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Sanctions - Effects on Russian Economy

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  • Merkel to call for extending sanctions against Russia
    03.04.2015 | 12:44 UNIAN

    German Chancellor Angela Merkel supports the extension of economic sanctions imposed against Russia for its aggression against Ukraine that are set to expire this summer, according to Polish newspaper Gazeta Wyborcza’s Tomas Beletsky, writing from Brussels.

    "Various groups of EU countries are uniting around Paris and Berlin. Merkel wants to extend until the end of the year sanctions that have been imposed against Moscow and that are to expire in July," Beletsky wrote.

    He said that currently French President François Hollande is pursuing a policy that was agreed with Merkel.

    By summer, the Kremlin may be surprised to see the European unity on the issue of sanctions, according to Beletsky.

    Such unity, the he wrote, would hardly have been reached with the previous French President Nicolas Sarkozy, who previously stated that Crimea could not be blamed for joining Russia.

    "Crimea has chosen Russia, and we cannot blame it [for doing so],” Sarkozy said earlier, adding that “we must find the means to create a peacekeeping force to protect Russian speakers in Ukraine.”
    Merkel to call for extending sanctions against Russia : UNIAN news

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    Hannia - Hania - Mighthelp


    • Airlines slash routes to Moscow in latest sign of Russia's growing isolation
      April 17, 2015, 7:06 p.m. | Russia and former Soviet Union — by Bloomberg

      Carriers scratch flights as the number of foreign visitors declines and the plunging ruble keeps Russian vacationers at home

      In 2012, British discount airline EasyJet beat Virgin Atlantic Airways in a fierce competition for the rights to fly from London's Gatwick to Moscow's Domodedovo airport, a route that became available when its former operator was swallowed up in a merger. British aviation regulators gave the nod to EasyJet, which hailed the decision as a milestone in its international development.

      Now, EasyJet has scaled back its London-Moscow service, from two daily flights to only one in each direction. The move, which took effect in late January, "was in response to the reduction in demand to and from Russia in recent months," an airline spokeswoman says.

      The British discounter is one of many airlines curtailing flights to Russia and shelving planned expansion there, as the number of Russians vacationing abroad has plummeted and fewer foreign businesspeople and tourists are visiting the country.

      For the airlines, it's a simple matter of supply and demand. But the reduced traffic at Russia's international airports mirrors the country's growing political isolation and weakened economic clout, as Western sanctions and lower oil prices push Russia into recession.

      Once-shabby airports such as Moscow's Domodedovo, Sheremetyevo, and Vnukovo have been emblems of Russia's booming economy during most of President Vladimir Putin's tenure. All three airports underwent extensive renovations to accommodate traffic that has more than quadrupled since 2000 to a combined 77 million passengers in 2014, exceeding international hubs such as London Heathrow and Dubai. Those gleaming new terminals in Moscow are getting a lot quieter.

      On Wednesday, Delta Air Lines announced it will suspend service to Moscow during the final three months of this year, meaning that no U.S. passenger carrier will fly to the Russian capital during that period. Delta has already trimmed its spring and summer service to Russia; it now flies only five times a week between New York City and Moscow, down from seven in 2014.

      Hong Kong-based Cathay Pacific says it will end service to Moscow in June. And Air India, which had resumed flying from Delhi to Moscow in 2014 after a 15-year hiatus, cut back service to two flights a week in February after filling an average of only 47 percent of seats on the route. Others scaling back include Middle Eastern carriers Etihad and Qatar, as well as Czech Airlines, which is scrapping plans to serve the regional cities of Kazan, Kaliningrad, Perm, and Ufa this summer.

      "We have been relocating the capacity freed in the Russian market, which has been experiencing a significant drop in demand," the company said in a statement.

      Russian-based airlines are taking even more drastic steps, as the ruble's sharp decline has led to a more than 50 percent drop in the number of Russians traveling abroad, according to the government. The country's air-transportation agency reported on March 24 that Russian carriers were abandoning 71 international routes linking Russian cities to such destinations as Barcelona, Dubai, Tel Aviv, and Vienna. Carriers Transaero and UTAir accounted for most of the reductions.
      Airlines Slash Routes to Moscow in Latest Sign of Russia's Growing Isolation - Bloomberg Business

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      Hannia - Hania - Mighthelp


      • Russian GDP Plunges 4.6%
        BLOOMBERG Anna Andrianova 8/10/2015

        Russia’s economy shrank the most since 2009 after a currency crisis jolted consumer demand, while a selloff in oil threatens to drag the country into a deeper recession.

        Gross domestic product contracted 4.6 percent in the second quarter from a year earlier after a 2.2 percent decline in the previous three months, the Federal Statistics Service in Moscow said on Monday, citing preliminary data. That was worse than the median forecast for a 4.5 percent slump in a Bloomberg survey of 18 analysts. The Economy Ministry had projected that output shrank 4.4 percent in the period, calling it “the lowest point” for Russia.

        The rout on commodities markets has overshadowed the first signs of stabilization in Russia by hammering the ruble and shaking a country that relies on oil and gas for about half of its budget revenue. The world’s biggest energy exporter is enduring its first recession in six years after the nation’s biggest currency crisis since 1998 and a surge in inflation eroded consumer buying power as sanctions over Ukraine choked access to capital markets.

        “While second-quarter growth surprised on the downside, perhaps far more importantly is the fact that the outlook for the Russian economy has deteriorated so far in the third quarter,” Piotr Matys, a London-based foreign-exchange strategist at Rabobank, said by e-mail. “The central bank may have to pause the monetary policy easing cycle at a time when local banks are still cut off from external sources of funding.”

        Forward-rate agreements are signaling 23 basis points of increases in borrowing costs during the next three months. The Bank of Russia has lowered its key interest rate by a cumulative six percentage points to 11 percent in five steps this year.

        Rate Pause?

        A renewed slide in commodity prices may put the central bank in a bind if it destabilizes the ruble and reignites inflation. Consumer prices rose 15.6 percent in July from a year ago, down from a 13-year high of 16.9 percent in March. The central bank forecasts inflation at 10.8 percent by year-end and says its 4 percent target will be reached in 2017.

        Urals, Russia’s export blend of crude, averaged $57 in the first half, down almost 47 percent from the same period a year earlier, according to the Economy Ministry. The ruble has depreciated more than 43 percent against the dollar in the past 12 months, the worst performance globally, according to data compiled by Bloomberg. It traded little changed at 63.97 versus the dollar as of 5:17 p.m. in Moscow.

        “Faltering oil prices have increased the risks for the expected economic improvement in the second half,” UralSib Capital analyst Alexey Devyatov said in a report before the data release. “Sharp swings in the ruble rate have hit consumer demand and capital investment.”
        Russian GDP*Plunges*4.6% - Bloomberg Business
        Additional reading:

        Gold Crash Costs Russia and China $5.4 Billion in Just Three Weeks
        BLOOMBERG Aug 6, 2015
        Gold Crash Costs Russia and China $5.4 Billion in Just Three Weeks - Bloomberg Business

        æ, !

        Hannia - Hania - Mighthelp


        • Another stupid economic move by the current Kyiv government. Their actions are that of a petulant child.

          Unless I’m missing something, this is going to hurt Ukraine more than Russia, and to what end?

          Until Ukraine builds up its own economy, which take times, the Ukrainians working in Russia have been a net economic plus to Ukraine’s economy. So why mess with that?

          But Kyiv is apparently happy to cut off its own foot as long as they can cut off one toe of the Kremlin?

          Where does Kyiv draw the line? Surely there must be a better way to “punish” Russia than to cancel direct flights?!

          BTW, according to this
          OEC - Ukraine (UKR) Exports, Imports, and Trade Partners Ukraine currently exports USD $15.1 billion to Russia and imports USD $23.9 billion from Russia.

          Ban due on direct flights between Russia and Ukraine

          By Sarah Rainsford BBC News, Moscow 24 October 2015

          Direct flights between Ukraine and Russia will stop on Sunday, as new sanctions initiated by Kiev come into effect.

          Moscow first called Kiev's ban on Russian airlines "madness", then announced that it would mirror the move.

          Ukraine now says flights will end at midnight on Saturday, after last-minute crisis talks failed.
          Up to 70,000 passengers a month will be affected.

          The sanctions are intended to punish Russia for annexing Crimea and supporting armed rebels in eastern Ukraine. The fact that they have been introduced now, when a ceasefire is finally holding on the ground, shows how bitter relations remain.

          Russia has accused Ukraine of shooting itself in the foot with the move, pointing out that most passengers are Ukrainian travelling to work in Russia, visiting relatives or in transit.

          But two-thirds of all passengers travel on Russian airlines.

          Russia's transport minister has estimated that the loss in ticket sales to both countries will run to around $110m (£73m) a year.

          The ban is already angering passengers from both countries.

          "The government does things and it's the people who suffer," Ukrainian Alexander Vyshnevsky said, after checking-in for one of the last remaining flights to Kiev from Moscow.

          He had been visiting his Russian wife and daughter.

          "Russia and Ukraine are like one country for me. Half of Ukraine is married to Russians. So this is total nonsense," Mr Vyshnevsky added.

          "This is stupid," Russian Konstantin Fokin agreed, before his own flight to Kiev. His sister lives in Ukraine and travelling to see her will now be difficult.

          "Lots of people have relatives in both Russia and Ukraine and they want to communicate. It's up to the authorities to stop this stupidity," Mr Fokin said.

          Last-minute talks to find a compromise are under way - so far to no avail - and the chances of success look slim in this climate.

          So as of Sunday, passengers will be forced to take longer, more expensive routes via third countries, or to brace themselves for a 13-hour trip by train.

          Ban due on direct flights between Russia and Ukraine - BBC News


          • Originally posted by Szary View Post

            BTW, according to this
            OEC - Ukraine (UKR) Exports, Imports, and Trade Partners Ukraine currently exports USD $15.1 billion to Russia and imports USD $23.9 billion from Russia.
            Yes, and Russia also imports territory from Ukraine. Stupid move or not, Ukraine clearly does not have as many options in the world to slow Russia down. Since in large part it's left to fight it's battle on it's own, they'll do what they can. I don't have an opinion on the move but at the least let it be a reminder to people carelessly traveling back and forth between the 2 nations. There is a war going on and thousands of people are dying.

            See whats been posted in the past day.

            Contact forum moderators here.


            • The Russian bank Tempbank was disconnected from the international system for the exchange of financial data SWIFT. Tells Акценти

              "Tempbank", like the entire top management of the bank, is under US sanctions because of the provision of trade operations in the directions Russia-Syria, Russia-Iran. Moreover, last year a human rights agency under the aegis of the CIA threatened the management of the bank Tempbank with the imposition of personal sanctions because of cooperation with both Iranian and Syrian companies.
              The Russian bank Tempbank, which, after withdrawing sanctions from Iran, opened correspondent accounts with the Iranian central bank and a number of large banks of the country, was taken into account by the human rights organization "Associations Against Iran's Nuclear Program" (UANI). In the name of the chairman of the board of Tempbank Mikhail Gagloev, a letter came in which UANI warned the Russian bank against cooperation with Iran and Syrian companies.
              Google Translate for Business:Translator ToolkitWebsite Translator


              • SWIFT disconnect: Why does it absolutely terrify the corrupt Russian elite?
                EUROMAIDAN PRESS Andrey Shipilov 2015/02/16 - 04:02

                One bank official from Cyprus* explained to me why top Russian officials, such as Medvedev, Kostin, etc., responded so nervously and irrationally to reports of a possible disconnection of Russia from SWIFT.

                The fact is that while the other Western sanctions affect the Russian economy as a whole, a disconnection from SWIFT would primarily affect them personally.**

                Russia’s economy without SWIFT will continue to operate, albeit with difficulty. But they–personally–without SWIFT will not be able to control their personal anonymous assets in Western banks and will lose access to them.

                At present, they control their accounts in Western banks anonymously through a chain of front firms, which are impossible to trace. But their operations are completely dependent on SWIFT for operation. All of current money-laundering and anonymization schemes are dependent on SWIFT. Other such operations simply do not exist at present, and new ones can not be developed in a month. Nor in six months, either. And it is not clear that they would be possible at all.

                When disconnected from SWIFT, the [corrupt elite] will either have to give up control over their anonymous assets or assume a high risk of losing their anonymity.

                * Cyprus is a major offshore tax heaven for Russian cash. For more information, read Quartz’s What Russian money sloshing back to Cyprus teaches us about tax havens.

                **For more information about corruption amongst the top Russian elite, watch CNN’s interview with Bill Browder, the CEO of Hermitage Capital Management, formerly Russia’s largest foreign investor, and a once supporter of President Putin. He describes the dynamics between power and wealth in Russia, claiming that during “the first eight or 10 years of Putin’s reign over Russia, it was about stealing as much money as he could. And some people, including myself, believe that he’s the richest man in the world, or one of the richest men in the world, with hundreds of billions of dollars of wealth that was stolen from Russia.”

                Translated by: A. N.
                SWIFT disconnect: Why does it absolutely terrify the corrupt Russian elite? -Euromaidan Press |

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                Hannia - Hania - Mighthelp


                • SWIFT software producer stops working with two Russian banks
                  EUROMAIDAN PRESS 2017/08/25 - 15:22

                  Finastra, a company which owns the software used for SWIFT banking transactions, has ceased cooperation with Russian banks under sanctions, the Russian outlet Vedomosti wrote citing two sources who know this from Finastra and the banks.

                  According to them, this software is used by two such banks: the Russian National Commercial Bank (RNKB), which works in occupied Crimea, and Tempbank, which introduced a temporary administration.

                  Finastra, whose business is largely concentrated in the United States and Canada, told its Russian distributor, Finnet, that it will cease working with these banks from August 31, said one of Vedomosti‘s interlocutors.

                  There are several software options for working with SWIFT, he continues. In Russia, software from Finastra and SWIFT itself (Alliance Access) is used. According to the other, most banks in Russia and the world use software from SWIFT.

                  The bank can switch to another interface for access to SWIFT and make technical adjustments, which will cost several thousands of dollars. The banks need to do this by August 31 so they are not cut off from SWIFT while moving to the new software, the first interlocutor adds, the outlet wrote.

                  Due to uniform standards and wide coverage, SWIFT allows banks and companies to carry out financial transactions around the world. There are other ways to do this in Russia, but there are no alternatives to SWIFT for international transactions.

                  The Bank of Russia is a system-forming bank in occupied Crimea and operates only in Russia, said a representative of the bank, adding that it does not make payments through Western credit organizations.

                  According to him, the bank uses the settlement system of the Russian Central Bank.

                  “The business of RNKB and its clients is not affected by the termination of relations with Finastra,” added the representative of the RNKB.

                  He did not specify whether the RNKB will switch to other software.

                  Representatives of Finnet and SWIFT refused to comment. The representatives of Finastra and Tempbank did not respond to the media request.

                  Two weeks ago, Russian media reported that Tempbank was allegedly disconnected from SWIFT because the bank and its top management were subject to US sanctions through cooperation with Syria and Iran.

                  According to three interlocutors, it was only about the termination of cooperation with Finastra, and not about disconnection of the bank.

                  Disconnecting Russia from SWIFT had been discussed in the EU Parliament as an additional sanctions measure against Russia, which is waging a low-scale proxy war in Ukraine’s Donbas region for the fourth year in a row.

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                  Hannia - Hania - Mighthelp


                  • 28.08.2017 | Halya Coynash KHPG ORG
                    Russian banks cut off from SWIFT for working in Crimea

                    The main Russian bank working in Russian-occupied Crimea and one other have been informed that the company providing their connection to the SWIFT network will terminate its services from 31 August. According to Vedomosti’s two unnamed sources, Finastra has taken the decision because both the Russian National Commercial Bank [RNCB] and Tempbank, in which Russia’s Central Bank has introduced temporary administration, are under international sanctions. In the case of RNCB, this is specifically over its work in Crimea.

                    According to one of the sources, RNCB and Tempbank differ from most other Russian banks, in that the crucial technology required for the SWIFT connection is provided by Finastra and not by SWIFT (Alliance Access) directly.

                    It would be possible for the banks to come to an arrangement with another provider of the software, though time is running out to do this without being cut off from SWIFT. A representative of RNCB told Vedomosti that Finastra’s decision would not impact upon the bank’s business and its clients. The person who is also unnamed was not prepared to say whether they were looking for another company to replace Finastra.

                    SWIFT basically enables Russian banks to offer international services, and this has been one of the main reasons why it is seen as a powerful method for exerting pressure on Russia to stop breaching international law through its ongoing occupation of Crimea and military aggression in eastern Ukraine.

                    SWIFT refused to block Russian use of its network over its aggression against Ukraine, though it has previously disconnected all Iranian banks. In a statement issued on October 6, 2014, it asserted that “SWIFT will not make unilateral decisions to disconnect institutions from its network as a result of political pressure. SWIFT regrets the pressure, as well as the surrounding media speculation, both of which risk undermining the systemic character of the services that SWIFT provides its customers around the world. As a utility with a systemic global character, it has no authority to make sanctions decisions.”.

                    This refusal and the arguments presented have up till now not been directly challenged. Finastra has, however, understood that its continued servicing of banks that are subject to sanctions for their major role in Crimea directly implicates the international company itself.

                    It is very clear why SWIFT does not wish to block Russian banks. Despite the relative or extreme poverty in which a huge number of Russians live, there are large amounts of money travelling abroad, and foreign companies are not too bothered where such wealth came from.

                    While international sanctions mostly target certain individuals, and the retaliatory measures hurt ordinary Russians, disconnection from SWIFT would hit Russia’s leaders and others directly implicated in Russia’s breach of international law over Ukraine.

                    They would almost certainly ‘persuade’ those responsible to release the 45 Ukrainians illegally held prisoner in Russia and occupied Crimea, as well as the over 130 POW and civilian hostages that the Kremlin’s proxies in Donbas are holding in custody.

                    In its excuses for not disconnecting Russian banks, SWIFT claimed that “being EU-based, SWIFT complies fully with all applicable European law”.

                    It seems the UK-based Finastra had reason to believe that this was not the case.
                    Russian banks cut off from SWIFT for working in Crimea - Human Rights in Ukraine

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                    Hannia - Hania - Mighthelp