03.06.10

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

Business

Mikhail Khodorkovsky, the jailed Russian oil tycoon, began a hunger strike on Tuesday in an attempt to draw attention to what he says is the abuse of the criminal justice system in Russia.

Russia’s banks and the ruble can withstand shocks triggered by the euro area’s sovereign debt crisis, central bank chairman Sergey Ignatiev said.

The Golden Hundred list of Russia's 100 richest people originally appeared in the May issue of Forbes Russia.

Currency

As the financial markets try to absorb news of a rescue package for Greece and other teetering euro-zone economies, some bankers and economists see parallels to Russia's default in 1998.

Russia Drops 'Bellicose' Dollar Talk as Reserves Grow

The dollar’s ascent against the euro may be stifling Russian efforts to challenge the greenback’s dominance as a reserve currency, with policy makers in Moscow allowing the dollar’s share of foreign reserves to swell.

Domestic

Russia is heading for a pension crisis as the budget deficit strains under increased payments and the country's sovereign wealth funds drain ahead of a demographic crisis.

Russian President Dmitry Medvedev has signed a decree to memorialize Yegor Gaidar, the controversial architect of Russia's painful post-Soviet transition to a free-market economy who died last year.

A series of modernization projects, approved by Russian President Dmitry Medvedev, will cost Russia 800 billion rubles ($26 billion), a Russian business daily said.

Russian President Dmitry Medvedev's speech at the St. Petersburg International Economic Forum will focus on Russia's recent economic changes, a presidential aide said Thursday.

Russia’s morbid addiction to resource politics

Energy discounts for allies are driving Russia deep into the red.

Foreign

Russia's government has submitted a draft law to the State Duma introducing administrative responsibility for Russians who fail to receive foreign guests properly.

Russia may be able to join the World Trade Organisation this year, Russia's first deputy prime minister Igor Shuvalov said on Tuesday, flagging progress in the decade-and-a-half old accession process.

If US troops can march across Red Square during the traditional Russian Victory Day parade, then a significant number of legislators and policymakers in Washington think it’s time to rethink the relevance of the Jackson-Vanik amendment.

Gas

Development of natural-gas supplies for the planned Nabucco pipeline, intended to reduce European dependence on Russian fuel, may cost more than twice as much as the 7.9 billion-euro ($10.5 billion) link itself.

Energy-rich Turkmenistan will start later this month building a pipeline linking its natural gas-rich fields in the east to the Caspian Sea coast in an effort to increase its export potential, a state newspaper said Monday.

Russian Energy Minister Sergei Shmatko said on Monday rules regulating the development of Russia's offshore deposits may be toughened following a major oil spill in the Gulf of Mexico.

Russian billionaire Viktor Vekselberg plans to renovate a money-losing, Soviet-era synthetic oil plant as President Dmitry Medvedev demands the rich invest in towns left impoverished by dying industries.

Indicators

Russian manufacturing growth jumped in April to the highest level in almost two years as orders rose and companies resumed hiring, VTB Capital said.

Russia’s economic recovery may be gaining pace this quarter after unemployment in April declined to the lowest rate in four months and retail spending rose to the highest level in more than a year.

Russia’s economy is recovering faster than previously estimated, creating room for the government to scale back emergency stimulus measures sooner than planned, the Organization for Economic Cooperation and Development said.

Investment

Russia may have to implement capital controls to defend the economy against excessive inflows, the International Monetary Fund said.

The Russian government does not intend to introduce any restrictions on capital movement despite the threat of excessive inflows damaging the economy, First Deputy Prime Minister Igor Shuvalov said on Thursday.

Revisions to the legal framework regulating foreign investments in strategic branches of the Russian economy will be implemented by the end of 2010, Prime Minister Vladimir Putin said.

Russian foreign direct investment slipped an annual 17.6 percent to $2.6 billion in the first quarter on an uneven economic recovery from the worst contraction since the Soviet Union collapsed in 1991.

President Dmitry Medvedev met with U.S. venture funds to seek capital for Russia’s planned “Silicon Valley” high-tech hub near Moscow.

Russian President Dmitri Medvedev met Tuesday with a group of American venture fund managers in a bid to increase foreign investment in his country's fledgling high-tech industry.

Labor

Teenage boys in Moscow will start compulsory military training in high school this September, while girls will undergo medical training, according to a new decree signed by Mayor Yury Luzhkov.

Russian employees seem to be largely unconcerned about ethical issues at their workplace as long as their own salaries and career advancement are not affected.

Fifty-five percent of respondents to a Levada Center poll of 1,600 Russians said they believed that "bribes are given by everyone who comes across officials" in Russia.

The tragedy at Raspadskaya, which produces more than 10 percent of the coking coal used to make Russian steel, is exposing lingering class resentments in Russian society.

More than half of Russian Internet users (52%) have accounts in several social networks, a poll by the Russia Public Opinion Research Center (VTsIOM) published on Tuesday revealed.

The Russian government is ready to cut taxes, offer residence permits and abandon work permit quotas for foreign employees in an effort to attract more qualified professionals from abroad.

Mining

The boss of Russia's Raspadskaya mine quit on Tuesday after Prime Minister Vladimir Putin assailed him over explosions that killed 66 people and could be prosecuted following a safety probe into the tragedy.

Russian Prime Minister Vladimir Putin has urged the question of providing state financial aid for the restoration of the Raspadskaya coalmine in west Siberia to be considered within the next month, a first Russian deputy prime minister said on Monday.

Technology

The Russian Communications ministry and a leading software company are working on a project to produce computer games aimed at boosting patriotism among young people and promoting Moscow's vision of the "historic truth," a leading business daily said.

Yandex may have some tricks up its sleeve, but these are unlikely to undermine Google’s hegemony in the global world of search engines.

The Russian investment vehicle that bought a $200m stake in Facebook last year is preparing to buy stakes in dozens of well-known internet companies as Russia turns to the internet to lead its future prosperity.

Russians can finally register domain names in Cyrillic, but are Internet users likely to change their preferences?

A group of Silicon Valley venture capitalists who bet on companies like Skype and Facebook are taking a look at another long-shot proposition — that Russia can diversify its economy away from oil.