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Ukraine crisis: Why a lack of parts has hamstrung Russia’s military

A Russian Mi-26 helicopter: Ukraine stopped delivering engines for the military versions Russia’s defence firms have been hit not only by Western sanctions but also by a breakdown in business ties with Ukraine. For decades under Soviet rule, Russia’s strategic industries had close links with partners in Ukraine, all centrally controlled from Moscow. But relations soured last year, with Ukraine’s pivot to the West, Russia’s annexation of Crimea and the pro-Russian insurgency in eastern Ukraine. The EU and US banned military exports to Russia, saying Moscow was supplying the insurgents with sophisticated heavy weapons and regular troops. Moscow denied the allegations. Equipment blocked Last month, Russian Deputy Prime Minister Dmitry Rogozin told parliament that Ukrainian components were used in the production of 186 types of Russian military equipment. That is a serious problem, he admitted, and Moscow could resolve it only by 2018. Back in June 2014, Ukrainian President […]

Posted On : Published By : Tom Whipple
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Ankara blames Kremlin for gas pipeline delays

Turkey blames Russian planners for delays in momentum of the planned Turkish Stream natural gas pipeline. Photo by Kodda/Shutterstock ANKARA, Turkey, Aug. 5 (UPI) — Turkish Energy Minister Taner Yildiz said there were delays in planning on the Russian side in developments of the planned Turkish Stream gas pipeline. Yildiz told the state-backed Anadolu News Agency that Russian planners delayed delivering route coordinates for the pipeline through his country. "Turkey could not begin any construction without these coordinates," he said. Russian energy company Gazprom said in February it surveyed the Turkish land route for the 110-mile section of pipeline from the Black Sea. The Kremlin said the Turkish gas project will help ensure European energy security. South Stream, a longer version of the pipeline, was envisioned as a European network before the Russian government pulled it off the table in late 2014. Russia meets about a quarter of the […]

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Ruble Recovers With Oil as Citigroup Says Selloff Went Too Far

The sun sets beyond an oil pumping unit at a drilling site operated by Tatneft OAO near Almetyevsk, Russia. The ruble climbed from the weakest level since February as oil rebounded and Citigroup Inc. raised its recommendation on Russia’s currency, saying the slump was “excessive.” The ruble strengthened 0.5 percent to 63.1770 against the dollar by 5:26 p.m. in Moscow after slipping 10 percent in July, the biggest drop among major global currencies. Crude oil, which tumbled into a bear market last month, rose 1.3 percent to $50.17 a barrel in London. The Bank of Russia was forced last week to halt its daily dollar purchases after the ruble retreated with oil to the lowest levels in six months. There are signs the drop may have gone too far: the ruble’s 14-day relative strength index fell to 21.1 yesterday, the lowest since Dec. 16 and below the level of […]

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Russia Seen Turning to Crisis Playbook to Prevent Ruble Rout

Elvira Nabiullina, governor of Russia’s central bank. Photographer: Andrey Rudakov/Bloomberg Russia’s central bank may pick up where it left off earlier this year to avert another run on the ruble. To take the pressure off the currency, the Bank of Russia will restart one-year foreign-exchange repurchase operations that were halted June 1, according to 14 of 17 economists surveyed by Bloomberg. Other support measures may include “targeted” currency interventions and a delay of further interest-rate cuts, according to BNP Paribas SA. Policy makers will start verbal intervention with the oil price below $50 a barrel, Royal Bank of Scotland Group Plc said. The central bank may be forced to take a page from the playbook used to fight Russia’s worst currency crisis since 1998 as companies face growing repayments of external debt and last week’s suspension of foreign-exchange purchases fails to arrest a plunge in the ruble. It made […]

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Russia Stakes New Claim to Expanse in the Arctic

MOSCOW — Russia formally staked a claim on Tuesday to a vast area of the Arctic Ocean, including the North Pole. If the United Nations committee that arbitrates sea boundaries accepts Russia’s claim, the waters will be subject to Moscow’s oversight on economic matters, including fishing and oil and gas drilling, though Russia will not have full sovereignty. Under a 1982 United Nations convention, the Law of the Sea , a nation may claim an exclusive economic zone over the continental shelf abutting its shores. If the shelf extends far out to sea, so can the boundaries of the zone. The claim Russia lodged on Tuesday contends that the shelf extends far north of the Eurasian land mass, out under the planet’s northern ice cap. Russia submitted a similar claim in 2002, but the United Nations rejected it for lack of scientific support. So this time, the Kremlin has […]

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Russia-Iran-Iraq: The Emerging Natural Gas Mini-OPEC

Iran’s natural gas stands in the mind of many as a question mark in the post-sanctions global ties with Tehran. President Obama said in mid-July that Moscow was very helpful in getting the negotiations with Iran to a fruitful conclusion. “I was not sure given the strong differences we are having with Russia right now around Ukraine, whether this (Russia’s role) would sustain itself. Putin and the Russian government compartmentalized on this in a way that surprised me, and we would have not achieved this agreement had it not been for Russia’s willingness to stick with us and the other P5-Plus members in insisting on a strong deal.”, the President said. But why would Russia do that? If Moscow supplies the EU with almost one third of its natural gas requirements, wouldn’t it be self-damaging to Moscow to introduce another seller to its preferred client in the West? Iran’s […]

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Kremlin official not surprised by sanctions

U.S. sanctions dig deeper into Russian energy sector as fighting continues in eastern Ukraine, where pro-Kremlin fighters remain active. UPI/Ivan Vakolenko MOSCOW, Aug. 3 (UPI) — U.S. sanctions extending deeper into the Russian energy sector prompted legal threats from Kremlin-backed entities but come as no surprise, an official said. The U.S. Treasury Department’s Office of Foreign Assets Control targeted Ukrainian and Russian business leaders, including Russia gas trader Gennady Timchenko and Boris Rotenberg, a close associate of Russian President Vladimir Putin. OFAC Director John Smith said the sanctions are aimed at encouraging Russia to honor peace-keeping commitments signed earlier this year regarding conflict in eastern Ukraine. Sanctions, he said, are part of the Western-backed effort to keep pressure on Russia for violating international laws and "fueling the conflict in eastern Ukraine." Russia’s energy sector, a key source of government revenue, has been the target of Western sanctions since conflict […]

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IMF Says Sanctions Take Toll On Russia

MOSCOW—Russia’s economy faces the loss of as much as 9% of the inflation-adjusted value of the goods and services it produces if Western sanctions and Moscow’s retaliatory measures remain in place in the medium term, the International Monetary Fund said on Monday. The West imposed the sanctions last year in response to Moscow’s annexation of Crimea and its support of rebels in eastern Ukraine. The IMF said their impact on Russia’s oil-dependent economy suggests a recovery could be slower than the Kremlin’s forecast. This year, the U.S. and European Union extended sanctions against Moscow, restricting access to global capital markets for Russian banks and companies. In response, Moscow prolonged its ban on food imports from states that sanctioned Russia. “The external shocks, added to pre-existing structural weaknesses, are certainly weighing on Russia’s growth prospects,” Ernesto Ramirez Rigo, IMF mission chief for Russia, said in a report. The IMF kept […]

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Russian oil sector slowly adapting to new tax regime

Seven months after Russia made the latest changes to its oil tax regime, the industry seems to have been able to adapt more easily to the new landscape than had been expected at the turn of the year. However, market experts have warned that the government must consider more fiscal reforms as the current system is continuing to distort the sector. The so-called tax maneuver, which includes a phased reduction in export duty for crude and oil products over 2015-2017 and an increase in oil extraction tax, was introduced in January. It significantly reduced refining margins at a time when oil prices were already falling sharply, limiting the financial leverage of refiners that were already suffering from the dual impact of international sanctions and a weak economy. Refining throughput slipped by 4% year on year in March, the first drop following four years of steady growth, prompting oil companies […]

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Russia slows rate of cuts amid ruble weakness

Russia’s central bank cut its key interest rate by 50 basis points on Friday, amid signs of renewed weakness in the country’s currency, the ruble . The move by Russia’s Central Bank (CBR) was as expected, according to a poll of analysts by Reuters, and eases the pace of cuts to its key interest rate. In a statement, the bank said it took the decision "taking into account that the balance of risks shifts towards the considerable economy cooling despite a slight increase in inflation risks." The bank also forecast the Russian economy could weaken further. "Major macroeconomic indicators demonstrate further economy cooling. The Bank of Russia estimates gross domestic product (GDP) decrease in the second quarter of 2015 compared with the similar quarter last year to be more significant than that in the first quarter of 2015." "The economic situation in Russia will further depend on the dynamics […]

Posted On : Published By : Tom Whipple