Russian newspapers

Double Taxes. What is the threat of the abolition of tax agreements with the West?

noreply@blogger.com (Unknown) — Fri, 24 Mar 2023 17:27:00 +0000

In response to the inclusion of Russia in the European Union's tax blacklist, the Ministry of Finance and the Ministry of Foreign Affairs yesterday proposed suspending double taxation agreements with "unfriendly" countries. A total of 40 agreements could be concerned. The measure would affect foreign businesses and foreign subsidiaries of Russian companies, employees who have left and landlords of real estate. The Finance Ministry and the Foreign Ministry on Wednesday proposed that the president suspend double taxation treaties (DTTs) with all "unfriendly" countries. This is in response to the EU's decision to blacklist Russia as a taxing jurisdiction, according to a message on the Finance Ministry's website. "If the proposal of the Ministry of Finance and the Foreign Ministry is supported, the application of reduced withholding tax rates (tax exemptions) on income subject to double taxation treaties will be suspended," the ministry said. Now Russia has concluded double taxation treaties with 81 countries. About 40 of them, including SIDN with Malta, Cyprus, Luxembourg, USA, Great Britain, Switzerland, Japan and Singapore may be suspended. It is proposed that the agreements be suspended from the date of the presidential decree and "until the restoration of the violated rights of Russia. What is the threat of this? SIDN allow legal entities and individuals who are tax residents of one country but receive income in another country to pay tax on it only in one country or in both countries, but at a reduced rate. There is no way to avoid double taxation if the treaty is abolished. As a rule, agreements on avoidance of double taxation regulate personal income tax and tax on profits, says RBC. In particular, SIDN provides for a reduced tax on dividends (5-10% vs. 15% in Russia) and a zero rate on interest payments and royalties (instead of 20%), writes "Kommersant. For example, how much taxes Russian investors will pay because of double taxation can be seen here. Experts note that from the wording of the Ministry of Finance and the Ministry of Foreign Affairs is still impossible to understand with which particular countries LEDN will be suspended. At a minimum, these will be EU countries that already have a black list against Russia (which is a smaller part of the EU). At the most, all "unfriendly" countries (i.e., about 40 states). Who will be affected In answering this question, experts stipulate that in 2022 the application of LEDS benefits has already been significantly hampered by sanctions, so it is difficult to accurately assess the consequences of the suspension of these agreements. But some things are already clear: After the suspension of the SITA, individuals who received income in "unfriendly" countries, such as from renting apartments or commercial use of other property, will not be able to apply foreign tax credit when paying tax in Russia, the lawyer explained to Kommersant. In this case the tax burden may increase up to 35-40%, says RBC. The risk of double taxation also arises for employees of Russian companies who have gone to "unfriendly" countries and became their tax residents, if such remote work is not stipulated in the employment contract, the lawyers explain. Under current legislation individuals lose their tax resident status in Russia, if they are abroad for more than 183 days a year: after this period of time their income from Russian sources is withheld personal income tax at a rate of 30%, and they begin to pay foreign tax on income in foreign jurisdictions, where they have tax residency. Russian companies that still have a presence in the EU or are in the process of restructuring their "foreign circuit" may be affected, experts add. For them, the tax burden could increase by 15-40%. Also, additional difficulties may arise for the Russian owners of controlled foreign companies from "unfriendly" countries. For example, TCS Group, which includes Tinkoff Bank, as well as Cian, Ozon, HeadHunter and others are registered in Cyprus. Changes will also affect international companies operating in Russia, but registered in "unfriendly" countries, RBC notes. However, such companies are few in number now, so Russian business will suffer more than foreign, experts admit. Even private investors with blocked assets may suffer if the Federal Tax Service can prove that they were credited coupons and dividends on foreign securities, says Frank Media. However, lack of access to these securities and income is not a basis for nonassessment of tax. The appeal of the Ministry of Finance and the Foreign Ministry directly to the president indicates that the initiative is likely to be approved. The only question is how many countries will be suspended from the SIDN. The second danger lies in the terms of suspension: the experts polled by RBC hope that the authorities will leave time for restructuring at least until the end of the year, but they admit that there is a risk of immediate suspension right after the presidential decree. Russian companies will need the most time to restructure and adapt to the new tax regime. Analysts believe that the suspension of the SITN will be a significant incentive for Russian entrepreneurs to leave the "unfriendly" country. But it may not be easy to do so, "as Russian business is not well tolerated there," the experts add.

Why the purchase of Credit Suisse will not end the banking crisis

noreply@blogger.com (Unknown) — Fri, 24 Mar 2023 16:17:00 +0000

Credit Suisse will get its main competitor, UBS. This is not yet the end of the banking crisis, but already a sobering lesson for investors. On Sunday the fate of the second largest Swiss bank with a 150-year history was decided. After intense negotiations, the Central Bank of Switzerland announced that Credit Suisse, which had lost the trust of customers and investors, would be absorbed into UBS for 3 billion Swiss francs ($3.25 billion) in shares. That's more than half what the bank was worth at closing on Friday. UBS will receive preferential liquidity from the regulator for 100 billion francs and guarantees to cover losses for another 9 billion. Thus, the risk of Credit Suisse's collapse being passed on to other banks in Europe was flooded with money. It was quite real: the WSJ found out that clients withdrew $10 billion a day from the Swiss bank last week (for the entire fourth quarter - "only" 110 billion francs). UBS wins from the transaction, writes Bloomberg. Firstly, the amount of assets under its management will now approach $5 trillion, and secondly, it will receive a steadily profitable "home" business of Credit Suisse. The latter is valued at about three times the price that UBS will pay for the entire group. The main losers are Credit Suisse's big investors: convertible bonds worth 16.3 billion francs ($17.6 billion) will be written down to zero. They are issued by banks to replenish Tier-1 capital, and the holders are the latest in the list of creditors and shareholders, for which they get a higher interest rate. Notably, the Asian markets reacted to the news by falling in similar bonds. Saudi National Bank, which had become the largest investor in Credit Suisse four months before the collapse, announced the loss of 1.1 billion francs of the 1.4 billion invested. However, it was the sloppy statement of its head that triggered the collapse of quotes last Wednesday. In a broad sense, the losers are the Swiss banking system and its regulators, forced to rescue the second systemic player in 15 years: in 2008 the UBS itself was pulled out of the crisis model of "bad bank. The current merger carries high risks of management, rising costs and falling revenues, according to Citigroup. "The combined assets of [UBS and Credit Suisse are $1.7 trillion, or >200% of Swiss GDP <...> we doubt that [the deal] is what the Swiss government wanted," the analysts wrote. Is that the end of the banking crisis? Unfortunately, no: there is still a lot to fall, experts interviewed by Bloomberg say. A lot will depend on the Fed's rate decision this Wednesday. In any case, the former alternative (increase by 0,25 or 0,5 p. p.) is not actual any more. The regulator will have to choose between banking system stability (with the rate kept) and fighting inflation (with the rate hike). Last Thursday the ECB raised the rate by 0,5 p.p., fearing that a smaller step will provoke investor panic. Some analysts think the Fed can't afford to pause for the same reason, but raising the rate along with inflation will also bring down the economy - if it triggers a recession and credit crunch. These are all deferred consequences of ultra-soft "coronavirus" central bank policies, which are not exhausted by inflation, but could lead to a "disinflationary sharp landing." For details about why three big banks collapsed in the U.S., why their problems have the same root, and what the consequences for the global banking system will be, we told The Bell (this is a paid product, but it is worth it). On the whole, the current banking crisis looks a lot easier than the global financial one, primarily because it is a liquidity crisis, not a credit crisis, which is relatively easy to fill with money. On the other hand, the picture of volatility and record use of emergency financing by U.S. banks through the discount window is alarming: judging by it, the liquidity problems are very serious. The collapsed Lehman and Bear Stearns also seemed too small to cause a global financial crisis, Absolute Strategy analysts remind us. Investors should learn a few lessons. First, a name, even a name like Credit Suisse, does not guarantee anything. Although the bank's slow decline has dropped its capitalization dozens of times since its 2007 high, and it could make money on rebounds, the passive strategy ends up being a loser. Second, portfolios should be assembled as if external shocks could materialize at any moment. Finally, you need to get used to high volatility, especially if there are new victims of rising rates.

Bank of Russia Employees are Urged to Learn Chinese

noreply@blogger.com (Unknown) — Fri, 24 Mar 2023 16:13:00 +0000

And today's news is just the right confirmation of my predictions. There is a large-scale, high-speed surrender of everything and everything to big brother China. From the broadcasting of Xi Jinping's sayings on Russia's main federal TV channel - in Chinese - to the direct order to everyone to learn Chinese. The Bank of Russia, which is cut off from the Western financial system, intends to teach its employees the Chinese language in order to interact professionally with partners from China. The Central Bank's request for educational services in the Chinese language "in the field of professional communications" appeared on the website of Sberbank AST, writes Kommersant, noting that the application was placed during the visit of President Xi Jinping of China to Russia. According to the project documentation, the Central Bank plans to teach the Chinese four groups of trainees numbering four to eight people annually. Training up to 32 people a year for the number of more than 45 thousand employees does not look large-scale, but it will have an annual regular character. Total employees of the Central Bank will pass 288 academic hours of the program, more than 70% of which will be for practical exercises. The regulator's staff will learn Chinese for its subsequent "use in business processes and professional communication in the field of international cooperation. According to HeadHunter, over the year the demand for employees with knowledge of the Chinese language in the financial sector in Russia has increased by 113%. According to calculations by Superjob, the number of vacancies, which imply knowledge of the Chinese language, has doubled over the year. Ingosstrakh-Invest has already announced the recruitment of employees with knowledge of the Chinese language, and Alfa Bank sees great prospects in developing relations with Chinese organizations. After the sanctions for the war in Ukraine were imposed, Russia has been gradually shifting its trade turnover to Chinese yuan. According to statistics from the Central Bank, the RMB accounts for about 16% of payments for Russian exports. In imports, the share of Chinese currency is 23%. This means that every month Russia receives $7 billion worth of yuan, of which $6 billion goes out of the country to pay for foreign goods, said Natalia Orlova, chief economist of Alfa Bank. The yuan's share in transactions of Russian business is also growing: it accounts for 37% of the trading turnover on the Moscow Stock Exchange against 36% of the dollar (as of January). By the end of 2023, the Chinese currency will become the main currency in Russia, a source close to the Kremlin told the Financial Times. Also, the Central Bank of Russia has already transferred a sixth part, or about $100 billion, of Russia's foreign exchange reserves into yuan. However, despite Russia's openness to China, Chinese partners are unwilling to work with Russian counterparts who have fallen under sanctions. "Chinese banks fully comply with all sanctions restrictions imposed by the U.S. Treasury," Mikhail Zadornov, former head of Otkritie State Bank, said in late December.

What will happen to the Russian economy in the next two years, according to ACRA

noreply@blogger.com (Unknown) — Mon, 05 Dec 2022 16:54:00 +0000

The rating agency ACRA has published its forecast for the development of the Russian economy over the next two years. The estimates presented in it are tougher than in the state forecasts. The agency expects a prolonged decline in industrial production, a more significant depreciation of the ruble, and a slow recovery of the economy with higher inflation. It also forecasts a reduction in the labor force, including due to factors around the war. In its forecast for 2022-2024, ACRA assumes that oil prices will remain high: $82 per barrel in 2022, $77 in 2023 and $75 in 2024. World GDP growth in the next two years will be very low (1.1% in 2023 and 2.5% in 2024), and China's GDP dynamics will be almost catastrophic (2.1% in 2023 and 4.4% in 2024). But the long-term recession of the EU countries and the U.S., according to ACRA analysts, will be avoided, although the risk of a global recession remains high. The main thesis of the agency's forecast, which distinguishes it from government forecasts: the global economy will not be a driver of growth of the Russian economy - due to restrictions on Russian exports and due to its own slowdown. On this basis, ACRA forecasts a more significant drop in GDP than the authorities. According to the agency, in 2022 GDP will decrease by 4%, in 2023 the fall will slow down to 2.8%, and the recovery in 2024 will be weak - only 1.3%. The expected decline of Russia's GDP by a total of 6-8% over 2022-2023 will be due to a supply shock rather than a demand shock, ACRA notes. Therefore, the recovery will occur not because of the return to circulation of unused means of production, but through the creation of new or changing existing ones. And this takes much longer than a cyclical recovery, even in the absence of complications in the external environment, the analysts conclude. This rules out the authorities' thesis of a rapid restructuring of the Russian economy, which will take up to two years. ACRA forecasts inflation at 12.5% by the end of the current year, 6.9% next year, and 5% in 2024. The Central Bank expects a return to the target of 4% in 2024. The agency generally agrees with the thesis of a low decline in investment, although in this matter, its forecast is also tougher than the official. ACRA provides pessimistic assessments for the industrial production, predicting a decline of 3.8% in 2022 and 2% in 2023 by 2021. The agency also predicts an increase in the budget deficit from 1.5% in 2022 to 2.8% in 2023 and 2% in 2024. In addition, the agency expects somewhat more than the Central Bank and the Ministry of Economic Development, the weakening of the ruble and higher interest rates on loans in the economy. In addition, ACRA expects a significant reduction of the workforce in Russia (by 2.1% by 2024 in the conservative scenario) - due to demographic trends and near-war factors (increased mortality and injuries, reduced civilian employment, emigration). As a result, unemployment will be ultra-low and real wages will grow (however, real disposable income is projected to increase only in 2024 and by only 1%. ACRA's forecast is the first publication of a non-governmental medium-term forecast, the number of which this year will be noticeably lower than usual, notes Kommersant. ACRA analysts are traditionally tougher and looser in their assumptions than analysts at the Central Bank and the Ministry of Economic Development, since the rating agency has to take all risks into account in order to maintain its reputation.

Germany's largest purchaser of Russian gas sued Gazprom for 12 billion euros

noreply@blogger.com (Unknown) — Mon, 05 Dec 2022 16:52:00 +0000

They waited until they blew up the Nord Streams and now Gazprom will trump up force majeure in court - you'll see. Germany's Uniper has filed a lawsuit in the Stockholm arbitration against Gazprom Export, the company's press office said Wednesday. Uniper, formerly Germany's largest buyer of Russian gas and one of the investors in the Nord Stream 2 project, is seeking damages because of a sharp drop in Russian gas supplies that began in June and accelerated in the fall. In order to cover its obligations to customers, the company was forced to buy gas on the spot market, where quotations are many times higher than Gazprom's contract prices. This led to additional costs of 11.6 billion euros, stated Uniper in a release, stressing that the amount is not final and will increase until the end of 2024. "We demand compensation for our substantial financial losses," Uniper CEO Klaus-Dieter Maubach said. He added that the company "is not responsible" for Gazprom's refusal to supply the contracted volumes of gas, and getting it to pay compensation is a "debt to shareholders, employees and taxpayers." The German government has already allocated 29 billion euros to save the company from collapse, the net loss of which reached 3.2 billion euros in January-September and became the biggest in its history. In total, Uniper may need an infusion of 60 billion euros if gas prices remain high, sources familiar with the estimates of German officials told Bloomberg. In September, the government of Germany agreed to buy 78% from the Finnish Fortum. As a result, the concern was de facto nationalized: now Uniper is 90% owned by Germany. "Gazprom Export is studying the statement of claim in the case with Uniper and plans to defend its interests: the company does not recognize the breach of contracts and the legitimacy of claims for damages, Gazprom told RIA Novosti. Gazprom's pipeline exports to the European Union collapsed in the third quarter by 70% compared to the previous year, according to Bloomberg. In May, the company stopped the Yamal-Europe pipeline, which connected consumers in Germany, and in August Nord Stream shut down after Gazprom refused to take a repaired Siemens turbine from Germany.

The Russian government is going to siphon currency from the population

noreply@blogger.com (Unknown) — Mon, 05 Dec 2022 16:50:00 +0000

Russian Finance Ministry said this week: gold should replace dollars lying with Russians in the "vegetable garden banks" Deputy Finance Minister Alexei Moiseyev said that the volume of gold sales to the population in 2022 has increased tenfold. According to the minister, it is still not enough to replace the hundreds of billions of dollars lying with the Russians "in the banks in the gardens. "The measures that have been taken, still had an impact: our sales of gold to the population have increased tenfold... But this is not enough all the same. Gold should substitute for dollars, which exactly the population has hundreds of billions in the banks in the gardens and so on. It is clear that all this has to be exchanged for gold, which we manufacture ourselves," said the deputy minister at a meeting with Chairman of the Federation Council Valentina Matvienko (quoted by RIA Novosti). The "vatniks" immediately started screaming that the currency should be given up, and gold is better than all assets. But no one asks the question, why the hell did the government become so kind that it decided to get rid of this harmful currency? When has it ever been the case that the Russian state (and often not only it) has rid its subjects of an asset, and it would be beneficial to the population. Because in the history of Russia only one such case comes to mind, the 30s of the 20th century and the Torgsins On November 27, 1922 new money entered into circulation in the Soviet republics: tickets of the State Bank of the RSFSR in denominations of 1, 3, 5, 10 and 25 chervonets. There was a single moment in history, very short, only 6 years, when the Communists promised a guaranteed exchange of their banknotes for gold. The government promised a free exchange of paper ducats for gold denomination after a special decision, which, however, never came. A 10 ruble gold piece was traded at 11.4 to 12.5 rubles. The stability of the paper gold piece was ensured not by the gold backing but by the control of the money supply. The market "thaw" lasted only six years. In 1928 the Soviet ruble became inconvertible again: the purchase and sale of foreign currency by individuals and legal entities, the private import and export of gold and the acceptance of gold coins for cash payments were banned. Moreover, from 1928 the forced withdrawal of currency and gold from the population actually began. Just as Putin's Finance Ministry wants to do now. Gold and currency, which remained in the hands of the population from the pre-revolutionary and neap times (287 million rubles at face value), was pumped out almost entirely in 1931-1936 through a network of Torgsin (trade with foreigners). Foreigners for hard currency and Soviet citizens for gold could buy there food and goods which by that time had disappeared from regular trade. The fact is that the communists created a severe shortage of anything and everything in the country. And in some areas - Ukraine, the Non-Black Soil Belt, the Volga region, Kazakhstan - there was a real famine. You could buy anything you wanted, from food to manufactured goods, only in trading stores. The rare remittances from abroad were also taken away through the trading-houses. This was the only way currency and gold could be withdrawn During the Holodomor of 1932-1933 one of the most profitable and cynical projects of the Soviet trade was a network of stores and department stores "Torgsin": to buy the most basic food people brought there their gold wedding rings, crosses, earrings, bracelets, brooches, chains. In 1933, when the Holodomor reached its climax, the Ukrainian office of the Torgsin took more than nine (!) tons of gold from the population. This is one fifth of the "yellow metal" harvested in the entire Soviet Union that year! We all know how that seizure of gold and currency from the population of the USSR ended. These assets were the only ones which have not lost nearly their value throughout subsequent history, and which have remained a liquid asset right up to the present day. What does Alexey Moiseev mean when he talks about the desire to confiscate currency from the population? And most importantly, how is the government going to achieve this? After all, surely no one will exchange currency for anything voluntarily. So the government will create the conditions to force people to do it? How? By creating a deficit? A new famine? The idea of exchanging currency for gold looks very strange. Not only is the ruble not firmly tied to gold since 1928, but the exchange for gold is not profitable, it's too expensive in Russia. And again the question arises - why does the government want to withdraw this harmful currency? It believes that the population does not need the currency, but why does the state need it?

European Commission plans to confiscate frozen assets of Russia

noreply@blogger.com (Unknown) — Thu, 01 Dec 2022 09:00:00 +0000

It looks like there is a smell of kerosene. They have seriously started discussing the confiscation of the frozen part of the FER and Russian assets, including the assets of Russian oligarchs in the West and transferring them to the fund for the reconstruction of Ukraine. The European Commission proposed a plan to confiscate frozen Russian assets. "We have blocked 300 billion euros of Russian central bank reserves and frozen 19 billion euros of Russian oligarchs' money," said Ursula von der Leyen, head of the European Commission. According to her, in the near future, the EU and its partners could take over the management of these funds and their investment. The proceeds would go to Ukraine to compensate for the damage caused to the country. "To make this possible, we will work with our partners on an international agreement. And together we can find legal ways to do this," von der Leyen stressed. Russia must pay for its terrible crimes. We will cooperate with the ICC and help establish a specialized court to address Russia's crimes. Together with our partners, we will ensure that Russia pays for the destruction it has caused with the frozen funds of oligarchs and the assets of its central bank - speech of the head of the European Commission. In principle, nothing is impossible here. The assets of many Russian corporations in the West have already been confiscated and nationalized, just as Western assets in Russia have been nationalized. But in this case we are talking about most of the gold and foreign currency reserves, which are still on the balance sheet of the Central Bank of Russia. At the time of the outbreak of hostilities, the gold reserves were $629 billion and that was the most important in history. Since then they have been falling and are now at $568 billion. At the time of the shooting in Ukraine, there was $350 billion in foreign reserves in the West, which is now most of the $568 billion. If this money were to be confiscated, the Russian state would effectively be left destitute, all of its liabilities becoming worthless. Approximately $200 billion is taken as an emergency fund for Russia and in fact there will be nothing left in the gold reserves. And that is even if we do not remember that most of the gold reserves available to Russia are now invested in illiquid gold (it is forbidden to sell it on foreign markets) and in yuan, which also cannot be sold without the permission of China. In a crisis situation, the reserves can be used to purchase important imported goods, such as medicines. If the ruble weakens, part of these reserves may be sold on the domestic market to stabilize the exchange rate. But there would be nothing to send. Especially after Europe will stop buying Russian oil after December 5, and since March - even petrochemical products. There is one more nuance. It is generally considered that the National Welfare Fund is a part of the GOLD. The National Welfare Fund accounts for about 1/5 of international reserves. The only problem is that most of the NWF now is shares of Russian blue chips like Uber and Gazprom. Which, as you understand, won't be worth anything if you can't support the stability of the financial system. And how will you support it if you have no money? It seems to be understood in the Russian Government, at the beginning of the week there were proposals from the Russian Government to exchange the frozen gold reserves of Russia for the assets of foreigners in Russia. Apparently, this proposal will remain unanswered, most likely because the size of assets offered for exchange is disproportionate - there are much more Russian assets in the West. Thus, if Ursula von der Leyten's proposal passes, it will change a lot in the financial stability of the Russian monetary system. Let's see, it gets interesting.

Ceiling for Russian oil.

noreply@blogger.com (Unknown) — Fri, 25 Nov 2022 16:29:00 +0000

As you may recall, during the discussion of the Russian oil price ceiling, estimates among analysts varied. The Russian officials promised that the price of oil would rise to $300 a barrel, but the Russian analysts, the same Demura and Levchenko were so fucked up that they began to argue that Moscow would set the price of oil in the world and Moscow and Riyadh would regulate the market and redistribute markets amongst themselves. Yesterday they came close to introducing a price ceiling on Russian oil and what happens on the market? The answer is no. The discussion of prices seemed to come to nothing yesterday, that is, there is no clear decision. Europe wants to introduce the ceiling at $60 - $65, which corresponds to the prices at which urals are sold now. On the chart below, the difference between urals and the brand that goes now at $85 is $24. So the price of urals today is $61. The Baltics and Poland think the $60-70 ceiling is too fat for Russia and suggest a $30 ceiling. The discussion stopped there yesterday, but in the morning news came in that Biden had discussed with US Treasury Secretary Janet Yellen the introduction of a ceiling on Russian oil and the ceiling is ALREADY in effect. He did not name the price level, but by all appearances it is the same $60-65. Did the market notice these moves? Absolutely not. Oil is under seasonal pressure until the end of the year, sometimes until December, then there follows a rebound up to spring, in peaceful years on this ruble is strong and there was even a strategy, sell the dollar for rubles in December and buy back in March April - and this time it is likely to just horizontal movement, but oil prices will not go to any $ 300 and no center in Moscow for the distribution of oil in the world. Just like it doesn't exist with gas. The technical picture in oil remains bearish, we have a stable price below the 200-day average and there are no signs yet that oil is going to rise. Russia, according to Russian officials, is going to stop selling oil to the countries that imposed the ceiling, thus repeating the self-embargo imposed on itself. The same one that Russia imposed on itself in the case of gas. Remember the sale of gas for rubles? Who buys gas for rubles now? No one. Putin simply dumped his sales market in Europe, giving it to anyone but himself. What happened after that? When the gas flows were blown up and gas supplies to Europe began to plummet? The hell did not happen. The price of gas fell instead of rising. Putin lost his European market forever. Moscow didn't became the center for setting gas prices, and Plesky the sitter abruptly forgot his forecast of a $5,000 gas price, and Levchenko and Dr. Ebanucci were, to put it mildly, mistaken. Well something similar will happen now. Demura's Lefties will shit their pants again, the price of oil will continue to fall, and the world will not notice the loss of the oil fighter. But there will be less and less currency coming into the country. USD_TODTOM swaps have more than doubled in a month, and they are approaching what they were before the invasion of Ukraine. Market participants expect a squeeze in the supply of currency, and the feverish actions of the Central Bank, which recently allowed even cash settlements on foreign contracts, indicate just that.

Russian and Belarusian trucks are banned from entering the EU from Belarus and Russia

noreply@blogger.com (Unknown) — Tue, 12 Apr 2022 09:49:00 +0000

States of the European Union have stopped letting heavy vehicles with Belarusian and Russian license plates into their territory. According to the truckers, at the moment only transit trucks going to Kaliningrad, as well as cars with food and medicines, can go through the border crossings of Belarus with the EU countries.All the trucks with Russian and Belarusian license plates, which had already been loaded and even cleared by customs, were turned back. Usually, before, in such circumstances, both Lukashenko and Putin immediately responded symmetrically, banning the entry into their territory of the same trucks, but with the numbers of the European Union. All the time, but not now. Because this would cause a collapse of exports and imports to these countries. In some cases of critical importance. So at the moment, the EU vans go to Russia and Belarus unhindered. But Russian and Belarusian carriers are standing by. The fifth package of the EU sanctions against Russia and Belarus has affected international road transport. Last Saturday, our country's trucks with Belarusian and Russian license plates were not allowed into the EU. Transit was also affected by restrictions. Following the introduction of sanctions against truckers traffic on the border of our country with the EU has decreased by three times. Experts predict serious losses in foreign trade for Belarus because of these restrictions. We talked to the carriers and found out what they think about what is happening and how they will work further. Andrei (name changed - Editor's note) lives in the district center in Vitebsk region, and for the last ten years he has been engaged in trucking. His firm is one of those that are called "micro" in the transport sector - it has only three trucks with towed equipment. However, the Belarusian has another company in Latvia with six trucks with European license plates; he opened it only two years ago. In this situation, it is a salvation for him, because the cars with EU registration go through the border freely. - My Belarusian cars traveled all over Europe, I had regular drivers, established contacts with customers. But it's unclear how we will work after the new sanctions are introduced. During the last day, I received a phone call from 20-30 people with whom I interacted at work, all of whom had the same question: "What are we going to do? Our government, the Ministry of Transport, BAMAP are silent on this matter," said the man. Andrei's company was one of the first to feel the EU sanctions: last Saturday, their car, which was loaded with cable on its way from Belarus to Germany, was reversed at the Latvian checkpoint "Paternieki" (neighboring checkpoint "Grigorovshchina"). The driver told the director that the truck had already been cleared and was ready to leave, but "a new shift came and turned away the Russian and Belarusian cars with an explanation that the EU sanctions had begun to apply and entry was prohibited. This car is about to return to base. What to do with the customer's cargo, the director has not decided yet. Perhaps, the truck will be unloaded and the goods returned, or there is another option - to hook the semi-trailer to the "head" with a European license plate - it will be allowed through the border. - These sanctions threw the Russian and Belarusian vehicle fleet out of the transportation market. Twenty thousand cars that used to go to Western Europe are too many for the domestic market of Belarus. Of course, there is the territory of the Customs Union but the rates on transportation to Russia are very low and the profitability of a trip is only three to five percent. By comparison, the profitability of flights to Europe was up to thirty percent, depending on conditions of transportation, - said Andrew. The fact that two trucks in the company of the Byelorussian were taken on credit and still have 70 thousand euros to pay for them adds more difficulties. Andrei says that there is no free money, it is invested in the turnover of the company. The man explains that such a situation is in many domestic carriers. - All road carriers are still waiting for developments. I hope Belarus won't decide to ban to deliver the cars from Europe to our country as a reciprocal move. After all, then all exports would stop. It's not even a shot in the leg, but much higher. Andrei believes that if the current conditions persist, the emphasis in international road transport will shift to vehicles registered in Europe. The situation will become more complicated if Russia stops allowing European trucks to enter its territory, but there is a way out even here. - It would look as follows: a European truck comes into Belarus, the goods go through customs clearance, then a semi-trailer is hooked to the Belarusian car, and it takes it to Russia. "It's not a blow to Russia, but to ordinary people." Alina's firm (name changed - Ed. note) has 15 trucks with Belarusian registration. It's a family business, started by her parents, the girl gradually got used to the business, and now runs the company on her own. The haulier has some brand-new cars; they were taken on credit last year. The money on it has to be repaid monthly, and the contract does not provide for delays in payments. - I don't know how the EU went along with such sanctions, because they are aimed not against Russia, but against us - small and medium carriers, as well as people who work for us", the entrepreneur believes. - It feels as if these sanctions were lobbied by Polish and Lithuanian hauliers in order to remove competitors, a kind of blow to the weak. Because Russia is not suffering - two weeks ago it redirected transport flows by rail, the goods go through Turkey, Georgia. The woman says that not only business owners are worried about the situation, but also hired workers - many have families, children, debts on loans and installments, some other obligations. - Not all drivers want to go to Europe to work. It's clear that they are just guest workers, exploited there, they need to sleep in the cabs. So far, European trucking firms haven't had enough truck drivers, but if an influx of Belarusians goes there, there will be an oversupply of drivers," says Alina. According to her, to prevent the entry of prohibited goods into the Russian Federation one should have only prohibited export declarations for export of products. But since they are there (although it has become much more difficult to obtain them), the traffic will continue. - The Lithuanians and Poles will speculate on the goods, and they will still get into Russia. Perhaps they will turn their noses up at first, say they won't go, and when the stakes are cosmic, they will move forward. For sure, there will be transshipment and transshipment of cargo somewhere near the border. Now the woman focuses on waiting for her transport from Europe - according to the sanctions it has to leave the EU until April 16, but there are doubts whether the drivers will have time to do it, because, according to Alina, the queue in the direction of Belarus is growing. Recall that truckers, who had been in the EU before April 9, are allowed to deliver the goods they are already carrying and return to the territory of Belarus by April 16. - What to do next - I do not know yet. Bankruptcy is the most pessimistic option. We will probably explore other options. It's a complicated business - you can't sell cars to anyone now, it's not IT when you pack a suitcase and go to any country. The entrepreneur believes that there should be sanctions, but not those that were adopted last and affected the interests of carriers. She adds that she herself is against the war in Ukraine (she has relatives living there, for whom she is very worried and worried) and condemns the actions of Russia. "We will travel in Russia, but we will lose our wages." What Drivers Say. Several Belarusian trucking firms reported that they intend to register companies in Poland and Kazakhstan in order to continue their work. One company informed me that they intend to sell some of the trucks, while the rest will try to work in new directions - Russia, Kazakhstan, Georgia, Turkey. As for the international drivers, many of them are in "waiting mode" and hope that their managers will find a way out of the situation. For example, Nikolai, a resident of Brest region, who was one of the first to be turned back to Belarus at the Lithuanian checkpoint "Šalčininkai" on April 9, thinks so. The man was carrying lumber to Germany. - The Lithuanians let us through to the last minute. I had already checked in on the Belarusian side and drove up to the barrier on the Lithuanian side, but they lowered it in front of me. We waited until 1.30, and then the shift supervisor came out and said they couldn't let us through - sanctions, - said the man. The driver went back to Belarus. The firm has ordered to park the truck and not to unload it yet. Nikolai and his colleagues are home until Wednesday. Then there will be a meeting in the company, where the leadership will announce how they'll work further. - We were offered to travel around Russia in the direction of Murmansk, Kazakhstan, and China. We will lose about 30 percent in wages. Of course, this is bad, but I do not want to go to Europe for work permits - it is hard not to see my relatives for two or three months, - says Mykola. According to the truck driver, his colleagues are discussing what they will do if they can no longer go to Europe by truck: many want to stay in Belarus, but move to domestic firms. Some want to join car fleets and cabs, some want to work with trucks. "Fraught with big problems for the economy." Experts - about the impact on cargo transportation Belarusian economy is highly dependent on the export of services. - The fact is that foreign trade in goods for Belarus has traditionally been negative. Due to the large volume of oil and gas purchases from Russia and other factors, Belarus sells less goods for export than it buys from abroad itself in value terms," say the experts of the project "Kosht Urada. - Negative balance of foreign trade in goods is usually several billion dollars per year. In 2021, thanks to the "export miracle," Belarus will have traded in deficit of "only" $0.8 billion - one can say that it is a success. Analysts point out that the situation in foreign trade is saved by the service sector, where exports exceed imports and this excess allows to fully block the negative balance of trade in goods. - Export of services is one of the few spheres where the natural benefits of the Belarusian economy, namely its geographic position, have been realized. Now the new restrictions deprive the country even of this seemingly obvious and inviolable advantage. Meanwhile, transportation services accounted for 43% of the total export of services from Belarus in 2021. This is more than $4 billion of foreign exchange earnings, the experts specify. By the way, the second most important area of the export of services is IT (about 29% of total exports of services in 2021, or about $3 billion). - It turns out that the mainstay of Belarusian foreign trade is services exports, while the mainstay of services exports is transportation services and IT. And both of these spheres are likely to bring much less currency to the economy. The IT-sector has not yet fallen under sanctions directly, but is slowly being eliminated on its own, as the Belarusian jurisdiction has become so toxic that no benefits will save it, experts predict. - At the same time, the negative balance of foreign trade in goods won't disappear so easily. Such trends in foreign trade are fraught with great problems for the economy as a whole and the ruble rate in particular.

Tax officials and police begin to fight the shadow sale of currency against the background of currency restrictions

noreply@blogger.com (Unknown) — Fri, 08 Apr 2022 04:37:00 +0000

The Federal Tax Service in its directive instructs to organize cooperation with law enforcement agencies to identify violations related to the purchase and sale of foreign currency bypassing banks. Hand-to-hand sales are carried out in social networks, Telegram-channels and Internet services with advertisements, the letter says: in the current conditions it "threatens the stability of the RF currency and the stability of the internal currency market". At the beginning of March, the Federal Tax Service said that it had suspended checks on compliance with currency legislation "in order to reduce the administrative burden on organizations and citizens. However, the new instruction states that currency speculations of individuals do not fall under the moratorium - checks related to the purchase and sale of currency bypassing commercial banks should be carried out as usual. The Tax Service refers to two "sanctions" presidential decrees (79 and 81), aimed at limiting the use of foreign currency by residents. Since operational measures are not within the authority of the Federal Tax Service, it instructed the territorial authorities to organize cooperation with the Ministry of Internal Affairs. The law enforcement agency confirmed the possibility of joint measures, it follows from the letter. The document also states that buying and selling currency bypassing banks - is an administrative offense under Article 15.25 of the Administrative Code (violation of currency legislation), which provides for a fine of 75% to 100% of the committed transaction for individuals and legal entities. The seller and the buyer of foreign currency will be held liable, warns Yury Fedyukin, managing partner of legal company Enterprise Legal Solutions. He notes that in some cases the criminal responsibility may be applied: if the seller received income exceeding $2 million 250 thousand he may be prosecuted under clause 172 of the Criminal Code (illegal banking). The punishment under it is up to four years in prison and up to seven years if the income exceeds 9 million rubles.

IT specialists ran away from Russia without a backward glance

noreply@blogger.com (Unknown) — Mon, 04 Apr 2022 20:45:00 +0000

The IT sphere turned out to be the main casualty after the start of Putin's liberation campaign against the West. Moreover, the Russian part of it only repeats what already happened in Belarus after 2020. At that time, the Belarusian IT simply flocked en masse, almost all of it to the West, to Poland and Lithuania. It seems that after February 24, this also happened in Russia. It happened so fast, that the Russian authorities did not wait to understand it. Unlike the Belarusian one, by the way. "Concord, Yevgeny Prigozhin's company reported that they have already submitted a bill instructing the Federal Security Service to regulate the departure of IT professionals abroad. Simply because it begins to threaten the security of the country. So what about our beloved Sanya 3%? He is also getting nervous. There is an outflow of IT staff from Belarus, and this issue must be addressed. This was stated by Alexander Lukashenko at a meeting to discuss the draft decree on the state governing body in the field of digital development and informatization. Lukashenko demanded to be informed about what is going on in HTP (High-Tech Park - the Russian Skolkovo-type thing, but a bit more realistic) and how acute the issue of staff outflow is. - As I am informed, there is such an outflow that tomorrow Belarus will die without IT specialists," said Alexander Lukashenko. He voiced a plan to hold a meeting with representatives of the IT-industry, working in the HTP, and to take a number of decisions. - The process of departure of some IT-specialists is still observed, and it may not be small. We need to see from the security point of view, how dangerous it is for Belarus. From another point of view, we have to deal with IT technologies, IT parks and these IT people, so that we have equal conditions for everyone. The time has come to solve these issues," said Lukashenko. According to a survey, the results of which were published earlier by dev.by, 27% of the interviewed industry professionals have left Belarus. Another 28% of respondents admitted that they are planning to move. Only 15% answered that they are not going to relocate. It looks like the same thing is happening in Russia.

Turkmen gas to replace Russian gas in Europe

noreply@blogger.com (Unknown) — Fri, 01 Apr 2022 10:28:00 +0000

Most readers of this post will probably laugh after reading my post. But I would not be so confident if I were you. First of all because I have not been wrong about anything for the last 8 years, including the latest events in Ukraine, and secondly, because it is already obvious what is happening and what will happen to the market for Russian gas in Europe, which by the way accounts for 83% of all Russian gas production. So, I'm telling you, Turkmenistan will replace Russian gas in Europe, and Turkmenistan will cause the liquidation of Gazprom as a huge gas monopoly. Gazprom will be liquidated, while its beautiful skyscraper in Lakhta, a suburb of St. Petersburg, visible from my apartment window, will be converted into a clothing market. How else could it be? Is that okay? And I'm not kidding. This is what's going to happen. This week we're obviously witnessing a de facto divorce between Gazprom and the European consumers. It's true that the West cannot suddenly give up Russian gas, not that it can't, it would be painful for the Europeans. On the other hand, losing the European gas market would be a disaster for Russia. Putin can juggle all he wants with demands to pay in rubles and threats to close the valve, but the reality is that Russia sells and transports gas to Europe much more important than Europe needs this gas. Putin can juggle all he wants with demands for payment in rubles and threats to close the valve, but the reality is that Russia's gas sales and transportation to Europe are far more important than Europe's gas supply. On the other hand, no one remembers Gazprom's favorite slogan of recent years - that Gazprom is the most reliable supplier in the world. It turns out that it is not. Gazprom is first and foremost Russia's political weapon, not a business. That is why it is worth so little in shares compared to the same companies in the world. The events around Ukraine and the gas war that has broken out with threats to turn the valve on one side and not to pay in rubles on the other will have only one consequence. Europe in 3-5 years will completely stop buying Russian pipeline gas. Or it will reduce its consumption to a critical minimum for Russia. This will lead to a fall in the price of Russian gas exports, as Russian urals are already cheaper than light and brandt. Period. What Russia will do then is unknown, but it will lose a huge share of its export revenues. But the most interesting thing is what will be used to replace Russian gas? I think it will be Turkmen gas. Generally speaking, I don't care how much Turkmen gas is produced now and how this gas will get to Europe. Consider that I had a revelation. This is why Turkey began to quickly solve the Karabakh problem by pacifying the Karabakh conflict. This is why the Turkmen president was suddenly unmotivated to change. Some of the European consumers will replace Russian gas with LNG. Some will switch to Turkmen gas. Gazprom will be liquidated, because there will be no need in such a monster. Instead of it several small companies will be created. The high-rise building in Lakhta will be rebuilt as a clothes market, it will be more suitable for future needs.

The "military operation" has been going on for a month now. How it will change the economy of Russia, Ukraine, and the world

noreply@blogger.com (Unknown) — Wed, 30 Mar 2022 16:09:00 +0000

A month has passed since Russia began its "special military operation" in Ukraine. Its main price is human lives, which have already been counted in the thousands. But the economy of Russia, Ukraine, and the world will also pay a high price. We have tried to assess the short-term and long-term consequences of the "special operation" for the economy and business. Russia. Events are moving very quickly, and assessments are becoming outdated faster than they are made. But so far the macroeconomic situation looks like this. Macroeconomics. The Russian economy is likely to experience its most powerful collapse since the global financial crisis of 2008-2009: Barclays predicted a 12.4% decline in Russian GDP this year, Goldman Sachs lowered its forecast of a decline from 7% to 10%, Bloomberg notes. The economic decline will be gradual and will accelerate by mid-2022, when the country will fully feel the effects of sanctions in the form of falling consumption, investment and imports, according to Barclays. Exports from Russia will suffer more than expected - it follows from the data on loading of ports in recent weeks, explain in Goldman lowering its forecast. As expected in the investment bank, exports in the second quarter will fall by 20% year on year, in all 2022 - 10%. Assuming exports are not de jure banned, they will begin to recover in the second half of the year. The abolition of most-favored-nation trade with Russia by the EU and the U.S. (which allows for higher customs duties) will lead to the diversification of export destinations rather than its destruction, expect Goldman. Analysts predict that the export of gas this year will not fall, and oil - will decrease by 20%. However, they note a high level of uncertainty associated with the duration of supply disruptions. Imports will fall by 20% in 2022. This will only increase the fall in GDP by 5 percentage points due to Russia's relatively weak integration into the world economy: most of the Russian economy is "quite insignificantly" dependent on imports. For example, in the mining industry only 7% of intermediate goods and technologies are imported. In the automotive and pharmaceutical industries the share of imports is much higher, but their contribution to GDP is not as high. "On average on the pharmaceutical market, according to our estimates, less than half of the drugs are produced in Russia, and those are based on foreign substances. And of the innovative drugs that are protected by patents, about 80-90% are supplied to Russia from abroad," co-founder of the biotech investment fund ATEM Capital Anton Gopka told The Bell. At the same time, according to Rosstat, at the end of 2021 40% of the resources of retail trade were imported goods. The uncertainty in assessing the impact of import restrictions is related to what share of imported goods and services will be replaced. For example, the departure of Western oil service companies should have a "moderately negative" impact on Russian oil companies in the medium term, Aton analysts wrote. They expect digital products for oil and gas prospecting, exploration and production to be replaced by solutions from domestic companies and internal products from major oil companies. The current account surplus of $205 billion in 2022 (the forecast is almost unchanged) will allow Russia to service its debt and allow companies to pay dividends to non-residents, and the Central Bank will be able to gradually remove capital restrictions, Goldman said. Inflation and the rate of the Central Bank The annual inflation rate in Russia as of March 18 has already accelerated to 14.53% in annual terms from 12.54% a week earlier. Analysts at Renaissance Capital in a March 15 review suggested that by mid-2022 the acceleration of annual inflation in Russia could reach 16%. Ruble devaluation, according to their estimates, adds 5 p.p. to the growth of consumer prices, and the deficit of imported goods - another 3-4 p.p. A poll of analysts conducted by the Central Bank, published on March 10, gave a median forecast of 20% by the end of 2022 (the previous poll, held before the start of the "special operation", gave 5.5%). If the forecast comes true, it will be a record since 2000. Despite these figures, as well as record inflation expectations in the history of observations, at the March meeting of the Central Bank did not go to another increase of the key rate, raised on February 28 to 20%. The emergency key rate hike, along with direct restrictions on currency operations, helped reduce the risks of the banking sector, according to the Renaissance Capital and suggest that the next step of the Central Bank may be the beginning of rate cuts. By June, the results of the "military operation" and the final adjustment of the sanctions and counter-sanctions regime may become clearer, and the focus will be on recession risks, analysts write. By the end of 2022 the key rate may decrease to 13-15%, by the end of 2023 - to 7-9%, the company predicts. The reduction in real disposable income of Russians (due to inflation and a potential upsurge in unemployment) will likely lead to a squeeze in domestic consumer demand, and the recession in the Russian economy will reach 6-10% per annum in 2022, economists said "Renaissance Capital". Structural changes The Bell talked to Oleg Itzhoki, a professor at the University of California at Los Angeles, about the long-term effects of the "military operation" on the Russian economy. He calls what is happening "an experiment on the Russian economy and the Russian population, which has never been conducted on such a scale anywhere else. He identifies three main shocks in the situation: Goods will begin to disappear from the economy. "Some goods will simply disappear because of the closure of imports of key components needed to complete their assembly process. And such shortages can provoke a cascading effect, because if one item goes missing from the economy, it often leads to problems with the production of others," Itzhoki explains. Many things can be produced in Russia - and eventually will be - but the adjustment process will be long, it could stretch on for years. An inevitable drop in personal income due to unemployment or declining wages and, as a consequence, a severe drop in demand. "People will greatly change the structure of their consumption, giving up many things that are not vital. This will produce a cumulative effect: one person loses his job, reduces his spending, and this causes someone else to lose his job - usually in the service sector," explains the economist. There is no way to prevent a decline in income - it is already in place, and the state has no tools to stop it. The risk of European rejection of Russian oil or reduction of its imports. As long as the Russian economy has not gone into complete autarky, export revenues will allow to establish new imports from third countries and avoid the budget deficit. "But if foreign currency revenues are lost, the budget will become deficit, the state will not be able to fulfill its social obligations. And then the government can force the Central Bank to start actually printing rubles to pay salaries and pensions," Itzhoki explains the twist. The result of these shocks in any case will be a decline in the economy's ability to produce goods and services. And adjustment to these shocks can occur in three ways - either through unemployment, or reduction of social benefits, or inflation and a fall in the real purchasing power of wages and pensions, says Itzhoki. After entering the acute phase of the crisis, the state may choose the path of inflationary accommodation - that is, printing money, the economist does not rule out. And to curb inflation, it may start to introduce price controls. Such a combination would lead to a commodity shortage and reduction of jobs due to the closure of businesses, and eventually to the nationalization of business. But the alternative - the government's refusal to fulfill its obligations to pay wages and pensions - could be even worse. What business thinks "Everything we've been building for thirty years is in ruins," a quote from Alfa Group co-founder Petr Aven to the Financial Times describes the mood of the overwhelming majority of the business community. Big business crisis. The unprecedented scale of sanctions imposed on Russia in a month of "special operations" has worsened the situation of almost all big business in the country. More than two hundred companies and three dozen co-owners of large enterprises have fallen under restrictions, while the EU and the U.S. have also imposed a number of painful trade restrictions. Here are just the first few examples of the new harsh realities: Severstal lost access to the European market due to sanctions against its main shareholder Alexei Mordashov, which accounted for a third of its revenues; Uralkali faced problems in repaying its loan due to sanctions against Dmitry Mazepin; and Sibur, according to Reuters, risks losing $500 million in investments in a joint venture from Sinopec - the risk of consequences for cooperation with Russian counterparts scares even its powerful Chinese partner. The exodus of foreigners and the problems of import substitution. The only beneficiaries of the sanctions crisis in the foreseeable future will be competitors of foreign retailers and fast food chains that voluntarily left the Russian market: among the nearly three hundred companies that partially or completely froze operations in the country this month were all major foreign retailers, from IKEA and Inditex to H&M and McDonald's. However, despite the bravura statements of politicians about the readiness to "import-substitute" the international giants, Russian entrepreneurs will hardly be able to do this in any time, Mikhail Goncharov, the founder of Teremok pancake houses, told The Bell: "To work like McDonald's, you need to create a very effective discounter from scratch. This is important to understand: McDonald's is a discounter, the most complex business model in existence. To recreate this story in Russia in a few years is unrealistic: we don't have that kind of experience, that kind of technology, and that strong brand. Import substitution also has another deterrent: dependence on imported components. For example, the co-founder of the Russian clothing brand 12Storeez, Ivan Khokhlov, is not happy about the departure of Zara and H&M: "Our production is based in Russia, but 80% of the cost is imported components. We buy fabrics and accessories in dollars, but our revenues are received in rubles, and we have already lost a lot in efficiency. Anti-crisis measures. Russian authorities, in spite of skepticism of businessmen, regularly announce new packages of "anti-sanction" measures to support business. Many initiatives resemble or repeat steps that the government has already taken in the covid crisis: a new stage of capital amnesty, relaxation of licensing requirements, a moratorium on inspections of individual entrepreneurs and small businesses until the end of the year, payroll credits, the extension of tax payment deadlines, etc. Of the new proposals we can highlight the government's system of grants to young (up to 25 years) entrepreneurs for up to 500 thousand rubles (and up to 1 million if a young entrepreneur will launch a business in the Arctic) and announced in Moscow the collection of applications for grants for the opening of public catering networks - the idea of "Russian McDonald's" does not give up the team Sergei Sobyanin (in Rospatent already registered and suitable trademark "Uncle Vanya"). Pessimism of small and medium business. The authorities have not yet succeeded in reaching out to small and medium-sized businesses with the idea of a window of opportunity, according to the results of the first surveys of entrepreneurs. According to a study conducted by the NAFI analytical center, which included 500 owners and managers of small and medium-sized businesses, in March the percentage of respondents, negatively assessing the situation of their company has doubled compared to February - from 22% to 40%. Moreover, the most pessimistic are representatives of microenterprises - among them only 15% give a positive assessment of the state of their business. More than half of all respondents - 51% - expect an escalation of the crisis in the next three months. According to another survey conducted by the service "Action Accounting", every fifth company from small business has already cut part of its staff or sent them to downtime since the beginning of the "special operation" crisis. Nearly 14% of respondents' revenues collapsed by more than 50%, and 3.5% of companies have not survived the new reality. The rise in the cost of everything and the collapse of logistics. The two main misfortunes that have haunted Russian entrepreneurs since the first days of the hostilities are the currency surge and broken logistics chains due to the closed EU skies and problems at customs. All goods that were not on the sanctions lists and continued to be shipped from abroad increased in price by 40% or even more in line with the exchange rate. This happened, for example, with flowers on the eve of March 8, the hottest day for this business. Part of the goods (mainly the main spring asset of traders - Dutch tulips) got stuck on the border, and what arrived, sellers had to buy back 40-200% more expensive than they planned, told The Bell partners flower marketplace Flowwow. Car Market Collapse. Some segments of the business experienced a real collapse this month. For example, with the outflow of Western automakers from the country, the collapse of the ruble and the disruption of logistics chains, the car market experienced a shock. The interlocutor among car distributors told The Bell that Russians who had savings of several hundred thousand or millions rubles at the end of February decided to exchange their money for cars in droves. The high demand continued despite the spike in prices - according to Autonews, about 20 companies rewrote their price lists in February and raised ex-works prices for dealers by a few tens of thousands to 4 million rubles. Alexei Golubyatnikov, general director of Rolf Group's Yasenevo location, explains that under such conditions those who had kept money in foreign currency and whose ruble savings rose along with the prices were ready to buy cars. By the end of March the market had calmed down, he said, and the increase in prices compared with mid-February is from 20% to 60%. At the same time, because of the withdrawal of Western corporations and the suspension of Lada and Renault production by AvtoVAZ, new cars will completely disappear in a few months and the market will be reoriented towards used cars. Pharma Risks. Medicines and medical equipment are not subject to sanctions and, despite statements by manufacturers condemning Russia's policy, continue to be supplied to the country. "In medicine, the humanitarian component is very important. So [political] pressure in our sphere is quite difficult to exert. Then we will have to admit that no one is interested in the current situation," Arkady Stolpner, co-founder of the Sergei Berezin Medical Institute, explained to The Bell. Nevertheless, according to him, the prices for imported drugs depend on the exchange rate, and the broken logistics complicate the delivery of components for medical equipment and it is impossible to replace them within a short time in the country. Anton Gopka, a pharma expert and cofounder of the biotech investment fund ATEM Capital, holds the same position. In his opinion, the real risk for Russian pharmaceuticals lies in the actions of the government: "Instead of increasing budget allocations into healthcare, it expands the boundaries of compulsory licensing. And this looks dangerous. Indeed, at the beginning of March, Mikhail Mishustin's cabinet issued a decree that allows not only the production of drugs in Russia in circumvention of international patent law, but also deprives the patent holder of monetary compensation. An escalation of the conflict with the international pharmaceutical giants could push the authorities to impose counter-sanctions like the food ones, Gopka fears. He characterizes the potential arbitrary cutoff of western drugs and medical devices supply to the country as "not even a catastrophe, but mass euthanasia". Ukraine Here it is even more difficult to make predictions - as long as the "special operation" continues, even the Ukrainian government itself finds it difficult to assess the losses already incurred in the economy. It will be possible to accurately assess the damage to the Ukrainian economy only after the cessation of hostilities, Ukrainian Finance Minister Sergei Marchenko told Forbes on March 14. Last week, Ukrainian Prime Minister Denis Shmygal estimated it at $565 billion, without explaining the calculation methodology. (The Ukrainian Finance Ministry declined to comment when asked by The Bell.) The 10 regions where the fighting is taking place, including Kharkiv, Kiev and Mariupol, account for half of Ukraine's GDP, Marchenko said. Many logistics chains have been completely severed, many businesses have been physically destroyed, some cannot operate in war mode, and many workers have simply left. "The Ministry of Economy estimated that the losses would amount to one-third to half of GDP. According to another estimate, we are talking about $500 billion," Marchenko said. There is an active discussion in the West about Russian compensation for Ukraine's losses. Ukrainian Foreign Minister Dmytro Kuleba said that Ukraine would raise the issue in all formats of international negotiations. Bloomberg editor John Oeters noted that Russia may also be required to compensate the costs of those countries that host Ukrainian refugees. European Union officials are discussing the possibility of using frozen assets of sanctioned Russian businessmen to compensate for damages, Bloomberg wrote last week, citing sources. The EU is going to work with the G7 to find such assets, the publication noted, as, for example, Germany paid money to Israel for Jews arriving after the Holocaust. The head of the National Bank of Ukraine, Kyrylo Shevchenko, suggested using the Central Bank assets frozen due to sanctions to make the payments. Some European politicians support the idea, Reuters noted. Russian Finance Minister Anton Siluanov estimated the amount of frozen assets of the Central Bank at $300 billion. The World In the short term, Russia's "military operation" will lead to higher global inflation and slower economic growth, the consensus among analysts and international organizations: The IMF will lower its forecast for global economic growth in 2022 and point to the risks of recession in some countries. But there will also be long-term structural changes. Increase in defense spending European countries in connection with the growing military threat will increase spending on defense to the target level for the NATO member states (2% of GDP), writes The Economist. Citigroup believes that 2% of GDP will be the de facto minimum for the alliance countries, and Jeffries estimates that annual defense spending by NATO countries, excluding the U.S., may grow by 25%, to $400 billion. The first signal came just a few days after the start of the "operation": On February 27, German Chancellor Olaf Scholz announced a €100 billion increase in the country's military spending in 2022. For comparison, in 2021 the military budget of the country was €47 billion. By 2024, Germany aims to increase defense spending from the current 1.5% to 2% of GDP. Shares of European defense companies rose sharply after Scholz's statements, Bloomberg noted. In the long term, increased military spending could create new industries and technologies (drones, robotics, etc.) that would then move from state-sponsored laboratories to the civilian sphere (like the Internet during the Cold War), financial columnist Matthew Lynn wrote in The Telegraph before the operation began. But it would also increase taxes and the state's share of the economy, as well as reduce social support for the population, Bloomberg's John Otters predicted. Reducing energy dependence on Russia "Russia is using oil and gas as a political and economic weapon, so Europe must act quickly to reduce dependence on exports from Russia," said Fatih Berol, executive director of the International Energy Agency (IEA), in a statement. In early March, the IEA developed a plan to reduce the supply of Russian gas to the continent from the current 155 billion cubic meters per year (about 45% of all imports) to 55 billion, notes WSJ. The main measure is to increase imports of liquefied gas (by 50 billion cubic meters) from the United States. But there is a problem here - LNG terminals with free capacities are located in Spain, France and Italy, which means that delivering gas to Germany, which is the largest consumer of Russian gas, will increase its cost. Building new terminals will take years. Other measures include new renewable energy sources (24 billion cubic meters), an increase in energy efficiency (14 billion cubic meters), more LNG supplies from other regions, etc. To reduce the volume of Russian gas purchases by 100 billion cubic meters is a very ambitious goal for the EU, says Marcel Salikhov, director of the Economics Department of the Institute of Energy and Finance at the National Research University Higher School of Economics. The key factor is the possibility to find 50 billion cubic meters of free gas in the world LNG market - but the world LNG market is in deficit, and the existing LNG plants are operating in full load mode. "Therefore, the full implementation of such a plan looks impossible, but we can expect a 20% reduction in Russian gas exports to the EU already this year for both political and economic reasons - high prices," Salikhov told The Bell. On March 8, the European Commission published a roadmap for a complete rejection of Russian energy resources (oil, gas and coal) by 2027. The plan is to be presented by May. On the horizon of the next 5-7 years, there is certainly much more scope for reducing purchases of Russian gas, as LNG capacity focused on the European market could be expanded, Salikhov says. "The main sources could be the United States and Qatar, which have a resource base and can increase production," the expert notes. The search for alternatives will mean that gas prices in Europe must remain high for the foreseeable future. Russian gas is one of the cheapest sources of supply for the European market. Gradually abandoning it will keep prices high. Deglobalization Even before the pandemic, between 2008 and 2019, the size of world trade declined from 61% to 56% of global GDP, while international investment declined. Among the reasons are rising customs duties (especially under Donald Trump), the outpacing growth in consumption of services over goods, the inability to further reduce shipping costs, and lr. Russia's "military operation" could be another blow to globalization, writes The Economist. The world economy could become more fragmented: in democratic regimes, voter pressure on governments and consumer pressure on companies could lead to restrictions on trade with non-democratic countries. The fact that sanctions can be used as an economic weapon will lead to the formation of trade alliances of countries with authoritarian regimes. For example, China with a closed autocratic regime (as classified by the Our World In Data project) signed a trade agreement with 14 Southeast Asian countries (ASEAN) in 2020. In the same year, this bloc became China's largest trading partner, surpassing the EU. Non-democratic regimes are more active in investing in the same countries, The Economist notes. The complication of supply chains will lead to higher inflation and slower economic growth, writes Otters. Reducing the role of the dollar The sanctions imposed against Russia - freezing the foreign exchange reserves of the Central Bank, restrictions on currency transactions, a ban on the supply of dollar bills to Russia - will reduce confidence in the U.S. currency. The dominant position of the dollar in the global financial system, which began to assert itself after World War II, is still undeniable, but in some areas its role may be declining, said Gita Gopinath, first deputy managing director of the IMF. In her opinion, some countries will reconsider the currency composition of their reserves. Now the dollar accounts for 59% of the reserves of the world's central banks, while the euro accounts for only 20.5%. The dollar's position is due to the liquidity of the U.S. government debt market: the volume of issued Treasury bonds in circulation is $23 trillion, and many of them are available to international investors. In energy trade, the dollar's role will diminish "forever," according to Gopinath. After sanctions against Russia, Saudi Arabia began discussing paying for its oil supplies to China in renminbi. And this week, Vladimir Putin instructed to convert payments for Russian gas with "unfriendly countries" into rubles (but Europe has so far refused to do so verbally). Russia will indeed seek to switch to settlements in other currencies to reduce the risks of freezing and blocking settlements, Salikhov explains. Perhaps other producing countries, fearing sanctions, will follow the same path. However, one can hardly expect a serious reduction of the US dollar share in international payments for energy resources, says the expert: "The US dollar has no serious rival. China maintains restrictions on capital flows, which is a risk for energy suppliers as well. Growth of the role of cryptocurrencies The military operation has updated the discussion on the role of cryptocurrencies in the global financial system, notes Bloomberg. The volume of exchange transactions using rubles and hryvnias has risen sharply in recent weeks. This may indicate that cryptocurrency is perceived as a protective asset and means of transactions at a time when the banking system is working with disruptions, the agency writes. In the West, the possibility of leaving with the help of cryptocurrencies from personal sanctions of wealthy citizens is actively discussed: for example, this was stated by influential U.S. Senator Elizabeth Warren, Bloomberg wrote. However, representatives of the crypto industry do not agree with this: for example, the head of the largest cryptocurrency exchange Binance, Changpeng Zhao, believes that the public blockchain underlying cryptocurrencies makes them easier to track. But we should probably expect advances in global regulation of the industry anyway, such as those related to the ability of cryptocurrency exchanges to block accounts, Bloomberg notes. Russia's military operation could also have long-term implications for cryptocurrencies. Larry Fink, head of Blackrock, the world's largest asset manager, said in a letter to investors that digital currencies, including stabelcoins, will be more actively used for international transactions, Reuters wrote. The IMF also expects a more rapid spread of digital currencies by central banks, Gopinath noted.

And here comes the introduction of the institution of authorized importers.

noreply@blogger.com (Unknown) — Wed, 30 Mar 2022 16:02:00 +0000

Today we actually introduced the institution of authorized importers. Who will be able to buy currency on the official exchange strictly for certain purposes. The fuckup is following exactly the scenario I once wrote for the revival of Soviet economic practices, effectively killing the market economy. The answer is an inevitable shortage of any imported goods. Any because the number of authorized importers will be reduced currency will be allocated to them only for the purposes vital to the partyocracy. Provision of the population with goods is not such. The same will lead to an increasing difference between the official and black market rates, as well as to the elimination of the RTS currency index. The Central Bank recommended the banks to have different rates for importers and other companies Central Bank recommended the banks to bring the exchange rate closer to the exchange rate for importers and those who have currency liabilities, found out RBC. On the contrary, it is prescribed to worsen conditions for purchase of foreign currency for other companies Bank of Russia recommended credit institutions to adjust approaches to setting rates of purchase and sale of foreign currency to clients - legal entities, according to the Central Bank letter to credit institutions, which was sent on March 30. RBC reviewed it and its authenticity was confirmed by the sources in three Russian banks. The list of addressees was not disclosed in the document. It was sent to the credit institutions "according to the list". RBC sent an inquiry to the Central Bank. According to the letter the Bank of Russia recommends the following approaches to corporate clients. For importing companies purchasing foreign currency for settlements under import contracts the maximum deviation of the exchange rate in the bank from the exchange rate should not exceed 2 rubles. The same maximum deviation is proposed to corporate clients with foreign currency loans or Eurobonds, if the currency is purchased for the settlement of such obligations. For legal entities buying foreign currency with the aim of conducting operations with the permission of special governmental commission, the purchase price should not exceed the exchange rate also by more than 2 rubles. For other companies, on the contrary, it is proposed to expand the range of spreads (the difference between the purchase and sale price of currency) on exchange transactions in dollars, euros and pounds sterling. Banks are advised to set rates with a deviation of at least 10 rubles from the exchange levels. Thus, the conditions of currency exchange for these companies will be less favorable. Central Bank suggested the banks to change conditions of exchange operations for business to provide stability at financial market and prevent "considerable increase" of banks liabilities in foreign currency to legal entities and private persons, as it is said in the document. It doesn't say for how long such recommendations of the Central Bank are introduced. The instruction was received by banks against the background of the rapid decline in the dollar and euro at the stock exchange: as of 15:40 Moscow time on Wednesday, March 30, the dollar is traded at 84.6 rubles and the euro at 94 rubles. Monday morning the dollar was still above Br93, while the euro - above Br100. March 10, the Bank of Russia introduced restrictions on cash withdrawal of foreign currency by clients - legal entities and individual entrepreneurs (PE) for six months. The standard limit for the Russian residents is up to $5 thousand in cash or its equivalent in euros, pounds, Japanese yen to pay or reimburse business trip expenses of employees traveling abroad. Non-residents will not be able to withdraw cash dollars, euros, pounds or yen from accounts and deposits until September 10. Restrictions also apply to the withdrawal of cash currency by individuals.

Draft of Putin's address to the Federation Council

noreply@blogger.com (Unknown) — Sun, 20 Feb 2022 10:50:00 +0000

Deputies of the Federal Assembly! For a long time we have suffered from a terrible problem, a problem created by the shameful decision made in Belovezhskaya Pushcha in 1991, which got worse until it became unbearable for us. Donetsk was - and is - a Russian city. Russian Donbass was - and is Russian. Both territories by their cultural development belong exclusively to the Russian people. Donbass was taken away from us, the territories of Little Russia were annexed by Ukraine. As in other Russian territories in the west, all Russian minorities living there were treated worse and worse. More than a million people of Russian blood between 1991 and 2020 were cut off from their homeland. As always, I have tried to peacefully seek a revision, a change in this intolerable situation. It is a lie when the world says we want to bring about change by force. Ten years before the United Russia party came to power, there was an opportunity for a peaceful resolution of the problem. On my own, my own initiative, I have repeatedly offered to reconsider these intolerable conditions. All these proposals, as you know, were rejected - proposals to limit armaments and, if necessary, disarm, proposals to limit military production, proposals to ban certain types of modern weapons. You know about the proposals I made to restore Russian sovereignty over Russian territories. You know about my endless attempts to peacefully resolve issues with Ukraine, then Crimea, Northern Kazakhstan and the Estonian Narva. They all turned out to be in vain. It is impossible to demand that this impossible situation be resolved peacefully, while at the same time continually rejecting offers of peace. It is just as impossible to say that those who want change for themselves are breaking the law - for the Belovezh agreements are not the law for us. We were forced to sign it with a gun to our heads, under threat of starvation for millions of people. And after that, this document, with our signature obtained by force, was solemnly declared a law. In the same way I tried to solve the problem of the Crimea, the problems of water for it, etc., by offering a peaceful discussion of the problems. That the problems will be solved is clear. It is also clear to us that Western democracies have no time and no interest in solving these problems. But lack of time is not an excuse for indifference to us. Moreover, it cannot be an excuse for indifference to those who suffer most. In talking with Ukrainian statesmen, I discussed ideas with which you are familiar from my last speech in the Duma. No one can say that it was impolite, or that it was unacceptable pressure. I, naturally, finally formulated Russian proposals. There is nothing in the world more humble and loyal than these proposals. I wanted to tell the whole world that only I could have made such proposals, because I knew that by making such proposals I was opposing myself to millions of Russians. These proposals were rejected. Not only was the response first mobilization, but then increased terror and pressure on our compatriots in Ukraine and with a slow push from the territories of Little Russia - economic, political, and in recent weeks, military means. Ukraine has lashed out at the free republics of Donbass. Moreover, Ukraine was not prepared to resolve the Donbass problem in a reasonable way, with equal treatment of both sides, and it did not think about respecting its obligations to the national minorities. I must make it clear: Russia respects its obligations; national minorities who live in Russia are not persecuted. No Georgian can stand up and say that any Georgian living in Ossetia is oppressed, tortured, or deprived of his rights. No one can say such a thing. For four months I had been silently observing events, although I had not stopped issuing warnings. In the last few days I have tightened those warnings. Three weeks ago, I informed the Ukrainian ambassador that if Ukraine continued to send notes in the form of ultimatums to Donbass, if Ukraine continued its harassment against Russians, and if the Ukrainian side did not repeal customs regulations aimed at destroying Donbass trade, then Russia would not remain an idle observer. I gave no reason to doubt that those people who compare the Russia of today with the Russia of yesteryear are deceiving themselves. There was an attempt to justify the oppression of Russians - there were demands that the Russians stop provoking. I don't know what the provocations are of women and children, if they themselves are mistreated and some have been killed. One thing I do know is that no great power can passively watch what is going on for a long time. I have made one final effort to accept the offer of mediation by the German Government. They do not want to enter into negotiations themselves, but have proposed that Ukraine and Russia come into direct contact and once again begin negotiations. I must state that I agreed to these proposals, and I have been preparing for these negotiations, of which you are aware. For two days straight I have sat with my government and waited to see if the Ukrainian government would see fit to send a plenipotentiary representative or not. Last night they did not send us a plenipotentiary, but instead informed us, through the Ukrainian Ambassador, that they were still considering whether the German proposals were suitable for them. The Ukrainian government also said it would inform the U.S. of its decision. Deputies, if the Russian government and its President were to patiently tolerate such treatment of Russia, they would only deserve to disappear from the political scene. But he who would regard my love for peace and my patience as weakness or even cowardice would be wrong. So I made up my mind and informed the American government last night that under the circumstances I did not see any willingness on the part of the Ukrainian government to negotiate seriously with us. These offers of mediation failed because the time when they came, there was a sudden Ukrainian general mobilization, accompanied by a large number of Ukrainian atrocities. They were repeated last night. We recently recorded 21 incidents on the line of demarcation in Donbass overnight, last night there were 14, of which 3 were very serious. So I decided to resort to the language that Ukrainians have been using in their conversations with us for the last few months. This position of Russia will not change. I would like, first of all, to thank North Korea, which has always supported us. You must understand that we will not need foreign help to fight. We will accomplish our task ourselves. The neutral states have assured us of their neutrality, just as we guarantee their neutrality from our side. When statesmen in the West declare that it goes against their interests, I can only regret such declarations. This cannot embarrass me for a moment in the performance of my duties. What is more important? I have solemnly assured them, and I repeat it, that we ask nothing of the Western States and will never ask for anything. I have declared that the border between Russia and Kazakhstan is final. I have repeatedly offered friendship and, if necessary, the closest cooperation to the Baltic States, but such offers cannot be unilateral. They must resonate with the other side. Russia has no interests in the West, our interests end where the Western border of our Union State ends. Moreover, we will not have any interests in the West in the future either. We earnestly and solemnly guarantee this, and as long as other countries observe their neutrality, we do so with respect and responsibility. I am especially happy to be able to tell you one thing. You know that Russia and China have different state doctrines. This is the one issue that needed to be clarified. Russia is not going to export its doctrine. Given the fact that China has no intention of exporting its doctrine to Russia either, I no longer see any reason for a confrontation between us. This view is shared by both of our sides. Any confrontation between our peoples would be advantageous to others. We have therefore decided to conclude a treaty which forever removes the possibility of any conflict between us. It imposes an obligation upon us to consult each other in resolving certain European questions. There is an opportunity for economic cooperation and, above all, there is confidence that the two states will not squander their strength in fighting each other. Any attempt by the West to hinder us will fail. At the same time I want to state that this political decision is of great importance for the future, this decision is final. Russia and China have fought against each other often in the past. That will not happen again. Beijing is as happy about this treaty as you are about it. This is confirmed by the speech of the Chinese Foreign Minister, Wang Yi. I am meant to solve: one, the problem of Donbass; two, the problem of Malorossia; and three, to provide a change in the relationship between Russia and Ukraine, which should guarantee peaceful coexistence. So I have decided to fight until the existing Ukrainian government does so, or until another Ukrainian government is ready to do so. I have decided to free the Russian borders from the elements of insecurity, the constant threat of civil war. I will ensure that peace prevails on the western border, just as on the rest of our borders. To this end I will take the necessary measures not inconsistent with the proposals I made in the Duma for the whole world, that is, I will not go to war against women and children. I have ordered that my air force shall confine itself to attacks on military targets. If, however, the enemy decides that this gives him carte blanche to wage war by all means, he will receive a crushing teeth-grinding response. Last night Ukrainian soldiers fired on our territory for the first time. Until 5.45 a.m. we responded with fire, now we will counter the bombs with bombs. Those who use combat gases, let them expect us to use them too. Whoever adheres to the rules of humane warfare can expect us to do the same. I will continue to fight against anyone until Russia's security and his rights are assured. It has been twenty years since I labored for the Russian defense. More than 90 trillion has been spent on the armed forces in that time. They are now better equipped and incomparable to what they were in 1998. My faith in them is unshaken. When I created these forces, and now when I call upon the Russian people to make sacrifices and, if necessary, to sacrifice themselves, I had and have the right to do so, because today I myself am fully prepared, as I was before, to sacrifice myself. I am not asking any Russians to do any more than I have been willing to do all these twenty years at any time. There will be no hardship for the Russians that I am not subjected to. My whole life belongs to my people-more than ever. From now on, I am Russia's first soldier. I have put on again the uniform which was dear and sacred to me. I will not take it off until victory has been won, for I will not survive defeat. If anything happens to me during the struggle, then my first successor is Comrade-Party Shoigu; if anything happens to Comrade-Party Shoigu, my next successor is Comrade-Party Matvienko. You will be obliged to obey them as presidents with as much blind loyalty and obedience as I do myself. If anything happens to Comrade-Party Matvienko, then, in accordance with the law, the Federation Council will convene and choose from among its members the most worthy, most courageous successor. As a Russian patriot and as a Russian soldier, I enter the fight with an unbroken heart. My whole life is only an endless struggle in the name of my people, its revival, and in the name of Russia. There was only one slogan in this struggle - faith in this nation. One word was never familiar to me - surrender. If anyone thinks that we may be facing difficult times, I ask him to think about the fact that the Russian Tsar, together with his ridiculously small state, once confronted a major coalition and in just a few battles eventually came to victory, for he had a faithful and strong heart, which we also need today. Therefore, I would like to assure the world at once: June 1941 will never happen again in Russian history! As I myself am ready to give my life at any moment - anyone can take it - for my people and for Russia, I demand the same from everyone else. Well, he who thinks he will be able, directly or indirectly, to oppose this national duty, must fall. We do not go our way with traitors. In doing so, we all express a commitment to our old principle. It makes no difference whether we ourselves survive, it is necessary for our people to live, for Russia to live! The sacrifices required of us are no greater than those made by many generations. If we create a society bound by oaths, ready for anything, determined never to give up, then our will will prevail over all difficulties and hardships. I want to end with the same words with which I began the struggle for power over Russia. Then I said: "If our will is so strong that no hardship and suffering can break it, then our will and our Russia will prevail over everything!"

The Duma decided to send an appeal to Putin for recognition of the DNR and LNR

noreply@blogger.com (Unknown) — Tue, 15 Feb 2022 11:51:00 +0000

The State Duma has decided to send an appeal to Russian President Vladimir Putin to recognize the DNR and LNR. This decision was made at the plenary session of parliament. There were two options: to send it immediately to the president, or to send it to the Foreign Ministry for evaluation. As you understand, nothing just happens in the Russian parliament. And if the option to send it to Putin was agreed in advance, it means that this is the option that Putin needs. And this has several consequences. Now it becomes clear that with 99% probability Putin will recognize the independence of the DNR and LNR, which will lead to an immediate appeal of these formations to Putin about deployment of troops. Which will begin immediately. The Russian army concentrated on the border with Ukraine will officially (for the Russian side) enter the DNR and take positions on the line of contact. This is a light version of a direct invasion of Ukraine, and as if it preserves the status quo, without significant aggravation. But it is worth understanding that this is an intermediate option and as soon as the first Russian tank passes through the official Ukrainian border - sanctions will be imposed. Their extent can only be guessed. It also means that the Minsk agreements that Putin and Lavrov talked about so much are dead. The Putin administration has failed to force Ukraine to implement them, and now any reference to the Minsk agreements loses absolute, even formal, meaning. Ukraine will have its hands free in the question of a cease-fire and in the use of all kinds of weapons on the border of the ORDLO. Including the Russian troops, which will definitely be there quickly. This is roughly the situation at the moment. Interestingly, the massive information campaign in the world media actually prevented Putin from attacking Ukraine directly. But as I said, Putin can no longer simply back down and the recognition of the ORDLO is a light version of an attack. It is not much better than a direct attack and solves absolutely nothing. On the contrary, it makes Putin's negotiating position in the foreign arena much worse.

Britain threatened to leave Putin's oligarchs without a stake and without yard.

noreply@blogger.com (Unknown) — Mon, 31 Jan 2022 09:48:00 +0000

The head of the Foreign Office, Liz Truss, announced that Britain would change its sanctions laws to expand the list of potentially sanctioned assets and people linked to the Kremlin. London is working with Washington and Brussels to prepare new sanctions in case Russia attacks Ukraine. Speaking on BBC television Sunday, Liz Truss said Russian financial institutions, energy companies and any firms and individuals that support the Russian government could fall under the new sanctions. "Right now the sanctions are narrowly targeted by law: we can only impose them against companies that are directly involved in destabilizing Ukraine. We want to broaden the scope so that any company of interest to the Kremlin and the Russian regime itself can fall under sanctions so that Putin's oligarchs and companies that support the Russian state have nowhere to hide," Liz Truss explained in another interview - to the British TV channel Sky News. "Nothing is out of the question," Truss said when asked if the sanctions would affect real estate in London owned by "Putin's oligarchs." "We're not going to go into detail about who exactly and what kind of sanctions we will impose, but these pieces of legislation will allow us to hit a much wider range of targets, so that no one will have reason to think that they are safe from sanctions," the British Foreign Secretary added. Truss is expected to introduce additions to the sanctions laws to Parliament as early as Monday. Interestingly, these measures are exactly what Navalny's team and the notorious Atlantic Council - the Atlantic Council, an American think tank founded in 1961 under the North Atlantic Treaty Organization - have always proposed. These two organizations and many Russian political émigrés who ended up in the West as a result of Putin's policies proposed these measures a long time ago as a very effective measure that would not only influence Putin, but would also be 100% supported by the Russian population, who harbor no love for their nouveau riche. See more in Kommersant english. Therefore, if the West goes for such measures, they could become a game changer in the conflict around Ukraine. By the way, how would you feel about such a measure if they really start taking property from Putin's oligarchs in the West and chase their families and mistresses back home with sex rags?

Kommersant english: West strengthens opposition to "aggression"

noreply@blogger.com (Unknown) — Fri, 14 Jan 2022 00:02:00 +0000

Against the backdrop of the NATO-Russia Council meeting in Brussels and on the eve of the OSCE Permanent Council meeting in Vienna, the "threat of a Russian attack on Ukraine" became one of the key issues in the strategic dialogue on security. The U.S. and its allies, who consider "Russian aggression" real or pretend to consider it as such, increase pressure on Moscow by threatening it with sanctions. In turn, Kiev, armed with the slogan "No Solutions for Ukraine Without Ukraine," has launched a diplomatic counteroffensive designed to permanently divide Russia and the West. Discussions of Russian proposals on security guarantees, taking place in Geneva, Brussels, and Vienna in the form of alternating U.S.-Russian consultations, as well as two meetings - the NATO-Russia Council and the OSCE Permanent Council (scheduled for January 13) - were the three main, but not the only, formats of diplomacy this week. In fact, the fourth format, or another diplomatic track that was outside of the negotiation process but had a growing influence on it, was statements by politicians, officials, and diplomats who were not part of the negotiation teams but who took on the role of prompter. See in Kommersant english. Kiev was the most active on this track. Without waiting for Thursday, when the Ukrainian delegation arrived to the OSCE meeting in Vienna, President Vladimir Zelensky and his entourage joined the dialogue between Russia and the West as a third party, pedaling the thesis: "No solution for Ukraine without Ukraine. At the same time, the Ukrainian side once again tries to set the tone in pressuring Russia, appealing to Euro-Atlantic solidarity and considering it a test of readiness to tighten sanctions against Moscow at any moment. "The position of Western countries in the dialogue with Russia must remain tough and resolute. We must be prepared to immediately implement a preventive package of sanctions against Russia to counter the Kremlin's aggressive intentions," President Zelensky said during a telephone conversation Tuesday with Canadian Prime Minister Justin Trudeau, the topic of which was the Western-Russian negotiation formats. Ukrainian Foreign Minister Dmytro Kuleba held telephone conversations with U.S. Secretary of State Anthony Blinken on the same day, the topic of which also included contacts with Russia in the formats of Russian-U.S. consultations, the Russia-NATO Council and the OSCE Permanent Council. According to Dmytro Kuleba, Kiev "continues to work actively to consolidate partners against the threat of further Russian aggression," and the U.S. "remains the number one security partner." "Thanks to active diplomatic work, Ukraine has strong international support. There is a growing understanding among our partners that the Euro-Atlantic space will be secure only when Ukraine is secure. Negotiations in Geneva have proved that our strength lies in unity and coherence of positions against the background of Russian ultimatums," Dmytro Kuleba did not hide his satisfaction. A statement of the Ukrainian Foreign Ministry noted that the heads of diplomatic departments of the two countries discussed "further implementation of a comprehensive package to deter Russia from further aggression, in particular, tough economic sanctions against Russia and practical strengthening of the defense capabilities of the Ukrainian armed forces. All new statements by U.S. diplomats and officials show that Russian officials' assurances that Moscow has no plans to attack Ukraine not only lower the temperature of the rhetoric, but raise it. Kommersant english version. "The situation is exacerbated by the massive pulling of Russian military forces to the border with Ukraine. The U.S. has a feeling of emergency," U.S. Ambassador to Russia John Sullivan told the Dozhd TV channel (recognized in Russia as a foreign agent) on Tuesday. According to the head of the US diplomatic mission in Moscow, there are "numerous discussions" between US President Joe Biden and Vladimir Zelenski, and between Anthony Blinken and Dmitry Kuleba about security issues, amid meetings in Geneva and Brussels. "These discussions continue almost every day at a very, very high level and will continue," said John Sullivan. For her part, speaking at a briefing at the White House on Tuesday, US administration spokeswoman Jen Psaki said she was "seriously concerned about Russia's build-up of forces near the border with Ukraine." As a reminder, the press service of the Western Military District (ZVO) said on Tuesday that about 3,000 servicemen of the Guards Red Banner Combined Arms Army of the ZVO started combat training at combined arms training ranges in the Voronezh, Belgorod, Bryansk and Smolensk regions. U.S. Undersecretary of State for Political Affairs Victoria Nuland issued the harshest warning to Moscow. "Russia has a difficult choice to make: Choose the path of diplomacy and dialogue or pursue confrontation and the large-scale consequences it will entail," she said, pointing out that if the Russian government "destabilizes the situation in Ukraine," the United States and its allies will make Moscow pay a high price for it. As one of the measures, the U.S. Undersecretary of State named the suspension of the launch of the Nord Stream-2 pipeline. "We are working with the German side, with the EU, to slow down their consideration of the use of the pipeline. The current German government has taken significant steps to do this. It has also reiterated the agreements we reached with the previous government on what will happen with Nord Stream 2, namely that its operation will be suspended if Russia resorts to aggression against Ukraine," Ms. Nuland said. "We will respond with large-scale economic measures, including those not used before," she threatened. At the same time, according to her statement, restrictive measures on the part of the U.S. and European allies need not coincide. Meanwhile, Democratic senators have developed a new package of sanctions against Russia that will be imposed "if President Putin invades Ukraine. The initiative was spearheaded by the head of the Foreign Affairs Committee, Democratic Senator Robert Menendez. The new U.S. sanctions could affect high-ranking Russian military and officials, including Vladimir Putin personally, as well as affect major banks. In addition, the bill calls for "consideration of all available and appropriate measures" to oppose the launch of the Nord Stream 2 pipeline.

Putin and Tokayev discuss withdrawal of CSTO peacekeepers from Kazakhstan

noreply@blogger.com (Unknown) — Thu, 13 Jan 2022 23:56:00 +0000

Presidents Vladimir Putin of Russia and Kazakhstan and Kassym-Jomart Tokayev held a telephone conversation, according to the Kremlin website. During the conversation, they discussed issues related to the start of withdrawal of contingents of CSTO member states from the territory of Kazakhstan. "The President of Kazakhstan informed about the measures for the final restoration of order in the country, taken in view of the effective actions of the Collective Peacekeeping Forces of the CSTO. Special appreciation for assistance and support was expressed to the Russian Federation, a strategic partner and CSTO ally. The parties discussed matters connected with the start of the agreed withdrawal of CSTO contingents from the territory of the Republic of Kazakhstan," the statement said. A spokesman for the Russian President, Dmitry Peskov, said at a press conference that "during the day the President will receive Defence Minister Sergei Shoigu with a report on the CSTO peacekeeping forces in Kazakhstan. Kommersant english On January 2, protests erupted in Kazakhstan over higher prices for liquefied gas, which later turned into clashes with the police and riots. At the request of the Kazakh president, CSTO launched a peacekeeping mission January 6, and today the withdrawal of peacekeepers began. An anti-terrorist operation ended in most of the country's regions. The exceptions are Almaty and the Almaty and Dzhambul Regions.

Shoigu: CSTO forces will be withdrawn from Kazakhstan by January 19

noreply@blogger.com (Unknown) — Thu, 13 Jan 2022 23:55:00 +0000

The withdrawal of the CSTO peacekeeping forces from Kazakhstan, where they were sent due to the unrest in the country, will be completed on January 19, that is, seven days after it began, reported the head of the Russian Defense Ministry, Sergei Shoigu, to President Vladimir Putin. "We begin withdrawal today. Tomorrow we will take all the forces of our colleagues - Armenia, Tajikistan, and Belarus - out in 14 ships. The Kyrgyz colleagues are leaving - given that they are close by - on their own. Over the next five days, as the facilities are handed over, the rest of the peacekeeping forces will be withdrawn as well. We plan to complete all the work on the 19th," said Mr. Shoigu (as quoted on the Kremlin website). Putin replied that "on the whole, we should return home: we have completed our task. Earlier today, CSTO Secretary General Stanislav Zas said that the troop withdrawal will take up to ten days. At the same time, he noted that the Interior Ministry of Kazakhstan will continue "intensive mopping-up and arresting suspects. This morning, the Ministry of Defense reported that military equipment was being loaded onto planes. Read in Kommersant english On January 2, protests broke out in Kazakhstan over higher prices for liquefied gas, which later escalated into clashes with police and riots. On January 6, following an escalation of the situation, the CSTO launched a peacekeeping mission at Kazakhstan's request. An anti-terrorist operation ended in most regions of the country. The exceptions were Almaty, Almaty and Dzhambul regions.

The first units of Russian paratroopers returned from Kazakhstan Kommersant says

noreply@blogger.com (Unknown) — Thu, 13 Jan 2022 23:53:00 +0000

Four IL-76MD military aircraft with Russian paratroopers arrived in Russia from Almaty, the press service of the Defense Ministry reported. The Russian soldiers were part of a peacekeeping mission of the Collective Security Treaty Organization (CSTO). The peacekeepers were sent to Kazakhstan at the request of the local authorities because of the mass unrest. On January 13, the first units of Russian paratroopers returned to the station of permanent deployment in Ivanovo. The Defense Ministry announced that the peacekeepers "have fulfilled all the tasks. The ministry also published a video of the paratroopers' arrival and the welcoming ceremony on YouTube. The CSTO countries agreed on a peacekeeping mission in Kazakhstan on January 6, the same day Russia deployed the first paratrooper units to the country. The withdrawal of the peacekeeping contingent began yesterday, January 13, and should take 10 days. According to Kazakh President Kassym-Jomart Tokayev, the situation in all regions of the country has stabilized. See at Kommersant english.

Izvestia: Negotiations between Russia and the U.S. are expected in the second half of January

noreply@blogger.com (Unknown) — Thu, 13 Jan 2022 23:49:00 +0000

Negotiations between Russia and the United States on security guarantees may take place in the second half of January, Izvestia reported, citing a source in diplomatic circles. According to him, the negotiations will be of paramount importance for Moscow: their outcome will determine whether further consultations with NATO will take place. According to the source, the Russian side had planned to hold the talks by the end of the year, but the United States insisted on negotiations in January. The place of the upcoming meeting is still being specified. Izvestia english version. "So far there are no details on the time and place of the meeting. We wanted to hold it before the end of the year, but the U.S. has holidays, vacations - war is war, and dinner is on the schedule. So the mood is for the second half of January. The negotiations with the U.S. will determine the dialogue with NATO, because Washington has a controlling stake in this alliance," said the source. How the dialogue with NATO will be held is still unknown. There is no negotiation platform at the moment, so Moscow holds talks with the alliance via the Russian embassy in Belgium and the Russian diplomatic mission of the Kingdom. The day before, US Secretary of State Anthony Blinken said that a meeting between Russian President Vladimir Putin and US President Joe Biden was not planned. In his words, the USA is interested in de-escalation on the part of Russia and withdrawal of its troops from the border with Ukraine. The US diplomat stressed that Russia and the US should work on the disputed issues at the diplomatic level. Vladimir Putin last spoke to Joe Biden via video link on December 7. Then the American leader urged his Russian counterpart to de-escalate and return to diplomacy in the situation around Ukraine. He also warned the Russian president of "serious economic and other measures" by the United States and its allies.

Kadyrov spoke out in favor of Ukraine joining Russia

noreply@blogger.com (Unknown) — Thu, 13 Jan 2022 23:47:00 +0000

Ukraine is "our people" and "our territory," said Chechen head Ramzan Kadyrov. He said that Ukraine should be annexed to Russia if the current policy of Ukrainian President Vladimir Zelensky continues, and stated that the republic's forces were ready "to leave and carry out the order. "My deep conviction is that if Mr. Zelensky and his team behave this way, Ukraine should be annexed to our country. The Ukrainians are our people, it's our territory," Mr. Kadyrov said during a press conference. According to him, he would have annexed Chechnya to Ukraine "if I had been instructed", but now such decisions are not allowed by "state agreements". The head of Chechnya accused Western countries of intending to place military bases in Ukraine and thereby dictate conditions to Russia. "I am sure our president will not allow this. And we, the infantry, are ready to leave and carry out the order absolutely without any problems," he said. Kommersant english version. It should be noted that Russian President Vladimir Putin, against the backdrop of the conflict with Ukraine, expressed his views on the history of the Ukrainian state and people. In an article published in July, he stated that Russians and Ukrainians are one people, after which he repeated this position. During his final press conference in December, the Russian president said that Ukraine was created by Vladimir Lenin, the founder of the USSR. Amid expectations of a Russian invasion of Ukraine expressed by the United States and European countries, the parties are considering sanctions against Russia. Secretary of the National Security and Defense Council Alexei Danilov called on Western countries to impose preventive sanctions against Russia. According to Bloomberg, Russia continued to build up troops on its border with Ukraine amid demands for security guarantees.

Putin called on NATO to urgently launch talks on Russian security issues

noreply@blogger.com (Unknown) — Thu, 13 Jan 2022 23:42:00 +0000

Russian President Vladimir Putin during a telephone conversation with Finnish President Sauli Niinisto called on the United States and NATO to hold talks on security issues in Russia. During their conversation, the two leaders paid special attention to issues related to the crisis in southeastern Ukraine. Vladimir Putin once again stressed the need to urgently launch negotiations with the United States and NATO to work out international legal guarantees for our country's security, ruling out further advances of the alliance to the east and the placement of weapons systems threatening Russia on the territory of Ukraine and other neighboring countries. See more at Kommersant english version. According to Vladimir Putin, this is fully consistent with the principle of the indivisibility of security, as enshrined in the Helsinki Final Act of 1975 and the Istanbul Charter of 1999. In this regard, the Russian President supported the initiative of Sauli Niinisto to organize a summit on the occasion of the 50th anniversary of the Helsinki Conference on Security and Cooperation in Europe to be held in 2025. Vladimir Putin also informed Mr Niinistö of the results of negotiations with US President Joseph Biden. The Russian president called on the Ukrainian side to comply with the Minsk agreements. According to him, the Ukrainian authorities, in violation of the agreements, "increasingly clearly rely on forceful methods" and use heavy weapons and drones in Donbas. In addition, the two leaders discussed issues on the bilateral agenda, agreed to continue cooperation between Russia and Finland, including in the trade and economic sphere, and emphasized the importance of further cooperation in regional affairs, including in the north and the Arctic.

Shoigu said that the U.S. is preparing a provocation with chemical weapons in Ukraine

noreply@blogger.com (Unknown) — Tue, 21 Dec 2021 22:06:00 +0000

Russian Defence Minister Sergey Shoygu has said that US private military companies were preparing a provocation with "chemical components" in eastern Ukraine. Shoigu said this at an extended meeting of the Defense Ministry board in Moscow with the participation of President Vladimir Putin. Putin is "fed up with US manipulations" in the sphere of international law. He promised to respond to Western aggression with adequate "military and technical measures". Defense Minister Shoigu says: -NATO countries are conducting military development of Ukraine. -There are more than 120 people from private U.S. military companies working in the Donetsk region. -NATO is practicing the use of coalition groups against Russia in exercises involving Georgia, Moldova and Ukraine. Russian President Putin at the Defense Ministry board: -NATO's strengthening near Russia's borders raises concerns. -Even U.S. legal guarantees are hard to trust. America easily withdraws from security treaties. -We will respond harshly to unfriendly and aggressive steps. -We will continue the planned deployment of our armed forces. -We are tired of U.S. manipulation of international law.