Archives for August 2014

Russian President Vladimir Putin (R) shakes hands with his Egyptian counterpart Abdel Fattah al-Sisi (L) during their meeting at the Bocharov Ruchei residence in Sochi on August 12, 2014 during the Egyptian leader’s first official visit to Russia. (AFP Photo / Alexei Druzhinin)

Egypt and the countries of the Customs Union are looking into creating a free trade zone, Russian President Vladimir Putin said after meeting with his Egyptian counterpart Abdel Fattah al-Sisi at the Black Sea city of Sochi.

“An important agreement was reached to establish cooperation
between Egypt and the Customs Union [of Russia, Belarus and
Kazakhstan],” said the Russian President. “And now we
are looking at a possibility of creating a free trade zone.”

He noted that this subject had been discussed at a meeting of the
council of the Common Economic Space on July 7.

The two presidents also agreed upon the creation of a Russian
industrial zone in Egypt, which will be part of a new Suez Canal
project.

“Our talks have opened great prospects in this area. I hope
that the creation of the Russian industrial zone in Egypt will
become a component that will supplement the new Suez Canal
project, which Egypt presented last week,” Sisi said.

Egypt launched a Suez Canal development project worth $4 billion
earlier in August. The project envisages digging a new canal
parallel to the original built 145 years ago with the aim of
speeding up traffic along the existing waterway and boosting the
country’s economy.

Egypt to boost food exports to Russia

Amid Moscow’s full ban of EU, US, Australian, Canadian, and
Norwegian food exports to Russia, Egypt said it is ready to boost
agricultural deliveries to Russia by 30 percent, Putin said.
Moscow imposed sanctions on August 7 for one year in response to
Western restrictions imposed on Russia over the Ukraine crisis.

An increase of deliveries of citrus fruits, potatoes and onions
from Egypt by 30 percent will close half of a possible deficit
following Moscow’s ban on the import from some Western countries,
said the head of the Ministry of Agriculture of the Russian
Federation, Nikolay Fedorov as cited by RIA Novosti.

During last year, Egypt’s deliveries of agricultural products to
Russia amounted $440 million, meanwhile during the first half of
this year, they have already supplied $460 million, said Fedorov.

He added that the two leaders also agreed to simplify Egypt’s
exports of goods to the Russian market, 90 percent of which
account for agricultural products.

Trade turnover between the two countries in 2013 amounted to $3
billion and more than doubled in the first half of this year to
$2.5 billion from $1.2 billion in the same period of last year,
according to ITAR-TASS estimates.

Egypt buys 25-30 percent of Russia’s wheat intended for export,
while Russian wheat accounts for about 40 percent of grain
consumed by Egypt.

Among other bilateral economic spheres Moscow and Cairo are
engaged in energy, automobile manufacturing and transport
cooperation, also developing the intergovernmental trade,
economic and scientific-technical cooperation commission.

Sisi’s first visit to Sochi was the first to a foreign,
non-Arab-African state since he was sworn in as president on June
8.

Article source: http://rt.com/business/179860-russia-egypt-free-trade-zone/

Aerial view of the Centenario exploration oil rig, operated by Mexican company “Grupo R” and working for Mexico’s state-owned oil company PEMEX, in the Gulf of Mexico (AFP Photo / Omar Torres)

Mexican President Enrique Pena Nieto signed into law Mexico’s historic energy reform bill that will allow foreign companies access to oil and gas fields in the country.

The reform is meant to make Mexico’s oil industry more
competitive, and drive economic growth in the world’s 15th
largest economy.

“It is the moment to put the energy reform into action,”
Pena Nieto said at the signing ceremony at the National Palace in
Mexico City on Monday.

In December 2013 Mexico approved the historic bill ending the 75-yr oil
monopoly that barred foreign participation.

The new law doesn’t just break the monopoly on foreign companies,
but now domestic private oil and gas firms will be able to
operate in direct competition with Pemex. Before, private
companies were only allowed to do work for Pemex under service
contracts.

Nieto expressed he wants Mexico – currently the 9th biggest
producer of crude oil – to remain an exporter, not an importer.

The President promised oil output will increased 20 percent to 3
million barrels per day in 2018. Bringing in foreign expertise
and investment will save declining production.

In the last 10 years, production from Pemex has dropped nearly a
third – in 2013 it produced only 2.6 million barrels per day
compared to 3.8 million barrels per day in 2004.

Since 1938 Petroleos Mexicanos (Pemex), Mexico’s state owned oil
giant, has held a monopoly over oil and gas, and the reform aims
to make Pemex more efficient through cooperation and joint
ventures with foreign players.

Japan’s Mitsui Co, Anglo-Dutch Royal Dutch Shell, and
US-based Chevron Corp. and ExxonMobil have all had been keeping a
pulse on Mexico since it announced the landmark reform in
December 2013.

Russia’s Lukoil was one of the first companies to forge a relationship with Pemex, and in January
agreed to a joint venture exploring and extracting oil.

On Wednesday the government will announce the ‘Round Zero’
allocation of gas and oil fields that Pemex gets to retain
control of. The rest of the areas will be auctioned off by June
2015. Pemex has asked to keep 1/3 of its oil fields and projects.

Mexico is believed to be home to the world’s 6th largest reserves
of shale gas. The process of extracting oil and natural gas from
shale rock formations requires sophisticated hydraulic fracking
technology. Pemex is also a novice at excavating deep-water gas
reserves.

US companies will be keen to get a fresh piece of Mexican oil
fields since at present Mexico is a top 5 exporter of crude oil
to America.

Left-leaning and socialist politicians voiced their stark
opposition to the bill, which they believe will surrender control
of Mexico reserves to foreign companies and strip Mexican
citizens of their fair share of oil wealth.

Pemex gained ownership of all natural resources when Mexico’s
government took over operations from foreign oil companies in
1938. At the time, the move was viewed by many as a symbol of
nationalism.

So now the leftist opposition accuses the president of gutting
Pemex, the country’s main source of tax revenue, and betraying
the nationalization legacy. Pena Nieto rejected that criticism
Monday, saying the reforms “preserve and assure our national
property.”

The signing comes five days after the Mexican Senate gave final
approval to the law. Nieto’s administration must now write new
regulations for the energy sector, a project the president said
would be finished in October.

Article source: http://rt.com/business/179824-mexico-signs-energy-reform-law/

Isabel Garcia Tejerina (image from www.magrama.gob.es)

Spain will meet with EU officials Thursday to discuss offsetting the country’s estimated €337 million in food and agriculture losses due to blocked access to the Russian market.

Spanish Agriculture Minister Isabel Garcia Tejerina said the
restrictions have prompted her ministry to convene a meeting with
the European Commission in Brussels on Thursday.

Last week Russia announced a ban on agricultural imports from
the EU, US, Canada, Australia and Norway.

READ
MORE: Moscow’s food ban could cost EU $16bn, spark crisis in
Europe

The Spanish Agriculture Ministry will analyze the impact of the
Russian trade embargo and try to address possible solutions.

“The ministry will perform specific monitoring of each of the
sectors to see how they evolve their markets and to ask, in the
event of disruption, compensation for these measures from the
European Union,” Tejerina said, as quoted by Spain’s
Region Digital.

To prepare for the meeting in Brussels, local Spanish industry
representatives will meet to discuss and share data.

“We will carry out a detailed follow-up on the progress of
our industries in relation to the restriction on the Russian
market,” Tejerina said.

The Spanish government has estimated that agricultural losses
will amount to €337 million, or about 1.8 percent of Spanish
exports. Other groups, like Spain’s opposition Socialist Party,
have estimated the losses to be higher- €581 million.

Last year, 37,000 tons of tomatoes, 35,000 tons of peaches, and
33,000 tons of mandarin oranges were exported from Spain to
Russia, according to Spain’s Small Farmer’s Association (UPA).

“The decision that was adopted involves many political issues
that exist between Russia and the European Union, and not just
the EU. As a result, it may be necessary to compensate us for
these political decisions – the producers who work all year and
want to at least be paid enough at least to cover production
costs,” Lorenzo Ramos, Secretary General of UPA, told RT.

A quarter of Spain’s €111 million meat exports were bound for
Russia until the ban, and it will be difficult for Spanish
farmers and meat producers to quickly find alternative markets
for their products, since all other EU countries are in the same
boat

Article source: http://rt.com/business/179764-spain-russia-trade-compensation-eu/

A man pumps gasoline at a service station in Caracas August 7, 2014. (Reuters/Jorge Silva)

The Venezuelan government is closing its border with Colombia in an attempt to curb mass smuggling of goods from Venezuela to Colombia during the night hours.

The border will be closed off to all traffic from 10:00pm until
5:00am, and movement of cargo vehicles will be prohibited from
6:00pm until 5:00am. The new regime came into effect on Monday.

Venezuela’s virtually-free gasoline and highly subsidized food
products have transformed the border into a smuggling channel to
Colombia, where goods are much more expensive.

In the first six months of 2014, 21,000 tons of smuggled food and
10.6 million gallons of gasoline were seized as they crossed the
border.

According to Venezuela’s National Armed Forces Chief Vladimir
Padrino Lopez, the amount of fuel smuggled across the border has
increased 500 percent since 2013.

“With these measures we are increasing the mechanisms to
minimize contraband,” the top ranking general said, as
quoted by Reuters.”

The general announced the 1,400 mile border will be shut down on
Saturday and this will be publicized via a nationwide
announcement on national TV. Venezuelan President Nicolas Maduro
agreed to the measure earlier this month.

An oil rich country, Venezuela supplies about 75 percent of its
own fuel needs, but the rest is imported from the United States.

Cutting food subsidies is a highly unpopular political stance, as
if affects each and every consumer on a very micro level. In
1989, the last time the government attempted to cut the coffers,
rioters took to the streets.

The country’s late former president Hugo Chavez largely advocated in favor of the
subsidies, as they lessened the country’s dependence on the US.

The subsidies helped Venezuela and other Latin American countries
weather the 2008 financial crisis. However, inflation, a slump in
oil production, and food shortages are all taking their toll on
the economy.

The national bolivar officially trades at 6.29 to the dollar, but
on the black market actually sells for over 72, according to Bank
of America. Inflation is quickly accelerating, and in June,
consumer price indexes rose 62.1 percent. To compare, consumer
prices rose 6 percent in Russia, and in 0.3 percent in the US.

Last year, oil sales at the state-run Petroleos de Venezuela fell
to $114 billion, or 8.4 percent year on year.

Article source: http://rt.com/business/179520-venezuela-close-colombian-border-smuggling/

A man pumps gasoline at a service station in Caracas August 7, 2014. (Reuters/Jorge Silva)

The Venezuelan government is closing its border with Columbia in an attempt to curb mass smuggling of goods from Venezuela to Columbia during the night hours.

The border will be closed off to all traffic from 10:00pm until
5:00am, and movement of cargo vehicles will be prohibited from
6:00pm until 5:00am.

Venezuela’s virtually-free gasoline and highly subsidized food
products have transformed the border into a smuggling channel to
Columbia, where goods are much more expensive.

In the first six months of 2014, 21,000 tons of smuggled food and
10.6 million gallons of gasoline were seized as they crossed the
border.

According to Venezuela’s National Armed Forces Chief Vladimir
Padrino Lopez, the amount of fuel smuggled across the border has
increased 500 percent since 2013.

The general announced the 1,400 mile border will be shut down on
Saturday and this will be publicized via a nationwide
announcement on national TV. Columbia’s President Nicholas Maduro
agreed to the measure earlier this month.

“With these measures we are increasing the mechanisms to
minimize contraband,” the top ranking general said, as
quoted by Reuters.

An oil rich country, Venezuela supplies about 75 percent of its
own fuel needs, but the rest is imported from the United States.

Cutting food subsidies is a highly unpopular political stance, as
if affects each and every consumer on a very micro level. In
1989, the last time the government attempted to cut the coffers,
rioters took to the streets.

The country’s late former president Hugo Chavez largely advocated in favor of the
subsidies, as they lessened the country’s dependence on the US.

The subsidies helped Venezuela and other Latin American countries
weather the 2008 financial crisis. However, inflation, a slump in
oil production, and food shortages are all taking their toll on
the economy.

The national bolivar officially trades at 6.29 to the dollar, but
on the black market actually sells for over 72, according to Bank
of America. Inflation is quickly accelerating, and in June,
consumer price indexes rose 62.1 percent. To compare, consumer
prices rose 6 percent in Russia, and in 0.3 percent in the US.

Last year, oil sales at the state-run Petroleos de Venezuela fell
to $114 billion, or 8.4 percent year on year.

Article source: http://rt.com/business/179520-venezuela-close-columbian-border-smuggling/

Skipper of the Whitby Rose, Howard Locker sorts his catch aboard his trawler in the North Sea, off the coast of Whitby, northern England (Reuters/Dylan Martinez)

UK food firms said they’ve already started feeling the brunt of the Russian import ban on some agricultural products. British businesses are warning they would lose out if the tension ratchets up to other industries.

On August 7, Russian PM
Dmitry Medvedev ordered a one-year ban on imports of beef, pork, poultry
meat, fish, cheese, milk, vegetables and fruit from Australia,
Canada, the EU, the US and Norway.

UK food exporters are concerned over the possible damage caused
from losing sales in the Russian market.

“It will have a big impact on business,” the BBC quotes Sinclair Banks, the boss of fishing and
fish processing firm Lunar.

Half of Lunar’s annual turnover of £60 million comes from Russian
exports.

“We’ve £200,000 of herring sitting at St Petersburg, we don’t
know if it will go through or even if it will be paid for,”
Sinclair Banks complained, adding that his company had already
cancelled a boat exporting herring because of the sanctions.

Another food producer, cheese maker Belton Cheese is also
suffering.

Managing Director Justin Beckett said the company has had to
cancel orders for £30,000 worth of cheese which was due to be
delivered to Russia this Monday.

“As you can imagine it’s very disappointing. Russia was a
very new market, about 2-3 percent of our business, but we had an
expansion plan for the next two to three years,” Beckett
said, citing that the expansion was estimated to return up to £2
million over the next three years.

Mike Shearwood, the chief executive of fashion chain Karen
Millen, said that despite his company not being connected with
the food business, together with its franchise partner they are
already negotiating the possible mitigation of any further
sanctions that could have a “detrimental effect” on the
business.

“The government may impose sanctions believing that they will
impact Russia. They will hurt domestic businesses as well. They
need to bear that in mind when taking any actions,”
Financial Times quotes Shearwood.

Other British clothers that operate in Russia – including Marks
Spencer, Kingfisher and Burberry – haven’t yet commented.

Matthew Beesley, the head of Henderson Global Investors stressed
that despite current sanctions don’t affect retailers with
Russian exposure, the issue may become a “problem for tomorrow”
if the pressure in Russia escalates.

British high street stalwart Marks Spencer has 41 outlets
in Russia, and earns 4 percent of its profit from the territory.
Kingfisher has 20 shops in Russia, and British luxury group
Burberry has two stores in Moscow.

Escalating tensions with Russia threaten the eurozone recovery as
a further breakdown in relations with Russia “would weaken
growth in the second half of the year“, Mario Draghi the
President of the European Central Bank warned.

Article source: http://rt.com/business/179420-uk-russia-trade-war/

Reuters / Filip Klimaszewski

Poland has asked the US to purchase the country’s apples after Moscow banned all food imports from the EU, the US, and other countries who imposed sanctions on Russia over the Ukraine crisis.

Prior to the full embargo on food exports from the West, Russia’s
agricultural watchdog Rosselkhoznadzor banned the import of
practically all fruits and vegetables from Poland, citing a
breach of food safety standards.

“We are interested in a quick decision because the situation
is extraordinary,” said Poland’s ambassador to Washington,
Ryszard Schnepf, as quoted by Polish press agency PAP.

He added that he had met with Michael Scuse, a senior official in
the US Department of Agriculture, and discussed the opening of
the US market to Polish apple producers.

“He told us to begin the procedure,” he said, adding
that the next meeting with US agricultural officials is planned
for August 18.

Rosselkhoznadzor banned Polish fruits and vegetables from August,
saying that they pose a threat to public health due to an
excessive amount of pesticide residue levels and the presence of
nitrates.

Read more: Russia’s food import ban sparks online
frenzy in Poland

Agriculture is a crucial part of the Polish economy, as about 60
percent of Poland’s territory is agricultural land. Poland is
Europe’s largest producer of apples and the biggest supplier to
the Russian market, accounting for 50 percent of apple imports.
According to Food and Agriculture Organization of the United
Nations, Poland is the fifth largest producer of apples in the
world. China is in first place, followed by the US.

On Thursday, the restriction on Polish imports was followed by
Moscow’s full ban of EU, US, Australian, Canadian, and Norwegian
food exports to Russia. The ban was imposed for one year and came
in response to Western sanctions imposed on Russia over the
Ukraine crisis.

“There is a greater understanding on account of the fact that
the United States has also been hit by Russian sanctions,”
Schnepf said.

The US restricts the import of fresh fruit and vegetables from
the EU, with a few exceptions – including Polish exports of
peppers and broccoli, as well as apples and pears from Italy, PAP
reported.

Poland is one of the key European allies of the United States,
being part of both NATO and the EU. Warsaw has supported the US
in many initiatives, including the Global War on Terror,
Operation Enduring Freedom in Afghanistan, and coalition efforts
in Iraq.

In 2012, the US deployed a full-time aviation detachment at Łask
Air Base, which marked the first continuous presence of US troops
in Poland. Poland also plays a critical role in the European
Phased Adaptive Approach to NATO missile defense, under which the
US plans to deploy a missile defense system to Poland in 2018.
Earlier this year, the US increased its military presence in
Poland based on claims that Russia plans to intervene and is
amassing troops at the border.

According to the Pew Research Center, 79 percent of Poles viewed
the US favorably in 2002, and 67 percent in 2013.

Article source: http://rt.com/business/179332-poland-us-import-apples/

Article source: http://rt.com/business/179200-exxonmobil-rosneft-arctic-drilling/

Reuters / Amr Abdallah Dalsh

​Russia’s 1-year ban on food products from the EU, US, Canada, and Norway will force Russia to increase food imports from Latin America, specifically Ecuador, Brazil, Chile, and Argentina.

Russia will ban meat, dairy, fruit, and vegetable imports
from countries that have imposed sanctions on Russia over the
Ukraine conflict, which opens the door to Russia’s partners on
the other side of the world.

Russia will have to fill an 8 percent gap in its total
agricultural imports that it sources from the EU, USA, Canada,
Australia, and Norway. The Netherlands, Germany, and Poland are
currently Russia’s biggest food suppliers in the EU.

Meat and dairy products from Ecuador, Chile and Uruguay may
appear on Russian supermarket shelves as early as September, said
Julia Trofimova, a at Rosselkhoznadzor, Russia’s consumer
watchdog.

On Wednesday the three countries confirmed they are ready to
start supplying Russia with agricultural goods and Moscow will
soon hold meetings with ambassadors from Brazil and Argentina.

Import bans could be expanded to any country that has a sanction
policy against Russia, including: Albania, Australia, the United
Kingdom, Germany, the European Union, Iceland, Canada, Latvia,
Liechtenstein, Lithuania, Moldova, New Zealand, Norway, Poland,
the USA, Ukraine, France, Montenegro, Switzerland, Estonia and
Japan.

Here’s what the key Latin America economies have to offer.

Brazil

Brazil’s main agriculture exports are soybeans, raw sugar, meat,
coffee, and tobacco. In 2012, the turnover of trade between
Russia and Brazil reached $5.9 billion, and total exports to
Russia were $3.14 billion, or about 7 percent of the total $43
billion of goods Russia imported from now sanctioned- countries
last year.

The 2014 World Cup host has already expressed interest in
expanding into the Russian market and is ready to export meat and
dairy products to Russia. In order for this measure to go
through, Russia’s consumer watchdog, Roselkhoznadzor, will have
to annul a restriction against Brazilian meat companies it
imposed in July 2011.

“Given the results of the negotiations, the interest of
Russian importers, taking guarantees from the Veterinary Service
of Brazil, Rosselkhoznadzor considers it possible to cancel the
temporary restrictions on the number of Brazilian companies for
the production of animal products,” the Russian watchdog
said.

Before the restrictions in 2011, Brazil was the number one meat
supplier to Russia.

Argentina

Agricultural products dominate Argentina’s export tally. Russia
imports Argentinian pears, grapes, apples, citrus fruits, beef,
peanuts, butter, and cheese, and in 2012 trade turnover exceeded
$1 billion. Meat producers in Argentina are considering the
possibility of increasing meat exports to Russia, but like
Brazil, it faces trade restrictions.

Chile

In 2013, Chile exported $567 million worth of agricultural
products to Russia, mostly salmon, trout, fruit, pork, and wine.
Russia imports a large amount of gelatin – an ingredient used to
make jello and cakes – from Chile. Regionally, Chile exports an
array of fruits, including grapes, avocadoes, berries, plums, and
kiwis.

Ecuador

Even though Ecuador primarily sends exports to the US and EU, it
still has the potential to cut into the Russian agriculture and
raw materials market. At present, bananas, cut flower, and coffee
and tea are sent eastward to Russia.

Article source: http://rt.com/business/178664-latin-america-benefits-russia-ban/

Reuters / Kevin Lamarque

Russia has decided to ban some transit flights across the country by Ukrainian airlines and is considering imposing a ban on flights from the EU and US, Russian Prime Minister Dmitry Medvedev said Thursday.

“Russia will cancel
all transit flights for Ukrainian airlines through its airspace
into Georgia, Azerbaijan, Armenia and Turkey,” Medvedev said
during a government meeting on Thursday.

Russia is considering closing its airspace to EU and US airlines
as a part of the countermeasures to Western sanctions which
affected Aeroflot subsidiary Dobrolet, Prime Minister confirmed.

“The measures
include a ban on transit flights by European and US air carriers
to Southeast Asia, and to the Asia-Pacific Region,”
ITAR-TASS quotes Medvedev.

“We are looking at changing the
so-called points of entry and exit from our airspace for
scheduled European air carrier and charter
flights,” Medvedev
said, adding that this would have an effect on flight costs and
hence impact the prices of tickets sold by Western
companies.

Russian Foreign Minister
Sergei Lavrov on Wednesday said Russia’s plans to impose
restrictions on flights of foreign commercial aircraft over
Siberia are rumors.

“I don’t want to comment on rumors, but everybody knows how
actively Russian airspace is used by foreign airlines, including
those from Europe, the United States and Asia,” the minister
stressed.

At the same time, Lavrov said the Russian government is
considering a number of retaliatory steps.

The government is also
“potentially
ready” to introduce
protective measures in a number of industrial sectors including
the automobile industry, shipbuilding and aircraft production,
Medvedev said, however stressing that Russia will
“perform them
meaningfully.”

However the final decision to apply the measures has not been
confirmed.

European ‘tit for tat’

In an interview with Deutsche Welle published Wednesday Richard
Kuhnel, the European Commission representative in Germany, said
Europe was ready for a “tit for tat” action against
Russia, and could close its airspace to Russian airlines if
Moscow decided to block flights to Asia over Siberia

Air routes are arranged internationally and Russia is obliged to
follow the rules the same way it follows the rules of
organizations like the WTO. It means that Russia can’t
unilaterally apply measures without violating international law,
Kuhnel emphasized.

Another option for the EU would be applying to the relevant
international bodies.

The European Commission said it was not commenting on moves until
they become official.

On August 4 Dobrolet suspended flights, citing the EU sanctions.
The move came after European contractors terminated the leases on
aircraft, technical maintenance, insurance and navigation
contracts because of the European Union’s economic sanctions
against Russia.

Article source: http://rt.com/business/178600-eu-close-sky-russia/