Archives for September 2014

RIA Novosti / Vladimir Fedorenko

Russia’s Duma has ratified an agreement on the Eurasian Economic Union, which will create the largest common market in the ex-Soviet sphere and provide for the free movement of goods, services, capital and labor between Russia, Belarus and Kazakhstan.

The agreement, which
comes as an extension of the Customs Union, requires approval
from the other two union members. If ratified, it will come into
effect on January 1, 2015.

Leonid Slutsky, the chairman of the State Duma’s Committee on
Commonwealth of Independent States Affairs, Eurasian Integration
and Ties with Compatriots, called the ratification of the
agreement an “event of historic importance,” Itar-Tass
reported.

“It is a mighty project from a geopolitical point of view.
Several countries of the FSU [Former Soviet Union] and other
countries have announced their aspirations to join the
Union,” the MP said. The Union will also become “a major
obstacle on the road toward creating a unipolar world,” he
added.

Any country can join the Union provided they share its aims and
principles, according to the founders.

The agreement to create a Eurasian Economic Union was signed by
the presidents of Russia, Belarus and Kazakhstan on May 29, 2014.

READ MORE: Russia, Belarus, Kazakhstan sign
‘epoch’ Eurasian Economic Union

Article source: http://rt.com/business/190852-russia-eurasia-economic-union/

Reuters / Todd Korol

The geopolitical crisis in Ukraine could cut Russia’s balance of payments by the equivalent of 2% of GDP, and lower oil prices could knock off another 2%, Maksim Oreshkin, head of Russia’s Finance Ministry’s strategic planning department, said.

Russia’s Urals crude oil experienced a significant drop from its
June price of above $110 per barrel to its current price of $93
per barrel, a reduction that Oreshkin believes, coupled with
Ukraine-related economic problems, could sink Russia’s balance of
payments by a total of 4 percent.

Oreshkin explained that lower Urals crude prices reduce exports
by $55 billion per year, the official said at the Fitch ratings
agency conference on Thursday, Reuters reports.

The World Bank recently lowered their GDP growth estimate for
Russia in 2014 to 0.5 percent, effectively equivalent to
stagnation. In 2013, the economy expanded 1.1 percent to $2.1
trillion.

The sudden drop is structural, whereas in the past it was
cyclical Oreshkin said. Now it has to do with a decline in demand
and increase in oil production, in addition to Libya returning to
the oil market.

“It is unlikely that we will see a sharp drop in prices, but
we are unlikely to see a sharp rise. Most likely, we will see
stabilization in the area of $90 per barrel,” he said.

The Finance Ministry has projected a baseline Urals crude price
of $104 in 2014, and $100 in 2015-17, but as noted by Economic
Development Minister Aleksey Ulyukaev, there is a risk of price
change, in the case of turmoil in the Middle East as well as a
global economic turndown, which will lower consumer demand.

Oreshkin said that Russia could be being too soft on monetary
policy. The government has planned on $80 per barrel prices as a
cut-off when drafting the budget.

According to Oreshkin, the economy “didn’t even notice any
shocks.”

“When the Economic Development Ministry released a forecast
of $100 per barrel, we said then that we see the risks that oil
will cost $ 90-95. It fell in this range, however. When it comes
to conservative projections, the use of the lower level of this
range would be a conservative approach,” Oreshkin said.

Russia, the world’s largest energy exporter, relies on oil and
gas exports for 50 percent of its federal budget, as well as 70
percent of the country’s total exports.

Urals crude, Russia’s key export blend, hails from the Ural
mountain and Volga regions, and is usually priced slightly below
Brent.

Sanctions also threaten Russia’s oil future.

The CEO of Russia’s second-largest oil company, Lukoil, said that
he expects sanctions to affect 20 percent of Russia’s total oil
output – or about 100 million tons, The Moscow Times reported.

Former Finance Minister Alexei Kudrin has warned that sanctions
will cost Russia 1 percent of total GDP, which could send the
economy into a recession, and lead to a 3-4 percent economic
drop.

In the worst scenario, if Russia is cut off from the SWIFT
international banking payment system, Kudrin predicts a 5 percent
drop in GDP.

Article source: http://rt.com/business/190628-sanctions-gdp-russia-oil-price/

A militant of the Islamic State of Iraq and the Levant (ISIL) posing with the trademark Islamists flag after they allegedly seized an Iraqi army checkpoint in the northern Iraqi province of Salahuddin (AFP Photo / HO)

The White House has imposed sanctions on 21 people and 3 entities funding terrorism, freezing assets and barring them from any American financial dealings in an effort “to degrade and destroy terrorist access to financing.”

“Today’s broadly scoped designations will disrupt efforts by
ISIL, al-Nusra Front, Al Qaeda and Jemaah Islamiyah to raise,
transport and access funds that facilitate foreign terrorist
fighters,” David Cohen, the Treasury undersecretary for
terrorism financing said in a statement on Wednesday.

The announcement of the sanctions were a follow up to airstrikes against ISIS targets in Syria and Iraq as
well s the United Nations Security Council’s adoption of
resolution to preemptively nip in the bud financial activities
and mobility of terrorists believed to be aiding efforts in the
Middle East, Europe, and North Africa.

The US Treasury Department expanded the list created back in 2001 by
former President George W. Bush in the aftermath of the 9/11
attacks.

Among the newly added targets are Georgian national Tarkhan
Tayumurazovich Batirashvili who goes by the name ‘Omar the
Chechen’ and is believed to be a top Islamic State military
commander currently living in Syria who used to oversee a prison
facility near ISIS-controlled Raqqah where terrorists reportedly
detain dozens of captured foreign hostages, many journalists.

READ MORE: ISIS profits from oil, theft, human
trafficking exceed $3mn a day – report

The sanctions list already includes hundreds of individuals and
companies believed to be sponsoring terrorist organizations
worldwide. However, ISIS and other terrorist organization accrue
most of their money from more illicit activities such as
extortion payments, ransom from kidnapped hostages, and any kind
of theft from the areas taken by IS, such as black-market oil.
Therefore a ban on international banking may not block the cash
flow to people funding and diffusing terrorism.

Article source: http://rt.com/business/190516-us-counter-terrorism-sanctions-isis/

Polish miners block a railway for trains carrying Russian coal at the border crossing in Braniewo, September 24, 2014 (Reuters / Grzegorz Szaro)

Coalminers blocking “cheap” Russian coal at the Poland-Russia border have reportedly reached a deal with the government in Warsaw to consider new coal trade laws that will better protect the country’s coal industry.

Coal deliveries from
Russia have now resumed, according to a representative at the
railway station in Russia’s Kaliningrad enclave, which borders
Poland and the Baltic Sea but not mainland Russia.

“At 6:15am Moscow time,
the train departed the Russian station Mamonowo and after
sometime crossed the Russian-Polish border,” a representative said, RIA Novosti
reported. According to the representative, another train will
cross the border at 5pm Thursday local time.

“The decision to finish the protests at Braniewo is because
we received a positive message from the prime minister, Eva
Kopacz, and cabinet ministers,” ITAR-TASS reported Dominik
Kolorz, leader of the Solidarity Union in the Slasko-Dabrowskie
region, as saying.

On Wednesday, Polish PM Ewa Kopacz asked parliament to speed up
the introduction of new coal trade laws, and announced she was
commissioning a report on the country’s coal mining industry,
Polish Radio reported. The policy shift came after over 200
Polish miners blocked the delivery of Russian coal at a
railway crossing at the Branevo-Mamonowo border post.

A planned October 1
protest by the Solidarity miners’ union in Warsaw will go ahead
as planned, said Kolorz, the union’s leader.

The miners, who hail from the southwest Silesia region of Poland,
sent PM Kopacz a petition that said imports from Russia were
“unfair” are “ruining” the Polish mining
industry and taking local jobs.

The protest is being led by mining union leaders, who want an
embargo on the import of Russian coal to protect local miners and
companies that are losing hundreds of millions of euros (billions
of Polish Zloty) due to expensive labor costs and a decrease in
prices and demand.

Poland is a major producer of coal, but still imports about 10
million tons per year from Russia and the Czech Republic. The
country also exports 10.6 million tons of coal annually.

Coal industry in Poland provides over 55 percent of the country’s
primary energy demand, with about 90 percent of electricity
sourced from coal in 2013.

Article source: http://rt.com/business/190536-polish-coal-miners-blockade-finshed/

Polish miners stand on railtracks in Braniewo near the northern border with Russia’s Kaliningrad province to stop a train carrying cheaper Russian coal, on September 24, 2014 (AFP Photo / Tomasz Waszczuk)

More than 200 Polish miners obstructed Russian coal trains at the border in northeast Poland, threatening that any future trains will also be stopped, to protest the “dumping” of Russian coal imports that are hurting Poland’s struggling mining industry.

The Russian coal was stopped at the Polish-Russian border
crossing at Braniewo-Mamonowo, and was led by mining union
leaders, local Polish media reported Wednesday.

“We can block the passage until the end of the week, we want
to bring attention to the mining and energy security,”
Stanislaw Kłysz, a representative from the national trade union
Solidarity told Polish radio, Polish Press Agency reported.

Protests will continue throughout the week and on October 1
demonstration is planned in Warsaw.

The miners were from Silesia in southwest Poland, PAP reported.

Poland is a major producer of coal, but still imports about 10
million tons per year from Russia and the Czech Republic. The
country also exports 10.6 million tons.

Kompania Weglowa, the largest coal mine in Poland, says it has 5
million tons of unsold coal, which the union workers blame on the
flood of Russian imports. The overproduction is adding to
pressure on labor costs and a decrease in prices and demand,
which led to Kompania Weglowa suffering losses of 145 million
euro last year.

“Right now around 80 percent of tenders for coal supplies to
units run from the state budget are won by suppliers of imported
coal, because they offer dumping prices,” said Jaroslaw
Grzesik, leader of the mining Solidarity union.

Poland’s dominant coal industry provides over 55 percent of
primary energy demand, with about 90 percent of electricity
sourced from the fossil fuel in 2013.

Earlier this year, Poland floated the idea of placing an embargo
on the import of Russian coal, to protect local miners.

“For months, the government promised to settle the issue of
imported Russian coal and concessions on trade in raw materials.
And, as usual, they haven’t done anything,” Dominik Kolorz,
leader of the Solidarity Union in the Slasko- Dabrowskie said, as
quoted by PAP.

Kolorz threatened imports will be blocked until the government
starts listening to the demands of the coal miners.

The Braniewo-Mamonowo border handles both passenger and freight
trains.

Article source: http://rt.com/business/190308-polish-miners-blockade-coal-border/

Reuters / Nacho Doce

Three so-far-unnamed Brazilian dairy companies have received the proper paperwork to start deliveries to Russia, a representative of the Brazilian Ministry of Agriculture said. The new imports will help fill a gaping hole left by EU suppliers.

One of the companies has already started deliveries, Marcelo
Junqueira, secretary for international affairs of the Brazilian
Agriculture Ministry Marcelo said, ITAR-TASS reported.

The new deliveries will help fill the 57 percent gap of imported
dairy products after Russia introduced a one-year food embargo in August
on certain agricultural products from the EU, US, Australia,
Canada, Australia and Norway.

The move is symbolic of the strengthening political and economic
ties between Brazil and Russia as relations with the West
continue to sour over the Ukraine crisis.

“Brazil is known for its high level of sanitary control, we
supply meat to more than 100 countries and poultry to 155
countries, so it is natural that a major importer [Russia] came
to us,” Junqueira said, as quoted by ITAR-TASS.

READ MORE: Russia’s import ban means big
business for Latin America

Last week the Brazilian delegation, comprised of 37 private
companies, attended the Moscow International Exhibition of World
Food. Over $106 million in contracts were inked, Junqueira said,
without disclosing which companies.

In 2012, the turnover of trade between Russia and Brazil reached
$5.9 billion. Brazil plans to import fish and grains from Russia.

In August, the Brazilian Ministry of Agriculture began a
registration process allowing companies to be authorized to
export to Russia. At the same time, the Kremlin approved 89
Brazilian companies to sell dairy, meat, and other products in
Russia, a number which has since grown to over 130.

Before 2011, Brazil was the number-one meat supplier to Russia,
but lost market share after Russia’s consumer watchdog,
Roselkhoznadzor, banned the import of meat from the country. The
ban was lifted on August 18.

In the past, Russia has been a big importer of Brazilian butter,
but Brazil hopes to sell milk and milk powder to Russia.

Brazil already has a large domestic dairy market, and it may be
hard to convince some farmers and distributors that it is better
to send the product abroad. However, Russia’s weak currency
favors the seller, and not the buyer.

Since the embargo was set, Russia has held talks with several
countries – China, Turkey, Serbia, Egypt, Mauritius, Ecuador,
Chile, Columbia, Mexico, Sri Lanka, Paraguay, Guatemala, Morocco,
Kenya, Argentina, Lebanon, the Faroe Islands, and of course
Brazil – about increasing agricultural exports to Russia.

Article source: http://rt.com/business/190260-brazil-begins-dairy-exports-russia/

Reuters / Stringer

Beijing is ready to meet fruit and vegetable demand in Russia after Moscow’s food embargo on the West, a Chinese commerce official said. Boosting agricultural trade, already worth $20 billion a year, would further cement Russia’s links with China.

The eastern Chinese region of Shandong is ready to meet these
demands, Izvestia newspaper reported
Wednesday, citing the director of the Department of Commerce in
the province, Zhang Qingwei.

Situated on the east coast between Beijing and Shanghai, Shandong
is China’s agricultural powerhouse – producing $141 billion in
agricultural products annually. The region is home to 94 million
people.

Shandong is ready to supply carrots, ginger, garlic, pepper,
peas, pumpkins, zucchini, squash, tomatoes, cucumbers and
broccoli as well as, peaches, pears, grapefruit and watermelon to
Russia – and in return is eager to import grain, rapeseed and
honey from Russia.

“If we reorient from the West to China, even 1 percent of
total agricultural products from Shandong will more than cover
the needs of Russia,” Yakov Lyubovedsky, head of the Russian
Organic Farming Union, told Izvestia.

Qingwei, the Shandong official, said that a delegation from
Shandong is currently in talks with representatives from Russian
agriculture groups to better understand the supply and demand
dynamics of Russia’s new import substitution policy, which hopes
to boost domestic agriculture.

Roselkhoznadzor, Russia’s consumer protection agency, has
confirmed that Moscow and Beijing are discussing an agricultural
trade deal, and that China is interested in doing more business
with Russia.

READ MORE: China to start direct sales of fruit and
vegetables to Russia

Earlier, RT reported that China is planning to begin the
direct sales of fruit and vegetables to Russia in light of the
loss of European products on the Russian market.

On August 7, Russia introduced a one-year ban on imports of some
agricultural products from the EU, US, Australia, Canada,
Australia and Norway. The move could cost the EU and other
Western countries the equivalent of $9 billion in food exports.

Article source: http://rt.com/business/190196-china-ready-russia-exports/

Japan’s Chief Cabinet Secretary Yoshihide Suga (Reuters / Yuya Shino)

Japan has limited operations with five Russian banks including top lenders Sberbank and VTB, and arms exporters over Moscow’s involvement in the Ukraine crisis, according to Chief Cabinet Secretary Yoshihide Suga.

Other blacklisted lenders include Gazprombank, Rosselkhozbank and
development bank VEB (Vhesheconombank), which manages Russian
state debts, pension funds and other state financial activities.

The new sanctions announced Wednesday are Japan’s first economic
restrictions on Russia. All those previous were largely seen as
symbolic and a gesture of solidarity with the US and the EU,
which are championing a policy of punishing Russia for its stance
on the crisis in Ukraine.

“Japan together with the member states of the Group of Seven
intends to continue making an effort to settle peace in Ukraine
and is seeking a diplomatic solution to the crisis,”
ITAR-TASS quotes Suga.

Japan first imposed sanctions on Russia in March. It also
suspended talks with Moscow over visa restrictions, investment,
space cooperation and military tension prevention. It also
targeted 40 individuals from Russia and Ukraine with asset
freezes and travel bans.

Putin’s Tokyo visit in doubt

Despite Tokyo’s calls to cancel the visit, Russian President’s
Chief of Staff Sergey Ivanov arrived on the largest of the South
Kuril Islands, Iturup, on Wednesday where he toured the
recently-opened airport and discussed the pressing issues with
the airport personnel. However, Suga said it was unlikely to
damage Tokyo’s plans to continue talks with Moscow.

This week Japanese Prime Minister Shinzo Abe asked to reschedule
his meeting in Tokyo with Russia’s President Vladimir Putin due
in the fall. Instead, Abe proposed holding direct talks with
Putin in November on the sidelines of the annual summit of the
Asia-Pacific Economic Cooperation Forum, Suga said Monday. So far
the schedule of Putin’s visit to Japan hasn’t been decided,
Ivanov said.

The four islands – Iturup, Kunashir, Shikotan and Habomai – are
the subject of a 60-year-old dispute between the two nations.
Ivanov insisted that he arrived on the island to discuss
primarily social and economic development of the region, not
political issues.

Article source: http://rt.com/business/190204-japan-russia-sanctions-ukraine/

Reuters / Yuriko Nakao

Still jittery over the 2008 market crash, billionaires are hoarding mountains of cash – $600 million on average – hoping to have it on hand for a good investment opportunity, and perhaps signaling to ordinary people what to do with their money.

Over 2,300 billionaires worldwide, worth $7.3 trillion total, are
sequestering record amounts of cash – each holding $600 million
on average, or 19 percent of their net worth, says a new report
by the Wealth X and UBS. The amount represents an increase of $60
million in cash per billionaire from a year ago, and wealth
followers say it’s a sign that the ultra-wealthy are nervous
about putting more money in today’s markets.

“This increased liquidity signals that many billionaires are
keeping their money on the sidelines and waiting for the optimal
moment to make further investments,” the study said.

Wealth managers are often asked by these families what they
should do with the cash.

“The apparent safety of cash, reinforced by the painful
psychological experience of the 2008-09 global financial crisis
and the subsequent troubles within the European Monetary Union,
likely reinforces the tendency to favor this cautious allocation
strategy,” said Simon Smiles, CIO of UBS Wealth Management,
in the report.

The Billionaire Census found that with cash holdings at 19
percent, billionaires are only investing a fifth of their wealth
in real estate. As many billionaires are entrepreneurs, almost
half their wealth is invested in private holdings and 28.9
percent in public holdings.

There are 571 billionaires in the United States, but eight of the
top 20 now are in Asia. On average it takes 45 years to become
one, argues the study. Eighty-one percent are self-made, and 35
percent have no university degree.

READ MORE: China pumps $81bn into banks to stop slowdown –
report

The number of billionaires is likely to increase to 3,800 by 2020
when wealth is transferred to the next generation.

“The combined wealth of the world’s
billionaires is now higher than the combined market
capitalization of all the companies that make up the Dow Jones
Industrial Average,” reportedthe Financial Times.

READ
MORE: OECD cuts 2014 growth forecast for advanced economies

And UBS’ Smiles said that the large cash holdings aren’t specific
to billionaires – millionaires and multimillionaires are also
holding cash hordes, on the order of 20 percent to 30 percent of
their net worth.

Article source: http://rt.com/business/190100-billionaires-hoarding-millions-cash/

AFP Photo/David McNew

In a symbol of the times, America’s biggest “oil family”, the Rockefellers, has announced it will get rid of any investments or holdings in fossil fuels from its $860 million charitable fund, and target clean energy instead.

The announcement is part of a $50 billion pledge
by over 180 institutions to cut oil, natural gas, and coal from
their portfolios and redirect investment into clean energy.

“Our immediate focus will be on coal and tar sands, two of
the most intensive sources of carbon emissions,” the
statement said, adding that investment in the two sectors will be
reduced to less than 1 percent of the total portfolio by the end
of 2014.

Coal and tar sands are two of the biggest carbon emitters.

The Rockefeller Brothers Fund was established in 1940 from wealth
acquired through the family’s company Standard Oil, once the
world’s largest oil refiner.

Monday’s announcement comes ahead of today’s United Nations
summit on climate change, where 120 global leaders, including US
President Barack Obama, have gathered to discuss how to combat
carbon emissions and global warming.

ExxonMobil, Conoco, and Chevron are the modern day successors of
the original Standard Oil, which was such a big oil company the
US Supreme Court said it violated antitrust laws, and it was
broken up in 1911.

“John D Rockefeller, the founder of Standard Oil, moved
America out of whale oil and into petroleum,” Stephen
Heintz, president of the Rockefeller Brothers Fund, said, saying
that if John D. Rockefeller were alive today, he would invest in
clean, renewable energy.

About 7 percent of the fund is currently invested in dirty fossil
fuels.

In 2013, the Rockefeller charity gave over $6 million in grants
to sustainable development projects.

Many American universities have also cut their ties with ‘Big
Oil’, most prominently Stanford and Harvard, which both have
multi-billion dollar endowments. The University of California
school system says it won’t divest from fossil fuels, an
unpopular choice amongst students.

A nice gesture

The switch won’t be immediate or apply to the full $860 million
in charitable funds. The “divestment” will only apply to
10 percent of the endowment, an approved commitment from the
fund’s board of trustees in line with the organization’s
sustainable development goals.

“There may continue to be minimal investments in our
portfolio in those energy sectors,” the statement said,
clarifying it will be a “two-step” process.

The divestment program will be conducted with the overall
organization’s finances in mind; that is they won’t divest if
such a move will negatively alter the charity’s day-to-day
operations.

Article source: http://rt.com/business/189928-rockefeller-oil-divest-fossil-fuels/