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    Russian Economy General News: #2

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    Austin


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    Post  Austin Thu Jul 31, 2014 8:29 am

    I like your sense of Hannibal but humour is not a substitute for hard facts.


    Right now it does not look bad because sanction has just started within 3 months the effect will show , there is already talk of -ve GDP growth.


    The Business Climate will get impacted and FDI will slow down drastically or might just stop.


    Short term it will be a shock but medium to long term the impact will be low.
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    Post  magnumcromagnon Thu Jul 31, 2014 9:32 am

    Austin wrote:I like your sense of Hannibal but humour is not a substitute for hard facts.


    Right now it does not look bad because sanction has just started within 3 months the effect will show , there is already talk of -ve GDP growth.


    The Business Climate will get impacted and FDI will slow down drastically or might just stop.


    Short term it will be a shock but medium to long term the impact will be low.

    According to S&P... Rolling Eyes lol1 an entity that's being sued by several countries for selling misinformation and helping cause the economic crisis of 2007/08. Last year they estimated that Russia would grow like only 1% most likely and 3% at most...but guess what? Despite the minimum growth percentage predicted by Western agency's, despite the Rouble losing monetary value the average wage for a Russian citizen jumped by a monumental percentage of 15-18% , the average wage was like $14,400 USD in 2012, and it jumped to $17,700 by the end of 2013 (this includes the Rouble losing significant value from financial warfare). Western rating agency's have always been politicized, and they sold dangerous economic misinformation in the past for their own benefit...hence the reason why BRICS nations are set to create their own rating agencies.
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    Post  George1 Thu Jul 31, 2014 9:46 am

    Argentina Deliberately Defaults, Rejects Alternative Proposals - Reports

    BUENOS AIRES, July 31 (RIA Novosti) – Argentina went into default deliberately, turning down a number of proposals made by the court-appointed mediator, Infobae.com local news website reported Thursday, citing a statement by hedge fund NML Capital.

    The international ratings agency Standard & Poor’s declared Argentina in “selective default” on its bonds, following the country’s failure to reach a deal with its creditors and make a $539 million interest payment on Wednesday.

    After two days of debt negotiations between Argentina and its bondholders held in New York, Argentina’s Economy Minister Axel Kicillof held a press conference, where he said that the situation could not be described as a default.

    According to Infobae.com, overnight into Thursday, NML Capital said in a statement that Daniel Pollack, a mediator appointed by Judge Thomas Griesa to settle the negotiations, had offered multiple creative proposals that could have satisfied the hedge fund. Nevertheless, Argentina refused to consider them, choosing to default.

    The website also reported that NML Capital abstained from commenting on the information and that the representatives of Argentina’s largest private banks continue negotiations with the bondholders.

    The information about those negotiations is rather contradictory. While some media outlets in Argentina report that bank representatives are close to reaching an agreement on debt restructuring, others report that negotiations failed and that the bankers went back to Buenos Aires.

    Argentina restructured 93 percent of its debt but creditors holding the other 7 percent of the bonds did not accept Argentina’s proposal and filed a lawsuit, demanding a full payment.

    A New York court earlier ruled that Argentina had to pay $1.33 billion to its 2001 bondholders who did not agree with the restructuring deal.

    The court had also blocked the transfer of the sum that Buenos Aires forwarded in order to cover its restructured debt, forcing the country to start negotiations with creditors who refused the restructuring deal.

    Over the last 40 years Argentina went through three major debt crises, in 1982, 1988 and 2001, with the default declared by the country’s government in 2001 becoming the largest in history.
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    Post  Austin Thu Jul 31, 2014 10:00 am

    I agree on the Western Rating Agency like S&P , Moodys and Fitch have lost all credibility and is just a tool by West to carry out their Financial Warfare.

    No one takes these Rating Agency any more seriously.

    BRICS should have its own rating agency.
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    Post  sepheronx Thu Jul 31, 2014 10:53 am

    Austin wrote:I like your sense of Hannibal but humour is not a substitute for hard facts.


    Right now it does not look bad because sanction has just started within 3 months the effect will show , there is already talk of -ve GDP growth.


    The Business Climate will get impacted and FDI will slow down drastically or might just stop.


    Short term it will be a shock but medium to long term the impact will be low.

    I dont see how FDI would stop seeing as both China and South Korea have invested billions as well. Not just EU.

    That said, a nation which relies on FDI to survive economically is a sick economy. China gets a huge FDI, but compared to its total economy, it isnt a big factor. As well, India has a very low FDI and is doing better too.

    I just read about US and UK GDP growth and letcme tell you Austin, the measurment is no longer even needed or right. UK now added in prostitiution amd drug trade (which are both illegal in UK) into its GDP forcast. US added in Military spending, credit card spending amd inflation to its GDP forxast. In other words, methods that do not actually help an economy, are being added to fabricate the GDP numbers, is really just sad but prives that this method of economic output means that it has served its purpose for far too long.

    As well, credit rating agencies are pointless. Remember S&P scheme on debt selling? And they are still considered trust worthy when they are one of the main reasons that we are facing a world economic issue.

    What this will do is force Russian enterprises to become competitive in order to survive, rather than foreign loans. It will mean they will have to make proper choices in management and modernization with its own funds or higher interest rate loans (8%). In the 80's in Canada, interest rates were as high as 18% and we survived. These days? Interest rates are low but companies are not productive (see blackberry).

    The benefit is that now western agencies/companies will not be able to come into Russia to strip it of its assets. As well, it forces to have the money stay and circulate into the economy. Hong Kong and Singapore are now being concentrated on in terms of FDI (rather than NYSE or London SE) as well South Korea is being considered as well, with reserve currencies being diversified as well.

    Only thing now is deoffshoring the economy and opening Russian enterprises to ME, Asia and Africa which were Russian products could very well be competitive in both machibe building and cobstruction. Add in Russias need to localize production (import substitution) and or buy from elsewhere.
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    Post  Austin Thu Jul 31, 2014 2:07 pm

    [url=http://en.ria.ru/business/20140731/191536448/Russia-Could-Face-Recession-by-Year-End-Due-to-Western-Sanctions.html]Russia Could Face Recession by Year-End Due to Western Sanctions – Senator[/url]


    MOSCOW, July 31 (RIA Novosti) – Stiffer economic penalties on the Russian economy could push it into an early recession by the turn of the year, a senior Russian lawmaker warned Thursday.

    “The sanctions are very likely to cause a slump in GDP growth, with a recession looming even before the end of the year,” First Deputy Chairman of Russia’s Federation Council Economic Policy Committee Yuri Shamkov told RIA Novosti.

    Shamkov stressed that the EU ban on the nation’s state-owned banks to raise long-term funding in Europe could hit the Russian economy particularly hard.

    “This particular measure can deal a serious blow to our economy and consumers, because it will further complicate access to credit-related funds, which has been hard enough due to unscrupulous banking,” Shamkov noted.

    The senator said Russia could look for long-term loans in China and other fellow BRICS member states – Brazil, India, and South Africa – although, he added, the third-tier sanctions will eventually hurt the liquidity of assets inside the country.

    The lawmaker said a weaker ruble could lower some costs for the Russian economy. “I’d push the ruble lower as this step would increase the liquidity of our funds, give a competitive edge to our producers, expand export markets, boost tax revenues and create more jobs,” Shamkov said.

    Earlier today, the European Council announced it had adopted “restrictive measures” against Moscow over Russia’s alleged involvement in the Ukrainian crisis, two days after agreeing on a new set of economic sanctions.

    The third round of penalties limited Russian state-owned financial institutions' access to EU capital markets, imposed an embargo on trade in arms, established an export ban for dual-use goods for military end users, and curtailed Russian access to sensitive technologies, particularly in the oil sector.


    Moscow has repeatedly said the measures are counterproductive, and warned they will hurt Europe no less than Russia.


    The European Union takes more than 45 percent of Russia’s exports, while Russia receives less than 3 percent of EU exports, according to BBC. It also said that “for the first time, the Russians are going to realize that they in fact can live without the global financial services industry.”
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    Post  sepheronx Thu Jul 31, 2014 2:13 pm

    Key word in that article is scrupulous. If they get off their fat lazy asses, then they wont have an issue. And no, it cant hurt its assets in the country. And if they rely on loans, then they were screwed before hand. Like I said, sberbank has almost $500B in assets, they can easily give long term loans. But some rumors are that the people in CB are old monaterists and are doing a horrendous job as it is with its banking.

    Nothing more pathetic imo than Russian banking industry.

    They say serious blow to the economy. I wonder what is defined as serious blow? And the guy is a senator, so I wonder what he has to lose in all of this? As most of those guys are crooks too.
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    Post  magnumcromagnon Thu Jul 31, 2014 2:46 pm

    sepheronx wrote:Key word in that article is scrupulous. If they get off their fat lazy asses, then they wont have an issue. And no, it cant hurt its assets in the country. And if they rely on loans, then they were screwed before hand. Like I said, sberbank has almost $500B in assets, they can easily give long term loans. But some rumors are that the people in CB are old monaterists and are doing a horrendous job as it is with its banking.

    Nothing more pathetic imo than Russian banking industry.

    Sepheronx, the key is to re-nationalize the Russian central bank, issue long-term 0% interest loans with 100-year maturities, loans worth $50-100 trillion USD (split between high dual-use technology, and modern infrastructure for the far-east and central Russia). You may be wondering if they re-nationalized the central bank and it issues Rubles the equivalent to $100 trillion USD for 0% interest for domestic loans, what stops the Ruble from hyper-inflating? Capital and exchange controls on the Ruble would prevent any and all hyper-inflation or deflation of the Ruble, when Russia privatized it's National bank and destroyed it's capital and exchange controls the Ruble instantly hyper-inflated due to decades of economic warfare which the capital and exchange controls were successfully defending the USSR/Russian economy, once those evaporated the economy crashed and the Ruble hyper-inflated. If you want to see a modern day and significant example of this (a powerful govt. controlled bank and capital and exchange controls) than all you have to do is look no where else but China, which uses both measures successfully and created the most powerful economic engine in the world in the process! If you were reading the trashy Western economic newspapers (The Economist, Forbes, Wallstreet) they were all demanding in the reforms that China was going to initiate, that they privatize their govt. controlled central bank and free float it's currency (with no capital exchange controls) so they could do the same economic warfare that they did to USSR/Russia economy, EU economy, the Japanese economy to the Chinese economy to save the wretched and corrupt US Dollar...and the Chinese aptly refused to play a game of "beggar my neighbor".

    If you want to look at another powerful example from history from a Western civilization perspective than you can look at the Renaissance observed in the city-state of Florence in what is now known as the country of Italy. Lorenzo de Medici or otherwise known as Lorenzo il Magnifico (The Magnificent), the de facto Neo-Platonist ruler of Florence successfully financed the Renaissance (and should take most of the credit for starting it) used his powerful family bank and issued 600,000 Skudi (the equivalent of $450 million) and used it to finance the arts, the sciences, and Florence's infrastructure, and because of his substantial investment the Renaissance flourished due to that investment:

    Russian Economy General News: #2 - Page 13 Lorenzo_de_Medici2


    Last edited by magnumcromagnon on Thu Jul 31, 2014 2:54 pm; edited 1 time in total
    TR1
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    Post  TR1 Thu Jul 31, 2014 2:54 pm

    The key is to stop being a corrupt , amazingly somehow still functional, thug-ocracy.

    If it actually happened you Putin lovers would shit yourself at how much better Russian military reform could go, not to even speak of civilian life.
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    Post  sepheronx Thu Jul 31, 2014 2:57 pm

    Then Russia should use Sberbanks liquidity and start funding over $100 B investments in infrastructure in rest of Russia and start issuing loans. Maybe split its assets to other banks so they can build up liquidity too.

    Lack of liquidity is due to lack of investing. Better to have a less rich economy but a stronger economy than rich but brittle like it is now.

    Only thing I disagree with Russia and its taxes are its sales tax.

    CB, the one group who controls Russias banking and economics, should not be private.
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    Post  sepheronx Thu Jul 31, 2014 2:59 pm

    TR1 wrote:The key is to stop being a corrupt , amazingly somehow still functional, thug-ocracy.

    If it actually happened you Putin lovers would shit yourself at how much better Russian military reform could go, not to even speak of civilian life.

    Corruption is one factor out of many. Forcing the corrupt to bring their money from their swiss or cypruss bank accounts back home is a good start. As well as taxing them more.


    Last edited by sepheronx on Thu Jul 31, 2014 3:00 pm; edited 1 time in total
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    Post  TR1 Thu Jul 31, 2014 3:00 pm

    sepheronx wrote:
    TR1 wrote:The key is to stop being a corrupt , amazingly somehow still functional, thug-ocracy.

    If it actually happened you Putin lovers would shit yourself at how much better Russian military reform could go, not to even speak of civilian life.

    Corruption is o.e factor out of many. Forcing the corrupt to bring their money from their swiss or cypruss bank accounts back home is a good start. As well as taxing them more.

    No, it is THE factor. Corruption enabled by disregard for the law by those in power.

    Great bring all that money back. You think that will fix anything? Not in the current climate.
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    Post  sepheronx Thu Jul 31, 2014 3:06 pm

    TR1 wrote:
    sepheronx wrote:
    TR1 wrote:The key is to stop being a corrupt , amazingly somehow still functional, thug-ocracy.

    If it actually happened you Putin lovers would shit yourself at how much better Russian military reform could go, not to even speak of civilian life.

    Corruption is o.e factor out of many. Forcing the corrupt to bring their money from their swiss or cypruss bank accounts back home is a good start. As well as taxing them more.

    No, it is THE factor. Corruption enabled by disregard for the law by those in power.

    Great bring all that money back. You think that will fix anything? Not in the current climate.

    Well, if you have a better idea. Saying all of you are corrupt is easy, but when they ask you to prove it, then it becomes hard. Like Napoleon once said, absolute power corrupts absolutely. In a perfect society there would be no corruption. But that is what there is now. Maybe more rampant and noticeable in Russia, but it is everywhere. So to say to get rid of it is easy. But doing it? Not so much. It requires a leader whom makes it their top priority to do it.

    Why not run TR1? You are very political, so why not give it a try? Heck, you can be runner up in the party you hate, but at least you could have a better chance of winning. If you dont try, why should someone do it for you?
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    Post  TR1 Thu Jul 31, 2014 3:13 pm

    Nah, I have 1.) No desire to be in politics and 2.) I wouldn't make it very far in a world of crooks and thieves.

    You are so pro-Russian, take some time out of your life to visit Russia and talk to some Russians on the ground so to speak. You will shit yourself at how corrupt aspects of society are. It is not just "bad" like it in normal countries.
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    Post  sepheronx Thu Jul 31, 2014 3:20 pm

    Another member from Russia on thos board said not long ago the average person repeats what they hear about corruption but little have any run ins or evidence of said corruption. I believe it exists of course, I never denied it, but word of mouth usually ends up more exaggerated than what evidence states. Most what I hear is what you hear is in quebec. But that is top level. Down to our level? No idea.

    To bad you wouldnt run. To say you wouldnt last is just defeatism. If you have backing from the populous, you would be fine. But no desire to do it, well, yeah, cant overcome that. Well, hopefully someone down the line will want to. If you say it is true about how average person feels, then it is only a matter of time till someone gets in that will change it.
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    Post  TR1 Thu Jul 31, 2014 3:30 pm

    People in business relating direct corruption experience, students (no, I am not talking about friends of friends) describing the sort of money they have to give to get good grades....that ain't inflated. They can't even buy a freaking anchor for the Kuznetsov without being ripped off by some crook. It is THAT bad.

    I don't know when it will change. Might hobble along for a long time. Or maybe economic well-being of oligarchs will be threatened and a mess will be created at the top. I don't think a spontaneous "people" uprising is at all likely. They are subject to a constant stream of Putin backing propoganda. People actually believe the "Putin is the best we got right now" or "without Putin it would be worse" crap.

    I am just hoping the guys at the top managed a way to screw up spectacularly in a public way.
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    Post  sepheronx Thu Jul 31, 2014 3:44 pm

    TR1 wrote:People in business relating direct corruption experience, students (no, I am not talking about friends of friends) describing the sort of money they have to give to get good grades....that ain't inflated. They can't even buy a freaking anchor for the Kuznetsov without being ripped off by some crook. It is THAT bad.

    I don't know when it will change. Might hobble along for a long time. Or maybe economic well-being of oligarchs will be threatened and a mess will be created at the top. I don't think a spontaneous "people" uprising is at all likely. They are subject to a constant stream of Putin backing propoganda. People actually believe the "Putin is the best we got right now" or "without Putin it would be worse" crap.

    I am just hoping the guys at the top managed a way to screw up spectacularly in a public way.

    The grade thing for university I heard that before. Lach of proper monitoring of teachers? Underpaid and thus, not caring? Same thing in India as example.

    I think this will be the time when it is forced to change because many oligarches are gonna lose a lot of money over these ordeals, and if they want to keep making money, they will be forced to make the Russian people buyers of their goods, and thus increase their living standards. May not change corruption at the top, but may force it at tghe lower side. At the top? Wish this could change but as long as there are people with power......

    Businesses being corrupt? Well, nothing new either. Civil servants though like cops, judges and teachers? Definately should not be.
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    Post  sepheronx Thu Jul 31, 2014 5:30 pm

    Aside from claims to things with no evidence to back them up.....

    Apparently Sberbank is being sanctioned. Here is the kicker though, EU will not sanction its EU held subsiduaries od Sberbank. In other sorts, they are afraid of the imolications it could cause. But CB said they will give liquidity to sanctioned banks so they can be in a better position (like I mentioned earlier) and Gazprombank doesnt need it as they are reliant on themselves and are still doing what they were before.

    Interesting times. If the gov is competent, they can pull out ahead. If not, well, they will be probably voted out of power.
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    Post  sepheronx Thu Jul 31, 2014 5:39 pm

    http://www.zerohedge.com/news/2014-07-31/russia-and-india-begin-negotations-use-national-currencies-settlements-bypassing-dol

    Yeap, more nations are jumping to trade with Russia in national currencies. Now they just need to move banks and assets around and start working with Asia in banking sector.
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    Post  Viktor Thu Jul 31, 2014 5:48 pm

    sepheronx wrote:Aside from claims to things with no evidence to back them up.....

    Apparently Sberbank is being sanctioned. Here is the kicker though, EU will not sanction its EU held subsiduaries od Sberbank. In other sorts, they are afraid of the imolications it could cause. But CB said they will give liquidity to sanctioned banks so they can be in a better position (like I mentioned earlier) and Gazprombank doesnt need it as they are reliant on themselves and are still doing what they were before.

    Interesting times. If the gov is competent, they can pull out ahead. If not, well, they will be probably voted out of power.

    Agree. Russian exports will be uneffected as 80% makes oil and gas.

    EU exports of machinery and value added produtcs will be sacked as Russia has now every month greater

    trade surpluses that can invest in new Russian factories, modernization of existing and placing more orderd on domestic industry strengthening it in the process.
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    Post  sepheronx Thu Jul 31, 2014 6:19 pm

    Well, with the $400B gas deal to China, the $240B oil deal to China, the billions in planned NPP's to various countries, and the negotiations to India in oil and gas, Russia will still end up semi dependant on natural resources (many EU countries signed decade long deals with Russia on gas and oil) but these sanctions will force the banks to work with others or themselves on their own equity, and force manufacturers to become more efficient and effective. All the while brining back billions in terms of import substitution and force its credit card development.

    Only factor left will be what TR1 is saying - corruption. Major thing holding Russia from really progressing. And that is a major social issue.
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    Post  George1 Thu Jul 31, 2014 6:36 pm

    Russian govt confirms VTB privatisation despite Western sanctions

    MOSCOW, July 30. /ITAR-TASS/. The Russian government on Wednesday confirmed its plan to privatize the VTB bank despite Western sanctions against it.

    “I cannot say what the economic or political situation will be like a year from now. Everything changes so quickly. But the asset must be in good economic condition to attract investors today, tomorrow and the day after tomorrow,” Olga Dergunova, head of the Federal Agency for the Federal Property, said.

    She said the Agency was not revising privatization plans for VTB and the state-owned oil company Rosneft, which has also been affected by US sanctions.

    Earlier this week, the United States announced a fourth round of anti-Russian sanctions which will apply to VTB, Rosselkhozbank and Bank of Moscow. They will not be allowed to borrow from American companies for a period of more than 90 days.

    On July 16, the US government announced further sanctions against Russian officials and companies in Russia and Ukraine, including State Duma (lower house of the Russian parliament) Deputy Speaker Sergei Neverov, Minister for Crimean Affairs Oleg Savelyev, presidential aide Igor Shchegolev, Federal Security Service Colonel-General Sergei Beseda, and one of the leaders of the self-proclaimed Donetsk People’s Republic, Alexander Borodai.

    The sanctions list also includes the Donetsk and Lugansk People’s Republics, Russia’s Vnesheconombank, Gazprombank, Rosneft, Bazalt, Feodosia Oil Company, Radio-Electronic Technologies Concern, Sozvezdie Concern, Almaz-Antey machine-building company, Kalashnikov Concern, KBP Instrument Design Bureau, Uralvagonzavod, and Novatek.

    The Russian government was planning to sell 19.5% of shares in Rosneft and 11% of share in VTB this year.

    Rosneft is the leader of Russia’s petroleum industry and the world’s largest publicly traded petroleum company. Rosneft activities include hydrocarbon exploration and production, upstream offshore projects, hydrocarbon refining, and crude oil, gas and product marketing in Russia and abroad.

    The company is included in the list of strategic companies and organizations of Russia. The main company shareholder (69.50%) is OJSC ROSNEFTEGAZ, a 100% state-owned company. BP owns another 19.75%, and the remaining 10.75% of shares are publicly traded.

    The Russian government plans to receive 3,000 billion rubles from the privatization of state-owned property in 2012-2016. This exceeds privatization revenues over the past 18 years.

    In 2012, 202 billion rubles worth of state property were sold, 1.6 times more than in 2011; privatization revenues in 2013 amounted to 6.261 billion rubles.

    By 2018, the number of joint stock companies in federal ownership will decrease 10 times, and the share of civil servants in such companies' governing bodies will be reduced to 30% during the same period.

    There are 2,325 joint stock companies in the federal register of federal property. The combined value of all federal property is 12,000 billion rubles.

    Prime Minister Dmitry Medvedev said only those assets would remain in federal ownership that secure strategic interests of the State.

    The Russian government said earlier its privatization plan included more than 850 organizations, such as VTB bank, Sovcomflot, the United Grain Company, RusHydro, Sberbank, Rosneft, Rosagrolizing, Rosselkhozbank, Russian Railways Company, and others.

    Russia will also continue privatizing state-owned banks after 2015.

    According to the privatization plans, the government intends to reduce its share in Sberbank, VTB and Rosselkhozbank to 50% plus one share.

    Subject to privatization will be large enterprises in the oil and oil transportation sector, air transportation, financial sector, machine-building, and defense industry.

    There are 2,500 more enterprises across Russia that can be of interest to investors. These companies are engaged in wood processing, agriculture and other industries.
    sepheronx
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    Post  sepheronx Thu Jul 31, 2014 8:50 pm

    This is what I am waiting for. As much is known, it is mostly civil servants who are corrupt as TR1 would put, and lack of civil servants means that less corrupt government employees. 10 times reduction will mean a leaner government force, which will be a lot easier to monitor corruption over rather than the mass amount there is now.
    magnumcromagnon
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    Post  magnumcromagnon Fri Aug 01, 2014 7:27 pm

    sepheronx wrote:This is what I am waiting for.  As much is known, it is mostly civil servants who are corrupt as TR1 would put, and lack of civil servants means that less corrupt government employees.  10 times reduction will mean a leaner government force, which will be a lot easier to monitor corruption over rather than the mass amount there is now.

    If private businesses were significantly less corrupt as you say, then Wallstreet and the City of London would of never financed Hitler's rise to power:

    Russian Economy General News: #2 - Page 13 51WtSDew7RL._SY344_BO1,204,203,200_

    Hannibal Barca
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    Post  Hannibal Barca Fri Aug 01, 2014 9:57 pm

    magnumcromagnon wrote:
    sepheronx wrote:This is what I am waiting for.  As much is known, it is mostly civil servants who are corrupt as TR1 would put, and lack of civil servants means that less corrupt government employees.  10 times reduction will mean a leaner government force, which will be a lot easier to monitor corruption over rather than the mass amount there is now.

    If private businesses were significantly less corrupt as you say, then Wallstreet and the City of London would of never financed Hitler's rise to power:

    Russian Economy General News: #2 - Page 13 51WtSDew7RL._SY344_BO1,204,203,200_


    Why not. His ideology was sound, obviously he was doing a good job and he was great for business. If he was alive I would suck to have me in his payroll.

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