Archives for December 2015

Putin approves economic sanctions against Turkey following downing of Russian warplane

According to the updated list, Turkish companies won’t be able to construct buildings, work in architecture and design in Russia. The ban also prohibits Turks working in the travel and hotel business. Turkish companies won’t get Russia state and municipal contracts and won’t be able to participate in forestry and timber processing.

The sanctions do not apply to contracts in place before the date of them the coming into force, or for the duration of those contracts.

“As you know, special economic measures with respect to the Republic of Turkey have been approved. The import of certain food products and agricultural produce has been banned. Starting January 1, 2016, the visa-free regime for Turkish citizens holding ordinary passports will be suspended. Moreover, also starting next year, Russian employers will not be allowed to hire any more Turkish nationals,” said Russian Prime Minister Dmitry Medvedev at the government meeting on Wednesday.

The list makes an exception of 53 Turkish companies working in Russia. According to the Kremlin’s website, these are engaged in construction, the auto industry, production of construction materials, polymeric tubes and fittings, plumbing equipment and flooring. The companies not listed in the resolution will be prohibited from hiring Turkish citizens.

READ MORE: Russian government ratifies economic sanctions against Turkey

“I would like to receive as soon as possible a list of contracts, works and services involving companies within Turkish jurisdiction or controlled by Turkish companies. The document must be finalized and submitted to the Government for signing,” said Medvedev.

The deterioration in relations between Russia and Turkey was prompted by the downing of a Russian Su-24 jet by a Turkish F-16 fighter near the Syrian border in November.

Article source: https://www.rt.com/business/327442-russia-turkey-sanctions-update/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“Banks won’t be able to create money for themselves anymore, they’ll only be able to lend money that they have from savers or other banks, or even, if necessary, money that the Swiss National Bank has provided them,” the campaign said in a statement on their petition website.

As soon the petition concerning changes to the Swiss banking system had received more than 100,000 valid signatures, the Swiss government confirmed it would hold the referendum, according to the Telegraph. The date when the country will vote to decide whether private banks should be keep their power of creating money has not yet been set.

The move comes as part of the Swiss Sovereign Money Initiative (known as the Vollgeld-Initiative in German) that seeks to put an end to financial speculations. The group is concerned with the current state of affairs in traditional fractional reserve banking, where real coins, banknotes and central bank liabilities account for only a minor part of money in circulation, while most of it exists as electronic cash created by private banks.

Gold tumbles to 3-week low after Swiss decide not to hoard

“Most people believe that the money they have in their bank accounts is real money… This is wrong! Money in a bank account is… a promise the bank makes to provide money, but it is not itself legal tender,” they group explains in their statement.

The initiative claims that it strives to change the system so that it complies with the Swiss Constitution, guaranteeing safety and avoiding such phenomena as finance bubbles and empty money.

If the change is introduced, Swiss banks would have to look for a workaround to continue providing their clients with the usual set of services.

This won’t be a first referendum on monetary policy in the recent history of Switzerland. The Swiss voted against a law that would increase country’s gold reserves from 7 percent to 20 percent back in 2014, despite early polls showing increasing support for the initiative.

Article source: https://www.rt.com/business/327118-switzerland-money-banking-referendum/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“In the framework of the agreement between Rosneft and Esser group, large-scale supplies of oil and petroleum products – 10 million tons of oil annually in the next 10 years – are planned to be delivered to Indian refineries,” said Putin Thursday during a joint statement with Modi.

The Indian prime minister is on a two-day visit to Moscow as part of the 16th Annual Bilateral Summit. The summit started on Thursday with a private dinner hosted by Putin in the Kremlin following which Russia and India inked 15 agreements.

Moscow reiterated its commitment to cooperate in the nuclear sphere as Putin confirmed Russia’s plans to build at least six new nuclear power units in India in the next 20 years. In April, 2014 Russia and India agreed to begin phase two of the Kudankulam plant, which is to be launched in the coming weeks. According to Putin and Modi, the construction of Blocks 3 and 4 is to be launched shortly, while negotiations are still held on the construction of Blocks 5 and 6.

India and Russia reaffirmed that military-technical cooperation remains one of the key objectives of their partnership.

“It’s not just about the final product, but about close technological cooperation,” Putin explained.

He elaborated that the two countries have been successfully cooperating in the production of BrahMos short-range supersonic missiles and that they planned to jointly develop a new type of jet fighter and transport aircraft.

Russia and India have also affirmed their commitment to further collaborate in developing space exploration, rocket manufacture and engine manufacture.

Modi and Putin inked documents simplifying the approval of business and tourist visas, while the PM urged Russian businesses to more actively invest in India.

“Russia is our most loyal partner, particularly in the fields of defense, security, that’s why I’ve come [here] to welcome our partner to participate in our country’s economic progress,” Modi said. “Russia is holding a leading position in many spheres such as space, information technologies and heavy industry.”

On Wednesday, Modi announced a large-scale development program for the country’s armed forces, which could be worth $150 billion. Earlier, India’s Deputy Foreign Affairs Minister Subrahmanyam Jaishankar promised to increase mutual investment five-fold over the next decade.

“Mutual investments currently average around $11 billion and we want to increase them to $30-50 billion by 2025,”Jaishankar told reporters on Tuesday. He called it a “very big priority” for both parties.

In joint statement on Thursday the Russian and Indian leaders also condemned terrorism saying that the fight against it is only possible if the entire global community joins efforts dropping “selectiveness and double standards.”

“It is important Russia and India make similar approaches to key international problems. Our countries are for a political settlement of the conflict in Syria and promotion of national reconciliation in Afghanistan,” Putin said.

“Together with President Putin we have a great level of mutual understanding of global issues,” said Modi.

Article source: https://www.rt.com/business/327035-modi-putin-russia-india/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Washington lifts ban on oil exports

Some 600,000 barrels of light sweet crude pumped in South Texas will be loaded onto a tanker in the first week of January, according to the company. The tanker belongs to a Dutch oil-trading titan Vitol Group which is buying the crude. It will head to a Vitol subsidiary’s refinery in Switzerland, which supplies diesel and other fuels to Northern Europe, the Wall Street Journal cited a person familiar with the matter.

“We are excited to announce our first contract to export US crude oil, which to our knowledge may be the first export cargo of US crude oil from the Gulf Coast in almost 40 years,” said Jim Teague, chief operating officer of Enterprise’s general partner.

While American oil producers are enthusiastic about Washington’s decision to lift the oil export ban, they face difficult obstacles. Low oil prices on the global market will prevent some private producers from selling on their product abroad. It makes more sense for smaller operators to temporarily seal their oil wells instead of selling more crude at a loss.

READ MORE: Oil gas ‘zombies’ on the rise as US oil production set to decline through 2016

The other problem is that despite being a major oil producer, the US still heavily relies on crude imports. The US produces 9.4 million barrels per day while consuming nearly 20 million barrels. Therefore the country cannot be a significant crude exporter and will instead export relatively small amounts of light crude.

“It’s universally agreed in the short-term we won’t see a flood of ships leaving for foreign ports because the economics aren’t right,” Sandy Fielden, director of energy analytics at RBN Energy was cited as saying by Reuters.

Last week, US President Barack Obama signed a bill lifting crude export restrictions which were introduced in 1975 in the middle of the energy crisis. The restrictions followed OPEC’s oil embargo on the US and other countries backing Israel during the Arab–Israeli war of 1973. In the face of embargo-related high oil prices, Washington eased the limits on oil imports and ordered an export ban.

Article source: https://www.rt.com/business/326981-us-firm-export-contract/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Putin denies Russia sabotaged talks on free trade zone with Ukraine

According to proposer Prime Minister Arseny Yatsenyuk the embargo will begin on January 1, the same date the Ukraine Association Agreement with the EU comes into force.

The new law allows the government of Ukraine “in case of discriminatory or unfriendly actions by the state, recognized by the Verkhovna Rada as an aggressor country” to introduce reciprocal responses, including the abolition of tariff preferences.

“Over the past three years we have cut the dependence on Russia three-fold. Three years ago, the volume of Ukrainian exports to Russia amounted to about 35 percent. Today, it’s only 12 percent. We will protect the domestic market of Ukraine,” said Yatsenyuk.

This fall, Ukraine began to impose sanctions against Russia. The blacklist included 29 Russian banks, more than 20 Russian airlines, several military enterprises and software security firm Kaspersky Lab.

The relationship between Kiev and Moscow deteriorated even further in December, when they failed to agree on the economic part of Ukraine’s Association Agreement with the EU.

Ukraine set to lose preferential trade with Russia after failed last-minute talks in Brussels

In mid-December Russian President Vladimir Putin signed a decree suspending free trade with Ukraine as of January 1, 2016. Putin said Kiev’s move to open its borders with the EU compromises Russia’s interests and economic security. Moscow is also concerned that without such a barrier, Ukraine could illegally supply embargoed European goods to Russia.

During the negotiations with representatives from Ukraine and the EU, Moscow’s position has been that Ukraine is not entitled to preferential trade with CIS (Commonwealth of Independent States) countries once it aligns itself with the European trade bloc. Prime Minister Dmitry Medvedev explained that Ukraine cannot be part of two free trade zones at the same time.

According to Russia’s Economic Development Minister Aleksey Ulyukayev, the food embargo against Ukraine has nothing to do with the failed talks. It is a proportionate response to Ukraine joining US and EU-backed anti-Russian sanctions in August, he said.

Article source: https://www.rt.com/business/326975-russia-ukraine-trade-embargo/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The announcement comes as Moscow and New Delhi plan to sign a number of multi-billion dollar defense and nuclear energy deals. India has already approved the purchase of five S-400 air defense systems from Russia which is part of the biggest arms deal between the two countries in a decade.

Among other arms contracts expected to be signed is the purchase of 200 light Ka-226T helicopters, which would replace India’s outdated Cheetah and HAL Chetak machines. The sides could also agree the lease of a Russian nuclear submarine, along with the purchase of three Russian battleships. There could also be a breakthrough in the protracted negotiations for joint production of Russia’s PAK FA (T-50) fifth-generation fighter jets.

Energy cooperation, investment and trade will be also on the agenda during the talks. Trade between the countries is planned to increase from $11 billion to $30 billion over the next decade.

Trade between Russia and India does not correspond with the level of trust and cooperation between the countries, according to the First Deputy Minister of Russia’s Economic Development Ministry Alexey Likhachev.

“Russia is ready to turn on the green light for the restart of the relationship,” Likhachev said at the opening of the meeting with representatives of Russian and Indian businesses on Thursday.

The countries will also discuss hydrocarbon exploration and the development on Russia’s Arctic shelf, as well as the construction of nuclear power plants in India. Work on the Russian-designed Kudankulam reactor is underway. The first generator is already operating and a second is expected to start in the coming months.

The Russian and Indian leadership will discuss foreign policy issues, particularly cooperation within the SCO (Shanghai Cooperation Organization), the fight against terrorism in the Middle East and the future of Afghanistan.

Article source: https://www.rt.com/business/326961-india-russia-deals/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

At present, all factors point towards a downward spiral. There is a glut in the oil market, as OPEC and Russia continue to pump at record highs. The US has ended its export ban after almost 40 years. Iran is due to return to the global energy market. In the middle of all this, China’s growth is slowing and the demand for crude is dropping.

“We view the oversupply as continuing well into next year,” Jeffrey Currie, head of commodities research at Goldman Sachs said Tuesday. He added that there’s a risk that oil prices would fall to $20 a barrel to force production shutdowns if mild weather continues to dampen demand.

The bearish outlook has made investors buy put options – which give them the right to sell at a predetermined price and time – at prices of $30, $25, $20 and even $15 per barrel, according to data, quoted by Bloomberg.

However, Russian oil firm Gazprom Neft CEO Aleksandr Dyukov makes the opposite prediction.

“It is obvious that the decline in prices will be short. Anyway, in mid-term or long-term, the prices will return to the level that is fair and right for all – for consumers and producers. I am talking about $90-100 per barrel,” the CEO of Gazprom’s oil subsidiary said this week.

OPEC’s second-biggest oil producer Iraq is also expecting a price rise.

“There is no doubt that oil prices will rebound. This current level is too low, and it’s affecting oil producers. I think economic factors and fundamentals are still strong,” said Iraq’s Oil Minister Adel Abdul Mahdi last Sunday.

According to OPEC, less spending by major producers and prices at below $40 a barrel for a long period could affect future oil supplies and lead to a surge in prices.

“If the right signals are not forthcoming, there is a possibility that the market could find that there is not enough new capacity and infrastructure in place to meet future rising demand levels, and this would obviously have a knock-on impact on prices,” said Abdallah El-Badri, secretary-general of the cartel.

OPEC also predicted that the reference basket, which measures the average price of crude produced by the cartel members, to rise to $70 per barrel by 2020 and $95 by 2040.

As of 9am GMT, Brent benchmark was trading at $37.66 per barrel, while US crude West Texas Intermediate stood at $37.78.

Article source: https://www.rt.com/business/326959-oil-prices-forecast-opec-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The European Commission has said the EU, Russia and Ukraine were close to reaching an accord over Ukraine’s integration into Europe. However, according to the EU, Moscow didn’t show enough flexibility to make the talks successful.

Ukraine set to lose preferential trade with Russia after failed last-minute talks in Brussels

According to Russia’s Economic Development Minister Aleksey Ulyukayev, talks failed because Ukraine and the EU were not prepared to take into account Russian interests.

Russia’s position is that Ukraine is not entitled to preferential trade with CIS (Commonwealth of Independent States) countries once it aligns itself with the European trade block. Moscow is also concerned that without new customs regulations, Ukraine could re-label and export European products currently under embargo in Russia.

The food embargo against Ukraine has nothing to do with the failed talks, according to Ulyukayev. It is a proportionate response to Ukraine’s joining US and EU-backed anti-Russian sanctions in August, he said. That’s why Moscow has cancelled the free trade agreement with Kiev and introduced an embargo against Ukrainian foodstuffs, he added.

President Putin said that after Russia raised some controversial issues at Monday’s talks, the head of the EU delegation said that “the game is over,” got up and left.

“It was not very European, very intolerant,” said President Putin, adding that “The following day they published a press release saying it was Russia that sabotaged the negotiations.”

“I think that we will come back to these issues. We want to build a relationship with our partners in Ukraine and the EU on trade,” the President said.

The economic part of Ukraine’s Association Agreement with the EU comes into force on 1 January 2016. Russia and Ukraine are currently trading in accordance with the free trade agreement between CIS countries. Moscow says it is trying to defend its economic interests and has said Kiev will lose the tariff-free preference and food exports to Russia from the beginning of the next year.

Accusing Russia of sabotaging the talks is false and cynical, said Russia’s First Deputy Prime Minister Igor Shuvalov, adding that the Russian authorities will release all information concerning the progress of the negotiations.