Saturday 27 December 2014

Russian news - 12/26/2014

Sanctioned: Visa, MasterCard suspend servicing Russian banks in Crimea
MasterCard and Visa have suspended service for Russian banks in Crimea, saying the decision complies with US sanctions.

Reuters / Kevin Lamarque

26 December, 2014

"According to the US sanctions imposed against Crimea on December 19, 2014, Visa currently cannot provide services and offer their products in the Crimea. This means that we can no longer issue or accept bank cards in Crimea, and service them in ATMs," the company has confirmed to TASS.

As for the time period, these limitations will last until the sanctions are lifted from Crimea. At the moment it is unclear when this will happen; it will depend on the development of the political and diplomatic situation. VISA continues to follow closely the events and will provide you with the information as soon as it appears,”a statement to journalists dded.

The Central Bank of Russia has promptly responded saying Crimea banks continue to operate as usual, TASS says.
"Russian credit institutions operating in the territory of the Republic of Crimea and the city of Sevastopol work as usual, including the opening of bank accounts, transferring funds, and deposits and withdrawals of funds," said the Central Bank.

As of December 16, about 31 banks were operating in Crimea.
Last week US President Barack Obama authorized individual and sectoral sanctions against Crimea. This included a ban on the export and import of goods, technology, and services, as well as new investment in the peninsula.
The head of the Duma financial markets committee, Natalya Burykina, has said the move isn’t new and plastic cards haven’t been working in Crimea since March.
Visa did not provide a card service in Crimea,” Burykina said, as cited by RIA Novosti.

She explained the cards in use since March had been issued by Russia’s Sberbank, and were part of their inner payment system.
Reuters / David Mdzinarishvili
Reuters / David Mdzinarishvili

This happened after Crimea joined Russia,” she said, adding that it’s the same with MasterCard.

In March Visa and MasterCard temporarily stopped servicing clients of blacklisted Russian banks, which triggered concerns in Russia over the excessive reliance on the Western financial system.
Since then the Central Bank and economic ministers have accelerated efforts to develop a self-sufficient and independent financial system in Russia.
On Friday, the CBR launched its domestic alternative to the SWIFT global system for banking transactions.

In mid-December, Russia’s sanctioned Rossiya and SMP banks started testing the country’s own payment system.

Kiev cuts electricity, transportation

On Friday, Ukraine also cut off electricity and train services to Crimea. It is the second time in a week that Crimea has been hit by blackouts because, according to the Ukrainian energy ministry, the peninsula failed to curb consumption as required.
"There remains an energy deficit in Ukraine and they [Crimea] exceeded their limit and therefore electricity supplies were switched off. As soon as they return to the limit, they'll be reconnected," an energy ministry spokesman said.
Ukraine's state rail company has also ceased operating its Crimean service for an uncertain time, including both passenger and cargo trains to the Black Sea peninsula.
"In order to ensure the safety of passengers ... [the railway] will cut the route to Crimea off at Novooleksiyvka and Kherson," the company said in a statement.

An American translation company suspended my account because I'm from Crimea

Russia’s new military doctrine lists NATO, US as major foreign threats
Russia has adopted an updated version of its military doctrine, which reflects the emergence of new threats against its national security. NATO military buildup and American Prompt Global Strike concept are listed among them.

AFP Photo / Natalia Kolesnikova

26 December, 2014

The new doctrine was approved on Friday by President Vladimir Putin. Its core remains unchanged from the previous version. The Russian military remains a defensive tool which the country pledges to use only as a last resort.

Also unchanged are the principles of the use of nuclear weapons which Russia adheres to. Their primary goal is to deter potential enemies from attacking Russia, but it would use them to protect itself from a military attack – either nuclear or conventional – threatening its existence.

The new sections of the doctrine outline the threat Russia sees in NATO’s expansion and military buildup and the fact that the alliance is taking upon itself global functions realized with violation of international law.”

The doctrine lists among major foreign military threats the creation and deployment of global strategic antiballistic missile systems that undermines the established global stability and balance of power in nuclear missile capabilities, the implementation of the ‘prompt strike’ concept, intent to deploy weapons in space and deployment of strategic conventional precision weapons.”

The Yury Dolgoruky nuclear-powered submarine.(RIA Novosti / Pavel Kononov)
The Yury Dolgoruky nuclear-powered submarine.(RIA Novosti / Pavel Kononov)

Another new point in the doctrine is that one of the Russian military’s goals is to protect national interests in the Arctic region.

The document also points to the threat of destabilization countries bordering Russia or its allies and deployment of foreign troops such nations as a threat to national security.
Domestically, Russia faces threats of actions aimed at violent change of the Russian constitutional order, destabilization of the political and social environment, disorganization of the functioning of governmental bodies, crucial civilian and military facilities and informational infrastructure of Russia,” the doctrine says.

Moscow sees international cooperation with countries sharing its effort to increase security, particularly members of BRICS, the OSCE, the Shanghai Cooperation Organization and others as the key to preventing military conflicts, the doctrine states.
Traditional threats that Russia must deal with mentioned in the doctrine include extremism and terrorism, proliferation of weapons of mass destruction and rocket technology and actions of foreign intelligence services.
The document notes that modern threats are increasingly drifting from a military nature to informational, and states that the likelihood of anyone launching a fully-fledged war against Russia is decreasing.

Ruble recovers, as big exporters ordered to behave

AFP Photo / Alexander Nemenov

26 December, 2014

The ruble has seen a full week of recovery after its drastic 20 percent drop on December 16 dubbed as ‘Black Tuesaday.’ This was triggered by the call from the Russian government for businessmen to sell currency earnings.

The Russian ruble closed Friday session at 54 against the US dollar, which compares to the average of 56 on Monday.

We are now seeing how the ruble is strengthening. It is now approaching, in my view has already approached, the area of a balanced rate, which is also called a fundamental one,” Russia’s Economy Minister Aleksey Ulyukaev said Friday in an interview with Rossiya 24 TV.

A drastic drop in the ruble’s exchange rate has triggered some of Russia’s biggest exporters in agriculture and energy to either accumulate foreign currency earnings or increase sales overseas.

In agriculture, increased exports of grain have caused a shortage within Russia which also pushed prices up.
To balance the market, the Russian government ordered the introduction Thursday of a 15 percent plus €7.5 export duty on wheat from February 1, 2015. The duty was calculated so the price is no less than €35 per ton.
As for oil companies, they started hoarding foreign currency earnings from selling crude which also poses risks to the domestic economy, as the supply was low compared to the increased demand.

After the CBR and a number of businesses raised concerns over the currency risks, President Putin ordered the Government Issue guidelines for all exporting companies to sell their currency earnings.
On December 23 the government urged the five largest state-owned exporting companies including Rosneft and Gazprom to bring the amount of their net foreign currency assets to an amount not exceeding the level of October 1, 2014.
Russian Finance Minister Anton Siluanov said Thursday the weakening period of the ruble has stopped and the national currency is seeing a strengthening trend.

New Zealand is also part of the move away from the dollar in trade with China

China to Start Payments With Russia in National Currencies on December 29
The China Foreign Exchange Trade System has announced that since December 29, China, Russia, Malaysia and New Zealand will start the usage of national currencies in mutual transactions. Beijing hopes to make the yuan an alternative to the US dollar in global trade.

26 December, 2014

MOSCOW, December 26 (Sputnik) — China will start swaps and forwards between the yuan and the national currencies of Russia, Malaysia and New Zealand on December 29, the China Foreign Exchange Trade System (CFETS) reported Friday.

Earlier in December, China's Minister of Commerce Gao Hucheng claimed that China could increase the usage of yuan in trade with Russia amid the ruble's depreciation, which falls in line with China's intention to increase the usage of national currencies in international payments in order to weaken the US dollar's dominance in global finance and promote the yuan as an alternative.

In October, the Russian Central Bank and the People's Bank of China reached a three-year agreement on currency swaps worth 150 billion yuan (over $24 billion).

Both the Russian and the Chinese leaders have repeatedly praised the decision, saying it would bring positive effects for the countries' economies and currencies.

The main benefits of mutual payments in national currencies are the absence of charges for the conversion of the currencies, direct payments and higher transparency in relations between the banks.

Ukraine Cuts Power To Crimea Again, Halts Train Services

25 December, 2014

There was some expectation following the loud public response following Ukraine's shut down of power to Crimea on Christmas Eve, that Kiev would treat the territory which it alleges is still part of Ukraine as, well, part of Ukraine. And sure enough, a few hours after the regionwide blackout was first reported, Ukraine restored power. Until today, when moments ago we learned that not only did Ukraine cut off electricity to Crimea earlier today, but also halted train services, moves which, according to the WSJ, could raise tensions with Russia, but which also will harden the local popluation's pro-Russian determination even further.

View image on Twitter
Repeated power blackouts in Crimea. Here's Sevastopol 10 mins ago. Cars are the only illuminated objects
View image on Twitter
Ukraine to suspend all trains to Crimea over security concerns - Ukrzaliznytsia 
Crimea’s Fuel and Energy Minister Sergei Egorov told Russia’s Interfax news agency that power was cut off at 1:50 p.m. Friday without warning. He said backup diesel generators and mobile turbine power plants were supplying critical infrastructure with electricity. 

More from WSJ:

The power cutoff is the second this week by Ukraine, which says it has electricity shortages of its own because rebels have halted shipments of coal to its power plants. The cutoff in railway services, however, could indicate Ukraine is stepping up its pressure of the peninsula.
Ukraine’s state rail company Ukrzaliznytsia on Friday said it would stop passenger and cargo train services to Crimea “in order to insure the safety of passengers.” The move will affect both Ukrainian and foreign trains traveling to the peninsula, the company said. It didn’t indicate when services would resume.

More from ABC:

Ukraine's state rail company Ukrzaliznytsia has suspended passenger and cargo train services to the Black Sea peninsula of Crimea due to security concerns.

Ukrzaliznytsia said cargo trains would be suspended from Friday while passenger routes would gradually cease running over the weekend and on Monday.
The company did not say how long the suspensions would be in place or specify what the security concerns were.
"In order to ensure the safety of passengers ... (the railway) will cut the route of trains to Crimea off at Novooleksiyvka and Kherson," Ukrzaliznytsia said in a statement, referring to two towns on the Ukrainian mainland near Crimea.

Back to the WSJ: 
Cutting supplies to Crimea may be a lever of influence for Kiev, since the matter has become a headache for Moscow after it annexed the territory in March. Crimea has no overland connection to Russia and has traditionally relied on a land bridge to Ukraine for essentials such as food, power and water.

Alternatively, it may simply force Russia to find an alternative solution much faster than it would have otherwise, much in the same way western financial pressure on Russia has forced the Kremlin and Beijing to accelerate their mutual cooperation not only in the field of energy infrastructure and natgas deals, but has led to China openly providing financial support to the country which is isoleted by the debt-monetizing west, if not by the BRIC countries and other non-US allies, whose combined population is well over half that of the world.

Belarus President Tells "Retailers, Money-Grabbers And Thieves" That Capital Controls "Will Remain Forever"

25 December, 2014

There is just so much win in the following article describing what is taking place in hyperinflation-ridden Belarus (aka a true Keynesian success story), that we decided to post it in its entirety.

State control of prices in Belarus will remain forever
Belarusian President Alexander Lukashenko has said that state control over prices will remain in place in the republic and urged businesses not to count on a liberalization of the price policy after the scraping of a package of emergency measures from the government and the National Bank.
"I was told, and saw it for myself, that some of our scoundrel-officials have been telling entrepreneurs, businessmen and all sorts of thieves that they should wait until around (January) 9th or 15th, everything will be liberalized here, and they would be able to get what they have not until now. People are simply begging to be you know where. I want to say that the trend, as is fashionable to say nowadays, towards control over domestic prices will remain forever," Lukashenko said at a meeting which focused on the country's economic development on Friday.
It is outrageous that certain politicians have been telling businesses the control over price-formation in the country will soon be lifted and businessmen will be able to make up for lost profits, the president said.
"Retailers, middlemen, money-grabbers and thieves working in this sector have become the richest people in our country," Lukashenko said.
"We did all we could to form a proper retail industry in our country. Even if tomorrow we have no more new retail companies, we still have an incredible number of them and middlemen. We could do without new ones. But those that are operating, we'll make them work the way they should," the president said.
"Like I said, unless they heard already: 2-3% of the profit margin. We'll have each type of goods under control, especially imported ones," Lukashenko said.
"They should not expect to be able to hide something somewhere in the hope that after (January) 9th or 15th they would get incredible prices and fill their pockets even more," the president said.

And just like that, we have government central-planning of... everything. Coming soon to every banana republic near you.

No comments:

Post a Comment

Note: only a member of this blog may post a comment.