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    Russian Economy General News: #11

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    Austin

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    Post  Austin on Mon Oct 21, 2019 11:28 am

    In India we have a different experience with Privatisaton , I lived in an era where every thing was government controlled in 80'

    It took 4-5 years to get one land line phone , Milk and Food was rationed and barely there was 2-3 car model on road , I can go on here.

    With privatisation every thing has changed in Telecom Sector and Food Sector as well , Many Government industry are almost 100 % sold to Private player like Hotel Industry or Part Sold and currently Government is on a privatisative drive for Air India , Energy Sectors etc even Rosneft among others are bidding for them.

    All in All Privatisation has been a Boon for India with far more positive then negative.

    Even Rosneft has been Privatised under Putin with stakes sold to BP and other players recently.

    If they plan out well then Privatisation will work out well and will benefit the People.
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    Post  GarryB on Mon Oct 21, 2019 11:38 am

    It took two years to get my fibre broad band installed and it is a private company... ironic that the guys who put it in were ethnically Indian but their work ethic was more cowboy.

    They sent some guys out to connect our house to the fibre network and the guy came out and said the pole out the front was not safe and it needed to be replaced before he could install the fibre. They don't replace poles so we had to call another company. Every 8-9 months the fibre company would call and say they were sending out someone to install fibre and we said the old pole was still there and they said don't worry it doesn't matter and when guy arrived (different guy each time) he said the pole needs to be replaced before they can do it. Eventually... after two years a guy came who listened to what we said... the house behind us had fibre already and that already ran from a different pole and he installed it to the house... two months later we got gigabit fibre.

    The purpose of state companies is to provide a service for everyone, not as a dumping ground for incompetent people who can't function in the real world.
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    Post  Austin on Mon Oct 21, 2019 11:55 am

    Garry , You need to look at the big picture you can have few instance of bad quality of service or good ones but the bigger picture should be more good than bad.

    If you want private capital to come in so that the government can use the same money into more productive use then you have to privatise , You have to sell both the non-performing and performing assets to make it attractive to private players.....they will come in only if there is profit.

    Rosneft is 50 % Government owned and the remaining by big private players or in public stocks. Gazprom is 100 % government owned, both are successful business so you need both types to be in there.
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    Post  Austin on Mon Oct 21, 2019 11:58 am

    Awara group: “Worthy roads finally appear in Russia - progress is impressive”

    https://sdelanounas.ru/blogs/125949/
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    Post  Kimppis on Mon Oct 21, 2019 3:55 pm

    Thanks, but it seems it's just a translation of this article from February 2019 that has already been posted here:

    https://www.awaragroup.com/blog/impressive-progress-of-russian-roads/
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    Post  kvs on Mon Oct 21, 2019 4:10 pm

    Those roads are state funded infrastructure. And the state has to keep the private road companies in line since they love
    to cut corners on the amount of asphalt they lay. If the utopian private everything model was followed, then every road and
    bridge would have a substantial toll for usage and the road construction would only service profitable markets. That is,
    no road development into poorly populated parts of the country. Russia clearly cannot live by such an idiotic model.

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    Post  Austin on Mon Oct 21, 2019 5:20 pm

    Not more than a trillion
    The Central Bank and the Ministry of Finance have decided on the scale of expenditures of the NWF until 2022

    https://www.kommersant.ru/doc/4132959?from=main_1
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    Post  Austin on Mon Oct 21, 2019 6:11 pm

    Medvedev says foreign investors not losing interest in Russia despite sanctions

    https://tass.com/economy/1084285

    According to him, "over the past five years, which was a difficult period, the volume of investment has increased by almost 50%."

    "Feel the difference and co-relation between various forms of pressure and investing," the head of the cabinet said.

    Medvedev recalled that the FIAC was created 25 years ago — in 1994, and foreign investments in the Russian economy started from about $700 mln.

    "Now the annual investment inflow is measured in billions, the total investment of companies that are members of the Foreign Investment Advisory Council is about $180 bln, which is quite a worthy amount," Medvedev stated.
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    Post  GarryB on Tue Oct 22, 2019 7:03 am

    Garry , You need to look at the big picture you can have few instance of bad quality of service or good ones but the bigger picture should be more good than bad.

    I agree the big picture is important, but that is largely ignored when privatisation is suggested... the reasons for doing so are never the real reasons why the changes are made.

    Normally bad service from a government department is easier to fix via someone going through and changing procedures and perhaps replacing a few incompetent idiots who got their jobs for all the wrong reasons than to sell it all off to the highest bidder and just hope for the best.

    The 1990s in Russia was all about asset stripping and a few people became millionaires and billionaires... and the money wasn't earned... it was basically stolen from the people who worked to earn it.

    The claim here was that splitting up and selling the power industry would result in better efficiency and cheaper energy and it simply has not happened. Power is more expensive than it has ever been, and we are burning coal... which we should not be doing because we don't need to.

    For the same reason in the late 1980s there was a big push to put people with mental and social problems out of institutions where they were cared for and into the community. The left wing people were told the community support would be much healthier for these people than hiding them away in asylums and institutions where they are abused and neglected. The right wing people supported it because it would save a shit load of money. All of a sudden people who had the mental ages of children were thrown out into a community that didn't understand them... they were thrown to the dogs.

    It was disgusting.

    What is even worse is that funding is there for expensive soft Australian wood panels for steps in brand new prisons... $700 per step, so that they don't make much noise while people are walking on them at night so it doesn't disturb the prisoners... but our elderly and mentally ill are left to fend for themselves...

    Sometimes social support can be abused, but the alternative of private enterprise can be just as wasteful and heartless.

    If you want private capital to come in so that the government can use the same money into more productive use then you have to privatise , You have to sell both the non-performing and performing assets to make it attractive to private players.....they will come in only if there is profit.

    Bullshit, some of the functions of government don't need to make a profit, and the functions that generate income need to be kept in government hands so that profit can fund less profitable sectors. Healthcare should not create a profit... if it does then you are clearly charging the patients too much.

    When healthcare is privatised then the priority becomes expensive long term treatments instead of cures... for a private investor someone with a disease that can be transmitted to others is best treated for the symptoms for life so they can continue to spread the disease for more future clients. For a government a healthy population is more productive and pays more tax and has less sick days so cures are the focus.

    It is pretty obvious which is better for society.

    Rosneft is 50 % Government owned and the remaining by big private players or in public stocks. Gazprom is 100 % government owned, both are successful business so you need both types to be in there.

    Why? If you run the company properly then why share out 50% of profit to someone else? The interests of the country are more important than the interests of the private investors.

    Those roads are state funded infrastructure. And the state has to keep the private road companies in line since they love
    to cut corners on the amount of asphalt they lay. If the utopian private everything model was followed, then every road and
    bridge would have a substantial toll for usage and the road construction would only service profitable markets. That is,
    no road development into poorly populated parts of the country. Russia clearly cannot live by such an idiotic model.

    Exactly. And I suspect a cheaper lower cost road made by a private company might also need to be relayed every few years at cost too.

    Medvedev says foreign investors not losing interest in Russia despite sanctions

    You make more money in a growing economy... they are not doing it to help Russia, they are doing it to help themselves.
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    Post  Austin on Tue Oct 22, 2019 6:18 pm

    Twenty-five years of investment alone

    https://www.kommersant.ru/doc/4133635?from=four_economic

    The EY indicates that the influx of foreign direct investment for the entire period of the FIAS (from 1994 to 2018) is estimated at $ 585 billion - so every third dollar invested in the Russian economy by foreign companies fell on board members. The leaders at the end of 2018 were American companies - they invested twice as many European and five times as many Asian. At the same time, as Alexander Ivlev, Managing Partner for CIS in the CIS, noted, Asian companies are the leader in the planned investment growth in the coming year. In 2019, based on the results of the survey, the total investment may reach $ 6.5 billion.

    So in 25 years Russia received Foreign Investment of $585 billion !
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    Post  GarryB on Wed Oct 23, 2019 1:47 am

    Investment that created a lot of wealth for a few... all those Russian millionaires now living in the UK and US... they are the Russian portion of the jigsaw.

    Obviously the Russians wanted to make sure the money value of everything they privatised stayed in Russia so only Russians could buy state owned assets... but rich westerners simply found a Russian and gave them the money to buy up these assets and then shared in the plunder... so westerners like Browder made millions of dollars in Russia very very easily... sure... he had to have a guy murdered to cover his crimes but it is a small price for him to pay right?

    Almost 600 billion dollars invested and if you tracked that you would see most of the results are now in banks in Switzerland or London or the US...

    It wasn't charity.
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    Post  kvs on Wed Oct 23, 2019 2:10 am

    I recall how during the early 1990s the monetarists were calling for the shut down of Russia's "rust belt" metal industry. The
    routine excuse was made that it was all outdated Soviet junk that would never be competitive.

    Thank God that their calls were never turned into reality. The Russian metal industry has been completely revamped and
    is vital for the economic well being and independence of Russia. Anyone who thinks privatization is smart is an idiot.

    https://bernardmarr.com/default.asp?contentID=1179

    https://iopscience.iop.org/article/10.1088/1757-899X/150/1/012001/pdf

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    Post  calripson on Wed Oct 23, 2019 4:04 pm

    There was also a western media spin that Russia had to abandon development in Siberia and the North - I believe the western articles were usually titled something like "Frozen Dreams". The gist of the spin was Russia should abandon those resource-rich regions and focus on "economically viable areas" like Moscow.

    That was right up there with the plummeting population being good for Russia because it meant a higher GDP per capita!

    By the way, those people never went away. They are still waiting in the wings for Putin to exit the scene.
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    Post  miketheterrible on Wed Oct 23, 2019 4:17 pm

    calripson wrote:There was also a western media spin that Russia had to abandon development in Siberia and the North - I believe the western articles were usually titled something like "Frozen Dreams". The gist of the spin was Russia should abandon those resource-rich regions and focus on "economically viable areas" like Moscow.

    That was right up there with the plummeting population being good for Russia because it meant a higher GDP per capita!

    By the way, those people never went away. They are still waiting in the wings for Putin to exit the scene.

    Those people being Kudrin, Chubias, and Greff.

    But since those people have no power and will never obtain power again. They are hated beyond you can imagine. Putin will leave but be in the background - or he will become PM again. Next person will continue on.

    There is a reason why those people aren't going to get in. Its the reason why Putin got in. FSB and intelligence has far more power than you know. The Liberals are the most hated and within United Russia party (dominant), they wont get far at all.
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    Post  zorobabel on Thu Oct 24, 2019 3:45 am

    I don't know if this was previously reported, but the National Welfare Fund has already reached 7% of GDP: https://www.themoscowtimes.com/2019/08/05/russias-national-welfare-fund-doubled-in-july-to-124-billion-a66714

    This means that starting in early 2020, Russia will be able to spend its budget surplus on development. Last year it was 2% of GDP and this year it may be even more.
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    Post  Big_Gazza on Thu Oct 24, 2019 11:38 am

    zorobabel wrote:I don't know if this was previously reported, but the National Welfare Fund has already reached 7% of GDP: https://www.themoscowtimes.com/2019/08/05/russias-national-welfare-fund-doubled-in-july-to-124-billion-a66714

    This means that starting in early 2020, Russia will be able to spend its budget surplus on development. Last year it was 2% of GDP and this year it may be even more.

    Reading the link, we find this little howler...

    "Unconfirmed reports suggested that the NWF is also eyed for supporting the troubled downstream oil industry "

    Troubled? Oh, my giddy aunt...   Is there no end to the inbred buttfuckery of these Atlantacist sock puppets???

    Especially when if starts off with:

    "The sudden rise was caused by the Ministry of Finance adding cash to the NWF it siphons off from oil revenues"

    So there was a sudden rise of O&G revenue, but the industry is "troubled"....  Apparently the lack of consistency doesn't trouble the presstitite scribbler responsible for this steaming pile?

    Moscow Times and bne IntelliNews...  Two fake-news media whores engaged in a soixante-neuf...
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    Post  Austin on Thu Oct 24, 2019 2:07 pm

    Glazyev: about $ 1 trillion withdrawn from Russia over the past 30 years
    Vedomosti October 23, 20:49


    The outflow of capital from Russia over the past 30 years amounted to about $ 1 trillion, and from the countries of the former Soviet Union - $ 2 trillion. This was stated by Minister for Integration and Macroeconomics of the Eurasian Economic Commission (EEC) Sergei Glazyev at the Russia-Africa economic forum, TASS reports .

    The reason for the large-scale withdrawal of capital from the country was the macroeconomic policy recommended by the International Monetary Fund (IMF), Glazyev said. According to him, Africa also suffered heavy losses due to IMF recommendations.

    To improve the economic situation, Glazyev advised relying on his own key areas - mineral resources and infrastructure, as well as having strategic development plans and the possibility of financing his own development. He suggested that African countries, together with the Eurasian Economic Union, consider the possibility of creating a new monetary and financial architecture that would focus on the development of real sectors of the economy.

    https://www.vedomosti.ru/economics/news/2019/10/23/814544-glazev
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    Post  Austin on Thu Oct 24, 2019 3:36 pm

    US awaits "financial armageddon"

    https://ria.ru/20191024/1560129853.html
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    Post  Viktor on Thu Oct 24, 2019 6:05 pm

    Nice start for both

    “The number of signed agreements, memoranda, contracts is more than 50, the total amount of only those that we know about at this moment is more than 800 billion rubles. This is a little more than ten billion dollars. But the meetings continue,” Kobyakov noted.

    https://www.vestifinance.ru/articles/127194
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    Post  Austin on Thu Oct 24, 2019 6:16 pm

    Russia’s New High Speed Rail Route to Cost $36Bln

    https://www.themoscowtimes.com/2019/10/23/russias-new-high-speed-rail-route-to-cost-36bln-a67866
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    Post  kvs on Thu Oct 24, 2019 7:16 pm

    Austin wrote:Russia’s New High Speed Rail Route to Cost $36Bln

    https://www.themoscowtimes.com/2019/10/23/russias-new-high-speed-rail-route-to-cost-36bln-a67866

    I am quite sure that California has spent more on its failed high speed rail line.


    https://en.wikipedia.org/wiki/California_High-Speed_Rail


    Last edited by kvs on Thu Oct 24, 2019 7:23 pm; edited 1 time in total (Reason for editing : Added reference link)
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    Post  kvs on Thu Oct 24, 2019 7:20 pm

    Austin wrote:Glazyev: about $ 1 trillion withdrawn from Russia over the past 30 years
    Vedomosti October 23, 20:49


    The outflow of capital from Russia over the past 30 years amounted to about $ 1 trillion, and from the countries of the former Soviet Union - $ 2 trillion. This was stated by Minister for Integration and Macroeconomics of the Eurasian Economic Commission (EEC) Sergei Glazyev at the Russia-Africa economic forum, TASS reports .

    The reason for the large-scale withdrawal of capital from the country was the macroeconomic policy recommended by the International Monetary Fund (IMF), Glazyev said. According to him, Africa also suffered heavy losses due to IMF recommendations.

    To improve the economic situation, Glazyev advised relying on his own key areas - mineral resources and infrastructure, as well as having strategic development plans and the possibility of financing his own development. He suggested that African countries, together with the Eurasian Economic Union, consider the possibility of creating a new monetary and financial architecture that would focus on the development of real sectors of the economy.

    https://www.vedomosti.ru/economics/news/2019/10/23/814544-glazev


    My so much sugar coating. This money was asset stripping and theft. That includes Khodorkovsky's transfer pricing racket. It also
    includes all the corrupt privatizations where the company built under the Soviet system was operated to suck revenue abroad and then
    bankrupted. The Yeltsin shock therapy capitalism was a racket where the money would flow outside of Russia never to return. Of course
    this is not a model for economic growth. It is a model for conversion of a country into a 3rd world toilet. NATO was banking on
    this vulture capitalism (anchored in NATO itself) to destroy Russia. Too bad for NATO that its dreams failed.

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    Post  franco on Thu Oct 24, 2019 9:25 pm

    In Russia will raise the minimum wage

    On October 24, 2019, the State Duma of Russia at its plenary meeting adopted in I (first) reading a bill to increase the minimum wage (minimum wage). According to the bill, since January 2020, the minimum wage will increase by 850 rubles and will amount to 12,130 rubles, i.e. growth will be 7.5%.

    It must be recalled that, according to the current situation, the minimum wage is 11280 rubles. According to the Russian Ministry of Labor, a new increase in the minimum wage will affect about 3.2 million people. At the same time, 50% of these people work in state and municipal organizations and institutions.

    The draft federal law proposes from January 1, 2020 to establish a minimum wage in the amount of 12130 rubles per month, an increase in the minimum wage in 2020 will be 850 rubles, an increase of 7.5% - Deputy of the Ministry of Labor Vsevolod Vukolov told the deputies.

    In addition, as a senior official specified, taking into account the application of district coefficients and percentage wage increases in excess of the minimum wage, the minimum wage will increase from 850 rubles in the central and southern regions of the country to 2,550 rubles in the Chukotka Autonomous Region.

    As emphasized, the amount of expenditures of the budget system in 2020 for the implementation of this bill will amount to 20.9 billion rubles, of which 5.8 billion rubles will be allocated from the federal budget.
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    Post  franco on Fri Oct 25, 2019 8:22 am

    Rosneft completely abandoned the dollars

    Rosneft has completely abandoned the use of the dollar in foreign trade transactions - all export contracts have been converted to euros, the head of the largest producing company, Igor Sechin, said on Thursday. According to him, so far this is a necessary measure related to the threat of expansion of US sanctions.

    “The potential for using the European currency is very large,” Sechin said, adding that in the future, the yuan also has great chances to become a reserve currency.

    As for the dollar, its status as the main means of settlement in world trade raises questions, since the imposition of the US agenda on global markets leads to negative consequences for the end consumer, including the European one, the head of Rosneft believes. “The US is manipulating interest rates and abusing the position in the global economy,” Sechin complained.

    Under these conditions, he emphasized, it is necessary to once again ask the question: should the dollar be a world reserve and trading currency, can one rely on the United States as a source of stability in the global economy and energy in the current conditions? “The question, of course, is rhetorical,” Sechin summed up, according to Finanz .

    When exactly the reversal of Rosneft's financial flows towards the European currency occurred, he did not specify.

    The company's comments on the IFRS report for the first half of the year showed the exact opposite: Rosneft almost completely got rid of the euro in its accounts and brought the dollar’s ​​share in its “currency pillow” to 90%.

    So, if by December 31 the company had 5.9 billion euros and 9.3 billion dollars in the form of liquid financial assets (cash and deposits), then by June 30, 0.7 billion euros and 7.2 billion dollars remained.

    Rosneft, in principle, cannot get rid of the dollar, in principle, since half of its debt is denominated in US currency. This is the $ 26.8 billion that the company owes to western credit and bank creditors.

    http://in24.org/economics/37634

    NOTE: story has some contrary comments so maybe has been taken partially out of context
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    Post  calripson on Fri Oct 25, 2019 5:01 pm

    Yandex recently reported very good revenue and income growth - around 36% year over year. The share price fell on the earnings call. Why? Recent Russian government legislation seeks to cap foreign ownership in Yandex at 20%. As we all know, companies like Yandex have tremendous value in shaping the hearts and minds of the consumer. Limiting foreign ownership is essential. Note Yandex is registered not in Russia but in the Netherlands. The owner of Yandex - holding 48% - holds "multiple passports". He has promised to push to increase foreign ownership to 50% as well as "to do everything possible to protect shareholders' interests".

    There is Russia's fundamental problem under Russified Neoliberal economics in a nutshell. How to reconcile the interests of the pro-western business class (that Putin sees as essential to economic growth and innovation) with national interests? Their interests are by definition globalist not national.


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