December 30, 2024

Economist Sergei Guriev Doesn’t Plan Return to Russia Soon

Mr. Guriev had taken steps to withdraw his candidacy for the board of Sberbank earlier this week, but bank officials said it was too late to remove his name from the ballot, which made Friday’s announcement all the more dramatic. He received more votes than any other candidate — indeed more than the bank’s chairman.

Though the votes for Mr. Guriev were cast days ago, before the news broke that he had fled, the results leave little doubt that he has the sympathy of a range of powerful figures in the world of finance and government. The bank’s chairman, German Gref, said Mr. Guriev could remain on the board and take part in board meetings by teleconference.

Mr. Guriev’s ideas had helped guide economic policy during the presidency of Dmitri A. Medvedev. After Vladimir V. Putin returned to the post, Mr. Guriev became one of the most prominent people to vocally support opposition causes. Since then, prosecutors have questioned him repeatedly in a conflict-of-interest case centering on a 2011 report he helped write that criticized the prosecution of Mikhail B. Khodorkovsky, a Putin rival and oil tycoon.

Kremlin officials have cast Mr. Guriev’s decision to leave the country as a purely personal one, but many in Moscow saw his flight as part of a new and foreboding phase in the crackdown on political opposition.

The Sherbank vote is “a display of solidarity from what are known as ‘in-system liberals,’” said Yevgeny N. Minchenko, director of the International Institute for Political Expertise in Moscow. Mr. Guriev, he said, is well connected in this circle of powerful technocrats who still dominate in Russia’s economic sphere, corporate world and system of higher education.

For days, Moscow insiders have been debating whether Mr. Guriev had truly been in jeopardy, and on Friday he offered a detailed account in e-mail exchanges of what led to his decision to leave Russia. He said scrutiny from investigators in the court case had mounted over the spring, culminating in a sudden — and, to his mind, alarming — demand that he surrender five years’ worth of professional and personal e-mails and submit to searches of his office and home.

In particular, he was worried that investigators were preparing to name him as a suspect rather than a witness in the conflict-of-interest case. Prosecutors contend that some of the experts who helped write the 2011 report that criticized the prosecution of Mr. Khodorkovsky had received money years earlier from his company, Yukos.

Mr. Guriev feared that the authorities could take away his passport and prevent him from leaving Russia — a serious consideration because his wife and children live in France. He said he also feared that the authorities would press him to serve as a witness in a new prosecution targeting Mr. Khodorkovsky, who is due for release from prison next year.

His informal exchanges with investigators were disturbing, he said — one of them asked if he was considering leaving Russia. In late April, increasingly anxious, he reached out to well-placed friends and concluded that his political protection had diminished.

“Some people told me the risks are acceptable, some advised me not to return, but nobody gave guarantees,” he said.

“I won’t go back even if there is a small chance of losing my freedom,” he said by e-mail. “I have not done anything wrong and do not want to live in fear.” He added that he had “no issues with Putin or Medvedev.”

Moscow’s power elite has been consumed with discussion of the case this week. In pro-government circles, many said Mr. Guriev had over-dramatized the investigation. But most analysts agreed on one thing: Mr. Guriev falls into a category of power brokers who disagree with the Kremlin’s anti-Western course and intense consolidation of power, but who have generally remained quiet about political changes.

Patrick Reevell contributed reporting from Paris.

Article source: http://www.nytimes.com/2013/06/01/world/europe/economist-sergei-guriev-doesnt-plan-return-to-russia-soon.html?partner=rss&emc=rss

DealBook: Canada Clears $15 Billion Chinese Takeover of an Energy Company

Canada's prime minister, Stephen Harper, warned that it would be the last such sale.Chris Wattie/ReutersCanada’s prime minister, Stephen Harper, warned that it would be the last such sale.

MONTREAL — Canada on Friday allowed a Chinese state-run oil giant to move forward with $15 billion takeover of a domestic energy company, but the government indicated that such deals might not pass muster in the future.

The deal — the acquisition of Nexen by the China National Offshore Oil Corporation, or Cnooc — is the latest effort by the Chinese government to find new sources of oil and natural gas reserves to help drive the country’s growth. The state-run Cnooc has been active, striking several partnerships in Canada and the United States.

Canada, in part, has welcomed the alliances.

Prime Minister Stephen Harper has been trying to create new markets to export Canadian energy, which is largely dependent on the United States for its exports. He has been courting China since the United States stalled approval of the Keystone XL pipeline project, which would move more oil sands production to the Gulf Coast.

On Friday, the government also approved a $5 billion acquisition of Progress Energy Resources of Canada by Petronas, the Malaysian state-owned oil and gas company.

But the Nexen deal has also reignited the controversy over strategic assets ending up in the hands of foreign owners. Seven years ago, Cnooc gave up on an $18.5 billion bid for Unocal of the United States after political opposition. Two years ago, Sinochem, a Chinese chemicals maker, backed away from buying the Potash Corporation of Saskatchewan for similar reasons.

A Nexen oil sands facility in Alberta. The company is being acquired by the China National Offshore Oil Corporation.Jeff Mcintosh/The Canadian Press, via Associated PressA Nexen oil sands facility in Alberta. The company is being acquired by the China National Offshore Oil Corporation.

The Nexen bid prompted nationalistic concerns in Canada. Some conservative members of Parliament worried about Cnooc, which is an arm of the Chinese government, gaining control over energy assets generally controlled by Canadian provinces.

Recognizing the sensitivity of the deal, Mr. Harper noted that foreign investment rules would be changed to block companies owned by foreign governments from acquiring properties in Alberta oil sands in all but “exceptional” circumstances.

“Canadians generally, and investors specifically, should understand that these decisions are not the beginning of a trend, but rather the end of a trend,” Mr. Harper said at a news conference. “When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments.”

It is not clear how the directive will play out on the deal-making front.

Gordon Houlden, director of the China Institute at the University of Alberta, said that the government’s new position might not be well received in China despite Canada’s approval of the Nexen transaction. “This will be a very mixed message for the Chinese,” Mr. Houlden said. “They had ambitions far beyond Nexen.”

He added that Canada’s new stance could also constrain several major state-owned oil companies, particularly Statoil of Norway, which has significant investments in North America. “This will create a major barrier to investors with some of the deepest pockets and who are prepared to think in terms of decades rather than quarters,” he said.

The government’s decision also did not necessarily quell criticism within Canada. Within seconds of the prime minister’s release, Peter Julian, a member of Parliament for the opposition New Democrats, condemned the Nexen approval as an act of “rubber stamping” that did not reflect the views of most Canadians.

The government’s shifting sentiments could curb the deal-making spirits of Chinese companies.

To help drive China’s growth, the government has been amassing natural resources in North America, and in riskier areas like Africa and Venezuela. In North America, Chinese companies have mainly focused on taking stakes in energy companies, rather than buying them.

In July, Sinopec, a competitor to Cnooc, agreed to pay $1.5 billion for a piece of the North Sea operations of Talisman Energy, another Canadian oil company.

After agreeing to buy Nexen in July, Cnooc made several moves to gain the support of the Canadian government. The Chinese company announced plans to keep Nexen management and establish Calgary, Alberta, as its headquarters for North and Central America.

“The Chinese are likely not to look at the oil sands for a while,” said Oliver Borgers, a Toronto lawyer with McCarthy Tétrault who frequently represents companies seeking approval of takeovers under Canada’s foreign investment laws. “The policy is not directed at them specifically, but it’s going to have a major impact.”

But Canada may find it difficult to entirely rebuff the overtures of well-financed Chinese players. Major oil and gas deals require enormous financing, and Canada needs to further develop the oil sands. All of that takes money, which the Chinese government-owned companies have.

Nexen’s own financial struggles prompted its relationship with the deep-pocketed Cnooc. Nexen, which was formed by the merger of two Canadian units of Occidental Petroleum in 1971, has struggled with weak production and profits. One of its core sources of reserves, Yemen, has been plagued by political instability.

Nexen has also run into trouble in its own backyard. OPTI Canada, Nexen’s partner in an oil sands operation in Long Lake, Alberta, went bankrupt after a series of production delays. Cnooc then acquired OPTI Canada for $2.1 billion, giving the Chinese a 35 percent holding in the project.

“I’m not sure you can do without state-owned enterprises,” said Burkard Eberlein, a professor of public policy at the Schulich School of Business at York University in Toronto. “They’re saying, ‘We are open for business, but we are very suspicious of that kind of investor.’ ”

A version of this article appeared in print on 12/08/2012, on page B1 of the NewYork edition with the headline: Canada Clears $15 Billion Chinese Takeover of an Energy Company.

Article source: http://dealbook.nytimes.com/2012/12/07/canada-clears-15-billion-chinese-takeover-of-an-energy-company/?partner=rss&emc=rss

DealBook: Canada Clears $15 Billion Chinese Takeover of an Energy Company

Canada's prime minister, Stephen Harper, warned that it would be the last such sale.Chris Wattie/ReutersCanada’s prime minister, Stephen Harper, warned that it would be the last such sale.

MONTREAL — Canada on Friday allowed a Chinese state-run oil giant to move forward with $15 billion takeover of a domestic energy company, but the government indicated that such deals might not pass muster in the future.

The deal — the acquisition of Nexen by the China National Offshore Oil Corporation, or Cnooc — is the latest effort by the Chinese government to find new sources of oil and natural gas reserves to help drive the country’s growth. The state-run Cnooc has been active, striking several partnerships in Canada and the United States.

Canada, in part, has welcomed the alliances.

Prime Minister Stephen Harper has been trying to create new markets to export Canadian energy, which is largely dependent on the United States for its exports. He has been courting China since the United States stalled approval of the Keystone XL pipeline project, which would move more oil sands production to the Gulf Coast.

On Friday, the government also approved a $5 billion acquisition of Progress Energy Resources of Canada by Petronas, the Malaysian state-owned oil and gas company.

But the Nexen deal has also reignited the controversy over strategic assets ending up in the hands of foreign owners. Seven years ago, Cnooc gave up on an $18.5 billion bid for Unocal of the United States after political opposition. Two years ago, Sinochem, a Chinese chemicals maker, backed away from buying the Potash Corporation of Saskatchewan for similar reasons.

A Nexen oil sands facility in Alberta. The company is being acquired by the China National Offshore Oil Corporation.Jeff Mcintosh/The Canadian Press, via Associated PressA Nexen oil sands facility in Alberta. The company is being acquired by the China National Offshore Oil Corporation.

The Nexen bid prompted nationalistic concerns in Canada. Some conservative members of Parliament worried about Cnooc, which is an arm of the Chinese government, gaining control over energy assets generally controlled by Canadian provinces.

Recognizing the sensitivity of the deal, Mr. Harper noted that foreign investment rules would be changed to block companies owned by foreign governments from acquiring properties in Alberta oil sands in all but “exceptional” circumstances.

“Canadians generally, and investors specifically, should understand that these decisions are not the beginning of a trend, but rather the end of a trend,” Mr. Harper said at a news conference. “When we say that Canada is open for business, we do not mean that Canada is for sale to foreign governments.”

It is not clear how the directive will play out on the deal-making front.

Gordon Houlden, director of the China Institute at the University of Alberta, said that the government’s new position might not be well received in China despite Canada’s approval of the Nexen transaction. “This will be a very mixed message for the Chinese,” Mr. Houlden said. “They had ambitions far beyond Nexen.”

He added that Canada’s new stance could also constrain several major state-owned oil companies, particularly Statoil of Norway, which has significant investments in North America. “This will create a major barrier to investors with some of the deepest pockets and who are prepared to think in terms of decades rather than quarters,” he said.

The government’s decision also did not necessarily quell criticism within Canada. Within seconds of the prime minister’s release, Peter Julian, a member of Parliament for the opposition New Democrats, condemned the Nexen approval as an act of “rubber stamping” that did not reflect the views of most Canadians.

The government’s shifting sentiments could curb the deal-making spirits of Chinese companies.

To help drive China’s growth, the government has been amassing natural resources in North America, and in riskier areas like Africa and Venezuela. In North America, Chinese companies have mainly focused on taking stakes in energy companies, rather than buying them.

In July, Sinopec, a competitor to Cnooc, agreed to pay $1.5 billion for a piece of the North Sea operations of Talisman Energy, another Canadian oil company.

After agreeing to buy Nexen in July, Cnooc made several moves to gain the support of the Canadian government. The Chinese company announced plans to keep Nexen management and establish Calgary, Alberta, as its headquarters for North and Central America.

“The Chinese are likely not to look at the oil sands for a while,” said Oliver Borgers, a Toronto lawyer with McCarthy Tétrault who frequently represents companies seeking approval of takeovers under Canada’s foreign investment laws. “The policy is not directed at them specifically, but it’s going to have a major impact.”

But Canada may find it difficult to entirely rebuff the overtures of well-financed Chinese players. Major oil and gas deals require enormous financing, and Canada needs to further develop the oil sands. All of that takes money, which the Chinese government-owned companies have.

Nexen’s own financial struggles prompted its relationship with the deep-pocketed Cnooc. Nexen, which was formed by the merger of two Canadian units of Occidental Petroleum in 1971, has struggled with weak production and profits. One of its core sources of reserves, Yemen, has been plagued by political instability.

Nexen has also run into trouble in its own backyard. OPTI Canada, Nexen’s partner in an oil sands operation in Long Lake, Alberta, went bankrupt after a series of production delays. Cnooc then acquired OPTI Canada for $2.1 billion, giving the Chinese a 35 percent holding in the project.

“I’m not sure you can do without state-owned enterprises,” said Burkard Eberlein, a professor of public policy at the Schulich School of Business at York University in Toronto. “They’re saying, ‘We are open for business, but we are very suspicious of that kind of investor.’ ”

A version of this article appeared in print on 12/08/2012, on page B1 of the NewYork edition with the headline: Canada Clears $15 Billion Chinese Takeover of an Energy Company.

Article source: http://dealbook.nytimes.com/2012/12/07/canada-clears-15-billion-chinese-takeover-of-an-energy-company/?partner=rss&emc=rss

India Ink: India’s Economy Continues to Be Weak

A bank employee counting currency notes in Mumbai, Maharashtra in this Feb. 27, 2007 file photo.Indranil Mukherjee/Agence France-Presse — Getty ImagesA bank employee counting currency notes in Mumbai, Maharashtra in this Feb. 27, 2007 file photo.

The Indian gross domestic product report released Friday for the April-June quarter showed that the economy was doing only marginally better than in the previous quarter. Growth was up 5.5 percent during the quarter from a year earlier, compared with 5.3 percent in the period ended in March, which was the weakest growth in nine years.

Analysts said high interest rates have dented investment, while the investor outlook continued to remain bleak. “High inflation, wide trade and current account deficits, bloated subsidies and a gaping fiscal deficit have all taken a toll on the real economy, while the rupee has plunged 25 percent since July 2011,” said Jyoti Narasimhan, senior principal economist at IHS Global Insight. “The investment environment remains toxic because of corruption scandals, policy inertia and fierce political opposition have stifled progress on reform.”

The report showed that the manufacturing output in the April-June quarter rose only 0.2 percent from a year prior, dashing prospects for growth. The growth in agriculture, forestry and fishing was 2.9 percent, while mining and quarrying remained nearly flat at 0.1 percent. The sectors that showed significant growth in the quarter were construction with 10.9 percent growth, financing, insurance, real estate and business services at 10.8 percent and community, social and personal services, which registered a 7.9 percent growth.

Forecasts for the coming year are less than rosy. “Weak growth is likely to remain a strong overhang on the corporate sector, and in the near-term raises chances of a sovereign downgrade, particularly in the light of the stalemate on the policy front,” said Tirthankar Patnaik, the director of institutional research at Religare Capital Markets.

A rebound of the economy is expected to be a gradual process. “The pickup in growth was encouraging, but growth still suffers due to external headwinds and supply constraints,” said Leif Lybecker Eskesen, chief economist for India and Asean at HSBC Global Research. “We expect a gradual recovery from here on the back of structural reform progress and global economic stabilization, although there is a risk that it could prove more protracted.”

All eyes are now on the Reserve Bank of India, the central bank, which meets Sept. 17 to review monetary policy. While there are expectations that a low growth rate would cause the R.B.I. to cut interest rates, just last week the central bank said that lower interest rates alone were not enough to jump-start the investment cycle. “Despite ever-worsening growth data, IHS Global Insight, expects the R.B.I. to wait until October to resume its rate cuts,” said Ms. Narasimhan. “We expect only a shallow recovery in manufacturing and investment, and only a mild upturn is expected by year-end.”

Article source: http://india.blogs.nytimes.com/2012/08/31/indias-economy-continues-to-be-weak/?partner=rss&emc=rss

Rule Change Would Allow Some Foreign-Owned Stores to Open in India

The government said it would lift the current 51 percent ownership limit on foreign companies that sell just one brand of products — a group that would also include companies like Apple and Starbucks — if they met certain strict conditions. Many foreign chains, most notably Ikea, which buys a lot of furniture and furnishings from India, have not opened stores in the country because they did not want to take on Indian partners.

The decision is one of a series of steps Indian officials took in recent weeks to bolster flagging investor confidence and increase the flow of foreign money to support its slowing economy and the falling rupee. This month, for instance, policy makers allowed individual investors who live in other countries to trade directly in the Indian stock market, rather than go through intermediaries like offshore funds.

One of those market-opening proposals, though, was recently tabled after meeting political opposition.

The government, led by the Congress Party, last month reversed a decision to allow 51 percent foreign investment in multibrand retailing — a category that includes companies like Walmart, Tesco and Carrefour. Many Indian political leaders, including some members of the Congress Party and its allies, opposed letting foreign retailers own controlling stakes of stores, saying they would decimate small shopkeepers and wholesale traders that employ about 34 million people. Much of that criticism was aimed at so-called big-box retailers like Walmart, which has a wholesale business in India.

But the decision Tuesday to further open up single-brand retailing to foreign competition — a move officials had signaled in early December — suggests that Prime Minister Manmohan Singh and his aides believe there will not be significant political resistance to the niche foreign retailers, which will largely cater to the middle and upper classes of Indian society.

Still, the approval comes with some strict conditions that may be difficult for some companies to meet. Among them is a requirement that single-brand retailers buy 30 percent of the value of their products from small Indian businesses and artisans — defined as businesses and individuals that have invested less than $1 million in factories or equipment. Previously, some analysts said that such a purchasing condition would violate World Trade Organization rules.

The new rules also say that investors wishing to hold 100 percent of single-brand stores must own the brands that their stores sell, a provision that would preclude franchisers.

Article source: http://feeds.nytimes.com/click.phdo?i=3400226485929a2daa985d67d1c92026

E.C.B. Takes Steps to Ease Cash Crunch at Continent’s Banks

As leaders in Greece and Germany continued to debate how to escape the sovereign debt crisis, the I.M.F. estimated bank risk stemming from the crisis at roughly €300 billion, or $412 billion. Political infighting is partly to blame, the I.M.F. said in its Global Financial Stability Report.

“Political differences within economies undergoing adjustment and among economies providing support have impeded achievement of a lasting solution,” the I.M.F. said.

As if to illustrate the point, the Greek government tried Wednesday to sell its lawmakers on adopting additional austerity measures being demanded by international lenders. Without more aid, Greece could go bankrupt within weeks if not days.

The measures include placing some 30,000 civil servants on a so-called labor reserve program in which their wages would be cut for 12 months, a government spokesman said. The program has been condemned by the political opposition as “a backdoor to layoffs.” Taxes will also be raised on pensions over €1,200 a month and on some pensions for those under 55.

In Berlin, where aid to Greece has become a highly divisive political issue, changes that would expand the main European bailout fund made progress through the German Parliament. But expansion of the fund still faces numerous hurdles, including ratification by other reluctant countries, like Finland.

In its report, the I.M.F. said that some European banks would need fresh capital as insurance against losses stemming from the debt crisis, and some weaker banks might need to be “resolved” or shut down. Taxpayers may again be called on to bolster the banking system, the I.M.F. said.

“Any capital needs should be covered from private sources wherever possible, but in some cases public injections may be necessary and appropriate for viable banks,” the fund said.

One of the most damaging side effects of the crisis has been a reluctance by banks to lend to each other because of doubts about each other’s solvency. The E.C.B. took further steps to address that problem Wednesday, saying it would ease the terms on which it lends to banks at low interest. Most banks must continually refinance their long-term obligations, and some would collapse without access to short-term credit.

The central bank said it would expand its definition of the collateral that banks can provide to receive central bank loans at the benchmark interest rate, which is 1.5 percent. The E.C.B. dropped a requirement that securities placed as collateral should also be traded on an official exchange.

At the same time, the E.C.B. placed further limits on how much of their own bonds banks can use as collateral. Analysts said the limit was intended mostly as a signal that the central bank had not unduly lowered its standards to ensure that banks did not run out of cash.

The E.C.B. is saying “they are not willing to accept all the trash out there,” Carsten Brzeski, a senior economist at ING, told Reuters.

Indicators that banks have been reluctant to lend to each other have been rising for months. In what investors take as a particularly bad sign, a small number of banks have been borrowing emergency dollars from the E.C.B. On Wednesday, one bank borrowed $500 million, stirring fears that a large bank had been cut off by U.S. lenders and might be dangerously close to collapse. The E.C.B. does not disclose the identity of bank borrowers.

On Tuesday, European banks arranged €201 billion in one-week loans from the E.C.B., the most they had borrowed since February. Heavy borrowing from the E.C.B. is interpreted as a sign that the institutions are having trouble raising money at reasonable rates on the open market.

Inspectors from the I.M.F., the E.C.B. and the European Commission were to return to Greece next week after two teleconferences this week with the Greek government. The commission said “progress was made” in the calls on an agreement to pave the way for the release of the next portion of aid, totaling €8 billion.

Article source: http://feeds.nytimes.com/click.phdo?i=9a499df56845b7104b95a4e2114abee1