Russia says close to final stage on China gas deal

By Gleb Bryanski

October 11 (Bloomberg) — Russia said on Tuesday it was close to the final stage of a huge gas supply deal with China, in what would be a landmark trade agreement between the long-wary neighbours.

A deal to supply the world’s second biggest economy with up to 68 billion cubic metres of Russian gas a year over 30 years has long been delayed over pricing disagreements.

“We are nearing the final stage of work on gas supplies,” said Russian Prime Minister Vladimir Putin, on his first overseas trip since announcing he was ready to reclaim the Russian presidency.

Putin is hoping his two-day visit will help broaden trade with China, which he expects to grow to $200 billion in 2020 from $59.3 billion last year.

Russia Continues To Buy Gold

By Rhiannon Hoyle

April 28 (Dow Jones) — Russia’s central bank is continuing to make steady gold purchases, while sales by signatories to the third Central Bank Gold Agreement meanwhile remain negligible, the World Gold Council said Thursday.

Russia added 8.2 metric tons of gold to its reserves between December and February–the most significant change in reserves reported by any country, the WGC said.

It appears to be continuing “its long-term program of gold accumulation,” with sustained buying primarily in the domestic market, the industry body added.

At the end of February the Russian central bank held 7.3% of its reserves in gold, at a total of 792.3 tons, according to data the WGC collected from the International Monetary Fund and other sources.

Sales of gold by CBGA signatories have meanwhile accounted for less than one ton so far during the second year of the agreement, which began in September, the WGC added. The agreement, which covers the gold sales of the Eurosystem central banks, Sweden and Switzerland from September 2009 to 2014, states that annual sales will not exceed 400 tons and total sales over the period will not exceed 2,000 tons.

Other substantial purchases between December and February included a reported 7-ton reserve increase in Bolivia, taking the country’s total holdings to 35.3 tons, or 15.1% of its overall reserves, the WGC said.

“While Bolivia has not made any public comment on this increase in gold holdings, it is very likely that the central bank has simply decided to restore its gold holdings relative to its growing foreign currency reserves, similar to other recent emerging market central bank purchases,” it noted.

The data was released in the council’s regular statistical update on gold reserves in the official sector.

What matter is what currency a nation saves in, not the numeraire for transactions.

So good this happened, so everyone can get past it and stop worrying about it.

China, Russia quit dollar

By Su Qiang and Li Xiaokun

November 24 (China Daily) — St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.

Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
“About trade settlement, we have decided to use our own currencies,” Putin said at a joint news conference with Wen in St. Petersburg.

The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.

The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.

“That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries,” he said.

Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.

The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.

Putin said one of the pacts between the two countries is about the purchase of two nuclear reactors from Russia by China’s Tianwan nuclear power plant, the most advanced nuclear power complex in China.

Putin has called for boosting sales of natural resources – Russia’s main export – to China, but price has proven to be a sticking point.

Russian Deputy Prime Minister Igor Sechin, who holds sway over Russia’s energy sector, said following a meeting with Chinese representatives that Moscow and Beijing are unlikely to agree on the price of Russian gas supplies to China before the middle of next year.

Russia is looking for China to pay prices similar to those Russian gas giant Gazprom charges its European customers, but Beijing wants a discount. The two sides were about $100 per 1,000 cubic meters apart, according to Chinese officials last week.

Wen’s trip follows Russian President Dmitry Medvedev’s three-day visit to China in September, during which he and President Hu Jintao launched a cross-border pipeline linking the world’s biggest energy producer with the largest energy consumer.

Wen said at the press conference that the partnership between Beijing and Moscow has “reached an unprecedented level” and pledged the two countries will “never become each other’s enemy”.

Over the past year, “our strategic cooperative partnership endured strenuous tests and reached an unprecedented level,” Wen said, adding the two nations are now more confident and determined to defend their mutual interests.

“China will firmly follow the path of peaceful development and support the renaissance of Russia as a great power,” he said.

“The modernization of China will not affect other countries’ interests, while a solid and strong Sino-Russian relationship is in line with the fundamental interests of both countries.”

Wen said Beijing is willing to boost cooperation with Moscow in Northeast Asia, Central Asia and the Asia-Pacific region, as well as in major international organizations and on mechanisms in pursuit of a “fair and reasonable new order” in international politics and the economy.

Sun Zhuangzhi, a senior researcher in Central Asian studies at the Chinese Academy of Social Sciences, said the new mode of trade settlement between China and Russia follows a global trend after the financial crisis exposed the faults of a dollar-dominated world financial system.

Pang Zhongying, who specializes in international politics at Renmin University of China, said the proposal is not challenging the dollar, but aimed at avoiding the risks the dollar represents.

Wen arrived in the northern Russian city on Monday evening for a regular meeting between Chinese and Russian heads of government.

He left St. Petersburg for Moscow late on Tuesday and is set to meet with Russian President Dmitry Medvedev on Wednesday.

They don’t like to buy dollars but they don’t want their currencies to appreciate and risk export market share.

And Bernanke, Geithner, and Obama want them to let their currencies appreciate to help our exports and ALSO want them to buy dollars and treasury securities because they think we need that to fund our deficit spending.

It is one confused and sorry state of affairs on our part.

On balance it looks like our exports won’t be going up nearly as fast as imports especially with crude prices higher. And a good chunk of domestic demand will be channeled towards imports (including those new fiats…). And with flattish GDP and rising unemployment and talk of spending cuts and tax increases it’s starting to look very grim again.

Not to mention no plan to cut imported energy bills anytime soon.

BRICs Add $60 Billion Reserves as Zhou Derides Dollar

by Shanthy Nambiar and Lilian Karunungan

June 8 (Bloomberg) — Reserves Reversal

Asian central banks, excluding China, ran down foreign-
exchange reserves by more than $300 billion in the 12 months
ended April 30, according to London-based HSBC Holdings Plc.
Russia’s slid by $213 billion in the eight months ended March 31,
central bank data show. Brazil’s reserves dropped $5.7 billion
in the six months ended Feb. 27.

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Yes, the risk of Russian corporate defaults due to governmental difficulties goes with the territory.

Fears rise over Russia’s foreign debt

by Catherine Belton

Feb 22 (Financial Times) — Western bankers are increasingly anxious about Russian companies’ ability to repay $500bn in foreign corporate debt after the government said this month it was suspending a $50bn bail-out programme due to dwindling reserves. Bankers are demanding clarity after Igor Shuvalov, first deputy prime minister, said in a closed-door briefing this month that Russia was going to switch focus from bailing out tycoons to supporting the banking system.

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Russian Central Bank Spent $58 Billion Backing Ruble (Update1)

By Alex Nicholson and Maria Levitov

Nov. 19 (Bloomberg) — Russia’s central bank spent $57.5 billion defending the ruble in September and October, Chairman Sergey Ignatiev said.

Why would they ‘defend’ the ruble? Maybe they ‘defend’ it selectively, via transactions with ‘insiders’ moving from rubles to dollars?

Russia held 45 percent of its reserves in U.S. dollars, 44 percent in euros, 10 percent in pounds and about 1 percent in yen on Nov. 1, Ignatiev, said in the lower house of parliament in Moscow today.

“Russia ensures the stability of its currency, given the fundamental indicators of our economy,” Finance Minister Alexei Kudrin told lawmakers today. The amount of reserves ensures “a firm foundation for macroeconomic stability, for stability of the national currency,” he added.

Looks like I’m wrong on suspecting insider conversion. Sorry!!!

Russia’s international reserves stood at $475.4 billion as of Nov. 7, the third-biggest after China’s and Japan’s. They have fallen $122.7 billion since Aug. 8 as the central bank shored up the ruble. The bank buys and sells currency to keep it within a trading band against a dollar-euro basket to limit the impact of exchange-rate fluctuations on the economy.

Right, that’s the reason…

Ignatiev also said that the central bank reduced its holdings of Fannie Mae and Freddie Mac bonds, which are held by Russian oil funds that are part of the reserves, to $20.9 billion on Nov. 1 from $65.6 billion on Jan. 1.

Explains some of the spread widening.

Fannie and Freddie were “taken under state control” in the U.S. in September, guaranteeing their reliability, Ignatiev said. The bank isn’t currently selling bonds of the two U.S. mortgage- finance companies, he said.

Right, not even if an insider wants to buy them with rubles.

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(email exchange)

Thanks! it’s all about price setting, as previously suspected.

Warren

>   
>   On Thu, Oct 23, 2008 at 10:09 AM, Scott wrote:
>   
>   Moving on, we note that Russia and OPEC held high level talks
>   yesterday in Moscow as President Dmitry Medvedev met with OPEC’s
>   Secretary-General, Abdallah Salem al-Badri. This is, to the best of our
>   knowledge, the first such “summit” meeting between Russia and OPEC.
>   The talks, apparently, were to discuss the volatile oil market, and it
>   appears that Moscow is pushing for wider and more open co-operation
>   with other world energy producers. Neither the Kremlin nor OPEC
>   released details of the meeting, but before the talks between he and
>   Mr. Medvedev began, Mr. al-Badri dispensed with the idea that he’d
>   come to Moscow to ask for an output reduction. Obviously we do not
>   believe that statement, nor should anyone else. It is in OPEC’s best
>   interest to get Russia, Norway, and any other large… or soon to be
>   large, such as Brazil… to curtail production. Further, the ‘summit’
>   followed an agreement between Russia, Qatar and Iran to consult with
>   one another on the natural gas market, to possibly pursue joint
>   projects and perhaps to create their own nat-gas cartel. Mischief is
>   afoot. We can just sense it.
>   

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The last statement is most troubling.

Venezuela expels US ambassador, threatens to halt oil trade

CARACAS: Venezuelan President Hugo Chavez expelled the US envoy to Caracas late Thursday and threatened to halt crude exports to the United States on a day he highlighted the recent arrival of two Russian Tu-160 strategic bombers.

Chavez on Thursday ordered US ambassador Patrick Duddy to leave the country within 72 hours, in a move he described as an act of solidarity with Venezuela’s ally Bolivia, which also expelled its US envoy.

“Starting at this moment the Yankee ambassador in Caracas has 72 hours to leave Venezuela,” Chavez said at a public event in the port city of Puerto Cabello, 120 kilometres west of Caracas.

He said it was “in solidarity” with the leftist government of President Evo Morales in Bolivia, which on Wednesday ordered the US ambassador to La Paz to leave. Washington late Thursday expelled Bolivia’s ambassador to the United States.

Chavez then threatened to halt the supply of oil to the United States, its main client, if Washington attacks his government.

“If there is any aggression towards Venezuela” from Washington, “there would be no oil for the people of the United States,” said Chavez, who used coarse expletives to disparage the US government.

Chavez also announced Thursday that his government had uncovered a coup plot hatched by active and retired military officers, which he said had tacit US approval.

A military prosecutor said two officers — retired general Wilfredo Barroso and retired major Elimides Labarca Soto – will be tried for incitement to rebellion, a charge punishable by five to 10 years in prison.

At least eight other officers were detained in connection with the plot and were being interrogated, the prosecutor said.

Venezuelan public television aired a recorded conversation allegedly between three high-ranking retired military officers discussing plans to storm the presidential palace in Caracas, target Chavez, and blow up the presidential airplane.

“We have already detained several people,” Chavez said.

“Look, pitiyanquis, don’t even think of launching a coup or some madness such as this. I warn you, I am not the Hugo Chavez of 2002,” he said, referring to a failed coup attempt against him in April of that year, when he was briefly ousted for two days before mass protests saw him freed and return to power.

Chavez, a former paratroop officer, headed a failed coup attempt himself in 1992. He was elected president in 1999.

“I have no doubt at all that the United States is behind plans to bomb this palace,” Chavez said, warning that “difficult times” lied ahead for Venezuela.

The anti-US leader frequently alleges assassination and coup plots against him, usually pointing the finger at the United States.

Chavez said those behind the latest plot were part of the country’s “desperate political opposition” and “the American empire” led by US President George W. Bush.

Earlier in the day Chavez said the presence of two Russian Tu-160 strategic bombers in Venezuela is a “warning” to the US “empire,” as he announced another coup plot against him had been foiled and suspects arrested.

“It’s a warning. Russia is with us… we are strategic allies,” said Chavez. “It is a message to the empire. Venezuela is no longer poor and alone.”

Chavez had announced Wednesday that two Russian bombers were in Venezuela for “training flights” and that he would be piloting one of the aircraft himself.

“I hope that stings, ‘pitiyanquis’,” he said, using a derogatory term for Venezuelan opponents who have perceived US sympathies.

“What’s more, I’m going to take the controls of one of these monsters,” boasted the president, a former paratrooper and left-wing politician who has avowed antagonism towards the United States.

The United States said it would monitor the deployment of the two Russian bombers, which it described as “Cold War era assets,” to Venezuela.

The moves came amid soaring tensions between Russia and the United States, including over the presence of US naval vessels sent close to Russian shores to deliver aid to Georgia.

Russia said Monday it was dispatching a nuclear cruiser and other warships and planes to the Caribbean for the joint exercises with Venezuela – the first such manoeuvres in the US vicinity since the Cold War.

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(an email from my brother)

>   
>   Hi
>   Hope things are going well
>   

yes, thanks!

>   
>   Laugh:
>   I asked Rachel what percentage of her friends thought Russia invaded USA
>   state of Georgia. She said when she heard it the first time she thought he
>   US was invaded. Even now she says over half still think the US was
>   invaded-the other half don’t pay attention!!
>   
>   

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There’s nothing credit issues can do to GDP that fiscal policy can’t handle.

Congress has seemingly figured that out and probably the rest of the world as well as evidenced by the new proposed fiscal packages popping up around the world.

Yes, we can lose a bank or two, and lending standards tighten further, but GDP will continue to muddle through even if that means a series of fiscal measures.

And Congress was born to spend; so, they are all over this one.

The only thing that might slow them down is inflation, and so far they’ve seemed to support the Fed trying to step hard on the inflation pedal, rather than ‘tighten’ which presumably helps inflation.

And no one seems to notice the 8000lb bear in the room.

Our response to Russia reminds me of Monty Python’s coconut clapping Arthur trying to intimidate the French defenders of the fort with his credentials.

We threaten them with diplomatic isolation, trade sanctions, etc. as if they care.

They don’t care.

They do care about the new missiles going into Poland.

And we are committed to considering an attack on Poland or any other NATO member as an attack on US soil, as Rice reminded them and even maybe dared them to try something.

We can’t defend anyone against against Russia with our own troops without risking nuclear war.

And Russia will be a lot quicker to that trigger than we will.

And they still have maybe thousands of nuclear warheads aimed our way.

Their next step for Russia is probably to make an offer to the rest of the ex-Soviet Union members they can’t refuse.

Russia sells the Eurozone something like 30% of their oil and gas and can do it at any price they want, and demand any real terms of trade they want.

The risk is we try to draw a line in the sand in some nowhere place over there, and it escalates to where we back down or get involved in lobbing nukes.

I suppose it’s just another case of this administration not seeing the forest for the trees.

We’ve let Russia be reorganized by the ex-KGB leadership that’s a lot smarter than ours, and now we’re paying the price.

Both the inflation and cold war of the 1970s is back, except this time our opposition is far stronger.

There is no even semi-quick supply response to dislodge the Saudis and/or Russians from setting any terms of trade they want.

The Russian consolidation is on the way up supported by a bath of capitalist type riches rather than crumbling under its own weight of a failed socialist economy.

Apart from that, I’m optimistic.

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