| June 27, 2014
Click on the link to get more news and video from original source: http://www.businessweek.com/articles/2014-06-27/putins-economic-model-showing-strain-as-russia-is-spurned-by-foreign-banks
Photograph by Yuri Kadobnov/AFP via Getty Images
Russia warned Ukraine today that it faces “grave” economic consequences, including potential new restrictions on trade, after President Petro Poroshenko signed a free-trade agreement with the European Union.
Such retaliation would certainly harm Ukraine, which sends about one-fourth of its exports to Russia. But the construction of new trade barriers only underscores the bunker mentality that underlies President Vladimir Putin’s management of Russia’s economy—and the increasing risk it poses to the country’s economic health.
In an eye-opening report today, Bloomberg News journalists in Moscow describe an economic system that’s increasingly run by the Kremlin, isolated from global markets, and starved for financing. Among the key points:
• State-controlled enterprises now account for more than half the national economy, up from 30 percent when Putin came to power in 1999.
• The central bank is pouring unprecedented sums into a troubled banking system that’s largely under state control after foreign competitors were squeezed out.
• Now the overstretched central bank is being ordered to step up long-term financing to designated industries.
As relations with the West deteriorate, economic xenophobia seems to be taking root. In recent weeks, Putin has called for restrictions on imports of advanced technologies, in an effort to stimulate domestic technology development. He’s set up a state-run payments system to compete with Visa (V) and MasterCard (MA). And a law taking effect on Aug. 1 will require foreign companies operating messaging and social networking services in Russia to store user data and messages on servers within the country.
Ultimately, these steps will probably hurt Russia more than its trading partners. “The measures the president is proposing will certainly limit competition and freeze modernization. They will lead to an increase in market regulation and protectionism.” No, that’s not a wild-eyed government critic speaking—it’s Alexei Kudrin, a member of Putin’s economic council who was Russia’s finance minister from 2000 to 2011, speaking to Bloomberg News in an interview.
About $90 billion in capital is expected to flee Russia this year, and higher borrowing costs have largely shut Russian companies out of external debt markets since the annexation of Crimea. That leaves Russian companies scrambling to find other sources of financing. Just today, state-run oil company Rosneft (ROSN:RM) raised at least $1.5 billion by getting BP (BP) to prepay for fuel it expects to receive over the next five years.
Most Russian companies, though, aren’t sitting on billions of dollars worth of oil. Instead, they’re turning to domestic lenders such as state-controlled Sberbank (SBER:RM) and VTB Bank (VTBR:RM). Central bank financing to commercial lenders has more than doubled in the past year, to $142 billion in April. Adding to pressure on the central bank, Putin has ordered it to set up a new financing mechanism for Russian industry.
“The banking system is close to having a deficit of assets that can be used as collateral to get funds from the central bank, while demand for refinancing is continuously increasing,” Sberbank Chief Executive Officer Herman Gref told Bloomberg News.
Why aren’t more business leaders sounding the alarm? Fear of Kremlin retaliation is certainly one factor. Another is Putin’s 86 percent approval rating—which has been strengthened, at least in the short term, by a population rallying around its embattled leader.
Time is running short, though. “The geopolitical tension is bad, but the problem with financing is far more serious,” says Alexey Vedev, head of the Gaidar Institute’s Center for Structural Research in Moscow. “This can’t go on forever.”
5 June 2014 Last updated at 15:47 ET
Click on the link to get more news and video from original source: http://www.bbc.com/news/world-europe-27719728
Barack Obama: “If Russia’s provocation continues, the G7 nations are ready to impose additional costs”
Leaders of the G7 industrial nations have urged Russia to begin talks with the new leadership in Kiev to end the crisis in eastern Ukraine.
US President Barack Obama and UK PM David Cameron said Moscow must recognise Petro Poroshenko, who takes office as president on Saturday.
The G7 leaders meeting in Brussels said they were fully behind Mr Poroshenko.
Later in Paris Mr Cameron met Russian President Vladimir Putin, giving him a “very clear and firm set of messages”.
The two leaders met in a customs area of the French capital’s Charles de Gaulle airport.
This was Mr Putin’s first face-to-face meeting with a Western leader since the Ukraine crisis began.
“The status quo, the situation today, is not acceptable and it needs to change,” Mr Cameron said.
“We need the Russians to properly recognise and work with this new president. We need de-escalation, we need to stop arms and people crossing the border. We need action on these fronts.”
Mr Putin later met French President Francois Hollande for dinner, but according to Russian media no announcements were made after the meeting. Mr Hollande was to see Mr Obama for a separate meal.
Analysis Hugh Schofield, BBC News, Paris
Desperate not to offend either of his mutually loathing invitees, the French president has taken the unusual step of agreeing to eat two meals in one evening.
First he dines on Thursday night at the Chiberta restaurant – just by the Arc de Triomphe – with President Obama.
Then – after presumably toying with his Michelin-starred plat and definitely not ordering the cheese – he returns to the Elysee for what they are calling “supper” with Vladimir Putin.
It is an unusual situation for a head of state – a reminder perhaps of the lengths Mr Hollande is prepared to go to make these two days a success.
When you are as unpopular at home as the president is, a big international shindig can come as a lifesaver. And shindigs rarely come as big as this one.
Mr Putin has not ruled out a meeting with Mr Poroshenko at a ceremony to mark the 70th anniversary of the D-Day landings in Normandy on Friday.
No talks are planned between Mr Putin and Mr Obama, who will also be at the ceremony.
Meanwhile, fighting continued in eastern Ukraine, with reports of an attack on a border post in Donetsk region.
A convoy of vehicles carrying pro-Russian separatists was involved in the attack near the Marynivka checkpoint which has now been repelled by government forces, the Ukrainian border guard service said.
The attack comes a day after rebels seized a border guard base in neighbouring Luhansk region after days of combat.
Speaking at a news conference in Brussels with Mr Cameron, Mr Obama said Russia should “seize the opportunity” provided by the change of leadership in Kiev, and be prepared to face sanctions if the situation continued to deteriorate.
“Russia needs to recognise that President-elect Poroshenko is the legitimately elected leader of Ukraine and engage the government in Kiev,” he said.
“Given its influence over the militants in Ukraine, Russia continues to have a responsibility to convince them to end their violence, lay down their weapons and enter into a dialogue with the Ukrainian government.
“On the other hand, if Russia’s provocations continue, it’s clear from our discussion here that the G7 nations are ready to impose additional costs on Russia.”
Earlier, German Chancellor Angela Merkel said that the G7 leaders had “exchanged expectations” about Ukraine and Russia.
“On substance, there is no difference whatsoever,” she said. “There is great common ground.”
European Commission President Jose Manuel Barroso said the group was united in sending a “resolute message” to Russia, that it should “recognise and fully engage with” the new Ukrainian authorities.
He added that Russia should “take concrete and credible measures to de-escalate the situation in the east of Ukraine”.
Barroso: “This democratic club… does not accept the Russia of Vladimir Putin”
The G7 summit is the first since Russia was expelled from the group following its annexation of Crimea in March.
On Thursday, leaders also discussed the global economic outlook, climate change and development issues.
5 June 2014 Last updated at 14:35 ET
Click on the link to get more news and video from original source: http://www.bbc.com/news/world-europe-27722256
President Barack Obama has said he has told France of his concerns about the sale of two warships to Russia in the light of the crisis in Ukraine.
The first carrier is due for delivery this year in a 1.2bn euro (£1bn; $1.6bn) deal signed in 2011.
Mr Obama said while he recognized it was a big deal and important for French jobs, “I think it would have been preferable to press the pause button”.
Paris says it will not halt the deal unless further EU sanctions are agreed.
A foreign ministry spokesman said a contract had been signed and had to be honored.
Russian President Vladimir Putin, who is among some 18 international leaders taking part in D-Day landings commemorations in France, has said he expects Paris to go through with the warship deal.
“We’re open, I would say even ready eventually, to signing new orders if our French partners wish to carry on this co-operation,” he told French TV.
But President Francois Hollande has come under sustained pressure from European allies over the Mistral-class helicopter carriers which are set to be delivered to the Black Sea ports in Crimea, annexed by Russia in March.
Polish Foreign Minister Radek Sikorski has also called on France to cancel the deal because “Russian generals have already said what these ships will be used for: to threaten Russia’s neighbours in the Black Sea and that means Europe’s partners.”
One of the ships is called the Sevastopol, named after the Russian port in Crimea. French media describe the Mistral-class carriers as the “pride of the navy” and Russia’s navy chief has described them as significantly enhancing its combat potential.
Although sanctions and asset freezes have been imposed on Russia by the European Union, US and others since the annexation of Crimea, further measures are being considered.
- May. 30 2014 10:30
- Last edited 10:30
Click on the link to get more news and video from original source: http://www.themoscowtimes.com/news/article/us-lawmakers-want-france-to-sell-russian-ordered-warships-to-nato/501186.html
U.S. lawmakers have urged France to cancel the sale of two advanced helicopter-carrier ships to Russia and suggested that NATO buy or lease them instead.
The purchase would send a strong signal to Russian President Vladimir Putin that “the NATO allies will not tolerate or in any way enable his reckless moves,” they said in a letter to NATO Secretary-General Anders Fogh Rasmussen.
Washington and some European partners have been urging Paris to reconsider its supply of high-tech military hardware to Moscow following Russian action in Ukraine, including its annexation of the Crimean peninsula in March.
Purchasing the ships would also enhance NATO’s capabilities at a time when many members have been cutting defense expenditures, and reassure NATO partners in Central and Eastern Europe, the lawmakers said.
Signatories of the letter included Eliot Engel, the top Democrat on the House of Representatives Foreign Affairs Committee, and the chairman of the U.S. delegation to the NATO Parliamentary Assembly, Michael Turner.
France has said it would press ahead with the deal because canceling would do more damage to Paris than to Moscow. The contract, worth $1.66 billion, has created about 1,000 jobs and includes the option for two more of the advanced vessels.
Four other U.S. lawmakers wrote to Obama earlier this month urging him to oppose the sale of the Mistral ships, which can carry 16 helicopters, four landing craft, 60 armored vehicles, 13 tanks and up to 700 soldiers.
A spokesman for Democratic U.S. Senator Mark Warner, who signed that letter, said he was unaware of any response.
The 2011 French sale was Moscow’s first major foreign arms purchase in the two decades since the fall of the Soviet Union. Former French President Nicolas Sarkozy had hailed the signing of the Mistral contract as evidence the Cold War was over.
The first carrier, the Vladivostok, is due to be delivered by the last quarter of 2014. The second, to be delivered by 2016, is named Sebastopol, after the Crimean seaport.
France Is Preparing to Train Hundreds of Russian Seamen Aboard a Powerful French-Made Warship This Month
France is preparing to train hundreds of Russian sailors to operate a powerful French-made warship this month, defying calls from the U.S. and other Western allies to keep the vessel out of the Kremlin’s hands. WSJ’s Grainne McCarthy joins the News Hub with more on this. Photo: AFP/Getty
PARIS—France is preparing to train hundreds of Russian seamen to operate a powerful French-made warship this month, defying calls from the U.S. and other Western allies to keep the vessel out of the Kremlin’s hands, people familiar with the matter say.
More than 400 Russian sailors are scheduled to arrive on June 22 in the French Atlantic port of Saint-Nazaire to undergo months of instruction before piloting the first of two Mistral-class carriers back to Russia in the fall, said one of these people.
The training is a pivotal step that deepens France’s commitment to fulfilling the $1.6 billion contract to supply Russia with the carriers, which are built to launch amphibious attacks.
The U.S. and other allies have called on the government of President François Hollande to cancel the contract, arguing the ships will significantly enhance Russian naval power at a time when the Ukraine crisis has raised tensions with the Kremlin to their highest levels since the Cold War.
French officials say Mr. Hollande is expected to discuss the contract with Mr. Obama when the leaders meet for dinner in Paris on Thursday, the eve of D-Day commemorations on Normandy’s beaches. The French leader has also scheduled a second—and separate—dinner that evening with Mr. Putin.
Franco-U.S. tensions are already on the menu: Mr. Hollande on Wednesday expressed outrage over the U.S. investigation into BNP Paribas SA, BNP.FR -0.04% which is potentially facing fines of over $10 billion for breach of U.S. sanctions.
Paris insists the training doesn’t tie its hands and that it won’t make a final decision on the ship’s delivery until October. But Mr. Hollande’s government also has said France intends to honor the contract, and privately officials give no indication they will renege.
France’s ability to reverse course on the delivery, defense analysts say, will be diplomatically and commercially constrained once the Russian Navy arrives on its shores to begin the training and prepare to drive the carrier home.
“Four hundred Russian trainees are rather difficult to keep below the radar,” said Nick Witney, a defense analyst with the European Council on Foreign Relations. Other observers say that Paris’s credibility to deliver on future contracts is also at stake.
For months, France’s planned sale has faced staunch opposition from the Obama administration and other Western governments including the U.K. and Poland—criticism that has grown in the wake of Russia’s annexation of Ukraine’s breakaway Crimea region.
“We have said that given the current context it’s not the right timing for those types of transactions to move forward,” said Ben Rhodes, a senior White House official who accompanied Mr. Obama to the G-7 meeting. “We ourselves have put restrictions on certain high-tech materials that could go toward the Russian defense industry.”
The tug of war over the Mistral illustrates how Europe’s reliance on Russian resources risks unraveling strategic alliances that helped the West win the Cold War. The European Union is deeply divided over how far the bloc should go in imposing sanctions on Russia over its actions in Ukraine. Russian natural gas powers homes and businesses across Germany, the EU’s biggest economy, while Russian oligarchs store their fortunes in U.K. banks.
Wednesday’s G-7 was convened without Mr. Putin in an attempt to isolate him on the world stage. But Western diplomats gathering in Brussels say there are some signs Russia may be easing pressure on Ukraine following the May 25 presidential election. That has triggered a fresh debate in Europe and the U.S. about whether to ratchet up sanctions.
The G-7 will make clear that “further sanctions are available” if Mr. Putin doesn’t take steps to calm tensions, German Chancellor Angela Merkel said as she arrived for the meeting.
France, hobbled by decades of deindustrialization and rising labor costs, is hungry for large defense contracts that could help get the country’s beleaguered shipyards back on their feet. Saint-Nazaire, a port that boasts a proud history of building France’s biggest ships, now relies on the occasional cruise-ship contract for economic survival.
The government says about 1,000 jobs are at stake, in a nation with more than 10% unemployment and a stalled economy.
Mr. Hollande said France was committed to delivering the contract but would re-examine it in October.
“If the contract was interrupted there would be a reimbursement,” he said. “There is no reason to enter into that process.”
France has already completed the first ship and built half of the second Mistral, which is scheduled for delivery in 2015. The second ship is named the Sevastopol after the Crimean port that serves as a headquarters for Russia’s Black Sea Fleet.
Asked Wednesday about France’s training plans, Mr. Putin said he expected the French to “fulfill their contractual obligations” and dangled the possibility of new contracts for the country. “If all goes as we agreed, we don’t exclude new orders—not necessarily in naval ships—but perhaps in other areas,” Mr. Putin told French TV.
The Mistral, which looms over the town, is a potent weapon. The length of more than two football fields, the ship is designed to edge up to a shoreline and deploy more than a dozen tanks and attack helicopters as well as hundreds of troops. This type of ship is also an integral part of the North Atlantic Treaty Organization’s defenses, using sensitive communications technology to coordinate operations with other NATO ships.
The potential transfer of that technology to Russia has long worried policy makers on both sides of the Atlantic.
The ship also plugs a crucial gap in Russia’s armed forces. Moscow boasts one of the world’s largest armies and a formidable air force. But Russia’s Black Sea fleet lacks an amphibious vessel like the Mistral, capable of launching a land invasion. That weakness deprived Moscow of a crucial knockout punch in 2008, when Russian troops invaded Georgia but never managed to dominate the former Soviet country’s shoreline, forcing a stalemate.
“A ship like that would have allowed the Black Sea Fleet to accomplish its mission in 40 minutes,” Russian Navy Admiral Vladimir Vysotskiy said at the time.
The proposal to sell France’s prized warship to Russia grew out of the Georgian conflict.
In October 2008, France’s president at the time, Nicolas Sarkozy met with his Russian counterpart President Dmitry Medvedev in the Alpine town of Evian in a bid to shore up a fragile truce Mr. Sarkozy had brokered between Russia and Georgia weeks earlier. By offering to sell Russia the Mistrals, Mr. Sarkozy aimed to persuade the Russians that NATO was no longer an enemy.
Georgian President Mikheil Saakashvili flew to Paris to protest the sale, but Mr. Sarkozy brushed aside his complaints during a tense meeting in the Élysée Palace, according to a French official.
“Look Mikheil, Russia is not going to invade Georgia with this boat,” Mr. Sarkozy said, according to the official. Mr. Sarkozy then quipped that it was no use worrying about a Russian invasion, because the Russians were “already in your territory.”
Years later, the sale has come back to haunt France’s government.
Western diplomats huddled in Vienna to devise a response to Russia’s annexation of Crimea in March. There, a French diplomat recalled how a Canadian colleague cornered him with a question: “Is France going to cancel the sale of those warships to Russia?”
Last month, Assistant Secretary for Europe Victoria Nuland told U.S. lawmakers: “We have regularly and consistently expressed our concerns about this sale.”
French officials, meanwhile, haven been poring over the technical details of the training session and deliberating how to temporarily house the Russian troops while they are in French territory without attracting too much attention, said one of the people familiar with the matter.
The Russian navymen crews are scheduled to sail for France on June 18 on the Smolnyi, a Soviet-era training ship, said Vyacheslav Davydenko, spokesman for Rosoboronexport, the Russian state arms company that is the formal buyer of the ships. Officers for the Mistrals have already arrived in France to begin training on the new ships ahead of the sailors, according to Russian state media.
Russia and France had planned to lodge the troops in a Russian vessel docked in Saint-Nazaire, but one of the people familiar with the matter said French officials are reviewing more discreet options.
Corrections & Amplifications
The name of Russian Navy Admiral Vladimir Vysotskiy was misspelled as Vysotkiy in an earlier version of this article.
—Carol E. Lee, Gregory L. White and William Horobin contributed to this article.
Write to Stacy Meichtry at email@example.com
“I’m proud to be an American and believe in disseminating the truth and that is why after this newscast, I’m resigning.”
Click on the link to get more news and video from original source: http://news.msn.com/world/us-based-tv-anchor-quits-russian-station-during-newscast
March 5, 2014
RT anchor Liz Wahl said she could no longer be “part of a network that whitewashes the actions of Putin.”
WASHINGTON (Reuters) – A Washington-based news anchor for the Russia Today television network quit her job on air on Wednesday, telling viewers she could not be part of a Russian government-funded station “that whitewashes the actions of Putin.”
Citing on-air comments earlier this week by another U.S.-based Russia Today presenter, Abby Martin, that Russian intervention in Ukraine’s Crimea region was “wrong,” Liz Wahl told viewers that “as a reporter on this network, I face many ethical and moral challenges.”
“My grandparents came here as refugees during the Hungarian revolution, ironically to escape the Soviet forces,” Wahl said, adding she was “very lucky to have grown up here in the United States.”
Wahl added she was the daughter of a military veteran and her partner was a doctor at a military base “where he sees everyday the first-hand accounts of the ultimate prices that people pay for this country.”
“And that is why personally I cannot be part of a network funded by the Russian government that whitewashes the actions of Putin,” she said.
“I’m proud to be an American and believe in disseminating the truth and that is why after this newscast, I’m resigning.”
Russia Today could not be reached for comment. The multilingual news and information network broadcasts in more than 100 countries.
(Writing by Peter Cooney; Editing by Jan Paschal)