Posts Tagged ‘China’
October 12th, 2016

Privatization, Sechin-style

Igor Sechin. Photo by Alexander Demianchuk/Reuters

Igor Sechin. Photo by Alexander Demianchuk/Reuters

As it often happens in movies, a multi-episode crime thriller entitled Bashneft that began in September 2014 with the arrest of the once-mighty Vladimir Yevtushenkov, head of the Sistema corporation, has ended in a prosaic finale that we had predicted from the very beginning: Bashneft has been expropriated from private owners and is being transferred to the state-run Rosneft. Despite public protests by ministers and even the deputy prime minister of Russia, the all-powerful Rosneft chairman Igor Sechin got what he wanted: Prime Minister Medvedev signed an ordinance providing for the sale of the controlling stake in Bashneft to Sechin’s oil empire for $5 billion — without any tender. This is $300 million above the minimum price that the government was prepared to accept for the privatization of its shares in Bashneft, which prompted Putin to observe that Russia’s deficit-ridden budget is in dire need of this money. The federal budget will now undoubtedly receive it, but this leaves the question of where Rosneft had gotten it from, since almost 70 percent of its own shares belong to the Russian state.

As the result of sanctions imposed by Western countries in response to the annexation of Crimea and the shooting down of the Boeing by a Russian missile, Rosneft is practically unable to borrow on the international capital markets. Consequently, just as with the purchase of assets of the Yukos Oil Company that had been forcibly expropriated from private investors and bankrupted, Sechin went to look for money in the East — and found it there in exchange for oil. The only difference is that Chinese companies got guaranteed oil supplies from Rosneft for a fixed low price for several years in exchange for the billions of dollars used for >> Read more

September 8th, 2016

The Earth’s Edge is Harsh and Embraced by Silence


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Russia’s Far East, a region that is farthest from Moscow with more than 6,000 kilometers between them, has been going through difficult times for quite a while now. Since 1990, when the last population influx was registered, the region’s population has decreased by more than 20 percent with 90 percent of it being due to the migration outflow – not to natural population decline. A considerable part of the population leaves the region to seek jobs and a better life.

Making a speech at the 2016 Eastern Economic Forum, Putin promised to turn Vladivostok, the country’s largest city on the Pacific Ocean coast, into a Russian San Francisco. Our dreamer in the Kremlin must be counting upon investments from Japan and China, including a joint development of the disputed Kuril Islands. One has a hard time believing that though.

This year, a Federal Law No 119-FZ from May 1, 2016 dubbed “On the Far Eastern Hectare” was adopted on the government’s initiative. However, the attractive idea of giving away land for free to anyone interested is confronted by the greed of corrupt officials. Right after the law had come into effect, opposition activist Aleksei Navalny exposed fraud schemes used by officials with regard to allocated land plots, when, for example, the most attractive ones turned out to be occupied within minutes of the entry into force of the aforementioned law. This story just gets funnier as it goes. According to the project’s official website, in three months only 379 people out of 6 million who still live in Russia’s Far East submitted requests for complimentary land plots.

A few years ago, when skyrocketing oil prices provoked an investment urge, there were plans to build automobile-manufacturing plants >> Read more

August 24th, 2016


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Picture by

According to the recent statistics provided by the Russian Federal Statistics Service, foreign direct investments (FDI) in Russia have dropped in the first half of 2016 by 4.3% APR. In fact, shallowing of the investment inflow has continued for more than two years. Hunger for superprofits sharks of capitalism perceive the expropriation of Yukos in the mid-2000s as an isolated case, which does not affect the overall investment climate in the country. They continued actively flirting with the Putin’s regime, and only economic sanctions, entered by the Western governments in 2014 in response to the annexation of Crimea and support of separatists in Donbass, have forced transnational corporations to slow down its expansion on the Russian market.

Russia’s overall investment climate quickly turned from positive to negative. Russia was among the top three recipients of FDI with a record US$94 billion in 2013. This precipitously fell to only US$21 billion in 2014 and US$4.8 billion in 2015.

In 2014 just 178 new foreign investment projects worth US$13 billion were launched, compared to 396 projects worth US$23bn in 2011. Russia’s second biggest European investor (after Cyprus), the Netherlands, decreased its investment from US$5.7bn to US$1.23bn in 2014. Even though weak currency usually attracts foreign investors, as ruble weakened, FDI kept collapsing.

Ernst & Young sees the following issues negatively influencing the investment climate: inconsistent and selective law enforcement, non-transparent decision-making procedures, and corruption.

Historically, the main industries for FDI inflows in Russia have been wholesale and retail trade, banking, manufacturing, and the mining sector (mostly extraction of oil and gas). Surprisingly >> Read more

January 12th, 2016

Russian Railways and the Unfair Silk Wind

August 24th, 2010

Foreign Direct Investment Falls; Lags other BRIC countries

March 16th, 2010

Round 1: Modernization vs. Corruption

November 24th, 2009

Rise of Oligopolistic Capitalism Flies in the Face of 1990s Foreign Policy Hopes