Western sanctions from a conglomerate of EU and other Western countries have thus far failed to hit the pressure points in the Russian economy, according to spate of new articles. In fact, their imposition appears to be hurting several Western companies more than Russian ones and the primary factors causing economic pain in Russia are related to issues around the appreciating dollar in conjunction with lower oil prices.
Western companies hurt by the sanctions are those who were exporting Enhanced Oil Recovery Equipment (EOR) to Arctic drillers in Russia, some of whom are operated by non-Russian oil majors such as the French Total. However, OAO Rosneft did report that project financing is the main issue – as Western capital markets originally provided much of the cash needed to keep Artic rigs pumping their oil. Thus, alternative sources are being sought in the short term to refinance oil and gas debt, primarily from the Russian government (which has its hands mostly full recapitalizing the domestic financial industry), export-credit agencies, and Chinese lenders.
However, unrelated to energy, other companies like Rusal, a producer of aluminum, welcome to pivot back to domestic lenders because they get better interest rates than from abroad anyway. In contrast, Exxon Mobil, whose earnings still exceeded expectations in the last quarter of 2014, will likely suffer greatly as a result of the sanctions due to having just made a large oil discovery in the Kara Sea and needing to withdraw from the project due to lack of US government support.
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- The Mongolian Parliament is backing a new presidential bid to resolve a long running dispute with Rio Tinto over the Oyu Tolgoi copper mine. A slump in coal and copper prices has weakened the bargaining position of the Mongolians significantly, and forcing them to consider the deal offered by Rio Tinto’s subsidiary handling the project directly, called Turquoise Hill. The government originally tried to offer its own equity in the project to Rio Tinto in exchange for a share of the mining royalties, but they announced they were not interested in increasing their stake. Thus, the new question is, can they find a third party to share the load?
- In unusually blunt language, US officials dismissed the public concerns Israeli and Israeli support lobbying groups such as AIPAC have relayed on the subject of the Iran Deal. Administration officials like State Department spokeswoman Jen Psaki acknowledged as well that there has been a selective sharing of information with Tel Aviv on the subject of the developing agreements.
- President of Turkmenistan Gurbanguly Berdimuhamedow has issued another ridiculous directive to government officials – he has urged them to follow his good example and lose weight. Officials not adhering to this new policy of less than 100 kg have been instructed to keep out of sight of their higher-ranking bosses and are being denied access to general meetings.
- President of Kazakhstan Nursultan Nazarbayev has met with all heads of foreign diplomatic missions in Astana to announce a large extension of foreign economic relations and regional integration, praising the EEU as a major first step. Most of his statements were general, but one in particular stood out – Nazarbayev’s interest in creating free trade zones to increase the attractiveness of foreign direct investment.
- The civilian death toll in Afghanistan tallied at 10,000 in 2014, the deadliest since the UN began keeping records on the conflict in 2009. Perhaps the most surprising statistic from the report was that most of these casualties came as the result of face to face battles and small arms fire, as opposed to roadside and suicide bombings in the past. These ground engagements accounted for some 34% of civilian casualties.
- The Ukrainian army is currently in full retreat from the besieged town of Debaltseve, proving to be one of the worst defeats for Kiev in a battle that has caused the death of 22 soldiers and more than 150 injuries. President Petro Poroshenko flew out to the frontline to support the retreating troops. No attempts are being made to retake the strategic town from the separatist forces.