Archives for October 2015

The project is facing obstacles from the EU, which says existing gas pipelines from Russia are more than enough. The commission also came out in support of Ukraine as a reliable transit country.

“German authorities should have the final say in all legal issues. If we succeed, any external influence will be ruled out,” said Gabriel, adding that political influence on gas projects was the biggest concern.

“In order to limit political interference in these questions, it is necessary to settle the role of Ukraine as a transit country…This has technical reasons, and you know that the gas transportation system in Ukraine is not in a very good condition,” he added.

In September, Gazprom signed a deal to create a joint company to construct the new pipeline. The new project will include two pipes that will deliver 55 billion cubic meters of gas annually from Russia to Germany via the Baltic Sea bypassing Ukraine.

Among the shareholders in the project called New European Pipeline AG will be Gazprom, E.On, Shell, OMV, BASF/Wintershall and Engie (former GdF Suez). Gazprom will hold a 51 percent stake, and its European partners will each have about 10 percent. The project’s route is expected to follow the 1,224 kilometers of Nord Stream which opened in 2010.

According to Gazprom CEO Aleksey Miller, the new pipeline’s main markets are Germany, France, Italy and the Baumgarten hub in Austria. Miller expects Nord Stream-2 to start in 2019.

The Nord Stream-2 pipeline project has become necessary due to the continuing problem of reliability of gas transit though Ukraine. Russian Energy Minister Aleksandr Novak has warned his German and French colleagues that Kiev could face a gas shortage this winter. This could result in a gas crisis similar to 2006 which left parts of Europe without heat after Ukraine began to siphon off gas sent to the European market.

Article source: https://www.rt.com/business/320029-germany-nord-stream-gas-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The negotiations between Israel and the EEU are being given the “highest priority,” TASS quotes the minister as saying.

“We have asked the Russians to begin negotiations in early 2016 and conduct at least two rounds of talks next year…As a rule, at a normal pace, such an agreement can be signed within two years,” said Elkin.

He said the final deal depends on the difficulty of issues faced during negotiations, but said Israel is actively working to kick off talks as soon as possible.

“We believe that it has great potential for the Israeli economy, and for the countries of the [EEU]. I believe there is no reason to delay this,” said Elkin.

Israel will be able to increase trade with the five members of the Union by 6-8 percent; Russia will see an increase in investment and technology transfer.

Despite the fact that Israel has traditionally been a close US ally, its relationship with Washington has recently deteriorated, says the president of the Russian Middle East Institute Yevgeny Satanovsky.

“The US betrayed Israel on Iran talks. Barack Obama thinks Benjamin Netanyahu is a hardcore Republican, it is difficult for them to find a common language,” the expert said in an interview with Russian business daily Kommersant.

At the same time, Moscow and Tel Aviv have reached a mutual understanding on a number of key issues, said Satanovsky. “Israel fully cooperates with Russia on Syria. Benjamin Netanyahu may meet with President Vladimir Putin whenever he wants. I would describe their relationship as ideal,” he said.

The EEU is a Russia-led trade bloc established in 2015 on the basis of the Customs Union of Russia, Kazakhstan and Belarus. It currently has five members: Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan, while Tajikistan is a prospective member.

The EEU ensures free movement of goods and services, capital and labor, as well as a coordinated, coherent and unified economic policy for its members.
The Union has a free trade agreement with Vietnam and is currently negotiating with Iran.

Article source: https://www.rt.com/business/319947-Israel-Russia-EEU-trade/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The regulators are increasing the scope of the investigation into the bank because a few transactions allegedly involved US dollars and a former banker who is a US citizen, according to the newspaper.

The probe focuses on so-called “mirror trades” in which Russian clients bought securities in rubles through Deutsche Bank’s Moscow office and then sold identical ones for foreign currency (including US dollars) through the bank’s London office. The transactions are reportedly worth in excess of $6 billion.

The key figure in the US inquiry is the former head of Deutsche Bank’s Russian equities desk American Tim Wiswell. He lost his job earlier this year during the US and EU investigation into the bank’s activities. Wiswell sued Deutsche Bank for wrongful dismissal earlier this month.

READ MORE: Deutsche Bank scales back in Russia after US criminal probe

The US authorities are also examining whether Deutsche Bank had adequate compliance programs relating to Russian sanctions and if it provided accurate information to regulators, the FT said.

“Deutsche Bank is investigating the circumstances around equity trades entered into by certain clients with Deutsche Bank in Moscow and London that offset one another,” the FT quoted Deutsche bank’s statement. “Deutsche Bank has taken disciplinary measures with regards to certain individuals in this matter and will continue to do so with respect to others as warranted.”

The FT reports that some of the bank’s Russian clients are subject to US sanctions.  Brothers Arkady and Boris Rotenberg, who own an energy service company and SMP Bank, were included in the US sanctions’ list in March 2014.

READ MORE: Deutsche Bank hit with record $2.5bn fine for rate-rigging

One of the biggest foreign banks in Russia, Deutsche Bank suspended a number of employees working in its Moscow equities trading operation earlier this year. This followed the launch of a probe in the US over alleged money laundering in Russia.

In June, Deutsche Bank began an internal investigation into securities trades that were carried out from 2011 to early 2015

Article source: https://www.rt.com/business/319680-us-deutsche-russia-sanctions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“Everything is on course technically and there is no obvious political obstacle. The report leans clearly towards including the RMB [yuan] in the basket but leaves the decision for the board,” an IMF official told Reuters, preferring not to be named.

“There is no real discussion, no obstacles, all seems on course,” another official added.

The IMF will decide in November whether to expand the current composition (US dollar, euro, yen and British pound) of Special Drawing Rights (SDR) with another currency.

The yuan has become the fourth most-used currency in global payments with a 2.79 percent share in August, surpassing the yen, according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

China has made several steps to make its currency meet the SDR criterion of being “freely usable”. Last Friday, the People’s Bank of China decreased interest rates for the sixth time this year – 4.35 percent from 4.6 percent. At the same time the one-year deposit rate was cut to 1.5 percent from 1.75 percent.

The US and Japan that have been the main obstacle to the yuan being included to the basket, are unlikely to thwart the deal, Eswar Prasad, a professor at Cornell University and former head of the IMF’s China Division told Reuters.

“I think it will be very difficult for the IMF, especially given all that China has done this year, to deny China the prize it really wants,” he said.

According to Reuters, France and the UK have already backed the yuan’s inclusion in the reserve currency basket, while countries like Germany and Italy are ready for the move, saying it depends on the technical criteria.

In mid-August, the IMF praised China for progressively devaluing its currency against the US dollar. According to the IMF the devaluation of the yuan allows the market to play a greater role in determining the exchange rate. However, the fund stressed that the devaluation would not affect its decision on the introduction of the yuan to the list of reserve currencies.

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Article source: https://www.rt.com/business/319678-imf-yuan-reserve-currency/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Saudi Arabia is expected to run a budget deficit of 21.6 percent in 2015 and 19.4 percent in 2016, according the IMF’s latest regional economic outlook.

The country needs to adjust spending, the IMF urged.

The IMF outlined two key factors shaping the region’s outlook. They are spreading and deepening regional conflicts and slumping oil prices.

The conflicts have given rise to large numbers of displaced people and refugees, on a scale not seen since the early 1990s, according to the report.

“Achieving fiscal sustainability over the medium-term will be especially challenging given the need to create jobs for the more than 10 million people anticipated to be looking for work by 2020 in the region’s oil exporting countries,” IMF Middle East and Central Asia Department Director Masood Ahmed told journalists after the report’s unveiling in Dubai.

According to the research, many experts suggest low oil prices will remain in place for the foreseeable future.

“For the region’s oil exporters, the fall in prices has led to large fall in revenue, amounting to a staggering $360 billion this year alone,” Masood Ahmed said.

OPEC members Saudi Arabia, Iran, Iraq, Kuwait, Qatar, UAE, Algeria and Libya have all seen their revenues drop sharply as a result of a decline in oil prices.

Saudi Arabia is currently facing a budget deficit for the first time since 2009. The crude price decline has strongly influenced the kingdom’s economy since oil sales account for about 80 percent of its revenues. It has prompted the government to cut spending, delay projects and sell bonds.

The country’s net foreign assets fell by about $82 billion from January to August. The government sold state bonds worth $15 billion (55 billion riyals) this year.

“There have been a number of one-off spending proposals this year that have taken place, and those initiatives have added to the spending needs,” Masood Ahmed said.

The budget deficit caused project layoffs in Saudi Arabia. Companies working on infrastructure projects haven’t been paid for six months or more. Payment delays increased lately as the government wants to cut prices on contracts in order to preserve cash.

Despite the perpetual appeals to reduce output and support crude prices, OPEC has been refusing to do so as the cartel is trying to maintain its market share. However, last month the cartel signaled a possible change of stance, saying it might cut output and is ready to talk to other (non-OPEC) producers. But experts say OPEC’s statements are not important without a change of policy by its biggest crude producer Saudi Arabia.

Article source: https://www.rt.com/business/319465-saudi-bankrupt-projection-imf/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The document was issued by the European Commission a month ago, but proved to be so obscure that Russian media only managed to dig it up today.

“While the provision of research is formally different from the provision of advice, it constitutes by its nature a form of indirect advice. The analysis contained in the research document indeed helps a potential investor in taking his/her decisions,” said a statement from the European Commission.

“This may concern, for example, the decision as to whether to ‘hold’, ‘buy’, or ‘sell’ a particular security. In sum, the provision of financial research should be seen as a form of investment service and is thus prohibited under the Regulation,” the statement added.

In July and September 2014 the European Union imposed restrictions on a number of Russian banks. In particular, the sanctions affected state-owned Sberbank, VTB, Vnesheconombank, Gazprombank and Rosselkhozbank (Russian Agriculture Bank). The banks were cut off from long-term (over 30 days) international financing.

The restrictions also affected oil companies, including Rosneft, Lukoil, Gazprom Neft (Gazprom’s oil subsidiary), and Transneft as well as the space and defense industry. In addition, the EU imposed restrictions against certain individuals.

However, the EU did not include other major Russian companies on the list.

The sanctions don’t apply to Gazprom and its European partners – E.On, Shell, OMV and BASF/Wintershall – participating in the Nord Stream-2 project, providing Russian gas to Europe.

Russia’s Aeroflot was also left off the sanctions list, after Moscow warned of retaliation by banning Western airlines from Russian airspace.

READ MORE: Airlines lose billions amid rumors of trans-Siberian flight blockade

This June the EU extended Anti-Russian sanctions till 31 January 2016.

Article source: https://www.rt.com/business/319342-european-commission-russia-research-ban/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

It’s the first time Chinese government notes have been issued outside China, PBOC said. The move is expected to help the yuan explore the offshore currency market and facilitate cross-border trade and investment.

“This strategic move demonstrates the clear commitment by the Chinese authorities to grow the offshore bond market and the confidence in the City of London as a leading renminbi hub for future activities,” Spencer Lake, global head of capital financing at HSBC, was cited as saying by the Financial Times.  He called the bonds’ issuance a milestone in the internationalization of the yuan, saying it will “give a genuine boost to liquidity, market confidence and provide investors with the quality that they demand.”

The central bank’s announcement coincides with Chinese President Xi Jinping’s first state visit to the UK.

READ MORE: Down to business: Cameron, Xi Jinping hold billion-pound trade talks

Industrial and Commercial Bank of China (ICBC) and HSBC are joint global coordinators of the deal.

London has paved the way for many offshore yuan bond issues in recent years, with the first released by HSBC in 2012. Many other banks have issued offshore yuan bonds in London since then. Last week Agricultural Bank of China and China Construction Bank also sold offshore yuan-denominated bonds in the London.

“It is significant that the UK was chosen ahead of possible launches in Europe and the US for the deal and sends a strong signal about the attractiveness of London as a global financial center,” William Liu, Capital Markets partner at Linklaters was quoted by China Daily.

The issue of Yuan bond by the PBOC was announced during UK Chancellor George Osborne’s visit to China last month. The initiative followed on from discussions at the 7th UK-China Economic and Financial Dialogue in September, when the two countries announced financial cooperation. A range of bilateral investment deals is expected to be agreed during Xi Jinping’s visit to Britain.

Article source: https://www.rt.com/business/319264-china-yuan-offshore-bonds-london/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

NDB was established by the BRICS member states – Brazil, Russia, India, China and South Africa – in 2014 to complement the World Bank. The bank’s main goal is to promote sustainable development in BRICS states. In July the bank opened for operations in Shanghai with the startup capital of $50 billion.

“BRICS New Development Bank which has already started the selection of next year’s priority projects, will contribute in attracting investment in joint projects in a wide range of industries,” Manturov said Tuesday at the first meeting of BRICS industry ministers in Moscow.

Russia has developed a roadmap of trade and investment cooperation with all the BRICS countries through till 2020, the minister added. It includes projects in manufacturing, mining, engineering, energy and many other sectors of the economy. “We are ready to work them out and determine the range of initiatives that will be implemented jointly with the assistance of the new development bank and national mechanisms of support,” the minister said.

READ MORE: Vietnam signs free trade deal with Russia-led EEU economic block

He also called for eliminating trade barriers between the BRICS countries and the members of the Eurasian Economic Union (EEU), the Russia-led trade bloc of former Soviet states.

“I suggest elaborating on how to decrease different barriers between the BRICS countries and EEU in order to increase mutual trade, investment and new large industrial projects,” said Manturov, adding that: “Eurasian Economic Union is not an exclusive club in which only the CIS countries can be members.”

READ MORE: Brazil wants free trade zone talks with Russia-led Eurasian Economic Union

The Russian minister also suggested cooperation between national research and scientific centers. This could significantly reduce the costs of studies while the results could be used in new joint innovation projects, according to him.