Friday, July 18, 2014

Russian increases sanctions in response to US and EU sanctions this week ( July 18 , 2014 ) - Russian Sanctions Retaliation Escalates: Dumps Intel/AMD And Now Foreign Cars ...... Russia may revise US participation ( divide and conquer as Europe may be carved out of Russia sanctions here ) in hydrocarbon development over sanctions ...... meanwhile russia perfects sanctions defenses for its banks even as clock and calendar tick on natural gas situation !

Russian volleys back into the forecourt of the US ... Intel , AMD and Car makers scream .....

Russian Sanctions Retaliation Escalates: Dumps Intel/AMD And Now Foreign Cars

Tyler Durden's picture

Ignoring for one second yesterday disastrous air crash in Ukraine, the 'boomerang' of sanctions continues to be thrown back and forth between the US and Russia. Having restricted Russian firm's access to USD funding, Putin has come out swinging. His first act was to demand that state departments and state-run companies will no longer purchase PCs built around Intel or AMD processors (which might explain AMD's slashing their outlook); but now he has hit out at the heart of what has made America great (in the eyes of some) -banning the use of foreign cars for officials in favour of home-produced cars.

Russia's policy on Western technology is clear: The country can live without it, especially if key issues like economic sanctionsNSA spying and GPS cooperation aren't resolved to its leader's satisfaction. It looks like this tough stance extends to US-designed computer chips too, as a Russian business newspaper is reporting that state departments and state-run companies will no longer purchase PCs built around Intel or AMD processors. Instead, starting in 2015, the government will order up to one million devices annually based on the "Baikal" processor, which is manufactured by a domestic company called T-Platforms. An interesting twist, however, is that the Baikal processor is actually based on an ARM (Cortex-A57) design, which means the East / West divorce isn't quite as complete as it might sound. It could also mean that many Russian bureaucrats won't get the chance to be a Mac or a PC: they'll have to use some sort of ARM-compatible, presumably Linux-based operating system instead.
And now Putin has gone after the auto sector... (via Reuters)
Top Russian officials may soon forfeit the sleek black Mercedes limousines that speed them through the Kremlin gates in favour of home-produced cars as part of a push to protect domestic industry threatened by Western sanctions over Ukraine.

Prime Minister Dmitry Medvedev said he had signed an order limiting purchase of imported cars for state and municipal officials - a move in line with Vladimir Putin's bid to increase self-reliance from engineering to defence, but carrying more symbolic than commercial importance.


To address the concerns, domestic producers Sollers , Kamaz and GAZ have been asked to design a car for government officials by the end of the year under a project known as "Cortege".

"We have drafted a resolution that bans the state and municipal purchase of certain types of foreign-made equipment and vehicles, notably such conspicuous issues as the purchase of vehicles for officials," the government's website quoted Medvedev as telling deputy ministers at a meeting on Monday.
*  *  *
As Putin recently opined, the boomerangs are coming home...
“The US is certainly one of the world’s leaders. At some point it seemed that it was the only leader and a uni-polar system was in place. Today it appears that is not the case. Everything in the world is interdependent and once you try to punish someone, in the end you will cut off your nose to spite your face,” he said.

Russia may revise US participation in hydrocarbon development over sanctions

 July 17, 15:01 UTC+4
If EU conduct a more reasonable policy, then Russia should create preferences for their companies and favorable investment conditions, Director of the Skolkovo Business School Energy Center says
© ITAR-TASS/Alexei Schukin
MOSCOW, July 17. /ITAR-TASS/. Russia should consider revising US companies’ participation in developing Russian hydrocarbon resources in response to fresh US sanctions against it, Director of the Skolkovo Business School Energy Center Grigory Vygon said on Thursday.
The US government on Wednesday announced new sanctions against Russia over the events in Ukraine. The penalties will apply to individuals and companies both in Russia and Ukraine.
The third package of US sanctions vs Russia imposes limitations on economic sectors. The blacklist newcomers are VEB, Gazprombank, Rosneft oil and gas major, the Kalashnikov weapon consortium, the Uralvagonzavod mechanical engineering company, Novatek natural gas producer and others.
In contrast to the first two waves of anti-banking sanctions against Rossiya, Sobinbank, SMP Bank and Investcapitalbank, Gazprombank and VEB have been prohibited from raising foreign funds for more than 90 days. According to a source in the US administration, these measures close access for the banks to medium-and long-term financing in the US.
Difficulties, which Russian companies will experience in making borrowings abroad, threatens the implementation of large-scale projects and this may inflict serious damage on Russian oil and gas producers, the expert said.
The fresh sanctions are not critical but further penalties may be considerably more serious, he said.
“As for the oil and gas industry, Russia can revise the US companies’ participation in developing Russian hydrocarbon resources,” the expert said.
“For example, it is possible to change the terms of ExxonMobil’s participation in the Sakhalin-I oil and gas project (off Russia’s Pacific Coast), revise the company’s offshore hydrocarbon deals with Rosneft, limit access for US oil service companies, including access to hard-to-extract resources,” the expert said.
“In this case, we’ll both respond to the US and give a clear signal to Europeans that their consent to join US sanctions may affect their business as well,” Vygon said, adding that once US companies fully felt the impact of Russia’s retaliatory sanctions, they would popularly explain to the US administration that economic interests are more important than political ambitions and would stop the sanction process.
If Europeans conduct a more reasonable policy, then Russia should create preferences for their companies and favorable investment conditions for them, the expert said.
For example, Russia may admit them to the development of its strategic deposits and actively create joint ventures and consortiums with them, he added.

Russia's Central Bank has tools to shield banks from US sanctions

 July 17, 16:21 UTC+4
The Central Bank will draw up a list of systemically important banks, which would be the prime target for central bank help in case of troubles
© ITAR-TASS/Yuri Mashkov
ST. PETERSBURG, July 17. /ITAR-TASS/. The Central Bank of Russia (CBR) has enough tools to ensure that Russian banks’ liquidity is sustainable against new US sanctions, under which Gazprombank and Vnesheconombank are prohibited from getting long-term US loans, Central Bank Deputy Chairman Mikhail Sukhov said on Thursday.
“We have enough tools to work with banks to make the liquidity of credit institutions sustainable. I do not see any probability of a situation where the liquidity of these organizations plummets. The central bank has enough instruments at its disposal to cope with this situation.” Sukhov told reporters the sidelines of a Saint-Petersburg International Banking Conference.
Sukhov also said that 30 largest banks’ capital adequacy will not be affected if they incur losses of up to 1 trillion rubles ($28.5 billion).
“Although the capital adequacy level is comfortable, a little bit less than 13%, if we try to proportionate capital reserves, which banks have to the potential risks and losses, the reserves will seem not so big,” he said.
“The difference between the current capital adequacy and the capital which banks would have in case of losses stands at about 1 trillion rubles. This means that the capital of 30 largest banks can stand losses of about 1 trillion rubles without breaching the capital adequacy rules.”
The central bank will draw up a list of systemically important banks, which would be the prime target for central bank help in case of troubles, in July-December, Sukhov said.
Households’ deposits will grow 10-12% in 2014, Sukhov said. “I know that the Deposit Insurance Agency reduced the forecast to 7-9%. I would be more optimistic and I would say that the realistic figure is closer to 10-12%.”
The central bank is considering allowing floating deposit rates to help banks assess their risks better, he said.
Russia’s 66 banks out of nearly 1,000 are exceeding the 20% limit of crediting their beneficiaries, which will be introduced next year, Sukhov said separately.
“To date, 66 of the country’s banks, not taking into account affiliates of foreign credit organizations, exceed the 20% limit on granting loans to their owners, which will be imposed next year,” Sukhov said.
Sukhov said that 16 banks out of 66 have capital of over 5 billion rubles.
The growth of retail loans amounted to 20% annually in June, which Sukhov called acceptable. Soured loans accounted for 3.3% of credits granted by five largest banks and to about 6.6% with the rest of the banks, he said.

Ukraine does not collect enough gas for heating season — Ministry

 July 17, 18:04 UTC+4
Ukrainian parliament-appointed Energy Minister Yuriy Prodan said that Ukraine "is working to increase the reverse" from Europe
KIEV, July 17. / ITAR-TASS /. Ukraine has not yet accumulated sufficient reserves of natural gas to get through the upcoming heating season, Ukrainian parliament-appointed Energy Minister Yuriy Prodan said.
"We have 6 billion cubic meters of gas for the entire autumn and winter - it's not enough," he said.
Prodan said that Ukraine "is working to increase the reverse" from Europe. In addition, he recalled, the government of Ukraine decided "to reduce gas consumption by energy enterprises by 30% and 10% by budget organizations."
The head of the Ministry informed that the gas price will be lower than if Kiev bought fuel directly from Gazprom, commenting on the gas imports from the EU.
Gas supplies to Ukraine were halted, but transit volumes were reportedly passing via Ukraine to Europe in line with the schedule.
Gazprom said June 16 that Naftogaz’s past due debt for supplied Russian gas totals $4.458 billion: $1.451 billion for November-December 2013 and $3.007 billion for April-May 2014.
Russia recently substantially raised the gas price for Ukraine to $485.5 per 1,000 cubic meters, but Ukraine has insisted the price should be lowered to that of this year’s first quarter ($268.5 per 1,000 cu m).
Moscow raised the price for Kiev to $385.5 per 1,000 cu m in the second quarter of 2014 because Ukraine failed to fulfill its commitments under an additional agreement concluded in December 2013, which obliged the country to pay for supplied volumes of Russian gas in time.
Another raise to $485.5 per 1,000 cu m was due to the cancelation of the Kharkiv Accords with Ukraine, which had been struck in 2010 and stipulated that Russia’s lease of naval facilities in Crimea (then part of Ukraine) would be extended by 25 years beyond 2017 - until 2042. The accords also envisioned a $100 discount.
June 16, Gazprom switched Ukraine off gas over unpaid debt while continuing pumping gas to the EU.

Russia condemns 'evil' new US sanctions

Prime Minister Dmitry Medvedev says the new measures will not bring "the country to its knees".

Last updated: 17 Jul 2014 13:23
Listen to this page using ReadSpeaker
Email Article

Print Article

Share article

Send Feedback

Russia is accused of backing pro-Moscow rebels fighting to secede from Ukraine [Reuters]
Russia's prime minister has condemned new Western sanctions over his country's role in the Ukraine crisis, calling the move "evil".
In comments released on Thursday, Dmitry Medvedev said the penalties imposed by the EU and the US could never bring anyone to their knees. Adding Moscow should pay more attention its defence spending.
The new sanctions agreed on Wednesday against Russia target two major energy firms, a pair of powerful financial institutions, eight weapons firms and four individuals.
A statement released by Russian foreign ministry further condemned the measures, saying that the EU had succumbed to US pressure.
"We are disappointed that the European Union, contradicting its own interests, succumbed to the blackmail of the US administration and followed the path of sanctions," it said.
The increased US economic pressure is designed to end the rebellion in eastern Ukraine that is widely believed to be backed by the Kremlin.
The new measures sent Russian shares and the ruble currency falling, the Reuters news agency reported,
"We consider the new set of American sanctions on Russia as a primitive attempt to avenge the fact that developments in Ukraine are not following Washington's scenario," the foreign ministry statement added.
It said Washington was trying to put the blame on Moscow for the conflict in Ukraine and was encouraging bloodshed by not putting enough pressure on Kiev to stop a military operation intended to end the uprising in the east.
"It is widely known that sanctions are a double-edged sword," the ministry said, adding that it reserved the right to introduce retaliatory measures of its own which would hit US businesses.
The Ukrainian government and its Western backers say Moscow backs pro-Russian rebels in Ukraine looking to breakaway from the Kiev government.
The first set of Western sanctions against Russia were imposed after its annexation of Crimea.

July 17, 2014

Plane Down In Ukraine - Facts? Who Needs Facts?

A Malaysian Boeing 777 with 295 people on board crashed today near Shakhtarsk 50 kilometer east of Donetsk, Ukraine.
The appropriate key for "western" journalist to press now is this one.

Over the now coming propaganda shit-storm the recent defeat of the coup-government troops will likely stay unreported.

( Interesting timing of Flight 17 being shot down and ukraine setback on the battlefield...)

July 17, 2014

More Sanctions On Russia After Ukrainian Forces Defeated

Six days ago the Ukrainian troops fighting local federalists in the south-east were hit hard by an artillery barrage and had major losses. This map shows their locations of the four nominal brigades on the right bottom in a narrow south-eastern strip along the Russian border. The plan for these troops was obviously to cut off the federalists from the Russian border and to surround them. But that risky plan on a thin logistic string worked against them. Repeated artillery attacks and disorganization have left them incapable of further advances.

The Ukrainian troops have now themselves been surrounded and are cut off from their resupplies. Their attempts to break out of the encirclement failed and they can now either flee to Russia or surrender to the federalists:
Earlier on Wednesday the press service of the DPR told ITAR-TASS that its militiamen had divided the Ukrainian military units into “several sectors” in the areas of the Amvrosievka, Izvarino and Saur-Mohila localities near the Russian border.The Ukrainian military units attempted to form a convoy and head for the port city of Mariupol, but failed as the DPR fighters encircled them.
In recent days the Ukrainian armed forces had suffered serious losses, and support to their rear services had been axed, the press service said adding that the army units were trying to retreat covering their rear.
The Ukrainian troops seem to be desperate with little left to better their situation.

It is this desperate military situation of the Ukrainian coup-government troops, I believe, that let Obama put new sanctions on Russian companies. The European Union did not follow up with sanctions of its own and the damage to the Russian economy will thereby be very limited. It was a stupid and self defeating step for Obama to take. What U.S. companies, including the oil majors, will now still be welcome in the rather large Russian market ?

The military situation as well as the propaganda tide has turned against the U.S. supported coup government in Kiev. Now even the BBC admits that many coup supporters and the "National Guard" forces are Nazis including foreign ones.