Tuesday, 21 July 2009

Ruble Posts Record Gain on Oil Surge

The ruble jumped more than 2 percent against the dollar Monday, tallying up a record gain as oil rallied and equity markets surged.
The currency rose 2.4 percent against the dollar to 31.05, following through on last week’s 2.9 percent rally. Monday’s jump was the largest single-day jump since 1999, Bloomberg reported.
The ruble has gained 16 percent against the greenback since February, and is 5.5 percent off its July lows. The ruble gained 1.8 percent against the Central Bank’s basket of 55 cents and 45 euro cents to close at 36.99.
Prices for Urals crude, Russia’s main export blend, set the stage for the currency’s rise, as it advanced for a fourth day to more than $65 per barrel on a weak dollar and fresh hopes for a global economic recovery. The commodity is up nearly 15 percent on the year.
Energy stocks rose in sympathy with oil, setting off a rally in broader markets, with positive news from the U.S. economy doing its part to send exchanges higher, as leading economic indicators rising for the third straight month in June raised hopes that a global recovery could be around the corner.
The MICEX Index closed the day up 2.9 percent at 994.28 after briefly breaking the 1,000 mark, while the dollar-denominated RTS closed slightly over 5 percent higher, at 972.31.
The ruble’s growth is not likely due to any fundamental changes in the economy, however, and may be little more than a technical bounce.
The ruble has been oversold since July 1, when the Central Bank lifted restrictions on how much foreign currency Russian banks can hold as part of their overall assets, said Yulia Tseplyayeva, chief economist at Merrill Lynch.
“Once the restrictions were lifted, money went out of the ruble and into other currencies and eurobonds,” Tsyplyaeva said.
Monday’s rally in oil prices sparked an overdue upward correction in the currency’s price, she said.
“This was much more of a technical event than a fundamental one,” she said. “Although capital inflows have improved and investor sentiment is more positive, the economic picture is largely the same as it has been.”
Traders, however, chose to focus on the short-term outlook, bidding up blue chips to extend a weeklong rally in the equity markets.
Norilsk Nickel was the day’s biggest gainer, climbing 5.6 percent as copper hit a nine-month high on a weaker dollar and improving economic sentiment, with some analysts expecting growth in demand for industrial metals toward the end of the year.
Gazprom shares rose 4.1 percent for a sixth straight day of gains, while Sberbank gained 2.7 percent, as a rising ruble made deposit withdrawals or conversions less likely.

Ukraine Challenger Advances

KIEV, Ukraine -- A new face in Ukraine is gaining popularity among voters looking to reignite the hopes of the Orange Revolution and to end the political squabbling that has hamstrung efforts to grapple with recession.
Arseniy Yatsenyuk, a former parliamentary speaker and foreign minister, has seen a surge in support in recent months as voters in the presidential election early next year look for a candidate who can put an end to the political paralysis and turn around an economy that contracted 20.3% in the first quarter.The mass protest in 2004 against an allegedly rigged presidential ballot swept pro-Western President Viktor Yushchenko to power on a reformist, anticorruption platform at the expense of Moscow-backed Viktor Yanukovych. But integration with the West has hit the rocks with overhauls delayed amid political infighting and in the face of an increasingly assertive Russia.U.S. Vice President Joe Biden is set to visit Ukraine next week to allay concerns that the U.S.'s efforts to patch up relations with Russia could undermine Washington's commitment to pro-Western governments in the region like Ukraine's. In a measure of his rising prominence, Mr. Yatsenyuk is scheduled to meet Mr. Biden.Ukraine's politics look ripe for a new approach. President Yushchenko is locked in a political battle with his former ally, Prime Minister Yulia Tymoshenko. Mr. Yanukovych's opposition party has added to the deadlock, blocking the work of parliament on several occasions in recent weeks. The political turmoil is exacerbating the economic crisis, as the government struggles to meet the terms of a $16.4 billion bailout package from the International Monetary Fund.The dual crises go a long way in explaining the surge in popularity that Mr. Yatsenyuk has enjoyed over the past six months. Promotional posters bearing his portrait and saying "To save the country" have been plastered across Kiev.Mr. Yatsenyuk is a touch less bombastic. "No messiahs," he said in an interview this month. "But Ukrainians are frustrated with current political figures."Polls show he is right.With his support at 11.8%, according to a June survey by the Kiev International Institute of Sociology, he is snapping at the heels of Ms. Tymoshenko, who is at 14.5%. Mr. Yanukovych leads the way with 23.4%, with Mr. Yushchenko languishing at 2.3%, a turnaround from the 60% he garnered following the Orange Revolution.Mr. Yatsenyuk shot up from only 3.4% in October, stealing support especially from Ms. Tymoshenko in her stronghold in the west and center of the country. Mr. Yanukovych, popular in the pro-Russian east and south, has made limited advances.At 35 years old, Mr. Yatsenyuk is from Ukraine's first post-Soviet generation. A lawyer by training, he Twitters and speaks fluent English. He has already collected a bulging résumé as parliamentary speaker, foreign minister, acting head of the central bank and economy minister. A member of Mr. Yushchenko's party, he is forming his own, on the basis of his movement, "the Front of Change."Rather than focusing on contentious issues such as the future of a Russian naval base or the status of the Russian language -- key rallying points for Mr. Yushchenko that have alienated Russia -- Mr. Yatsenyuk promises to focus on developing the country's industry and agriculture, education and health care by building consensus in the country's fractious parliament. He also stressed the need to curtail the political influence of powerful business tycoons."Mr. Yatsenyuk belongs to a new generation of the elite that isn't weighed down with corruption and unfulfilled promises," says Yevhen Bystrytsky, executive director of the Soros Foundation in Ukraine. "His discourse is fresh, and he is able to talk to people and put his ideas across in simple but clever language."Mr. Yatsenyuk faces a number of obstacles in the run-up to the Jan. 17 election. Beyond the need to back up his rhetoric with substance, analysts say his campaign could struggle against the established parties. Mr. Yatsenyuk is only now creating a regional support network and has yet to name any political allies. Even more damaging could be the claims from Ms. Tymoshenko and analysts that Mr. Yatsenyuk is receiving support from oligarchs whose political influence he says he wants to reduce. He strongly denies this.His efforts to balance between the West and Russia also could founder on contentious issues like NATO membership, something Moscow bitterly opposes.Analysts say Moscow is unlikely to bet on one candidate after the failure of its overt support for Mr. Yanukovych in 2004. Mr. Yushchenko has provoked the Kremlin's ire with his attempts to integrate Ukraine into NATO and his support for Georgia during the war in South Ossetia in August 2008, while the previously critical Ms. Tymoshenko has taken a much softer stance on Russia recently.

Biden In Ukraine To Reassure On Russia 'Reset'









KIEV, Ukraine -- Vice President Joe Biden arrived here Monday on a mission to reassure Ukraine that US efforts to repair relations with Moscow will not come at the expense of support for Russia's ex-Soviet neighbours.

But while Biden's programmes in Ukraine and, later this week, in Georgia, provide ample opportunities to express US backing in word, his trip was not expected to spur much new support from Washington in deed, experts said.Biden was scheduled to hold talks Tuesday with Ukrainian President Viktor Yushchenko, Prime Minister Yulia Tymoshenko and other political leaders before travelling Wednesday to Georgia to meet leaders there.Briefing journalists in Washington ahead of Biden's departure, one of his top aides summarized the message President Barack Obama's vice president was being sent to Russia's neighbours to deliver."Our efforts to reset relations with Russia will not come at the expense of any other country," said Tony Blinken, national security advisor to the vice president."We will continue to reject the notion of spheres of influence, and we will continue to stand by the principle that sovereign democracies have the right to make their own decisions and choose their own partnerships and alliances."Leaders in Kiev and Tbilisi are nervous that an improvement in US-Russian ties could translate into a rollback of Washington's aggressive past backing of their respective drives to move away from Moscow and integrate with the West.Russia has strenuously protested expansion of western influence and bedrock western institutions such as NATO into countries close to its borders and once part of the Soviet Union.Tensions also remain high since Russian troops in August 2008 pushed deep inside Georgia in a war over its breakaway regions, sparking new fears that Moscow would use force to assert its interest in the former satellite states.Obama spoke to such fears in a keynote speech in Moscow when he stressed his administration's "firm belief that Georgia's sovereignty and territorial integrity must be respected."Biden's two state visits are expected to drive home the message that the United States has not, and will not, abandon Ukraine and Georgia.But in its latest edition, the Ukrainian weekly Zerkalo Nedeli said that US interest in Ukraine has already sharply faded four years after a pro-Western coalition ousted the old Moscow-aligned elite in the 2004 Orange Revolution."In geopolitical terms, Ukraine remains a suitcase without a handle. It is too valuable to throw away but too cumbersome to carry" for the United States, the weekly commented ahead of Biden's visit."Times have changed, and the instruments of American 'influence' are minimal here."Biden will also use his visit to continue to press for more progress on democracy efforts inside both countries, according to Blinken, who said both nations face "the challenge of fulfilling the promise" of their revolutions.According to a source close the Ukrainian presidency, Kiev is hoping to secure a bilateral deal with the United States containing national security guarantees in connection with the expiry of the Cold War-era START nuclear disarmament treaty at the end of this year.Energy concerns will also be a topic of discussion in Kiev, where chronic disputes over gas prices with Moscow have interrupted European gas supplies, 80 percent of which are piped to Europe via Ukraine.Biden was scheduled to leave Ukraine on Wednesday for Georgia, where he was due to meet President Mikheil Saakashvili and deliver an address to the Georgian parliament.

Sunday, 19 July 2009

Russian Steelmakers Set To Avoid Worst of Tariffs

Mounting pressure on governments to impose protectionist tariffs is not likely to halt surging Russian steel exports because widespread foreign demand can blunt the impact of scattered import duties.
A sharp slowdown in global trade has also made it difficult for countries to prove domestic producers are under threat from imports, even though an increasing number of governments are considering tariffs.
The London-based Iron and Steel Statistics Bureau says global steel production fell 22 percent year on year in January through May, while exports by the world’s top 10 exporters dropped 30 percent in the first quarter.
“We’ve seen a slowdown in global trade and I don’t think there is any question that this makes it more difficult for domestic industry in the U.S.A. and elsewhere in the world to file dumping cases,” said David Phelps, president of the American Institute for International Steel.
Ordinarily, tariff actions increase during recessions as politicians respond to pressure from local industries to preserve jobs by blocking foreign competitors’ access, and from Washington to Beijing, anti-dumping investigations and other measures are on the rise.
In May, the WTO noted that anti-dumping investigations rose 17 percent year on year in the second half of 2008.
While some analysts argue that the situation is destined to change as the global downturn worsens, Morgan Stanley’s Dmitry Kolomytsyn maintains that Russia, the world’s fourth-largest steel producer, will continue to thrive.
“Risk remains but is less of a concern given the wide dispersion of Russian steel exports across countries and continuing hesitation on the part of some governments to increase duties,” he said, adding Iran, Turkey and Taiwan were Russia’s top export markets for long steel in the first quarter.
In recent months, almost every major Russian steel producer has announced that first-quarter exports increased compared with the fourth quarter.
Some analysts, however, are convinced that the pace of Russian steel exports to China could raise hackles among domestic producers there.
Thus far, China’s sole move has been a June investigation into Russian and U.S. electrical steel, though a recent Citibank report cited industry newsletters reporting that Beijing had also ordered a probe of Russian flat steel imports.
“It’s surprising that Russian steel exports have endured as long as they have, and we still question whether it is sustainable,” said Michael Kavanagh, UralSib senior metals and mining analyst.
“Don’t be surprised when the Chinese producers scream to the government for protection.”
But Morgan Stanley’s Kolomytsyn said that, despite recent inroads, Russian steel exports remain a small part of the overall Chinese market.
“Russia is selling nothing compared to how much China is consuming or producing,” he said, adding that this makes it difficult for Beijing to make a successful anti-dumping case.

East Europeans Nervous as U.S. Courts Russia

WARSAW, Poland — A group of prominent former Eastern European leaders wrote to U.S. President Barack Obama on Thursday that their region is gripped by anxiety that he could forget their interests as he seeks to repair ties with Russia.
The 22 former leaders said they still feel bullied by Russia and claimed that Moscow continues to challenge their sovereignty.
They warned in a letter, carried on the web site of the Gazeta Wyborcza newspaper and to be delivered in Washington later Thursday, that U.S. credibility would be damaged if Washington abandons plans for a missile defense shield in response to Russian pressure, calling this the “thorniest” of current issues.
The administration of former President George W. Bush reached agreements last year to station interceptor missiles at a base in Poland and a linked radar base in the Czech Republic. Russia vehemently opposes the plan, and Obama is skeptical of it and is undertaking a thorough review.
“Abandoning the program entirely or involving Russia too deeply in it without consulting Poland or the Czech Republic can undermine the credibility of the United States across the whole region,” according to the letter signed by former leaders from countries once in the Soviet-controlled communist bloc but now NATO and EU members.
The signatories include former Presidents Lech Walesa and Aleksander Kwasniewski of Poland, Vaclav Havel of the Czech Republic, Emil Constantinescu of Romania and Vaira Vike-Freiberga of Latvia. They describe themselves as U.S. allies who remain deeply indebted to Washington for helping bring down the Iron Curtain.
“Had a ‘realist’ view prevailed in the early 1990s, we would not be in NATO today and the idea of a Europe whole, free, and at peace would be a distant dream,” the letter said.
The letter comes days after an Obama visit to Moscow, where he sought to reboot the tense relationship between the United States and Russia, including by putting a renewed focus on paring down nuclear stockpiles.
While missile defense came up in the talks, there was no progress and further discussions were put aside for later.
Russia has threatened to deploy missiles near Poland if the United States pushes ahead with the shield. Obama has attempted to reassure Moscow that the system is geared to tempering a ballistic missile threat from countries like Iran, a strong trading partner of Russia.
There is “nervousness in our capitals,” the authors wrote. “We want to ensure that too narrow an understanding of Western interests does not lead to the wrong concession to Russia.”
While they welcome Obama’s attempts to “reset” ties with Russia, they warned that Russia still acts as if it has final say in the region.
“Our hopes that relations with Russia would improve and that Moscow would finally fully accept our complete sovereignty and independence after joining NATO and the EU have not been fulfilled,” the letter says. “Instead, Russia is back as a revisionist power pursuing a 19th-century agenda with 21st-century tactics and methods.”
The authors cite economic warfare, including recent gas shortages in past years with Ukraine and others; politically motivated investments; bribery and media manipulation in order to advance its interests and to challenge the trans-Atlantic orientation of Central and Eastern Europe.
A security analyst, Bartosz Wisniewski, said the letter is more “alarmist and defensive in tone” than the reality would dictate, especially since Obama has tried to reassure the region that he would not sacrifice its interests in his rapprochement with Russia.
“But if you want to get something across in Washington you need to be vocal,” said Wisniewski, who works for a state-funded think tank, the Polish Institute of International Affairs.
He said it is notable what is absent from the 3,000-word letter. There is no mention of Ukraine or desires for further NATO enlargement and only the briefest mention of Georgia.
“It’s about consolidating what has already been gained in the last 20 years and taking care of the allies that you already have and not thinking about the others,” Wisniewski said. “It is a very realistic approach given the priorities of the Obama administration.”

The Heart of Hitler’s Darkness: Ukraine

Nazi Germany’s greatest war crime is the Holocaust, of course, but the genocides against Ukrainians and Belarussians constitute a close second. And yet, while the Holocaust is common knowledge, few know much about the extermination of Ukrainians and Belarussians —and Germans may know about this least of all. The tragedy of these peoples’ suffering in the war has been compounded by the world’s almost complete ignorance and indifference.
That lamentable condition may be about to change, if only among professional historians. In a ground-breaking article that was published in the July 16 issue of The New York Review of Books, Yale University historian Timothy Snyder describes in excruciating detail just how Nazi policy was directed at exterminating first the Jews and then the Slavs. Since Belarus and Ukraine were occupied for almost four years, they suffered enormous population losses.
According to Snyder, “Half of the population of Soviet Belarus was either killed or forcibly displaced during World War II: nothing of the kind can be said of any other European country. … The peoples of Ukraine and Belarus, Jews above all but not only, suffered the most, since these lands were both part of the Soviet Union during the terrible 1930s and subject to the worst of the German repressions in the 1940s. If Europe was, as Mark Mazower put it, a dark continent, Ukraine and Belarus were the heart of darkness.”
The devastation that affected both countries is even greater when one considers their experiences in the Stalinist 1930s and in World War I. Ukraine lost at least 3 million people in the genocidal famine of 1933. Both countries also served as the main killing fields of the Eastern Front during World War I (1914-18), the Civil War in Russia (1918-21) and the Polish-Russian War (1919-21).
According to a recent study of the Moscow-based Institute of Demography, Ukraine suffered close to 15 million “excess deaths” between 1914 and 1948:
• 1.3 million during World War I
• 2.3 million during the Civil War, the Polish-Soviet War, and the famine of the early 1920s
• 4 million during the genocidal famine of 1933
• 300,000 during the Great Terror and the repressions in Western Ukraine
• 6.5 million during World War II
• 400,000 during the post-war famine and the destruction of the Ukrainian nationalist movement
Ukraine and Belarus experienced nearly 40 consecutive years of relentless death and destruction, starting in 1914 and ending with Stalin’s death in 1953. Although Soviet Russia bears a great deal of responsibility for the killing, the lion’s share falls on Germany.
And yet Germany, which so assiduously remembers its crimes during the Holocaust, has still to build one monument to the millions of Belarussians and Ukrainians its armies killed in the 20th century.
How can this blindness be explained?
Partly, it’s a function of ignorance. The German media devote almost no coverage to Belarus and Ukraine. It is also partly because Germans just don’t “see” these countries.
Nobel Prize winner Heinrich Boll’s 1949 novel “The Train Was Punctual” provides a good example of this cultural mindset. The novel describes a young German soldier’s return to the front in southern Ukraine. As he travels eastward from his furlough, he traces his route on a map and “visits” various cities, towns and villages in Ukraine. He speaks of Poles and Jews and Russians in great detail, but he doesn’t mention Ukrainians once, even though they formed the vast majority of the country and were the people whose farms he and his comrades probably plundered on a daily basis. Imagine a trip through the American South without a single reference to the black population.
But why don’t Germans “see” people who are so manifestly there? To some degree it’s because the “Untermenschen have remained Untermenschen” — economically underdeveloped peoples with silly cultural practices who either can’t get their political act together (Ukraine) or are proud to be Europe’s only dictatorship (Belarus).
The more important explanation is that German elites have traditionally viewed their neighbors to its east through the prism of great-power politics. Russia is big and strong and therefore demands respect. Its ruler may be a dictator, and its policies may be neo-imperialist, but these matters are easily overlooked. Former German Chancellor Gerard Schröder still managed to describe former President Vladimir Putin as a “true democrat” at precisely the time that Putin was doing all he could to crush Ukraine’s Orange Revolution. Poland may be prone to polnische Wirtschaft (the derisive term for Poles’ inability to do things efficiently), but they’re right next door and have to be dealt with.

Formula One Flies In to Race Round Kremlin






Anyone new to Moscow might have trouble adjusting to the dangerously high speeds that local drivers maintain as they shoot around the city.
This Sunday, however, foreigners will be leading the race, as Formula One comes to Moscow with the likes of former Monaco Grand Prix winner David Coulthard, who will join other drivers in taking a spin around the Kremlin.
He will be accompanied by Formula One drivers Kazuki Nakajima and Heikki Kovalainen from the AT&T Williams and Vodafone McLaren Mercedes teams in the second Bavaria City Racing event in Moscow.
“I’m really looking forward to going back to Russia,” said David Coulthard, according to the event’s web site. And, in words that will delight Formula One fans and send a shiver down the backs of those who are not so fond of fast, loud cars, he added, “I’ll be making some noise with the car and hopefully creating a bit of a show.”
More than a hundred cars will take turns zooming around, including a Russian-made Formula One style car, Adrenaline, built by Moscow students.
Kicking off at 2 p.m., drivers will start at Vasilevsky Spusk, in front of St. Basil’s Cathedral, before going straight onto the Kremlyovskaya Naberezhnaya; then, they’ll move to Mokhovaya Ulitsa before making a speedy U-turn at the southern end of Tverskaya Ulitsa and going back to Vasilevsky Spusk as fast as possible.
Local Formula One fans are looking forward to the event, especially since attempts to make Russia a venue for the Formula One championships have so far failed.
“I do not believe that Formula One as a business has a future in Moscow, which is why this is such a great opportunity for us as Formula One fans,” said Svetlana Amelichkina, head of the Russian fan club.
Even though the average speed in Formula One is around 350 kilometers per hour, when asked how fast racing cars will be going on July 19, Oleg Stolyarchik from sponsor Bavaria responded by saying the official speed limit in Moscow is 60 kilometers per hour.
Apart from watching cars shoot around the Kremlin, visitors can enjoy a parade of vintage cars that will include Bugattis, Ferraris, Porsches and numerous American vintage sports cars.