Guest view: Russia sanctions lack decisive punch 27 Sep 2022 Restrictions imposed by the United States and its allies following President Vladimir Putin’s invasion of Ukraine have done economic damage, write William Rhodes and Stuart Mackintosh. But Cuba and Iran show American sanctions are not decisive in changing geopolitical outcomes.
Uniper’s new bailout mixes scars and consolations 21 Sep 2022 Germany’s 8 bln euro capital injection heavily dilutes the stricken energy group’s investors and hands main shareholder Fortum a big loss. The Finnish group does gain from exiting the mess, and Berlin might one day profit from the rescue. But neither side will be celebrating.
Petrodollar rush may disappoint Western financiers 20 Sep 2022 In prior energy booms, like in the 1970s, the proceeds wound up in U.S. banks and bonds. OPEC’s $907 bln haul in 2022 is smaller, and winners like Saudi Arabia need cash to pivot away from oil. Bankers may not see a developed world equities and debt bonanza on the same scale.
Europe can shrug off Putin’s Chinese gas Plan B 14 Sep 2022 With exports to its key European market shrinking fast, Moscow hopes to hike gas exports to the People’s Republic. But last year these were just 7% of EU sales, and logistics and sanctions complicate the shift. It need not deter Europe’s talk of a Russian gas price cap.
Putin’s gas ploy worsens Russia’s economic plight 9 Sep 2022 The EU paid 89 bln euros for Russian oil and gas in the last six months. That helps President Vladimir Putin afford the closure of a key pipeline. But the move will speed Europe’s search for other energy sources. If the EU holds firm on sanctions, Russia’s recession will deepen.
The consequences of Europe’s energy crisis 8 Sep 2022 As Russian President Vladimir Putin cuts off gas through a key pipeline, Breakingviews columnists discuss the response from UK and European governments, how the shutdown could have some longer-term benefits, and when Russia will feel the squeeze of lost revenue.
Putin shoves Europe over the energy rubicon 5 Sep 2022 By shutting the Nord Stream 1 pipeline, the Russian president has ensured the continent faces sustained high power costs. States have so far stopped short of drastic market interventions. All are now wising up to the need to freeze prices, ration demand, and tax windfall profits.
Gorbachev’s bold political plan had economic flaw 31 Aug 2022 The former Soviet leader, who died aged 91, ended the Cold War and launched a liberalisation that brought the USSR to an end. But despite seeing the defects of Communism, he failed to reform Russia’s economy. The result is a country very different from the one he envisaged.
Russia is giving German industry a slow puncture 27 Jul 2022 Industrial users of gas are in the firing line as Moscow halts supply. Companies like BASF face a hit from higher input costs and energy rationing, rather than a Uniper-style bailout. The problem for Berlin is that sustained high prices could make production head elsewhere.
Russian grain deal gives food crisis a partial fix 22 Jul 2022 Moscow has agreed to lift a blockade on 20 mln tonnes of Ukrainian grain. That should reduce the scale of a Middle East food crisis, and ease prices which remain high versus 2021. Still, Russia could always renege on the new deal.
Russia’s macro health hides chronic deficiencies 22 Jul 2022 Oil and gas exports and lower imports mean the rouble is strong, and GDP hasn’t yet collapsed. But longer term, Moscow needs to aid inflation-hit consumers, and help sanctions-hit firms fill the gap left by departing Western rivals. Graft and a brain drain will make that hard.
Putin gas assault is a survivable test of EU unity 19 Jul 2022 Moscow’s key pipeline to Germany is offline for repairs, stoking fears Russia may cut off all its gas for good. That would mean soaring energy costs and a big economic contraction. But the worst outcome, where Germans hoard gas and splinter the European Union, looks less likely.
Review: The cat and mouse game of Russia sanctions 15 Jul 2022 In “Freezing Order”, investor Bill Browder describes lobbying to suspend the assets of those responsible for the death of his Russian employee. Moscow used economic interests and U.S. lawyers to undermine the sanctions. The same tactics threaten the response to the Ukraine war.
War helps Russian nickel king expand his realm 5 Jul 2022 Tycoon Vladimir Potanin may merge Norilsk Nickel with aluminium maker Rusal. The West would be extra wary of sanctioning such a giant for fear of roiling metals markets. The pair may have some synergies, but their two main owners don’t get on. It would be a governance nightmare.
Gazprom investors lack Rosneft’s Qatari airbag 1 Jul 2022 Moscow blocked the $93 bln gas giant’s 2021 dividend, but approved that of its $73 bln oil peer. In general the Kremlin, which is replacing its own Gazprom payout with a tax, isn’t fussed about riling Western investors. Doha’s Rosneft stake makes the driller a rare exception.
Robinhood’s reversal, Russian oil cap 30 Jun 2022 The digital brokerage is worth less than a quarter of its $32 bln IPO value. In this Viewsroom podcast, Breakingviews columnists argue that its $7 bln cash pile and ample user base make it an attractive target. Also, Western leaders’ plan to restrict funds to Moscow may backfire.
Uniper woes could force reality check on Berlin 30 Jun 2022 The German utility needs state support after Russia cut gas supplies, forcing it to buy more expensive fuel instead. A better alternative would be for the regulator to allow Uniper to pass the cost on to consumers, dampening demand. The risk of open-ended bailouts helps its case.
Saving energy now is an EU no-brainer 28 Jun 2022 The bloc has hiked LNG imports by 50% to replenish storages and cut its Russian gas dependency. But if Moscow turns off the taps, Germany could sink into recession. All the more reason to kick off energy-saving measures this summer and try to curb gas prices by cutting demand.
Enforcement is weak link in Russian sanctions push 28 Jun 2022 Western capitals have frozen assets and blacklisted oligarchs. The United States has many well-funded financial crimes regulators, but there’s little formal coordination with poorer European counterparts in policing breaches. Places like Dubai offer hiding places, too.
Russia’s economy will soon be unrecognisable 16 Jun 2022 When the Ukraine war eventually subsides, Moscow will try to tempt companies and investors back. But its $1.5 trln GDP will have changed dramatically, with poorer consumers and more basic modes of production. Returnees will find a very different economic beast.