Why Western bankers did not appreciate the success of Russia in the middle East
Although the Russian government managed, without losing face to leave from a head-on collision with the US and its middle East allies in Syria, objective grounds that the West would weaken sanctions dead grip of the Russian economy, no.
At the very least, European authorities have not reacted to the steep turn, which Moscow has laid on Syrian foreign policy track (maybe just not yet?). According to the Financial Times, Brussels warns that European financial institutions from placement of Russian Eurobonds, in fact, “otzerkalivat” the decision taken previously by the “Washington obkom”. Recall that the go-ahead to a “credit blockade” of the Russian economy gave the state Department and the U.S. Treasury, recommending their banks to refrain from buying Russian government bonds.
As it turned out, the notorious “vertical of power” does not fail even under conditions of exemplary American democracy and the seemingly strict observance of “sacred rights” of private property. So, the bankers are “independent” of Goldman Sachs and J. P. Morgan without further debate took down the order for execution. Confirming that will not take part in the opening of sovereign credit line of the Russian Federation. Bank of America Corp., Citigroup Inc., Morgan Stanley and Wells Fargo & Co. also quick to demonstrate loyalty to the parent structure in the face of the U.S. Federal reserve.
We will remind, on February 26, Finance Minister Anton Siluanov said that Moscow plans in one tranche to borrow $ 3 billion on foreign markets this year. The proceeds were to go to cover part of the deficit of the Federal budget of the Russian Federation, which in 2016 will amount 2,184 trillion. rubles.
Compared to the astronomical $ 19 trillion. the external debt accumulated by the USA, it represents an amount that tends to zero. In any case, given the “sliding” of the ruble exchange rate chart, the average level of profitability of Russian securities (about 13-14% per annum) and an impressive amount of resources in the various sovereign funds of the Russian Federation (have to return), American and European bankers obviously would not remain in the black.
Besides, Russia, unlike sponsored IMF, EBRD and other Western financial institutions monetary “black hole” called Ukraine, has an impeccable credit history and reputation as a responsible borrower. Despite this, Washington and Brussels, it seems, are guided not by economic logic. “Obviously, they don’t want us participated (in placing of the Russian Eurobonds – approx. ed)… We do not recommended,” or open up, or complained in an interview with the FT, the banker, previously aware of the warnings of Brussels.
The last time the Russian authorities went to the international debt capital markets in September 2013, when he sold the paper for $ 6 billion, maturing in 2019, 2023 and 2043, After the introduction last year of sectoral sanctions such has not been attempted. Although formally restrictive measures in the financial sector are not subject to hoteistitania.
While our Western “partners” is difficult to “blame” in the sequence — they use a proprietary “double standards” not only in foreign policy but also in the purely commercial sphere. As evidenced by the fact that the trade required by the EU and Washington energy and space motors has no limit. Despite the fact that part of export proceeds the state uses to recapitalise the Russian banking system. Including Sberbank, VTB, Gazprombank, VEB and Rosselkhozbank. That is, the Russian financial institutions that are in the sector “blacklisted” by the US and the EU.
Head of Department of economic theory, Moscow state University, doctor of Economics Andrei Kolganov believes that what is happening finally debunks the myth of liberals that in the West there is free market competition.
— When the Western elites wanted to undertake activities that are not consistent with this doctrine, they always do as they please. In addition, it is important to understand that the political and financial establishment of the West is closely related to the transnational level, they have common interests. This well known fact.
If policy is produced consolidated solutions, that, usually, the business elite, they unquestioningly obey. Another question, if some problem becomes a point of contention between various power groups. Only in this case there may be some options.
“SP”: — is it Possible to speak about presence of steady anti-Russian consensus, when the authorities of a number of European countries (Italy, Hungary, Greece) oppose automatic renewal of sanctions or extrapolation on the banking sector?
— I think that even those Western financial institutions, which supported the sanctions, hardly went at it with great joy. In any case, it leads to the loss of opportunities to earn on the bonds. But for them the maintenance of a hierarchical “solidarity” is more important than participation in “separate” transactions with Russia.
“SP”: — Roughly speaking, why did the same Deutsche Bank to step on the old rake, bearing in mind the history with $ 200 million fine imposed by the financial services regulator in new York (DFS) and the U.S. Federal reserve, due to suspected (!) the Germans of committing the so-called “mirror transactions” with the Russians?
Besides, if I’m not mistaken, then the us financiers threatened to fine Deutsche Bank in the amount of up to $ 4 billion “for complicity in money laundering in Russia.” Moreover, the U.S. Supreme court a couple of years ago was sentenced to state Bank of China to pay a fine of $ 50,000 a day for refusing to provide personal data of the customer that violate Chinese banking law. That’s how far the jurisdiction of the United States in the financial sphere.
There were many scandals with the “laundering” of Russian money in even relatively safe from the point of view of bilateral relations, period. The scheme is simple — against representatives of the Russian elite introduced the so-called personal sanctions. If their accounts or ownership are located in offshore jurisdictions, they can be arrested. If no such accounts, it’ll take over Russian state assets under the pretext of implementing sectoral sanctions.
We should not delude ourselves, for Western financial institutions the cooperation with Russia is less important than the benevolence of curators of international monetary institutions.
“SP”: — whether the withdrawal of some Russian troops in Syria sanctions to mitigate the rage of our geopolitical opponents, do it in Moscow?
— I do not think that economic opposition to West Russia directly is connected with our military presence or absence in Syria. The U.S. and its allies, in General, are not interested in strengthening the position of our country. Even within the post-Soviet space. In fact, the Ukrainian events have become the response of our competitors in the Moscow’s attempt to break the deadlock of the Eurasian integration. This was perceived as almost “an attempt to revive the Soviet Union.”
Another thing, I don’t think that the output VC of the Russian Federation from Syria means the complete failure of Moscow from the conduct of the “great game”. Our leadership doesn’t want much to aggravate the situation. And, in General, this is true. Syria is not the jackpot, for which the cost to the acute and unpredictable geopolitical game. In a sense, the problem we decided. The regime of Assad has been a good springboard for negotiations with the opposition. Moreover, completely from Syria not leaving, leaving the “boots in the door” so she accidentally slams shut.
“SP”: — Returning to economic issues, is it possible to solve the problem of the budget deficit without resorting to external borrowings?
— It can be solved other way, but you have to think a head. And to borrow money at a low interest rate on American or European markets this is the easiest way out. Unfortunately, the model of the “Washington consensus”, which remain true to our authorities, does not provide for the intensification of internal lending and borrowing.
The problem of gaining fiscal sovereignty, whatever may be said by our authorities, is still not resolved. If anyone has forgotten, let me remind you that in “zero” years, when our economy grew on the “petrodollar” the yeast, the entire increase in domestic credit was provided solely by the inflow of foreign loans. This is the same “credit needle” with which we today can not get off even in condition of cut-off of the financial sector of the Russian Federation on external sources of borrowing.
“SP”: — Who were the main beneficiaries of this “economic miracle”?
Russian bankers and their Western partners. Without policies to increase domestic capitalization of the banking system and reinvigorate credit the issue, the West will always tell us for the financial leash. And the Russian government will look to foreign markets as a lifeline.
“SP”: — what consequences can lead the buildup of external debt?
— With the growth of volumes of attraction of such funds, interest rates will increase. Accordingly, rising expenditure on debt servicing, and other expenditures (including social) has to be reduced.
Besides massive borrowing is a bad branding move. Investors will be sceptical about policy that we are pursuing, all closing their budget gap solely through borrowing. And, in General, the economic stability of the country depends on its ability to mobilize its own resources.
I strongly oppose any external financial flows. But they can be applied only in cases, when it is most profitable. Plus we must have reliable financial sources, which makes it relatively painless to repay the loans.
“SP”: — assessment of the Central Bank, total external debt of Russia as of 1 January 2016 is $ 515,254 billion (with a GDP compared to 80.4 trillion. RUB)…
— Yes, it is relatively small. But let’s not forget that the regional debt burden continues to grow, and it is about 2.3 trillion. rubles. And the cost of the payment and the service in 2015 has increased by about 22%. I’m not talking about corporate borrowers. Only servicing their external debt in 2016 will cost $ 40 billion, the Overall picture is not so well, as it is trying to report to the authorities.
And it’s not even in absolute terms the debt burden. Just our economic situation is such that difficulties may arise with servicing the debt. Can earn sufficient funds in order to repay foreign loans?
According to the President of the Center for strategic communications Dmitry Abzalov, an unexpected maneuver of Moscow on the Syrian track is not associated with the lifting of sanctions.
Sectoral sanctions linked to the Ukrainian problem and can not be removed earlier this summer. And the question about the future of personal sanctions will be decided, generally, after the autumn elections to the state Duma. Sectoral sanctions and a financial boycott declared by Russia’s Western financial institutions, it is an attempt to exert pressure on Moscow and Vice versa, to strengthen the bargaining position of Kiev in the framework of the Minsk process.
Washington is trying to achieve this with the help of loyal European structures. If Moscow before the official lifting of sanctions will have the opportunity to borrow in the West, it would strengthen the pressure of Russia on Ukraine’s leadership. Finally, the credit blockade is a way to put pressure on the Russian elite before the elections.
However, for Russia it is not so important — there are a number of allies who are willing to build relations with Moscow against the will of the United States. For Example, China, Japan, South Korea. These countries, in General, not against us imposed sectoral sanctions (like most countries in the world).
“SP”: — and the Americans following in the footsteps of the state Department “obscheevropeytsy” not undermine confidence in the global financial system, taking arbitrary and blatantly politically biased decision?
— A ban on the placement of Russian government bonds in European and American banks, it is purely an emotional decision. Because it discredits the entire global credit system. This means, if China’s relations with the EU deteriorate, then Beijing will not be able to issue Eurobonds. Why, then, one of the largest economies in the world “to be powered” on politically biased financial instruments, instead create your own? The same applies to a number of other countries. For $ 3 billion to undermine the credibility of the entire system, in my opinion, unwise.
“SP”: — is There an alternative to the Western line of credit?
— Of course. Chinese banks can issue a loan to us in yuan, that is, they are not tied to the dollar. The Central Bank of the Russian Federation and the people’s Bank of China agreed to swaps “ruble-yuan”. In addition, Rosneft has already received $ 20 billion prepayment for oil supplies from the Chinese national Corporation CNPC.
“SP”: — It happened a couple of years ago before any of the sanctions and other price situation for energy sources. Moreover, the Chinese are unlikely to invest in Russian “processing”, so as not to create a rival…
— Exactly right. Therefore, it is necessary to develop its own financial market, which would not be tied to external circuits. But this is not enough, because it is about speculative capital. If we create institutions of development, as China is doing, it almost neutralizes any attempt to bring down our economy from outside. What we do today, Americans and Europeans, will lead to erosion and fragmentation of the international financial system.
