Russia gains leverage from economic crisis

This worldwide economic crisis is not without its benefits to some.

While Russia’s government said the economy will contract for the first time in a decade and currency reserves are down 36 percent from August, the nation’s relative strength is raising Prime Minister Vladimir Putin’s influence over former Soviet states. Ukraine discussed borrowing $5 billion. Kazakhstan wants Russia to buy ailing BTA Bank. Belarus is asking for $3 billion in loans, on top of $2 billion granted last year.

“Russia isn’t looking at a straight-line deterioration into oblivion,” said Kieran Curtis, who helps manage $800 million in emerging-market fixed-income assets in London at Aviva Investors Ltd. “It has enough liquid assets to take stakes in all kinds of things in the former Soviet states.”
Russia may be willing to draw on its reserves to prop up neighboring economies, said Ivan Tchakarov, an economist at Nomura Holdings Inc. in London. “Ukraine will require more than the $16 billion from the IMF, so they will need Russian money,” he said. “It’s the perfect time for Russia to flex its muscles.”

Kazakhstan is seeking to sell its 78 percent stake in Almaty-based BTA Bank, the country’s largest, to Russia’s government-controlled lender OAO Sberbank, Arman Dunayev, deputy chief of Kazakhstan’s state oil fund, said Feb. 2.

Armenia will receive $500 million from Russia, equivalent to about 2.5 percent of its gross domestic product, Putin said on Feb. 28. Belarus, which borders Russia and Poland, has a $2.46 billion credit line from the IMF in addition to loans from Russia.

Kyrgyzstan got a $2 billion loan from Russia and was promised a further $150 million in economic aid on Feb. 3. The same day, Kyrgyzstan’s government announced it would shutter the military base the U.S. Air Force has used for supplying troops in Afghanistan.

Forum Categories: 

Balance of Power

It is amazing how fast the balance of power has changed within the last decade. It probably will take a few more years when we stop referring to "Eastern European Countries" as such.

Meanwhile in the U.S.

We have Cramer trying to "Obama proof" portfolios, bummer he was pushing the entire health care sector, not getting the costs of health care are destroying the U.S. competitiveness and crippling it long term with deficits....

and seemingly "upset" that Geithner isn't "bailing out the rich more", while others scream "socialism" etc.

It's insane, would all of these people just stop for a moment, whip out a calculator and see the goal is to get some real jobs, real economic growth and stop this fictional money ponzi scheme?

I have listened to more opinions without fact and details it's enough to drive someone nuts.

Russia solving the problem with mining

Putin gets it
For the last several years the Russian Central Bank has been buying gold.

Vyacheslav Shtyrov, president of Sakha, approached Prime Minister Vladimir Putin on Wednesday with a plea for help. The sparsely populated republic, home to companies including Transneft, Surgutneftegaz and Mechel, is suffering from the drop in prices for gas and coal.

Putin listened and then took a breath.

"Vyacheslav Anatolyevich," he said, addressing him by his patronymic, "the global prices of coal, gas, metals and even diamonds have fallen. But the price of gold is rising -- and gold is mined on your territory."

When Shtyrov called attention to miners' problems with creditors, he was once again rebuffed. "We'll solve the problem with gold mining," Putin said. "Especially since -- I'll say it again -- I'm well aware that the price of gold is rising on world markets."

It has always been about class warfare.