Russia wants to know when the sanctions will be lifted and discussions are presented to the table in that effect. WHEN RUSSIA RESPECT THE SOVEREIGNTY OF AND THE TERMS OF THE PRAGUE ACCORDS AND WHEN IT VACATES CRIMEA. Cuba has been under sanctions just days short of 54 years. Get used to it Bolshevik Bastards..............
On his birthday, when he wants to celebrate, a grown-up has pulled his pants down and given him a good spanking:
Putin has grand plans to modernize and expand Russia's armed forces ... but his finance minister, Anton Siluanov, has explained that "we can't afford it."
Western sanctions are only part of the problem. Russia's economic growth was already imploding in the second half of last year, and oil prices are low. Putin's grand spending plans were based on a 6% annual growth rate, and $100/bbl petroleum.
2014 GDP growth is likely to closer to 1%, and Russia's benchmark crude is selling around $90/bbl.
When boys are naughty, their birthday party can be spoiled...
With Putinís status and stature crumbling down around him,,,, you need to wonder how he will strike back. When Putin is cornered, he goes on the offense, and if he canít afford more conventional weapons,,, he can always fall back on his abundant supply of nukes.
Putin surely enjoys frightening people with his weapons.
But like all the world's power-mad, his top priority is increasing his power, and keeping it as long as possible. Using nuclear weapons isn't the way to accomplish that, and he is rational enough to get that.
Putin is cruel, vicious, and since February, reckless and impulsive. But I see no evidence that he is insane or suicidal.
No,,, I donít think he is suicidal either,,,, but Iím not sure about him not being insane. His ego and greed controls his actions,,, he has no problems letting his people suffer to reach his goals.
Pathological might be a better word?
Durak,,,, FYI,,,, Iíve known what a sociopath was long before your post! In fact,,,, Iíve had to deal with one on almost a daily basis for years now,,,, starting about a month or two after joining this forum.
1. The central bank is sticking to its limited intervention policy, which Russia adopted after burning up a huge portion of its foreign currency reserves in 2008. In effect, the ruble is nearly free-floating. The advantage for Russia is that they save their reserves and have more flexibility; the disadvantages are those that come with plummeting currency.
2. It could be worse: one major currency has done worse than the ruble this year. The Argentine peso :)
3. Since early July, Russian businesses have been unable to borrow or otherwise raise money from the West. The only place they can now get dollars or euros is from Putin's government.
4. However, Russian businesses must still make payments on foreign loans they took out before the window closed. In total, they must pay out almost $50 billion in the last quarter of this year. In order to obtain the needed dollars (or euros), they must buy them from the Russian central banking system, paying today's massively pumped-up rates ... so this is causing a lot of pain. (For those with auto loans or home mortgages, imagine your monthly payment suddenly rising 30%). The need for these foreign currencies is fueling the worsening exchange rate: it's a question of supply and demand.
5. It's not all bad news for Russia's Big Players: the weak ruble means that payments fixed in rubles are effectively cheaper. Great for Putin, whose pensions to the elderly don't cost him as much; awful for those living on pensions. Inflation is about 8%, and base interest rates are pushing 9%. Food inflation is near 12%.
6. If Russia's benchmark crude (called Urals) recovers to $100/bbl (currently a little below $90), the ruble is expected to strengthen to around 38/USD -- lousy, but at least an improvement. If Urals continues its slide to $85/bbl, the ruble could continue to 42/USD. The ruble is now a pure petro-currency, because Russia is a petro-state. Russia's underlying economy is for sh*t. In economic terms, Russia is a much colder and much more heavily armed Saudi Arabia -- though bizarrely, vastly more corrupt than even the Saudi regime! (Don't take my word for this, see the Transparency International rankings.)
7. Russian consumer purchases of big-ticket items (cars, computers, vacation travel) have decreased by large margins (on the order of 30% or more).
So relax, Russians. The economy and currency are crumbling all around you, but Putin will still have his gold and currency reserves, and a small budget deficit. Vsyo v poryadkye!
That's an interesting question, and I can only speculate: I'm no money guy!
I think that for at least some of those businesses, if they never get foreign credit again -- they are finished. Their only hope is that the present sanctions regime is temporary, so you can see how anxious they must be feeling about Putin's stubborn criminality.
In such cases, they MUST make loan payments, or lose all future possibility of credit.
Remember that Russia is a 2 trillion dollar economy (the US and EU are EACH about ten times that), and it is absolutely stalled. Just today, the IMF projected that Russia's GDP over 2014 AND 2105 will grow a total of about 1%. That isn't 1% per year, that's 1% over TWO YEARS.
Russia has some industries with very intensive capital needs, especially its cash cow: petroleum. According to what I was reading when the sanctions started, there's no way the necessary capital could be raised inside Russia.
Putin has put his own economy over a barrel. I suppose he thinks that the West is so cowardly that the sanctions will soon be lifted, and of course many of us are worried that he is right.
However (take note, rodan) Germany's Angela Merkel said just a few days ago that we must not lift the sanctions just because there is a nominal cease-fire. She's now taking the position that the West must hold Russia's feet to the flames until it is clear that the situation is really getting resolved. I understand rodan's frustration about Merkel's reluctance to punish Russia, but I don't think rodan realizes how furious she had become by the end of July. Reportedly, she takes very personally the numerous times Putin has lied to her, and is done "making nice." In parallel, polls of ordinary Germans have shown that a majority support sanctioning Russia, EVEN IF IT COSTS GERMAN JOBS.
If you look at history, it takes both leadership and public opinion time to change direction.
I guess what I'm trying to say, is that there is a reasonable basis for hope that the West will hang in there.