are inevitable. While the government is in a much stronger position today to fend off the crisis than it was

Interfax: Capital outflow from Russia might be lower than $100 bilion forecast in 2014 – minister

File Photo of Cash, Coins, Line Graph

MOSCOW. Oct 9 (Interfax) – Capital outflows from Russia in 2014 could turn out to be less than the official forecast of $100 billion, Economic Development Minister Alexei Ulyukayev believes. “We haven’t changed the forecast for this year. It is still $100 billion. Our accumulated outflow, I believe, is currently $78 billion for eight months

Ruble does overtime on downwards slide

File Photo of Cash, Coins, Line Graph

(Business New Europe – bne.eu – October 9, 2014) The ruble dropped on October 8 by a further 24 kopecks to the dollar and 29 kopecks to the euro. In order to support the exchange rate, the central bank was estimated by market participants to have sold more than $1.1bn, at least four times raising

Putin Seeks Solitude Amid Russia’s Perfect Storm

File Photo of Vladimir Putin at Outdoor Rally with Microphone in Hand and Heavy Coat

(Stratfor.com – October 9, 2014) Russian President Vladimir Putin celebrated his 62nd birthday Tuesday in a peculiar fashion: by himself in the Siberian forests. For the past few days, Putin’s spokesman, Dmitri Peskov, has brushed off journalists’ questions about why the president decided not to celebrate his birthday in Moscow or do other work as he

Interfax: Muscovites say food embargo doesn’t hamper food quality or assortment – poll

Aerial View of Moscow From Beyond Stadium, file photo

(Interfax – October 7, 2014) Food quality and assortments have not changed amid Russia’s retaliatory “food embargo” but prices have gone up, Muscovites told the Public Opinion Foundation. Two-thirds (66 percent) of 1,000 Muscovites polled over the phone on September 28 approved of the ban on food imports from a number of Western countries, 21

Interfax: Russia “moving along crisis trajectory” due to trade barriers – experts

Truck at Russian Border Crossing

(Interfax – October 7, 2014) The risk of the Russian economy moving from stagnation to a full-scale recession “has become slightly higher” in the short run, privately-owned Russian news agency Interfax reported on 7 October, quoting the latest study carried out by a group of Russian researchers. The research headlined “Comments on the state and

Putin Aloof as Russia’s Economic Troubles Close In

File Photo of Vladimir Putin Seated at Desk

(Moscow Times editorial – themoscowtimes.com – October 8, 2014) Official documents published Monday show the Kremlin has scrapped the president’s annual budget address. President Vladimir Putin’s spokesman Dmitry Peskov told TASS that the set piece speech would, from now on, be folded into the state-of-the-union address, usually given in December. While Putin floated the idea

RIA Novosti: Lavrov on Western Sanctions: Lifting Them Is Up to Those Who Imposed Them

Truck at Russian Border Crossing

MOSCOW, October 8 (RIA Novosti) – Speaking about the possible removal of sanctions against Russia, Russian Foreign Minister Sergei Lavrov said Wednesday that the matter was for Western states to decide. “Sanctions is the business of our western colleagues, the business of the countries that decided to use this illegal instrument for some reason, possibly

Ukraine Wants New IMF Bailout as War Squeezes Economy

Ukraine Map and Flag

(Voice of America – Henry Ridgwell – October 7, 2014) As the annual meeting of the International Monetary Fund and the World Bank gets underway in Washington, Ukraine wants to adjust the terms of its $17 billion bailout. Kyiv says the country is now at war and needs to build new armed forces. But some

Moscow Compensating for Economic Weakness by ‘Harsh’ Foreign Policy Moves, Lukyanov Says

Kremlin and Saint Basil's File Photo

(Window on Eurasia – Paul Goble – Staunton, October 8, 2014) The Russian Federation is seeking a revision in the international system but lacks the economic strength to be a new pillar, according to Fedor Lyukanov. And as a result, Moscow will seek to make up for that shortcoming by sudden and dramatic foreign policy

Critic of Russian Economic Policy Ejected From Influential Journal

File Photo of Cash, Coins, Line Graph

(Moscow Times – themoscowtimes.com – Delphine d’Amora – October 8, 2014) Prominent economist and Kremlin critic Sergei Alexashenko says that political pressure has forced him to surrender his post as editor and contributor to a respected macroeconomic bulletin published by Moscow’s Higher School of Economics. “Someone doesn’t like what I write, what I do, where

Russia Spends Up to $1.75 Billion in Two Days on Buoy Ruble

File Photo of Cash, Coins, Line Graph

(Bloomberg – bloomberg.com – Vladimir Kuznetsov – October 7, 2014) Russia’s central bank spent as much as $1.75 billion to prop up the ruble over the last two trading days, its biggest market intervention since President Vladimir Putin’s incursion into Ukraine in March. Russia’s central bank spent the equivalent of $980 million to shore up

RIA Novosti: Russia Needs to Create Domestic Credit System to Survive Sanctions: Presidential Aide

File Photo of Stack of Credit Cards, adapted from image at fdic.gov

MOSCOW, October 7 (RIA Novosti) – Russia needs to establish a system of domestic credit and improve the efficiency of public administration, so that the economy could successfully develop amid Western sanctions, Russian Presidential Aide Sergei Glazyev said Tuesday. “If we want to survive the war that is being waged against Russia, we need to

Russian companies’ failures to adopt effective sanctions policies worsen sanctions’ impact

Truck at Russian Border Crossing

Subject: Sanctions, Part 2. Date: Tue, 7 Oct 2014 From: Paul Backer <pauljbacker@gmail.com> Part 2. Russian companies’ failures to adopt effective sanctions policies worsen sanctions’ impact. Russian companies failed to address key aspects of sanctions: 1. Large law firm incentives are against giving operationally useful sanctions advice and 2. Nature and enforcement of sanctions differ

Ruble’s Fall and Food Import Bans Send Inflation Ever Higher

File Photo of Cash, Coins, Line Graph

(Moscow Times – themoscowtimes.com – October 6, 2014) Year-on-year inflation hit 8 percent in September, driven up by the plummeting value of the ruble and Russia’s bans on many food imports from the United States and European Union, according to data from state statistics service, Rosstat. Rising food prices were the main driver, climbing 11.4

Putin Clans Gridlocked Over Arrest as Sanctions Bite

Aerial View of Kremlin and Environs

(Bloomberg – bloomberg.com – Irina Reznik, Evgenia Pismennaya and Ilya Arkhipov – October 5, 2014) Russia’s wheels of power are grinding to a halt. That’s the assessment of five officials close to President Vladimir Putin, who say that a struggle at the heart of his inner circle is slowing decision making as sanctions squeeze the

Russia Beyond the Headlines: Russia to continue on economic course despite restrictions, says Putin

File Photo of Cash, Coins, Line Graph

(Russia Beyond the Headlines – rbth.ru – Alexei Lossan, RBTH – October 3, 2014) Speaking at the Russia Calling Investment Forum, Russian President Vladimir Putin discussed the main direction in the development of Russia’s economy. Analysts believe that Russia’s main challenge will be keeping inflation under control – inflation that was partly brought about by

Sberbank’s Gref: Inefficiency Crippling Russia’s Development Efforts

File Photo of German Gref Shaking Hands with U.S. Official

(Moscow Times – themoscowtimes.com – Delphine d’Amora – October 3, 2014) German Gref, head of Russia’s biggest lender Sberbank, on Friday castigated systemic inefficiencies in the Russian government that, he said, waste trillions of rubles and threaten to drag Russian society back into Soviet times. “We have inconceivable social costs in the area of public

The problem with Russia’s investment story is there isn’t one

File Photo of Outdoor Electronic Sign with Russian Exchange Data

(Business New Europe – bne.eu – Ben Aris – Moscow, October 2, 2014) Leading Russian investment bank VTB Capital held a slimmed-down version of their annual investment conference on October 1-2. The event, “Russia Calling! 6th Annual VTB Capital Investment Forum” at the World Trade Center Moscow didn’t look cut down from the point of

RIA Novosti: Putin: Russia Has Reserves to Implement Budget Plans Regardless of Global Trends

File Photo of Cash, Coins, Line Graph

NOVO OGARYOVO (outside Moscow), October 3 (RIA Novosti) – Russia has enough reserves to implement all the tasks under the state budget regardless of global political and economic trends, Russian President Vladimir Putin said Friday. “We certainly have reserves to resolve the issues that could arise as a result of developments of the situation in

Interfax: Expansion of Russian cooperation in China not end of relations with Europe – Putin

China Map

MOSCOW. Oct 2 (Interfax) – Russia has no intention of ending its relations with its traditional partners, including Europe, and expansion of cooperation with China is a global trend, Russian President Vladimir Putin said. “Russia is also thinking about expansion of cooperation with China, and it didn’t begin thinking about it yesterday or due to

Russia Oil Production Near Record With Sanctions Yet to Bite

Oil Well file photo

(Bloomberg – bloomberg.com – Jake Rudnitsky – October 2, 2014) Russian oil output rose to near a post-Soviet record last month, a sign the biggest source of revenue for President Vladimir Putin’s government has yet to be eroded by U.S. and European sanctions. The nation increased output 0.7 percent to 10.61 million barrels a day,

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