Russian Economy General News: #3

"Naturally, the priority objectives of this plan is to provide and support of industrial, agricultural production, the banking system, labor market, small and medium-sized businesses. But the main thing, of course, necessary to provide high-quality economic growth, not to forget about the system tasks, diversification of the economy, and all this plan is "- the president said at a meeting on economic issues.

As previously reported source TASS subsidizing mortgage will reduce interest rates on loans to 13% per annum

Hannibal Barca wrote:It seems that oil crisis is coming to an end. At least the first stage.
Stunningly enough, in the right moment happened that Saudi king died... well speaking about destiny and lady luck.

"By reducing the 2015 average oil price from $ 100 to $ 50 per barrel, falling budget revenues only from oil taxes, according to our estimates, could reach about 2.1 trillion rubles, while more serious price falls to $ 40 on average for the year, budget revenues could decline by 3.1 already trillion rubles, which is 14% and 21% of the planned federal revenues, respectively, "- said in an article published Thursday in the newspaper RBC .

Trunin notes that taxation of the oil industry in Russia is arranged in such a way that prices are high budget takes back the bulk of the additional revenue oil. "But even at lower oil prices and the loss is primarily the budget," - he writes.

"Paradoxically, it is this feature of the modern Russian tax system, on stiffness which oil complained during the whole period of its existence, significantly mitigates the negative effect of falling prices (oil - Ed.) For the industry," - says Trunin.

At the same time, according to Finance Ministry estimates, the uncollectible EBITDA industry after the adoption of the tax maneuver and lower oil prices range from $ 0.5 to $ 1 per barrel of oil at a price of $ 60 and $ 40 respectively.

"Tax maneuver in the face of declining oil prices does not lead to the realization of systemic risks in the oil sector in the medium term (1-2 years), and at the same time the industry has sufficient financial resources to maintain production at current levels. This conclusion is very important - in the short term the bulk of the ruble for the decline in oil prices comes from the federal budget. Among other things, this circumstance - the main rationale of the chosen model of formation of reserve and stabilization funds, it is perfectly explains why those funds impractical to spend to support the oil and gas industry in periods of low prices "- says Trunin.

higurashihougi wrote:May be but the ballhead Yatsenyuk claimed that Ukraina is planning to buy oil and gas from EU intead of Russia.

http://uatoday.tv/business/ukraine-says-it-is-paying-above-market-rates-for-russian-gas-407206.html

But EU countries buy oil and gas from who ?

par far wrote:What is going on with the debt Ukraine owes to Russia? I hope Russia asks for it soon.

flamming_python wrote:

par far wrote:What is going on with the debt Ukraine owes to Russia? I hope Russia asks for it soon.

If Russia asks for it the Ukraine will default on its obligations - which will be good for stopping the war by bringing the Ukrainian economy to a halt and destabilizing the US-installed goons in charge of it - but it would also mean that Russia won't get that $3 billion back; which it does quite need for its own economy. Not to mention; it would piss-off other creditors; not all of whom are Western countries & institutions.

As the Ukrainian government is fast loosing popularity and set to lose more with the latest string of military defeats, forced conscription attempts and the near 25% devaluation of the national currency today - it will most likely fall out of power sooner or later no matter what Russia does or doesn't do, and it has no means to continue the war by anyway.
Comfortable in that knowledge, Russia should focus on a proper plan to get that $3 billion back by giving some leeway to the Ukraine to restructure the repayment; in the meantime Russia could use the threat of debt call-in as leverage in any future negotiations with Kiev.

The end of the ‘commodity boom’ helped end Russia's economic turmoil which has resulted in rising exchange rates and deteriorating economic competitiveness, said Russian Finance Minister Anton Siluanov.

“Dutch disease is over,” Siluanov said on Friday as quoted by Bloomberg, “The ruble is no longer overvalued in real terms, something that was caused by the excessive use of volatile oil and gas revenues.”

Siluanov added that the real exchange rate, which strips out the inflationary effect, returned to the level of the first half of the 2000’s. That means Russia is no longer suffering from ‘Dutch disease’, Siluanov said referring to the negative effect on the economy caused by the oil slump.

The term ‘Dutch disease’ appeared in the 1970s to describe what was going on with the economy of the Netherlands after the discovery of natural gas in the North Sea. Then the strengthening of the national currency provoked export appreciation, a crisis in the manufacturing sector, an increase in inflation and the unemployment rate.

Siluanov believes the current fall in oil prices is “structural, long-term” unlike the cyclic recession in 2008, that’s why Russia is learning to “live within its means.”

Although the coming year will be difficult and industrial production will be cut, the economy will adjust to the current conditions in the first half of 2015, Siluanov said. He suggests the government must limit spending and give more freedom to private enterprise to stimulate economic growth.

"We have to decide what kind of economy we want to see in several years,” he said. “As far as fiscal policy, I’m sure we can revisit decisions that were shelved for a long time and not taken because they were politically unpopular.”

There are certain reasons for being optimistic, because if the government adopts an appropriate set of structural reforms under the current conditions, Russia will be able to sustain even higher growth rates than in previous years, he said.

Siluanov has said the ruble has found its equilibrium after the Central Bank of Russia reduced the key rate from 17 to 15 percent.

Modi, Vladimir, Xi and Obama’s Empty Pockets



After years of neglect Obama’s Washington has decided to try aggressively to woo the world’s second most populous nation, India. Why now? We need not look further than Moscow and Beijing and the recent dynamics surrounding the developing cooperation of the BRICS nations in developing a BRICS Infrastructure Bank to rival the US-controlled IMF-World Bank. India is a major chess piece in the Eurasian Grand Chessgame, and Prime Minister Modi has let the world know it is in play.

US President Barack Obama made a state visit to India on January 27, accompanied by a delegation of US corporate CEOs, to woo the new Prime Minister Narendra Modi, a man who when he was a mere state governor was denied entry into the US. Now, as Modi is Prime Minister, it seems Obama has changed his view. Not of Modi most likely, but of the danger that Russia and China might be about to integrate Modi’s India into their Eurasian economic prosperity sphere and their Shanghai Cooperation Organization. Since 2006 and the Bush-Cheney days, Washington has vigorously tried to seduce India into joining a US military alliance against China, but with very limited success.

Modi turned on the charm for the US President, inviting him on the Republic Day, an honor given no previous US president. Their joint televised press conference was a “Barack, this is for you” friendly first names session. They spoke about an “enduring commitment.”

But in the end, Obama came away with little. Modi signed a mild statement chiding the Chinese government for provoking conflict with its neighbors over the South China Sea; discussed possibly reviving a security network with the US, Japan and Australia; and expressed interest in playing a greater role in the Asia-Pacific Economic Cooperation forum. For his part, behind all the smiles and hugging with the US President, Modi refused to sign Obama’s favorite priority, an agreement to limit CO2 emissions as China had last year. Nor was there really a breakthrough in the US-China nuclear power deal negotiated in 2006 with Bush but blocked over India liability law issues. Then, the moralizer Obama—it’s an American disease I’m afraid I must to say—waved his finger at the Indians for their record on human rights and religious tolerance, a brazen intrusion into the affairs of a sovereign state, something neither Putin nor Xi would even consider doing.

Finally, when it came to the nuts and bolts, investment and joint projects, Obama’s pockets were empty. All he could do was make a nebulous “pledge” that American banks would lend up to $4 billion for unspecified Indian infrastructure projects, bridges, highways.

It may well be that Modi is appearing warm to Obama in order to play a little Indian game of being friends of all to secure the best deal. But the Obama offers pale in comparison with what Vladimir Putin offered just days before in his state visit to India.

Russia renews old India ties

A month before Obama’s India visit Russia’s President Putin came to New Delhi and his pockets were full, something one might not expect from a country being hit with EU and Washington economic sanctions.

In mid-December in a trip that raised more than eyebrows in Obama’s Washington, Putin and Modi signed twenty high profile deals worth $100 billion, including $40 billion in nuclear energy, $50 billion in crude oil and gas, and $10 billion in various sectors, including defense, fertilizers, and outer space. In a coup for the diamond processing industry and a blow to the Oppenheimer South Africa monopoly, Russia’s Alrosa, the world’s largest diamond mining company, will sell rough diamonds directly to India.

Under the nuclear pact, Russia will build 12 new nuclear reactors over the next 20 years at Kudankulam, Tamil Nadu, and at another yet-undecided site. Russia, unlike the USA, is the first nation to accept India’s tough nuclear liability law, though this raised the construction cost per reactor threefold to $3 billion each. Also important for India India will be allowed to manufacture equipment and components in India. Russia also reiterated support for India’s efforts to secure full membership in the Nuclear Suppliers Group, and the Missile Technology Control Regime.

The decision to produce state-of-the-art Russian multi-role helicopters in Indian factories was also a major point for Modi’s campaign to promote more ‘Make in India’ projects with foreign companies. Russia also gave India the right to export those helicopters to third countries. Russia may also accept India’s request for manufacturing spares and components for Russian defense equipment in India. And major oil and gas projects were signed including Indian exploration and production in new oil and gas fields in the Russian Federation, as well as in third countries. India will get liquefied natural gas from Russia, and feasibility of a gas pipeline to India is being seriously explored.

Russia, more than China which has been in conflict with India over issues like Tibet for decades, is the ideal Shanghai Cooperation Organization partner to make such an approach to India to advance the emerging Eurasian economic space. The two countries have had stable and positive relations since the Indo–Soviet Treaty of Peace, Friendship and Cooperation was signed in August 1971.

The Yeltsin era was chaotic for Russia to say the least, but the December visit of Putin to the new Indian Prime Minister confirms that a new architecture is being shaped by Putin’s Russia. It includes the support for the new BRICS Development Bank involving Brazil, Russia, India, China, and South Africa. It includes mammoth new oil and gas deals between Russia and China in recent months that bond the two great Eurasian powers intimately.

Last year diplomatic sources reported that China had dropped its objections to admission of India into the SCO after the election of Modi. Modi’s predecessor as Prime Minister Manmohan Singh was seen in India as being notoriously pro-American and not India’s traditional non-aligned state, and Beijing evidently feared a Washington Trojan Horse inside the SCO. It remains to be seen at the next annual SCO meeting in summer if the SCO, including China, opens the membership door to invite India, Pakistan, Iran and Mongolia as members.

Were that to finally take place it would not only fill a long-time Russian wish, but it would seal a tectonic shift in the plates of Eurasian geopolitics, and not to the advantage of Obama and Washington.

Modi’s meetings on the sidelines of the July, 2014 BRICS summit in Fortaleza, Brazil, with Russia’s President Putin and Chinese President Xi Jinping, were reportedly remarkably warm and cordial. There, Modi enthusiastically endorsed the BRICS Development Bank to be headquartered in Shanghai, China with an Indian as President. Modi has also refused to join Washington in the sanctions against Russia, declaring that any economic sanctions should be decided in the UN Security Council, something Washington was not at all happy to hear. As well, Modi has dramatically improved the long-standing tensions with Pakistan, a close ally of China.

The outlines of a genuine new ordering of our very dis-ordered world, the American Century, proclaimed triumphantly by Time-Life insider Henry Luce in 1941, is taking concrete material form. And that form lies in Eurasia, from Moscow to Beijing and perhaps, on to Teheran and New Delhi. It would make good sense. After all more than four billion of the world’s human beings are there.

Modi, Vladimir, Xi and Obama’s Empty Pockets