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GE, Boeing Among Firms Tracking Russia Sanction Fall-Out

Photographer: Alexander Astafyev/EPA Russian Prime Minister Dmitry Medvedev (L) meets with General Electric CEO Jeff Immelt at the Gorki residence, outside Moscow, on Feb. 11, 2014. GE Russia had earnings of $2.5 billion in 2012 and 3,400 employees, according to the company’s website. Close Close Open Photographer: Alexander Astafyev/EPA Russian Prime Minister Dmitry Medvedev (L) meets with General Electric CEO Jeff Immelt at the Gorki residence, outside Moscow, on Feb. 11, 2014. GE Russia had earnings of $2.5 billion in 2012 and 3,400 employees, according to the company’s website. Companies with investments in Russia — such as General Electric Co. (GE) and Boeing Co. (BA) — are growing concerned as the U.S. prepares to impose tougher sanctions over the crisis in Crimea that may spur retribution against corporate interests. Almost 100 chief executive officers with the Business Roundtable are set to meet in Washington today with Defense Secretary Chuck […]

Posted On : Published By : Tom Whipple
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Defying Sanctions, Putin Moves Swiftly to Annex Crimea

Moving swiftly in the face of international condemnation, President Vladimir V. Putin on Tuesday notified Russia’s Parliament of his intention to make Crimea a part of the Russian Federation, defying the United States and Europe just hours after they imposed their first financial sanctions against Moscow since the crisis in Ukraine began. The Kremlin announced Mr. Putin’s decision only hours after he formally recognized Crimea as a “sovereign and independent state” late Monday night, after a vote to secede from Ukraine that was hastily organized and conducted under the watch of thousands of Russian special operations troops. Mr. Putin is scheduled to address both houses of Parliament on Tuesday afternoon and, according to reports, could outline his vision for annexing a region that has been under the authority of Kiev since 1954 and part of an independent Ukraine since the Soviet Union collapsed in 1991. Mr. Putin’s […]

Posted On : Published By : Tom Whipple
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Release oil from US reserve to hurt Russia

Russia’s seizure of Crimea has prompted political leaders in Europe and North America to seek meaningful measures to convince Russia to pull back its troops. In particular, they seek measures that would affect Russia immediately, putting internal pressure on the country’s leaders to stop their aggression while leaving the rest of the world unharmed. Some propose accelerating natural gas exports from the US to Europe. However, this is no better than computer “vapourware” because the gas would not arrive for years. A viable alternative to gas exports is releasing oil from the US Strategic Petroleum Reserve (SPR). These stocks are available today and could have a speedy impact on Russia. Given that the country depends on oil and natural gas exports for its survival, such an action would have a quick and significant effect if the release depresses oil prices. The SPR now holds 694m barrels of crude. The […]

Posted On : Published By : Tom Whipple
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CEOs of Biggest Russian Firms Could Be Hit by Sanctions -Paper

The CEOs of Russia’s two largest firms are on a list of those who may be hit next week with European and U.S. sanctions over the Crimea crisis, a German newspaper said on Friday, suggesting tougher than expected measures against Russia’s elite. Moscow shipped more troops and armour into Crimea on Friday and repeated its threat to invade other parts of Ukraine, showing no sign of heeding Western pleas to back off from the worst East-West confrontation since the Cold War. Russia’s stock markets tumbled and the cost of insuring its debt soared on the last day of trading before pro-Moscow authorities in Crimea hold a vote to join Russia, a move all but certain to lead to U.S. and European Union sanctions on Monday. European officials told Reuters the EU was working on a five page list of 120-130 Russians who could […]

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Russian companies withdraw billions from west, say Moscow bankers

Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow. and VTB , Russia’s giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil , are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers. The flight comes as last-ditch diplomatic talks between Russia’s foreign minister and the US secretary of state to resolve the tensions in Ukraine ended without an agreement. In depth Battle for Ukraine Viktor Yanukovich has been ousted but Russia is flexing its military muscle, fearing a threat to its interests in Ukraine Markets were […]

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ANALYSIS: Potential sanctions may hit Russian oil, gas sectors long term

While many analysts see the sanctions, as they are proposed currently, only being partially effective, others say they could have much wider implications in the long term, potentially affecting the oil and gas sector too. "Though the scope of the sanctions remains uncertain, the effect could be enormous," Russia’s economist Sergei Guriev said in his column with the Project Syndicate, an online platform for expert opinion. A significant fall in foreign direct investment, "which brings not only money but also modern technology and managerial skills, would hit Russia’s long-term economic growth hard," Guriev said, adding that FDI was estimated to have reached $80 billion in 2013. In the short term, "it is trade that matters much more than investment," he said. Russia’s annual exports, mostly oil, gas, and other commodities, are worth nearly $600 billion, with annual imports totaling almost $500 billion, according to Guriev. The most important source […]

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Merkel Says Russian Trade Impact Limited as Industry Backs Curbs

Chancellor Angela Merkel won industry support as she stepped up her threat of sanctions against Russia , saying that Germany could withstand the economic impact of any measures taken. Merkel, speaking in Munich today, compared the 76 billion euros ($106 billion) in bilateral trade with Russia with the more than 60 billion euros in trade Germany has with its neighbor, the Czech Republic, a nation of 10 million people. Russia has a population of about 142 million. “That shows that there is a dimension there, but not to such an extent that it would have an impact on Germany’s entire economic engagement,” Merkel said. Ulrich Grillo, president of Germany’s BDI industry federation, told the same event that he “fully” supports the chancellor during the crisis in Ukraine . A day after she warned Russia that it risked “massive economic and political harm” if it didn’t change course, Merkel maintained […]

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Gazprom says South Stream making progress

The South Stream natural gas pipeline for Europe is making steady progress, Alexei Miller , chairman of Russian energy company Gazprom, said. Miller briefed members of the South Stream supervisory board in Zurich, Switzerland, to review the pipeline’s progress. "The South Stream project is steadily progressing," he said in a statement Tuesday. "Contracts for laying the first string as well as for procuring pipes for the second string will be signed before the end of this March." Gazprom said it plans to commission parts of South Stream before the end of 2015. The pipeline is designed to have an annual capacity of 2.2 trillion cubic feet. Gazprom envisions South Stream as a means to add diversity to an export market that depends on Soviet-era gas transit networks through Ukraine, where geopolitical tensions add a layer of risk to Russia’s export options. Ukraine descended into chaos when ousted President Viktor […]

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New Cold War Would Differ From Old

RUSSIA had some real economic problems even before the Ukrainian crisis led the United States and European countries to threaten sanctions on the country after the Russian flag was raised in Crimea, a part of Ukraine, and troops who spoke Russian appeared to take over a significant part of the region. Russia’s growth had slowed to almost nothing: Its real gross national product in the third quarter of 2013 was just 0.6 percent larger than it had been a year earlier. The ruble was weak. Its manufacturers appeared to be doing much worse than competitors in other countries. Its stock market has trailed markets in most other countries over the last year. If this is a new incarnation of the Cold War, it will be very different from the old one. Back then, the Soviet Union and the members of its empire were in some ways in their own […]

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Exxon Says Russian Projects Remain on Track

Exxon Mobil Corp. has more at stake in Russia than any other U.S. energy company but is confident its projects will remain on track despite recent tensions between the West and the Kremlin. "There has been no impact on any of our plans or activities at this point, nor would I expect there to be any, barring governments taking steps that are beyond our control," Chief Executive Rex Tillerson said Wednesday at the company’s annual meeting with analysts in New York. "We don’t see any new challenges out of the current situation." After years of investments, Exxon is supposed to start pumping oil and gas this year from a major field off Russia’s eastern coast and drill the company’s first well in Russia’s Arctic seas, which could hold billions of barrels of oil. Though Exxon said those endeavors will proceed on schedule, the company is putting plans on hold […]

Posted On : Published By : Tom Whipple