Monday, December 22, 2014

"The EU is always playing by the rules. Putin is always playing with the rules"

Ukrainian Prime Minister Arseniy Yatsenyuk
(Photo Source : Web portal of Ukrainian Government)

Said : Ukrainian Prime Minister Arseniy Yatsenyuk in an interview with Spiegel conducted by Matthias Schepp and Christoph Schult published on December 20, 2014. 

The interview centered around Putin's aggression in eastern Ukraine, implementing the Minsk Protocol (the Ukraine ceasefire protocol-signed in Minsk-being monitored by the Organization for Security and Co-operation in Europe, OSCE), possibility of Ukraine joining the EU, Chancellor Angela Merkel's role in the Ukraine crisis, and host of other points including the US support.

The key points made by Ukrainian PM :
  • Putin thought he could split the EU, but the opposite happened. Putin did not expect the kind of unity the US and the EU have shown. 
  • Putin's policies have turned him into a drug-addicted person. His survival depends on land grabs of foreign territories. He needs new annexations. The annexation of Crimea has gained him much applause at home. But that will not last forever. 
  • If 85 percent of Russians support the annexation of Crimea and the aggression against Ukraine, that is a very bad sign.
  • Ukrainian youth wants to belong to Europe. (Joining) the EU remains our dream. We must not give it up. Otherwise Putin would win. His goal is to undermine the EU. This is not only about a conflict between Russia and Ukraine. Russia is fighting against the West and its values. 
  • (German Chancellor Angela) Merkel is a flagship of the EU. Not everything depends on her, but much does. I have been shocked in a positive way by how Merkel is defending international law so openly and strongly. She wants to have peace and stability in the EU, and she knows that Russia is a problem in terms of security. 

Saturday, December 20, 2014

"India is a very rich fiancée"

Alexander Kadakin

Said : Russian Ambassador to India - Alexander Kadakin - at a press conference on December 8 to clarify that Russia was not jealous over President Barack Obama courting India, as reported by Douglas Busvine in Reuters' blog. Kadakin was probably referring to India's invitation to Obama for the Republic Day celebrations.

“We don’t feel jealous, though of course I say that India is a very rich fiancée. It is good for a rich fiancée to have a beautiful bridegroom. But they should not promise you a marriage and then betray you,” Reuters quoted Kadakin as saying.

The press conference was held to discuss Putin's visit to India on Dec 11 during which he is expected to unveil a bilateral vision document aimed at boosting trade and investment between the two countries, especially in the fields of nuclear energy and defense.

The blog notes that "Indo-Russian friendship recently has become strained as India relies more on U.S. and French companies to meet its defense needs." Russia has expressed its discomfort over India's over-reach to the United States by signing a defense cooperation pact with Pakistan recently.

However, Kadakin has been reported to have dispelled India's fears on military sales to Pakistan and speculations of any sort of Russia-China-Pakistan triangle formation in a new world order because of Delhi getting closer to US. He also assured that "Russia will never ever do anything to the detriment to the security of India, a close and old friend," reported Dipanjan Roy Chaudhury in Economic Times.
Talking heads: Prime Minister Narendra Modi with Russian President Vladimir Putin 
and US President Barack Obama during G20 Summit in Brisbane. PTI (Photo Source)
India's position is really tricky in the prevailing messy situation involving the three big powers namely, the US, China and Russia. It is going to be a sort of litmus test for PM Modi to demonstrate his policy skills to strike a balance which is in India's favour from a long-term view point. Any fiancée, rich or poor, has to get settled sooner or later by making a decision at some point of time. And, India cannot be an exception. We expect Modi to have India's choice quite clear.

Wednesday, December 17, 2014

"Money, after all, only has value as long as we think it does."

Matt O'Brien

Matt O'Brien, in his report "Checkmate, Putin. Russia’s economy is stuck in a catch-22", in The Washington Post of December 16, 2014.

Matt discusses the unprecedented fall of the Russian currency - ruble - to the lowest level of 80 rubles per dollar despite increase in the interest rates from 10.5 to 17 percent. According to him, Russia is facing the economic catch-22 situation for which, typically, the word "checkmate" is used. 

Russians have totally lost confidence in their currency. They are using any rubles they can't turn into dollars to go on shopping sprees buying things like like cars, real estate, Ikea furniture, and Apple products, which is only going to lead to ruble's faster demise.

"Money, after all, only has value as long as we think it does. If ordinary people decide that they'd rather turn all their rubles that are rapidly losing value into things that won't,"  Matt writes adding that Russians are exactly doing that. "It's a bank run on the currency. Prime Minister Dmitry Medvedev has already asked Russia's top exporters to behave "responsibly" and Russian Finance Ministry has started selling foreign currency to keep ruble alive.

It is widely felt that in order to stabilise ruble, Putin might declare capital controls that make it illegal for people or companies to turn their rubles into foreign currency. Next few days are going to be crucial not only for Russia but for global markets, too.

Tuesday, December 16, 2014

"Putin has, in effect, launched a vast experiment into whether it is possible to extract a large and relatively well-integrated country from the global mainstream, and to reject the rules by which that mainstream runs"

Anne Applebaum

Said : Anne Applebaum, a columnist for the Washington Post and Slate, in her post titled "Putin's great gamble is about to backfire" published in The Spectator. 

Anne has compared the current scenario with the one in 1941, when Hitler invaded the USSR and the nation rallied round Stalin. "The Ukrainians were said to be Nazis; NATO was said to be encircling. The head of a state polling agency told the Wall Street Journal, ‘If the West doesn't like us, that means we’re on the right track,’ she writes. 

According to her, the newly born ultra-rich Russians, who have minted oil money during the past decade, have no clear mechanism to respond to the onrushing economic crisis that has resulted from Western sanctions. tumbling oil prices and crash in the ruble. "Alternative leaders (in Russia) have been eliminated, and alternative policies are not discussed, but that doesn't mean they’ll remain passive forever," writes Anne. "They could leave the country, withdraw their money, stage a palace coup or simply find ways to make life in Russia unpleasant for Russia’s leaders in ways we haven’t yet imagined," Anne concludes. 
Photographer: Alexander Zemlianichenko/AP Photo
Bloomberg reported today that the ruble plummeted into a free fall, losing as much as 19 percent as panic swept across Russian financial markets after a surprise interest-rate increase of 6.5 percentage-point, to 17 percent, failed to stem the run on the currency. The ruble has plunged 52 percent this year. Policy makers are likely to consider currency controls as “the last solution” to stop Russians from converting money into dollars.

Wednesday, December 10, 2014

"Russian President Vladimir Putin has to put his shirt back on and stop acting like a thug"

Fadel Gheit

Said : Fadel Gheit, senior energy analyst at Oppenheimer in an analysis of OPEC's oil battle and to opine on how long Saudi Arabia can withstand low oil prices. His comments were published in CNBC Executive News Editor Patti Domm's post titled : "Oil battle is sticky, but OPEC may be forced to act." 

According to Fadel Gheit the Saudis could take low prices for more than a year. But other countries, like Iran, Venezuela and Russia, will be increasingly impacted, reported Patti.

Patti notes that Russia is feeling the pinch of sanctions and has lost the assistance of Western drillers. Saudi Arabia sees $60 as the level where prices will stabilize, after OPEC's decision not to cut its production. According to her "the U.S. shale industry is relatively new, and some analysts say it really is not clear what the impact will be."

"It's a threshold of pain. Saudi Arabia has enough money and is applying pressure on Iran. They have to bring Iran to its knees to bring it to the negotiating table, … and (Russian President Vladimir) Putin has to put his shirt back on and stop acting like a thug," Patti quoted Fadel Gheit saying in her article. 

Oppenheimer's Fadel Gheit on oil's next move

Putti also noted that the OPEC gathering was just days after negotiations between Iran, the U.S. and five other nations on Iran's nuclear program were extended after failing to reach an agreement by the Nov. 24 deadline.
The OPEC Secretariat in Vienna
It is worth mentioning here that the Organization of the Petroleum Exporting Countries (OPEC) in it's 166th meeting, last month, decided to maintain the production level of 30.0 mb/d, as was agreed in December 2011 ruling out any production cut "in the interest of restoring market equilibrium."  OPEC noted that "stable oil prices – at a level which did not affect global economic growth but which, at the same time, allowed producers to receive a decent income and to invest to meet future demand – were vital for world economic wellbeing."  The next Ordinary Meeting of OPEC is scheduled to be held in Vienna, Austria, on 5th June 2015, immediately after the 2-day OPEC International Seminar on “Petroleum: An Engine for Development” on 3rd and 4th June.

Sunday, December 7, 2014

"We have excellent contact with Indian government. You cannot undo the past, but future is bright"

Said : Switzerland's Ambassador to India Linus von Castelmur in an interview with PTI in Mumbai as reported by most Indian media today. PTI's story titled "Come with proof, not for fishing : Swiss to India" is expected to be front page news item in tomorrow's print media. PTI's synopsis of the story says : "As India continues its pursuit of black money allegedly stashed abroad, Switzerland has said it would not entertain any "fishing expedition" and authorities cannot ask for names of all Indian account holders in Swiss banks without doing their own independent investigations."

As per the News Nation, the Swiss Ambassador told PTI it was difficult to deal with the past and whatever has happened over the last 50 years or so "cannot be undone". However, he assured for Switzerland's full cooperation to the Indian government on the basis double taxation avoidance bilateral agreement with India. "In future cases of the money deposited by Indians, Germans or Americans in Swiss banks, the Swiss banking and taxation authorities would inform the national tax authorities of the client country and there will be transparency," the Ambassador was quoted to have said. He also made it clear that if somebody has obtained stolen data improperly-illegally, Switzerland cannot honour such claims. Swiss authorities can only work when there is true investigation by the Indian tax authority or the Enforcement Directorate. Not only that they must also have a clear prima facie evidence, that there has been a tax fraud involved. "Once they hand over a list thus prepared, we can cooperate and we will really try to cooperate," he reportedly said.

A quick glance at the officially available information in public domain indicates that although Switzerland has launched several initiatives to promote internationally coordinated action to combat potentate funds [monies illegitimately siphoned off public funds and transferred to international financial centres by holders of political power in dictatorial regimes], there is hardly any visible mention of the so called "Black Money" (all wealth, on which the applicable legal taxes have not been paid by the depositor) as people understand in India. They mostly talk of "heads of state and high-ranking officials (so-called "politically exposed persons" or "PEPs") who may fraudulently enrich themselves with public money and, if so, that they often move these so-called "potentate funds" abroad and invest them in international financial centres." In such cases they have a provision to freeze their assets but only in special situations, e.g. in the event of the collapse of a political regime. Generally, the Federal Council provides support to the judicial authorities of the states concerned, which can request mutual legal assistance from Switzerland, to help them initiate criminal proceedings. It is incumbent on the relevant judicial authorities of the country in question to initiate the necessary criminal proceedings and to demonstrate the illicit origin of the frozen assets.
We cannot undo the 'Black' past but can try for a 'White' (bright) future.
Under the Swiss legal framework, "potentate funds" have to be localised, frozen, confiscated and returned to the state where they originated. The process of restitution places specific demands on the states involved : they need to make sure, once the funds have been restituted to their country of origin that they are not fed back into the cycle of corruption, and sent to foreign bank accounts again. Switzerland claims that it is "working at an international level to ensure the effective implementation of the United Nations Convention Against Corruption (UNCAC) of 2003, specifically with potentates' assets."

Recently, during the annual meeting of the Global Forum on 29 October 2014 in Berlin, Switzerland became the 52nd jurisdiction to sign the Multilateral Competent Authority Agreement, which will allow it to go forward with plans to activate automatic exchange of financial account information in tax matters with other countries beginning in 2018. 

More information from Switzerland's Federal Department of Foreign Affairs (FDFA) can be accessed from it's website.