Vincent Varisano Western Financial Sanctions Won't Break Russia

Vincent Varisano,

This article originally appeared in The Moscow Times

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To many observers, financial sanctions have been the most effective of the so-called “sectoral” sanctions adopted last summer in response to Russia’s annexation of Crimea and subsequent involvement in the war in Ukraine.

Whereas sanctions imposed on the defense industry have caused relatively minor disruption to date, and the ban on technologies used for tight oil extraction will only really affect Russian oil production many years down the line, the limitations on Russian firms’ access to finance have exerted an immediate impact.

First, financial sanctions resulted in the effective closure of Western capital markets to a large number of Russian corporations, and not just those directly targeted by sanctions. This “sudden stop” of capital inflows has contributed to the steady decline in investment in the Russian economy that accelerated in the final quarter of 2014 and continued into this year.

Second, because Russian firms were unable to refinance existing debt, they were also forced to repay their debts on schedule.

As a result, Russia’s total external debt fell from about $728 billion in January 2014 to $597 billion at the end of 2014.

This sharp reduction of more than $130 billion in the stock of external debt was due to a combination of repayments (primarily to Western banks) and a reduction in the dollar value of ruble-denominated debt.

Read more in The Moscow Times

via Vincent Varisano, Western Financial Sanctions Won't Break Russia

Vincent Varisano What Russia Offered Greece

Vincent Varisano,

In the article about how Greek Prime Minister Alexis Tsipras’s  dealings with Moscow are putting at risk Greece’s traditionally friendly ties to Russia, I said that the gas pipeline proposal the Russians have floated is intended to help Greece, not achieve some grand Russian pipeline strategy. In this article I will explain why.

It is first necessary to say something about Russia’s gas export policies.

Western paranoia about Moscow’s supposed “pipeline politics” has distorted understanding of Russian gas policy to a quite extraordinary degree, even amongst commentators who are generally favourable to Russia.  

There is no evidence Moscow thinks of its gas exports in terms of “pipeline politics”.  Moscow hardly ever entertains the grand geopolitical strategies Westerners routinely attribute to it and this is a case in point. There is no evidence Moscow thinks of gas exports in geopolitical terms or sees them as offering Moscow a political advantage, and Moscow has always denied it.  

If Moscow ever entertained such farfetched notions then the experience of Ukraine and of the collapse in Moscow’s relations with the EU will have disabused it.

The Russians see gas export as simply business. They have never cut off gas to countries because they are in political conflict with them.  

They continued to supply Georgia with gas throughout the 2008 South Ossetia war. They supply gas to the Baltic States and have never threatened to turn it off despite the many political conflicts Russia has with those statea. On the occasions when the Russians have cut off gas to Ukraine (in 2006, 2009 and 2014) it was not because of political conflicts but because Ukraine didn’t pay. Since Ukraine is now paying - if only in dribs and drabs - the Russians are now supplying it with gas, much to the surprise (and annoyance) of some people.

If notions of Russia using gas exports as a political tool are put aside, then the falsity of much of the debate around this issue becomes obvious.

There is no evidence that the Russians have ever attempted to prevent Europe from diversifying its gas imports. They have never obstructed European projects to import gas from the Caspian or Algeria or Qatar or the US. If none of these projects has succeeded up to now it is not because the Russians have acted to prevent them. It is because they do not provide the needed gas.

It is therefore a mistake to think of the various Russian pipeline projects like North Stream and South Stream and Turk Stream as pursuing some sort of geopolitical agenda, intended to “lock in” Europe into buying Russian gas, the better to control or influence Europe’s policies. The Russians are practical enough to know that is impossible.

The reason for these pipeline projects is because the Russians have learnt that Ukraine - the key transit state most of the existing pipelines cross - cannot be trusted. In 2006 and 2009 the Ukrainians stole Russian gas intended for other customers. In 2014 Ukraine threatened to do the same thing again.

Understandably enough the Russians have decided to end Ukraine’s role as a transit state. The pipeline projects Russia has been pursuing are intended to circumvent it and have no other purpose. Though they are expensive they are necessary to guarantee that Russian gas reaches its intended customers. They therefore - contrary to what some say - make obvious commercial sense.

The North Stream project to Germany and northern Europe has been built and is now being extended.

The South Stream project was cancelled because the EU insisted that it be made subject to the EU’s Third Energy Package.  

I have previously explained in detail why that was completely unacceptable to the Russians and why that led them to cancel the whole project (see The Real Reason Russia Cancelled South Stream, Russia Insider, 4th December 2014).

In place of South Stream the Russians announced plans to build a pipeline to Turkey. That project - now called “Turk Stream” - is going ahead.

The Russian decision to build Turk Stream in place of South Stream was made because Turkey is a major customer of Russian gas which is not a member of the EU and which does not therefore require compliance with the EU’s Third Energy Package.

Turk Stream’s ultimate destination is a giant gas hub Turkey is building near Edirne in European Turkey. This hub is expected to receive gas both from Turk Stream and from a separate non-Russian pipeline from the Caspian, known as the Trans Anatolian pipeline.

At the time that Turk Stream was announced the Russians had no plans to extend Turk Stream beyond this hub.  

Since the EU insists that any pipeline on EU territory must comply with the Third Energy Package, the Russians said they would not build any more pipelines on EU territory.  As Turkey’s European neighbours, Bulgaria and Greece, are members of the EU, that meant the Russians were ruling out building any pipelines across their territories.

What the Russians said was that if the Europeans wanted to tap into the gas that would be stored at the hub then they would have to build the pipeline themselves. 

That was the Russian position until Syriza was elected.

In March 2015 Tsipras went to Moscow and the question of how to help him then came up.

It is a fallacy that Putin can simply click his fingers and give Greece money. Any money Russia gives Greece must come from some source. These are (1) the Russian state budget (2) the National Welfare Fund or (3) as commercial payment for a project. 

Russia’s budget has been approved by the Russian parliament and makes no provision of money for Greece. For that to change the budget would have to be amended, which would require the approval of the Russian parliament.  That would be controversial at a time when the budget is in deficit.

Providing money from the National Welfare Fund is equally problematic. The National Welfare Fund is only supposed to invest funds in AAA credit rated securities. Greece, which is bankrupt, doesn’t have such a rating.

In December 2013 the Russians overrode this provision to make a loan of $3 billion to Ukraine out of the National Welfare Fund. Ukraine at that time did not have a AAA credit rating. The Russians have regretted the decision ever since. It is inconceivable the Russians would be prepared to do the same thing again.

That leaves commercial payment for a project as the one remaining option, and that is what the Russians proposed. 

Though it reverses what the Russians decided when they cancelled South Stream last autumn, what they proposed to Tsipras in March and April was the building of a pipeline across Greece taking gas from the hub.  This would have come with a $5 billion prepayment paid out of Gazprom’s financial reserves.  Greece could have used that payment to pay this month’s instalments to the IMF.

That solution would obviously not have sufficed to help Greece overcome its problems. However it would have provided Greece with a breathing space. It seems that the Russians proposed that Greece use this breathing space to join the BRICS Bank.  It could then have negotiated with the BRICS Bank for a loan.

Behind the BRICS Bank stands China with its practically unlimited reserves. A loan from the BRICS Bank - with the knowledge that China, however discreetly, was now involved - would have changed the dynamic of the situation and might by itself have stopped the bank run that has been underway in one form or another in Greece since December.

It goes without saying that the proposal that Greece join the BRICS Bank - which the Russians have made publicly - could only have been made with China’s agreement.

That in essence appears to have been the offer the Russians made to the Greeks.

It is far from certain it would have succeeded. There would have been risks in it for both sides. 

The Russians would have gambled that Greece, unlike Bulgaria, would defy the EU and would press ahead with the pipeline project despite it not being compliant with the Third Energy Package. If this gamble failed and the Greeks, like the Bulgarians, reversed themselves then the Russians would have given Greece $5 billion with nothing to show for it.

It says much for the goodwill the Russians have for Greece that they were prepared to take this risk, which meant reversing the decision they took last autumn to abandon pipeline construction on EU territory.

The Greeks for their part would have gambled that knowledge that Russia and China were involved would force the IMF and EU to restructure Greece’s debt.  Without such a restructuring a default is at some point inevitable since the debt at 180% of GDP is obviously unsustainable.  

The IMF and EU might have agreed to such a restructuring rather than permit a default that would have pushed Greece further into Russia’s and China’s embrace. However there is no guarantee of this. It is equally possible that the IMF and EU would have been so incensed by Greece’s turn to Russia and China that they would have continued to refuse a restructuring. In that case there would at some point be a default whilst Greece in the meantime would have burnt its bridges with the EU.

Though accepting the Russian offer would have been a gamble, it is not obvious as I write this that accepting it would have left Greece in a worse position than the one it is in anyway. Reports today suggest that the IMF and EU are continuing to take a very hard line and are refusing a restructuring even though the Russian offer has been essentially rejected.

The problem is that whilst one part of the Greek government based around the energy ministry seems to have embraced the Russian offer, the other part, based around the finance and foreign ministries, seems determined to reject it. Tsipras seems unable to make his mind up between the two.

The Russian offer is probably still on the table if it is embraced wholeheartedly. As of now that does not seem likely. At the moment it looks like the Greeks will only likely embrace it in the event of a Grexit.  Whether at that point the offer is still there remains to be seen.

via Vincent Varisano, What Russia Offered Greece

Vincent Varisano Playing Russia and Europe off Against Each Other Is Losing Greece Friends

Vincent Varisano,

The great British historian AJP Taylor once said in my presence that Western politicians tend to think of Russia as a tap they can turn on and off whenever they like.

By that he meant by that Western politicians expect Russia’s help when they need it, but never feel under any obligation to give anything back in return.

Taylor was speaking about the diplomacy that led to the Second World War.  However it is starting to look as if the same is true of Greece’s Prime Minister, Alexis Tsipras.

Tsipras was elected on a contradictory promise of ending austerity and keeping Greece in the eurozone.  

He seems to have trusted in his own powers of persuasion - and the economic logic of his case - to achieve this remarkable feat.  I am told by people in Greece who are in a position to know that he had - and has - no Plan B.

Tsipras’s faith in his success seems to have been based on a belief that European demands for austerity were a bluff and that Greece is too important to the euro project and in geopolitical terms for its expulsion from the eurozone to be considered.

This presumably is what lies behind the extraordinary game Tsipras has been playing with Moscow.

In January, immediately following his election, in a move that caused anxious buzzing in European capitals and which must have provoked interest in Moscow, Tsipras met with the Russian ambassador before any others.  

His government then made known its concerns about the way in which the extension of EU sanctions against Russian individuals and companies was railroaded through later that month.  

He then announced he was going to go to Moscow to meet Putin, and he duly did so in March.

As I have discussed previously (see Grexit Looks Inevitable. But Greece Will Need Moscow’s Help, Russia Insider, 27th April 2015) this visit led to expectations of financial deals and of a major gas pipeline agreement.  Gazprom’s chief Alexei Miller went to Athens in April to negotiate it.

In the event nothing happened.  Though I am told a deal that came with a $5 billion prepayment was ready for signature on 23rd April 2015, it went unsigned and Miller left Athens empty handed. 

Here I should say that the gas pipeline offer the Russians made to Tsipras in April was intended to help Greece.  It was not part of an elaborate play by the Russians in pursuit of some great gas pipeline strategy.  As this is a complex point, I will discuss it in more detail in another article.

The Russians must have been annoyed to be stood up in this way, but characteristically they said nothing.

What followed must have annoyed them even more.

At the time of his trip to Moscow in March Tsipras led everyone to think he would attend the 9th May Victory Parade in Moscow.  

This would have been an important symbolic act.  Tsipras would have broken with the rest of the EU, which was boycotting the event.  

Such a step would have been very popular in Greece.  Attitudes to Russia in Greece are very positive.  Most Greeks think of Russia as the fellow Orthodox country that liberated Greece from the Ottomans.  Most Greeks - unlike many Europeans and Americans - are also fully aware of Russia’s immense contribution to the defeat of fascism in the Second World War.  

Last but not least, many Greeks have family connections with Russia.  Many were born there or have lived there.  Those Greeks with such connections to Russia tend to view Russia very positively.

Without any clear explanation Tsipras then reversed himself and failed to go - something that provoked much more public criticism of him in Greece than it did in Russia.

Over the last 7 days the same pattern has repeated itself.

On Thursday Tsipras went to the St. Petersburg International Economic Forum - making him the only Western leader to do so.  

There he met Putin again.  

This time a gas deal of sorts was signed.  The details however are vague and it looks less generous than the deal the Russians offered in March and April.  It did not come with the offer of a $5 billion pre-payment that came with the offer made in April.

Meanwhile, at the same time as Tsipras was flying to St. Petersburg, Tsipras’s representative in Brussels was agreeing to an extension of EU sanctions against Russia (see EU Extends Sanctions Against Russia, Russia Insider, 18th June 2015 ). Tsipras himself tamely agreed to this at the European Council meeting on Monday.

At the same European Council meeting Tsipras capitulated in principle to all the demands the Europeans and the IMF made of him.  Reversing what he promised at the time of his election, he agreed to an extension of austerity in return for more bailout money. 

He has since found, in the classic scenario of someone being blackmailed, that his concessions were not enough, and have simply led to the blackmailer raising his demands.

The result is that not surprisingly Tsipras now looks like someone who has cut deals with the Russians he is not going to be able to honour (see A New Problem for Athens: How to ‘Unpivot’ From Russia After Capitulating to the EU, Russia Insider, 24th June 2015).  

The Russians had almost certainly figured that out for themselves before Tsipras went to St. Petersburg, which is why the deal they offered Tsipras in St. Petersburg was less generous than the one they offered him in April. 

This is poor diplomacy by any standard.  

If Tsipras’s policy is to play the Russians and the Europeans off against each other, then it is a bad policy.  

It has not panicked the Europeans into making concessions.  It has made them angry, causing them to increase their demands even more.

As for the Russians, they must be getting increasingly fed up with someone who repeatedly takes them to the Church door - and then at the last moment runs away.

If Tsipras was not prepared to see through his moves to Moscow, then he should not have made them.  

He would have been better off in that case going to Washington instead of Moscow. There is also much sympathy for Greece in Washington, and the US, unlike Russia, can put actual pressure on the IMF and EU to cut Greece some slack.

Instead, by making moves to Moscow that he repeatedly fails to see through, Tsipras has lost possible friends in Europe and the US, whilst putting Greece’s traditionally friendly relations with Russia in jeopardy.

Anyone who knows Russia knows the friendly feelings Russians have for Greece.  

If a Grexit happens  - which is very possible despite Tsipras’s latest concessions - Greece will need Russia’s help (see again Grexit Looks Inevitable. But Greece Will Need Moscow’s Help, Russia Insider, 27th April 2015).  

Hopefully what looks like a frankly manipulative policy will not have soured Russian attitudes by then.

 

 

 

 

 

 

via Vincent Varisano, Playing Russia and Europe off Against Each Other Is Losing Greece Friends

Vincent Varisano Are European Companies Ignoring EU's Russia Sanctions?

Vincent Varisano,

This article originally appeared at Forbes

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It’s been nearly a year since sectoral sanctions were slapped on Russia for its involvement in helping create a frozen conflict in Eastern Ukraine. European and American companies banned financing of Russian energy firms, and banks. They banned any joint venture deals with Russian oil and gas companies that involved exploration and production, or the selling of technologies used in E&P. But if a string of memorandum of understandings signed during last week’s St. Petersburg International Forum puts anything in the spotlight this week it is this: some very powerful entities in the E.U. have had it with sanctions.

For example, Gazprom, Shell, E.ON and Austria’s OMV Group signed a memorandum last Thursday for a joint venture deal involving a new pipeline that will hopefully one day have the capacity to ship 55 billion cubic meters to European each year. That is bigger than the existing Nord Stream pipeline that takes Russian gas westward.

“Extra gas transmission facilities along the shortest route connecting gas fields in Russia’s north to European markets will provide for higher security and reliability of supplies under new contracts,” Gazprom CEO Alexey Miller said in a statement last week.

Gazprom shares have outperformed the Market Vectors Russia (RSX) exchange traded fund over the last five days, up 3.66% in dollar terms. The market is being reminded just how important this company is to keeping air conditions firing and baseboards heated throughout Europe.

On one hand, European energy companies are getting ready for the end of Western sanctions, which are  not expected to end until next January. On the other hand, lawyers at these firms are working overtime to make sure they’re successful at  loopholing the E.U.

Ben van Beurden, CEO of Shell, said Gazprom will remain an important part of Europe’s energy matrix for some time to come. “Natural gas will remain an integral part of the European energy mix, that’s why such new projects are important to satisfy the demand for energy carriers, especially with an account of the declining domestic gas production in Europe,” he said.

Shell and Gazprom also signed an Agreement of Strategic Cooperation last week. The document provides for developing the strategic partnership between Gazprom and Shell across all segments of the gas industry, from upstream to downstream, including a possible asset swap.

Absent from the St. Petersburg Forum were any announced deals with American oil and gas.  ExxonMobil has been cut out of its $700 million joint venture with Rosneft in the Kara Sea because of Washington’s sanctions against the company. Meanwhile, its European rivals are muscling in on one of the cheapest places in the world to drill for hydrocarbons.

The St. Petersburg International Forum, which concluded in the northwestern Russian city on June 20, is a testament to how Russia remains a one trick pony. The deal making is all Gazprom and Rosneft. It’s as if Russia’s private sector, including investor favorites like pay processing firm Qiwi and Russian supermarket player Magnit, does not exist.

Gazprom also inked a sanction breaking 300 million euro loan from UniCredit Austria, state media reported on Sunday.

Last July, the E.U. banned its companies to sign any new financing deals with Russia.In September, the E.U. placed even more restrictions on Russia’s access to E.U. capital markets. The sanctions state that individuals and corporations from the E.U. are banned from providing loans to five major Russian state-owned banks, including Sberbank and VTB Bank, and the three state owned energy companies, of which Gazprom tops the list.

The September sanctions, which went into effect on the 12th of that month, said that companies could no longer provide services related to the issuing of financial instruments, including broker relationships.

In addition, certain services necessary for deep water oil exploration and production, arctic oil exploration or production and shale oil projects in Russia were also banned.

via Vincent Varisano, Are European Companies Ignoring EU's Russia Sanctions?

Vincent Varisano Legendary Investor Jim Rogers: 'Russia has Changed, Russia is Rising, I’m Investing' (Audio)

Vincent Varisano,

June 19 (Sputnik) - Despite the Western efforts to discourage investors from participating in the St. Petersburg Economic Forum, the affair is in full swing. Jim Rogers, legendary investor and chairman of Beeland Interests, is in attendance, and he told Radio Sputnik that the Russian economy may be the most promising market for fellow investors.

“Well, it’s gonna change the world,” Rogers says when asked about the role of the BRICS Bank. “You know, the world has been dominated by IMF, World Bank, and other American-controlled institutions, and that’s never good, that only one players in charge of everything. So now we’re going to have competition…

“This will be very good for the world,” he adds.

Speaking with Radio Sputnik, Rogers notes how the United States economic actions are driving other together, in particular Russia and China. In the long-term, that new economic alliance can only hurt the US, as it continues to impose unfair sanctions.

“I suspect even Japan, eventually, will be closer and closer to Russia, just because they need to. That’s where the transportation will be, that’s where the natural resources are,” he says. “Go east, don’t go west.”

“Putin is trying to encourage people to invest in the stock market. The more of that, the better.”

Part of Russia’s strength comes from its natural resources, and not only in oil and natural gas, but also in even more essential resources, like water and timber.

“You do have a lot of water [in Russia], which also means you have the potential for agriculture, which means you have the potential for many many industries which are going to be important in the future.”

Rogers also expresses his support for the Trans-Pacific Partnership deal, saying he supports all open and free trade agreements.

“Any opening of trade and opening up and freeing of trade is good for everybody.”

He did, however, express misgivings about the way the Obama administration has gone about promoting the TPP deal.

“Unfortunately, for some reason, the Trans-Pacific Partnership, they won’t tell us what’s in it. America’s supposed to be this open and transparent democracy, and here they are passing a bill where they won’t even tell the people who are voting for it what’s in it.

“Which is peculiar and worrisome to me as an American citizen…” he adds.

When asked specifically about what investments to watch for in the future, Rogers offered sage advice.

“I was bearish on Russia for forty-seven years, and the last couple of years Russia has changed, so I’m changing,” he said.

“If you can invest in change, and you buy it at a good price, you’re probably going to make a lot of money.”

 

via Vincent Varisano, Legendary Investor Jim Rogers: 'Russia has Changed, Russia is Rising, I’m Investing' (Audio)

Vincent Varisano St. Petersburg Economic Forum - "Russia's Davos" Opens

Vincent Varisano,

This article originally appeared at Business New Europe

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The St. Petersburg International Economic Forum (SPIEF), dubbed the “Davos of Russia”, kicked off on June 18 to a reasonably heavyweight turnout from the business world despite global tensions over Ukraine. With thousands of delegates from 144 countries, this is one of the biggest events yet, but the agenda holds only one question of real note: does the Russian leadership have a plan to fix the economy?

The short answer is “no”, boiling down to the fact that President Vladimir Putin is preoccupied with his geopolitical showdown with the West, which is largely manifested by events in Ukraine and the vast industrial power and wealth being pumped into building up Russia’s military might.

Economic reform and the people will have to wait until Putin is satisfied this programme is complete. Given that the current military strategy calls for 70% of military equipment to be modernised by 2018, it could be at least another three years before a new comprehensive military programme is launched.

The forum opened with a panel discussion that included Sberbank CEO German Gref, First Deputy Prime Minister Igor Shuvalov and former finance minister and outspoken pro-liberal economic reformer Alexei Kudrin. While the whole event has been themed, “Time to Act: Shared Paths to Stability and Growth”, action and plans are almost certainly going to be entirely missing from this year’s jamboree.

In a sign of what is very likely to come, the opening panel fell at the first fence, when the moderator asked: Are you satisfied with level of political and media competition in Russia?” “No,” Gref and Kudrin replied in unison.

There was no followup as there can be none to this statement. As US banker and Russia investment doyen Bernie Sucher pointed out in an early morning interview with Bloomberg, everything stops with the elite clustered around Putin, who control all economic, bureaucratic, administrative and commercial power in Russia with no checks and balances.

“Political risk trumps economic risk and it all comes down to what is going on in Putin’s head,” Sucher said. “No one can know that.”

Showing at the ball

The need for a large-scale economic reform programme is obvious to everyone and SPIEF has been used in the past to launch some big ideas. In 2008, then president and now prime minister Dmitry Medvedev used the forum to re-launch a large scale privatisation drive that spluttered and stalled six months later in the wake of the 2008 global meltdown. That year, SPIEF was full of businessmen and CEOs and buzzed with optimism as Russia still rode on the crest of a sustained economic boom. Meltdowns notwithstanding, things could only get better as the Kremlin was launching deep and badly needed reforms while it was still ahead of the game.

This year, many of the delegates have come because they have to. It is like attending a ball in Elizabethan England. You go not for the dancing, but because you position at court depends on being seen by the queen.

Still, the mood is lighter than last year’s SPIEF, which was marred by the US State Department’s bullying of US and even European CEOs to stay away. Privately, European bosses and diplomats were outraged after the US government threatened their US assets with trouble in an effort to work a boycott of Putin’s highest profile international forum.

It partially worked. Most CEOs cancelled, but almost all of those companies with significant business in Russia sent their deputies and the Kremlin was understanding. A few like German engineering company Siemens defied the pressure and sent their CEO any way – a stand for which the company will almost certainly be rewarded with lucrative contracts.

This year, the same CEOs will be expected to show up if only to show their face. The forum may be under a cloud and reform may lie in the future, but Russia remains a rich country and the state is pumping billions of dollars into areas like infrastructure to buoy the flagging economy, so there is still a lot of money to be made at SPIEF.

Going East

Russia’s shift to the East was on prominent display in the agenda and the European CEOs that do make the trip will feel less at home than in the past, as the Chinese delegation is large and obvious. The event will offer SCO (Shanghai Cooperation Organisation) and BRICS (Brazil, Russia, India, China, South Africa) business forums, a B20 regional consultation forum, while the Russia-China intergovernmental commission will be devoted to investment cooperation.

Momentum in the latter area has been building fast. In May last year, as Western outrage over Ukraine was transforming into economic retaliation against Russia, Moscow and Beijing signed a 30-year, $400bn gas supply contract to supply 38bn cubic metres of natural gas annually from 2018.

In September, Gazprom launched the construction of the Power of Siberia pipeline to China, due to be operational by 2019, and valued in total with its supporting liquefaction facilities at some $55bn. And during his May visit to Moscow, Chinese President Xi Jinping together with Putin oversaw the signing of 32 contracts involving high-speed rail and other infrastructure loans. More importantly than the cluster of deals worth some $6bn, the Chinese leader sat beside Putin at the May 9 WWII Victory Day parade boycotted by Western leaders, in a firm sign of their countries’ growing alliance.

A major coup at this year’s SPIEF could also come from the Greek delegation, which says it hopes to sign off on a new pipeline deal that extends the mooted Turkish Stream gas pipeline into an EU country. If, or when, this is inked, it will defy Brussels’ attempts to block Russia’s gas diplomacy.

So while a vision for Russia’s future will be missing at SPIEF, there are plenty of deals to be done. In this sense, Russia has gone backwards from the 2008 forum, when it was an emerging European powerhouse developing a rational economy for the long-term. Today, SPIEF has more of a bazaar mentality, where deals are done and money made in the here and now, as the future is uncertain and the nights are dark.

 

via Vincent Varisano, St. Petersburg Economic Forum - "Russia's Davos" Opens

Vincent Varisano What Sanctions? Gazprom to Build Two New Gas Pipelines to Germany

Vincent Varisano,

Russia’s oil and gas giant Gazprom is eager to increase deliveries to  Asia, but that hasn’t stopped it from inking new deals with Germany. Sputnik reports:

Russian energy giant Gazprom announced Thursday that it was intending to construct two a double pipeline from Russia to Germany through the Baltic Sea with E.ON, Shell and OMV.

“The memorandum demonstrates the intention of the sides to implement the project of construction of two strings of the pipeline from the coast of Russia through the Baltic Sea to the coast of Germany. The capacity of the new pipeline will be 55 billion cubic meters annually,” Gazprom said in a statement.

This is just another indicator that western oil majors are against cutting ties with Russia. And yet, Europe continues to cling to its self-destructive sanctions. 

via Vincent Varisano, What Sanctions? Gazprom to Build Two New Gas Pipelines to Germany