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

 

Ag

 

Russia Fights for World Wheat Dominance, Undercuts U.S. Grain as Production Expands

On May 28, Egypt, the world’s biggest importer of wheat, bought 180,000 metric tons from Russia for $178.50 per ton, about $13 less than the U.S. price. The deal is one of many signs that Russia is challenging America’s supremacy in the global wheat market. 

 

Russia considers doubling minimum vodka price

Russia is considering doubling the minimum price of vodka to 200 rubles ($6.30) by 2013.

 

Banking

 

Falling rates expose lack of borrowers for Russian banks

The recent public disagreement between Sberbank Chief, Herman Gref, and Finance Minister, Aleksey Kudrin, has opened up debate about the effect falling interest rates are having on the banking system.

 

Domestic

 

Forbes names Moscow mayor's wife world's 3rd richest woman

Yelena Baturina, the powerful wife of Moscow Mayor Yury Luzhkov, is the one of the three richest women in the world with an estimated wealth of $2.9 billion, Forbes magazine reported.

 

Energy

 

Oil rig disaster may have upside for Russian energy

Washington is expected to tighten drilling restrictions in the wake of the BP oil rig catastrophe in the Gulf of Mexico, pushing energy firms to look for opportunities elsewhere.

 

BP's Natural Gas Joint Venture in Russia Is in Bankruptcy

The British oil giant BP conceded another setback Thursday in its struggle to recover hundreds of millions of dollars in investments from a venture to sell Russian natural gas to China.

 

Russia overtakes Saudi Arabia as world oil production leader – paper

Russia produced more oil and less gas than Saudi Arabia in 2009 and is now the world's biggest oil producer, a Russian business daily said on Thursday.

 

Northern Sea Route to open for Russian oil tankers in fall

Russian oil tankers will make their maiden voyage from the Russian port in the White Sea to South-East Asia via the Northern Sea Route this fall, a deputy Russian transport minister said on Friday.

 

Oil and gas production in Russia to fall after 2011 - LUKoil head

Oil and gas production in Russia will start declining gradually after 2011 if the government does not change laws to stimulate geological exploration, LUKoil head Vagit Alekperov said on Wednesday.

 

BP chief plans trip to Russia to offer reassurance

BP chief executive Tony Hayward is planning a trip to Russia to reassure President Dmitry Medvedev the oil giant is not on the verge of collapse, the Financial Times reported Monday.

 

Kremlin reduces gas to Belarus over payment dispute

Russia reduced natural gas supplies to Belarus on Monday after Minsk failed to settle arrears, brandishing again the country's energy clout and raising the spectre of supply disruption to Europe.

 

Russia further cuts gas supplies to Belarus

Russia on Wednesday further reduced natural gas supplies to ex-Soviet neighbor Belarus over what it claims is a debt of nearly $200 million, but said the transit of its deliveries to European customers has continued unimpeded.

 

Russia reopens Belarus gas tap but dispute goes on

Russia's gas monopoly said Thursday it has resumed supplies to Belarus after a payment dispute, but Belarus still threatened to stop sending gas on to other European countries unless Moscow settles its own debts.

 

Foreign

 

EU ready to support Russia's modernization programme – Summary

The European Union is ready to support President Dmitry Medvedev's plan to modernise Russia, the bloc's president said on Tuesday.

 

Medvedev's U.S. Trip Boosts Effort to Reset Economic Ties

Dmitry Medvedev and Barack Obama will try to jump-start economic links this week as Russia’s president travels to Silicon Valley and Washington, building on improved political ties after the U.S. “reset” relations.

 

Obama Aims to Build Economic Ties With Russia

In his quest to restore relations with Russia, President Obama focused first on security issues like disarmament and Iran. But with an arms control treaty signed and sanctions against Tehran approved, Mr. Obama hopes this week to open a new phase intended to build the robust economic relationship that has eluded his predecessors.

 

War in Senate brewing over U.S.-Russia arms deal

As President Obama and Russian President Dmitry Medvedev focus on economic issues during their seventh meeting today, debate over the new nuclear arms treaty that is the cornerstone of improved U.S.-Russian relations will continue across town in the Senate.

 

Obama's 'Reset' Pays Off as Russian Approval Hits 12-Year High

Russians like the U.S. government more than they have since before Boris Yeltsin ceded the presidency to Vladimir Putin, indicating Barack Obama’s “reset” is paying off, a poll published today shows.

 

Indicators

 

Russian economy shows robust recovery after crisis - NYSE president

The Russian economy, which was severely affected by the 2008 global economic and financial crisis, is demonstrating robust recovery and becoming increasingly attractive for international investors, the president of NYSE Euronext said on Tuesday.

 

Russia to lead world in economic growth - Morgan Stanley head

Morgan Stanley expects Russia's economy to be among the fastest-growing in the world this year despite trailing rivals in foreign investment, the firm's chairman said ahead of the International Economic Forum in St. Petersburg.

 

Bulls are wrong on Russia

Russia bulls claim the country is now shrugging off the crisis and recovering fast. I struggle with this rose-tinted view: first quarter 2010 numbers are weak and the country needs fundamental reforms if it is to fulfill its potential.

 

Infrastructure

 

Foreign capital wary of Russian infrastructure plans

Faced with a crumbling road and airport network, Russia says it envisages a $1 trillion construction programme to upgrade its Soviet-era infrastructure. Easier said than done.

 

Investment

 

Medvedev Targets Investment Boost, Tax Cuts

President Dmitry Medvedev on Friday said tax breaks, foreign investment and the privatization of some state enterprises are key to modernizing the economy and reducing reliance on oil.

 

Russia to scrap gains tax for foreign investors

Russia will loosen the state's controls on the economy and abolish a key tax to spark a desperately needed "investment boom," President Dmitry Medvedev told a gathering of foreign business officials Friday.

 

Russia Stocks Overtake China in Morgan Stanley Model

Russia replaced China as Morgan Stanley’s top pick among the largest emerging stock markets in its developing-nation model as the brokerage advised investors to take on riskier assets.

 

Labor

 

Education system is Russia's Achilles heel - head of largest bank

The Russian education system needs large-scale reforms, the head of Russia's largest bank said on Tuesday.

 

Unified State Exam fails corruption test

Russia's Unified State Exam has failed the corruption test - bribe-taking has drifted from colleges and universities to the school level. In the meantime, many institutions of higher learning have proved quite successful in finding ever new ways of making money on applicants and students.

 

What price mobility?

Prime Minister Vladimir Putin’s instruction to simplify internal migration rules will undoubtedly be welcomed as finally doing away with the bureaucratic Stalin-era system that restricted citizens’ freedom of movement.

 

Employee fines betray weak corporate culture

Firing an employee is not easy in Russia, so companies routinely use fines to motivate underperforming staff. But the system is often unfairly applied - and breaks labour law.

 

Moving For Earnings

While the government simplifies rules for foreign migrants, most Russians still avoid moving for work.

 

Fears over 'Muscovite's code'

Moscow authorities are planning to introduce a document called the “Muscovite’s Code”, which they claim will ease tensions between local residents and migrants from different cultural and ethnic environments – but not everyone is impressed.

 

Russia's retirement age to be raised in next few years – paper

Russia's retirement age may be raised in the next few years as part of sweeping reforms to the pensions system, Russian business daily Vedomosti said on Monday.

 

Russia to encourage entrepreneurship, mobility among unemployed – paper

The Russian Health Ministry plans to encourage entrepreneurial activity and mobility among Russia's millions of unemployed, business daily Kommersant said on Tuesday.

 

Law and order

 

Russian ombudsman demands rally clampdown inquiry

Russian human rights ombudsman Vladimir Lukin on Tuesday urged a thorough inquiry into Monday's "savage and inappropriate" crackdown on an opposition rally in Moscow.

 

Russia Prosecutors Say Magnitsky Was Not Sick While In Jail

Russian prosecutors Tuesday denied that lawyer Sergei Magnitsky, whose death in prison drew widespread condemnation, had been ill while in jail, although his supporters say he had long complained of a serious gallbladder condition.

 

Russian woman's jail death caused by surgical tube left in her body after operation

A Russian businesswoman who died in jail while awaiting trial was killed by a tube that surgeons had left in her body after an operation, investigators said Friday.

 

Rules of The Game

Russian judges are warned to avoid the temptation to act as latter day Robin Hoods when ruling on crimes by rich businessmen.

 

Sberbank Head: I would have known if there was oil theft

Sberbank head German Gref told a Moscow courthouse that he was not aware of any oil theft while he was minister of economic development and trade.

 

Russian trade minister testifies for Khodorkovsky

The Russian trade minister on Tuesday told the court hearing a case against former Yukos CEO Mikhail Khodorkovsky that he knows nothing about the theft of millions of tons of oil, of which the former tycoon is accused.

 

Public opinion

 

Insider's View of Russian Public Opinion Polls

Politicians in Russia often cite public opinion polls that indicate a solid 70 percent majority of voters support the country's leadership. But a sociologist at a major Russian opinion survey firm says those numbers fail to represent the actual relationship between politicians and the people of Russia.

 

Public trust in Medvedev, Putin drops 10%

Public levels of trust in Russian President Dmitry Medvedev and Prime Minister Vladimir Putin have dropped by almost 10% over the past six months, Russian daily Gazeta said on Friday.

 

Real estate

 

Medvedev Pursues Russian Home-Ownership `Dream' to Break With Soviet Past

President Dmitry Medvedev’s government has acquired almost 2.5 million acres, an area larger than Cyprus, to promote construction of single-family homes and move Russians out of Soviet-style apartment blocks, the official in charge of the effort said.

 

State

 

Prices watchdog unleashed

Fearful of high commodity prices hitting the prospects for economic growth, the government has been increasingly deploying the Federal Anti-Monopoly Service against offending companies.

 

Medvedev wants to rejuvenate Russia's civil service

Russian President Dmitry Medvedev has proposed setting the upper age limit for civil servants at 60, a Russian business daily said on Wednesday.

 

Experts skeptical on jobs cuts plan

Russia’s ambitious plans to slash the number of state bureaucrats by 20 per cent have been criticized by some experts, who laughed them off with the old epigram that “work expands so as to fill the time available for its completion”.

 

Russia Leaves Rates Unchanged as Economy Gathers Pace

Russia’s central bank left its main interest rates unchanged today, ending a 14-month easing cycle as the economic recovery gathers speed and inflation slows.

 

Medvedev reduces strategic companies fivefold

Russian President Dmitry Medvedev signed on Friday a decree reducing the number of strategic companies which enjoy privileged state support.

 

Technology

 

Russia launching 520-day Mars mission simulation

A manned mission to Mars may be decades away, but an international team of researchers will try to experience what one might be like by locking themselves up in a windowless capsule for a year-and-half - the time needed for a roundtrip to the red planet.

 

First project approved for Russian 'Silicon Valley' – paper

The first innovation project for Russia's new high-tech research hub near Moscow has been approved by Skolkovo's modernization committee, a Russian business daily quoted a presidential aide as saying on Tuesday.

 

Medvedev Seeks Microsoft, Nokia Expertise in Building Russia

Russian President Dmitry Medvedev takes his plea for foreign investment and technology directly to Microsoft Corp., Citigroup Inc. and Nokia Oyj as he hosts business leaders this week in his native St. Petersburg.

 

Can A Russian Silicon Valley Rise From The Dust?

Dmitry Medvedev is paying his first-ever visit to California, where he will tour the cradle of America's high-tech industry. As he meets with executives of Google, Microsoft, Intel, and Apple, the Russian president's thoughts will likely be on a vacant plot outside Moscow where he hopes Russia will soon create its own 21st-century hub of innovation.

 

Medvedev Wins Schwarzenegger Backing for Russian Silicon Valley

President Dmitry Medvedev won Governor Arnold Schwarzenegger’s backing for his bid to build Russia’s own Silicon Valley, saying he aims to create “powerful” ties with California companies.

 

Cisco, Twitter Pledge Russian Investments During Medvedev Trip

Russian President Dmitry Medvedev came to Silicon Valley with a goal: convince investors that his country is a safe place to put their money and resources.