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Russia Economy Worsens Even Before Sanctions Hit

Margarita R. Zobnina, a professor of marketing here, has been watching the Russian economy’s gathering woes with mounting alarm: friends who have moved abroad with no plans to return; others who put off new business ventures because of rising uncertainty. Meanwhile, Ms. Zobnina and her husband, Alexander, also a professor, have rented a safe deposit box to hold foreign cash as a hedge against the declining ruble. Most shocking, she says, is that her local grocery is now selling anchovies packed in sunflower oil rather than olive oil, an obvious response to the soaring cost of imports. “That really freaks me out,” she said. While the annexation of Crimea has rocketed President Vladimir V. Putin’s approval rating to more than 80 percent, it has also contributed to a sobering downturn in Russia’s economy, which was in trouble even before the West imposed sanctions. With inflation rising, growth […]

Posted On : Published By : Tom Whipple
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First section of South Stream pipeline manufactured

The first section of pipeline for the planned South Stream natural gas network for Europe has been manufactured, Russian energy company Gazprom said. Gazprom said pipe No. 1 — a 39-foot long, 32-inch diameter section — was produced from the Vyksa Steel Works plant in eastern Russia. South Stream is a gas transit network Gazprom plans as a way to avoid geopolitically-sensitive territory in Ukraine. Russian President Vladimir Putin said European energy security is at risk because Kiev is struggling to pay its gas bills. Ukraine hosts the bulk of the Russian natural gas bound for European consumers. Gazprom said Tuesday the first sections of pipe are scheduled for summer delivery in Bulgaria. Construction of the first leg of the pipeline is scheduled for late 2014. Gazprom Chairman Alexei Miller met in Strasbourg, France, with European Energy Commissioner Gunter Oettinger to discuss energy issues […]

Posted On : Published By : Tom Whipple
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Xenophobic Chill Descends on Moscow

The huge banner was unfurled on Friday morning outside one of Moscow’s biggest bookstores, Dom Knigi, a grand emporium of the written word on Novii Arbat Street across from a Citibank, a Baskin-Robbins and a Dunkin’ Donuts, and down the block from a big movie theater where the main feature at the moment is “Captain America: The Winter Soldier.” “Fifth Column,” the banner declared. “Strangers Among Us.” It showed black-and-white portraits of three of Russia’s better-known political opposition figures and two Soviet-era dissident rock musicians, along with two evil-looking space aliens, one carrying a briefcase marked with the white ribbon that has been the symbol of political protests against President Vladimir V. Putin and the Russian government. From the moment that Russia’s invasion and annexation of Crimea cast a new, bitter chill over relations with the West, a sinister jingoistic vibe has pervaded this unsettled capital […]

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BP Can Be Bridge Between Russia, West

PLC can play an "important role" as a bridge between the West and Russia, which remains vital for Europe’s energy security, Chief Executive Bob Dudley said Thursday. BP, the biggest foreign investor in Russia’s oil sector, will continue to seek ways of developing its business there, even as tensions grow with the U.S. and Europe over the crisis in Ukraine. "That has got to continue," Mr. Dudley said, in relation to its business in Russia. Mr. Dudley, who was addressing shareholders at the U.K.-based oil and gas company’s annual general meeting, said the situation regarding Ukraine was still very tense. BP has a 20% stake in Russia’s state-owned oil and gas company Rosneft . Mr. Dudley’s views were challenged by some investors, who cast doubt over the influence that BP, which holds a single seat on Rosneft’s board, could wield in reality. "If something should turn foul, should […]

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Russia says South Stream gas pipeline would help EU

The planned South Stream natural gas pipeline for Europe is more important than ever given ongoing crises in Ukraine, the Russian envoy to the EU said. Ukrainian and Russian officials have warned European natural gas supplies are at risk because of lingering contractual disputes that grew out of the political upheaval in Ukraine. European consumers get about a quarter of their gas needs met by Russia, though the bulk of those supplies run through the Soviet-era gas transit system in Ukraine. Russian Ambassador to the European Union Vladimir Chizhov told Russia’s state news agency RIA Novosti the South Stream pipeline, which avoids Ukrainian territory, was more important than ever. "I believe the relevance of the South Stream project has risen amid the Ukrainian crisis, because we have already heard not threats, but hints from Ukrainian authorities, including interim Prime Minister [Arseniy] Yatsenyuk, of yet […]

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US threatening tougher sanctions on Russia

Treasury Secretary Jacob Lew is warning Russia that it could face tougher economic sanctions because of its actions in Ukraine but so far other economic powers are showing a reluctance to go as far as the United States. Lew delivered his warning Thursday to Russian Finance Minister Anton Siluanov, telling him that the Obama administration was willing to impose "additional significant sanctions" if Russia escalates the Ukraine situation. Treasury said in a statement that Lew described Russia’s annexation of Crimea as "illegal and illegitimate." Lew met Siluanov in advance of talks between finance ministers and central bank presidents of the Group of Seven major economic powers and a broader Group of 20, which includes the traditional powers and emerging economies such as China, Brazil and India. Lew’s tough language did not find its way into a joint statement from the G-7, and there was no hint […]

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U.S. accuses Russia after Putin warning on gas supplies to Europe

President Vladimir Putin warned on Thursday that Russian gas supplies to Europe could be disrupted if Moscow cuts the flow to Ukraine over unpaid bills, drawing a U.S. accusation that it is using energy "as a tool of coercion". In a letter to the leaders of 18 European countries, Putin made clear that his patience would run out over Kiev’s $2.2 billion gas debt to Russia unless a solution could be brokered urgently. Russia has nearly doubled the gas price it charges Ukraine, whose economy is in crisis, since pro-Moscow President Viktor Yanukovich was overthrown two months ago. Russia then annexed the Ukrainian region of Crimea, provoking the biggest confrontation with the West since the Cold War. Putin said Russian exporter Gazprom would demand advance payment for gas supplies to Ukraine and "in the event of further violation of the conditions of payment will completely or […]

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Russian Deals Face Scrutiny, Firms Urged to List at Home

After a decade of snuggling up together, Russia Inc. and the global capital markets that finance it are starting to drift apart. Russia’s first deputy prime minister, Igor Shuvalov , this week encouraged domestic companies to delist their shares from overseas stock exchanges, where giants like OAO Gazprom and OAO Sberbank trade, for the sake of “economic security.” At the same time, U.S. and European banks such as Citigroup Inc. and Deutsche Bank AG are putting their business with Russian companies under the microscope as the Ukraine crisis continues. The moves on both sides herald a partial decoupling of Russia from the global financial system as the European Union and U.S. threaten economic retaliation for President Vladimir Putin ’s annexation of Crimea. That would make it harder for Russian companies to obtain foreign capital while hurting efforts by global banks to expand in an important emerging market. Despite the […]

Posted On : Published By : Tom Whipple
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Russia presses Kiev on gas as armed stand-off continues

Pro-Russian activists stand guard at a barricade as they block access to the Ukrainian Security Service building in the eastern city of Lugansk on Tuesday Russia threatened to force Ukraine’s cash-strapped government to pay in advance for its gas imports, adding fresh pressure to Kiev as it struggled to defuse a stand-off with armed pro-Russian separatists in the country’s east. The prepayment idea was raised by Dmitry Medvedev, Russia’s prime minister, at a meeting of senior officials convened on Wednesday by President Vladimir Putin to discuss a feud over Ukraine’s unpaid gas bills after the country missed a $2.2bn payment on Monday night. “If this critical situation continues, I think we have every reason to move to a system of prepayment for gas supply,” Mr Medvedev said. Mr Putin took a more conciliatory stance, asking the government to “refrain from applying this possibility” until further consultations had taken […]

Posted On : Published By : Tom Whipple
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Russian Gas Giant Discusses South Stream Project as EU Meets on Potential Gas Disruptions

As the European Union hosted talks Tuesday on the threat of disruptions to natural-gas supplies amid Russia-Ukraine tensions, OAO executives were in Brussels trying to press ahead with their own pipeline project. Russia’s state-run energy giant wants to build a €16 billion ($22 billion) pipeline to send natural gas from Russia, across the Black Sea, and into Italy. The route avoids Ukraine, through which about half of Europe-bound Russian gas flows. But in the wake of Russia’s annexation of Crimea, that pipeline, called South Stream, has become another political flash point between East and West. And a handful of large European companies, all partners with Gazprom in the offshore section of the project, are walking a fine line between the two sides. The talks held Tuesday by EU Energy Commissioner Günther Oettinger focused on growing concerns in Brussels about a potential disruption of natural-gas supplies to Ukraine itself. Those […]

Posted On : Published By : Tom Whipple