Economic News in Review
Crisis, Sectors, and Domestic Policy in Russia
March, 2010

 

Ag

 

No state monopoly for alcohol in Russia

The Russian government on Friday ruled out establishing a state monopoly for alcohol production, a first deputy premier said.

 

Russia watchdog says could reopen to U.S. poultry

Russia could reopen its market to U.S. poultry, worth $800 million in 2008, if both countries can build on "stunning" progress during talks in Moscow this month, Russia's lead negotiator in the dispute said on Monday.

 

Auto

 

What will save the Russian car industry?

Russia has decided to follow in the footsteps of some European countries and the US by introducing a car scrappage scheme in an attempt to save the country's automotive industry.

 

Banking

 

Russian pawnshops thrive as banks tighten lending

During the depth of the credit crisis in Russia last year, when banks were charging exorbitant interest rates for loans, some businessmen raised cash by less conventional means — pawnshops.

 

Business

 

Yukos case against Russia begins at European court

The European Court of Human Rights (ECHR) has begun hearing a complaint from collapsed Russian oil company Yukos against the Russian government.

 

Modernising Russia. Another great leap forward?

Modernisation is hard to argue with. But it may not be what Russia needs.

 

Russian parliament makes anti-corruption move

Russian lawmakers give preliminary approval to bill permitting bail for white-collar crime.

 

Return of the prodigal oligarchs

For Azeri-born tycoon Telman Ismailov, who angered Prime Minister Vladimir Putin last year by splurging on a $1.5 billion hotel in Istanbul and got his Cherkizovsky market shut down, things couldn't get any worse, it seemed.

 

Billionaire Lebedev Lambastes Russian 'Primitivism'

Billionaire Alexander Lebedev lambasted what he called Russia’s failure to modernize its economy and said derelict infrastructure and an oversized state sector threaten recovery more than a global recession.

 

Russia's bail-out - was it worth it?

Russia's anti-crisis bailout may have been dwarfed by the more than $700 billion the United States was ready to dish out, but at 4.1 per cent of GDP in 2009 it was comparatively the largest bailout of the G20.

 

Russia's Medvedev moves to ease penalty for economic crime - paper

President Dmitry Medvedev has proposed a package of amendments to Russia's criminal and criminal procedure codes with the aim of making punishment for economic crimes more humane, a business paper reported Tuesday.

 

Medvedev demands harsh response to hampering businesses

Russian President Dmitry Medvedev said on Thursday all attempts by Russian officials to hamper businesses for personal profit should be met with crushing response.

 

Russia Wields Three-Pronged Policy Fix for Recovery

Russia, the biggest economy still cutting interest rates, will probably deploy a three-pronged strategy to steer an uneven recovery as the ruble soars, inflation hovers at a 12-year low and bank liquidity swells.

 

The Hard Man of Russia

Alisher B. Usmanov made his first fortune more than two decades ago making plastic bags--a commodity so scarce in the former Soviet Union that people washed and reused them. Since then Usmanov has morphed into a metals mogul and can now claim to be the biggest Russian investor in the Internet.

 

Domestic

 

Russia's Gold Deficit Shows Us What's Wrong

Russia is in a funk. Its performance at the Winter Olympics in Vancouver was its worst ever, and its economy suffered more last year than any other nation in the Group of 20.

 

Energy

 

Energy efficiency: Russia's hidden reserve

Russian oil majors may be world leaders in terms of production volumes, but this week's visit by President Dmitry Medvedev to Western Siberia, country's key oil producing region, has highlighted the fact that outdated technology and old soviet equipment still stand in the way of making efficient use of Russia's huge hydrocarbon resources.

 

Russia, IAEA Agree To Establish World's First Nuclear Fuel Bank

Russia has signed a deal with the UN's nuclear watchdog, the International Atomic Energy Agency (IAEA), to set up the world's first nuclear fuel bank of low-enriched uranium for countries that need fuel for civilian purposes, including nuclear power plants.

 

Russia's Nuclear Industry Seeks to Profit From Alternative Fuels

Russia’s nuclear industry has profited handsomely from the world’s interest in alternatives to fossil fuels. But at least one environmental group is saying the latest Russian effort to capitalize on the green reputation of nuclear power — marketing designs for old Soviet nuclear submarine engines — is potentially dangerous.

 

Foreign

 

Foreign Workers in Russia Face Sudden Red-Tape Barrier

Sudden enforcement of four-year-old visa statue may signal new Kremlin effort to discourage foreign presence in Russia.

 

Russia to ease immigration rules to draw in specialists, investment

Russia is poised to ease immigration restrictions for highly-qualified foreign specialists in a bid to encourage the free flow of trade and investment in the country, a Russian business daily said on Friday.

 

Russia dominates neighbours in new customs union

Russia's partners in a new customs union, Kazakhstan and Belarus, are getting cold feet about a pact designed to boost trade between the trio of ex-Soviet states and add clout to their WTO accession talks.

 

Gas

 

Chasing Shadows

Treading what industry players call “a familiar path,” the Federal Antimonopoly Service (FAS) this week introduced a draft bill that seeks to impose a ban on the development of networks of gas stations by big monopolies in the regional markets and municipalities, and to put a cap of 35 percent on what a vertically-integrated oil company can control. But even before FAS had the chance to put the new law on the table, industry executives were already calling the agency’s new proposals another “red herring.”

 

Alternative gas threatens Gazprom's operations – paper

Gazprom's position as the world's largest natural gas supplier may be shattered as an ever larger number of companies are investing in alternative gas production, a Russian business paper reported on Wednesday.

 

Putin Deputies' 'Tug of War' Threatens Russia Oil Flows to Asia

A feud between Russian Prime Minister Vladimir Putin’s deputies over how to plug the budget gap may end up curbing growth in oil output, the biggest source of state revenue, and limiting flows to Asia, analysts said.

 

Russia Rejects Eni Call to Merge Europe Gas Pipelines

Russia isn’t considering merging its South Stream gas pipeline to Europe with the rival European Union-backed Nabucco link, Energy Minister Sergei Shmatko said.

 

Russia-Europe gas pipeline secures full funding

The consortium behind the planned Nord Stream gas pipeline from Russia to Europe said Tuesday it had secured a 3.9-billion-euro (5.9-billion-dollar) funding deal from 26 banks.

 

First Nord Stream pipelay vessel heads for Baltic

The first pipelay vessel started its journey to the Baltic Sea to begin construction on the Nord Stream pipeline, which will pump Russian natural gas to Europe, the project operator said on Monday.

 

Ukraine delegation heads for gas talks in Moscow

The visit will be the first attempt by the new leadership of President Viktor Yanukovich to get a revision of what the Ukrainians say are onerous prices for Russian natural gas.

 

Indicators

 

Russian economy to grow faster than projected in 2010 – ministry

Russia's economy could grow by as much as 4-4.5% in 2010 compared with the government's forecast of 3-3.5%, an Economic Development Ministry official said on Tuesday.

 

Russian GDP May Grow 5.5% in Jobless Recovery, World Bank Says

Russia’s economy will grow faster than previously forecast this year as higher wages and pensions stoke household spending, though unemployment will constrain growth, the World Bank said.

 

In Russian Statistics, One Must Not Believe, Moscow Analyst Says

Rosstat, the Russian State Statistics Committee, has been playing so many games with the data it has released on that country’s economy, according to a Moscow analyst, that at the present time, one cannot say whether they bear any relation to reality in terms of the direction they ostensibly point to or the magnitude of the vector they supposedly show.

 

Boom and bust

Russia is on course for booming growth of 5.5 per cent in 2010 as the economic recovery gathers pace, but worries the rest of the World is heading for bust has sent Moscow's bourses down.

 

Infrastructure

 

Corruption Keeping Russian Highways among Worst in the World, Investigators Say

Russia ranks 118th out of 133 countries, right alongside Mozambique and Burundi, in terms of the quality of its highways, according to the latest report of the World Economic Forum, a ranking that is the result, Russian investigators say, of the outmoded construction practices and massive corruption such practices invite.

 

Investment

 

The Russian Bear awakes

Last year, Russia was in the midst of its worst economic crisis for a decade, but with the return of growth and the successful debt restructuring of aluminium giant UC Rusal, recovery is just around the corner. M&A activity will, however, start slow.

 

Improving Russia's "investment climate": Will the latest wave of judicial reform succeed? (PDF)

President Dmitry Medvedev appears perfectly to understand the crucial importance of judicial reform if Russia is to attract significant investment.

 

The Return of the Investor

Recent data from the Federal State Statistics Service shows that in 2009, foreign investment in Russia dropped by 21 percent to $82 billion. Also, since last year, direct foreign investment has fallen by 41 percent to $16 billion, the federal service reports. As a result of the global financial downturn, which dealt a heavy blow to Russia’s economy, foreign investors withdrew billions of dollars from the country. But will they ever come back?

 

Russia's Erin Brockovich: Taking On Corporate Greed

When the state-friendly Russian oil company Surgutneftegas held its annual shareholders meeting in the Siberian city of Surgut two years ago, the proceedings in the shabby auditorium started off as tightly scripted as a Politburo meeting. That is, until the moderator called for questions and Alexei Navalny took the stage.

 

Russia to Meet U.S. Investors for 1st Bonds Since '98

Russian government officials will meet U.S. investors for the country’s first sale of Eurobonds since the 1998 financial crisis next month, taking advantage of record-low yields to plug its budget deficit.

 

Russia May Sell State Assets Without Auction, Shuvalov Says

Russia may sell some state assets or transfer them for “long-term” management to strategic investors without an auction, First Deputy Prime Minister Igor Shuvalov said.

 

Russia Has 'Good Prospects' for Ruble Bonds Abroad

Russia may consider selling ruble- denominated bonds abroad in a bid to repeat the success of companies that have raised money from the securities, said Deputy Finance Minister Sergei Storchak.

 

IT

 

Can a Russian Silicon Valley Spur Tech Innovation?

The Kremlin wants to engineer its own Silicon Valley. In a plan that was revealed in February, the Russian high-tech haven will come complete with new-wave architecture and all the comforts of a resort, a place for Russian geniuses to get together and invent the biggest thing since, well, the Internet.

 

Putin takes charge of technology and innovation commission

Russian Prime Minister Vladimir Putin has taken charge of a government technology and innovation commission designed to boost the country's modernization, according to a resolution posted on the government's web site on Wednesday.

 

Russian Silicon Valley chief wants foreign manager for project

The coordinator of a project to build a high-tech research and production hub in Russia similar to the U.S. Silicon Valley could select a foreigner as manager, the media reported on Wednesday.

 

Russian 'Silicon Valley' needs 5-7 years of tax breaks - Vekselberg

Russia's answer to Silicon Valley, being created from scratch near Moscow, should be given tax breaks for at least five years, the Russian billionaire coordinating the project said on Thursday.

 

Retail

 

Ex-IKEA Boss Bares Russia's 'Chaotic Reality'

While the dust is still settling over the recent firing of two IKEA managers amid corruption claims, the former head of the Swedish furniture giant's Russian operations has packaged his love and hate for Russia in a new book.