The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.

Wednesday, March 5, 2014

NPR And The Daily Kos: Russian Economic Influences On Putin

If there is a serious check on Vladimir Putin, it is the Russian economy. The young "alleged" democracy (non-communist state) has uber wealthy plutocrats much like in the United States and money fissures that spread far tot eh west into many corners of Europe

I heard a recent broadcast on NPR's about Russian oligarchs who have money stashed around globe much like US corporatist with maintain offshore accounts across the globe.

NPR's Robin Young, Then & Now, and guest political analyst and author Ben Judah explore why Russia is not worried about Sanctions. The radio segment also gave me insight into the extensive financial web that has to influence Putin and his obvious longing by-gone era.

Tuesday, March 4, 2014

Why Russia’s Not Worried About Western Sanctions

YOUNG: Well, and you write about why Putin is emboldened to do it. You say once upon a time, Russians might have feared Cold War sanctions, being cut off of access to Western banking, for instance, but no more, because what matters to the West is money. Explain your theory about how money is playing a role here. What money? 
JUDAH: Let me explain to you how Russian corruption works. Out of every dollar stolen in Russia, the majority of that dollar will end up in Western Europe. It will end up in French chateaus. It will end up in German oil and gas companies. It will end up, above all, in British tax havens and in London property and the London stock exchange and in the London hedge funds. 
Who are the people taking corrupt, stolen money out of Russia and bringing it to the West? These people are British bankers. They're French bankers. They are German lawyers. They're accountants. These people are the Western elite. Putin knows this. He sees that in the 21st-century Western Europe, there are no sources of growth in London and Paris, apart from living off oligarch rents. 
You know, Britain's Prime Minister David Cameron likes to say that Britain is open for business. Well, that sounds very charming. But what in actual fact that means is that Britain is open for the money of dictators to come and be placed and laundered in the capital, London. 
YOUNG: Elaborate on that. You actually point to three former European leaders who you say are part of this. 
JUDAH: Putin, when he came to power, Putin assumed the control of a Russia that, in many ways, had been ruined and driven into ruin by Western economic sanctions. And there was fear that Western elites were MI6, that Western elites were CIA, that they were cunning, determined, and they not only had economic power, but they were willing to use it.What Putin, who has been in power, dare I say it, for quite a long time, Putin has seen how the previous generation of European leaders turned out. Let's take the moralizing Tony Blair, invader and democracy promoter in Iraq. This gentleman now works as a PR advisor for the dictatorship of Kazakhstan. Let's have a look at Gerhard Schroeder, former chancellor of Germany. This gentleman was, of course, a very stern defender of human rights in Eastern Europe.
AUDIO Segment

Ian Reifowitz's piece for the Daily Kos provided another perspective on the power of economic influences on a relic of the Cold War.

Re-Blog from The Daily Kos

Russian President Vladimir Putin takes part in a news conference at the Novo-Ogaryovo state residence outside Moscow March 4, 2014. Putin said on Tuesday that Russia saw no need to use military force in the Crimea region of Ukraine for now, in remarks apparently intended to ease East-West tension over fears of war in the former Soviet republic.  REUTERS/Alexei Nikolskiy/RIA Novosti/Kremlin (RUSSIA - Tags: CIVIL UNREST MILITARY POLITICS) THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. IT IS DISTRIBUTED, EXACTLY AS RECEIVED BY REUTERS, AS A SERVICE TO CLIENTS - RTR3G0UM
The ruble dropped my how much?
Here come some of the "costs" to Russia for violating the sovereignty of Ukraine, as of Monday morning:
1) The Russian benchmark stock index, the MICES, is down 10% or more (it has been down as much as 11.2% earlier today), the biggest drop in at least five years (depending on the close).
2) The Russian ruble reached all time lows against the euro and the dollar. To prop it up the Russian central bank—on a "temporary" basis—raised interest rates 1.5%, from 5.5 to 7.0%, and spent $10 billion toward the same end. This will significantly hamper growth in Russia unless they lower those rates fast.
3) Shares of the corporation Gazprom, the Russian Federation's gas monopoly, are also down 10%.
4) The yield the Russian government has to pay on its state bonds is near a record high.
5) Foreign capital reserves for Russia are at a multi-year low.
The Ukrainian currency and its markets, along with stocks in its neighbors Poland and Hungary, are down sharply as well, but of course the West can help out at a relatively small cost, given the size of their economies. No one is coming to the financial rescue of Russia here. For what it's worth, global financial experts (it is hard to write those words with a straight face) are confident that they do not see the "contagion" spreading to worldwide financial markets, which are down 1-2 percent so far today.
Please read below the fold for more on this story.
The Forbes contributor makes one other excellent point. Whereas the Soviet Union was essentially economically self-sufficient when it invaded Czechoslovakia in 1968, or Hungary in 1956, Putin's Russia is decidedly not, as the data above make clear. It is fully integrated into world trade markets as well, something that offers the West real leverage. Peter Weber has neatly laid out the steps the West can take, and why they can cripple the Russian economy.
Vladimir Putin may be "out of touch with reality," and "in another world," as German Chancellor Angela Merkel noted after speaking with him. In this world, however, money talks, and money may well prove to be what reins in the man who would recreate the Russian Empire.
PS-I just found this photo on Facebook:
Translation: "Supporters of Putin—with him you will not be speaking in Russian, but will be silent in Russian."


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