Category: Sanctions


Bloomberg

 

U.S. Strikes at Putin’s Inner Circle With Sanctions as Fight Over Ukraine Intensifies

 

The Obama administration today imposed sanctions on seven Russian officials and 17 companies linked to President Vladimir Putin’s inner circle over the crisis in Ukraine.

The list includes Igor Sechin, OAO Rosneft (ROSN) chief executive officer, and Sergei Chemezov, director of State Corporation for Promoting Development, Manufacturing and Export of Russian Technologies High-Tech Industrial Products, also known as Rostec, and banks such as InvestCapitalBank and SMP Bank.

The travel bans and asset freezes announced by the White House were levied in coordination with the European Union, which said today it’s adding 15 more names to the list of 55 individuals previously sanctioned. The identities of those targeted by the EU weren’t immediately disclosed.

The U.S. and EU say Russia hasn’t lived up to an accord signed April 17 in Geneva intended to defuse the confrontation between the Ukrainian government and pro-Russian separatists. The U.S. warned it’s prepared to levy additional penalties to hit the broader Russian economy if Putin escalates by sending troops into Ukraine.

“The goal here is not to go after Mr. Putin, personally,” President Barack Obama said earlier today at a news conference in the Philippines. “The goal is to change his calculus with respect to how the current actions that he’s engaging in in Ukraine could have an adverse impact on the Russian economy over the long haul.”

Photographer: Scott Olson/Getty Images

Pro-Russian activists break through the gate in front of TRK Donbass television station… Read More

Export Restrictions

The U.S. also expanded export restrictions on defense technologies and services and revoked previously approved export licenses.

A Snapshot of Ukraine’s Past and Future

The new sanctions list includes Oleg Belavantsev, Putin’s presidential envoy to Crimea; Dmitry Kozak, deputy prime minister of the Russian Federation, and Evgeniy Murov, director of Russia’s Federal Protective Service and an army general.

Most of the companies on today’s list are tied to Gennady Timchenko or brothers Arkady and Boris Rotenberg, who were placed on a sanctions list on March 20. They include the Volga Group, which is controlled by Timchenko, and InvestCapitalBank and SMP Bank, which are controlled by the Rotenbergs.

One of the most prominent individuals on the list is Sechin, 53, who was Putin’s colleague at the St. Petersburg mayor’s office before rising to become the head of state-run Rosneft. Over the past decade he has built it into the world’s largest publicly traded oil company by output and reserves.

Photographer: Maxim Shipenkov-Pool/AP Photo

Russian President Vladimir Putin enters for his meeting with Royal Dutch Shell’s CEO… Read More

Company Ties

Rosneft, in which British oil company BP Plc holds a 20 percent stake, isn’t being sanctioned. The Russian company also has exploration projects with other international oil producers, including a venture with Exxon Mobil Corp. (XOM) to drill a multibillion-barrel prospect in Russia’s Arctic Ocean.

 

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Full coverage of the Crisis in Ukraine:

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Bloomberg

U.S. Sanctions Target Putin Allies’ Companies, Rosneft’s Sechin

The U.S. imposed sanctions on seven Russian executives and officials and 17 companies controlled by four of President Vladimir Putin’s allies as the crisis in Ukraine escalates.

The following is a list of those targeted.

*Igor Sechin

Sechin, 53, has worked with Putin for more than two decades, starting the St. Petersburg mayor’s office in the 1990s. He was appointed chief executive of OAO Rosneft (ROSN) in 2012, having served as board chairman since 2004. Sechin oversaw the company’s growth over the past 10 years into the world’s biggest publicly traded oil producer by output, largely through acquiring Yukos Oil Co.’s assets and TNK-BP.

*Sergey Chemezov

Chemezov, 61, heads Rostec, the state corporation that owns arms exporter Rosoboronexport and holds stakes in more than 660 other civilian and military-industrial manufacturers. He is chairman at titanium producer OAO VSMPO-Avisma and OAO Uralkali, the world’s largest potash producer, and is on the boards of automaker OAO AvtoVAZ, controlled by Renault SA-Nissan, and OAO Kamaz, part-owned by Daimler AG.

Chemezov has known Putin since the 1980s, when the Russian leader served as a KGB officer in Dresden, then East Germany.

*Dmitry Kozak

Kozak, 55, a deputy prime minister, was in charge of Russia’s preparations for the Sochi Winter Olympics and is now overseeing the development of Crimea, the Black Sea peninsula that Russia annexed from Ukraine.

*Vyacheslav Volodin

Volodin, 50, has served as the first deputy chief of the presidential staff under both Putin and now Prime Minister Dmitry Medvedev, replacing Kremlin ideologue Vladislav Surkov in 2011.

*Alexei Pushkov

Pushkov, 59, heads the foreign affairs committees of Russia’s lower house of parliament and supported the annexation of Crimea.

 

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Bloomberg

Russian Billions Scattered Abroad Show Trail to Putin Circle

Outside a Moscow stadium one night in 2006, deputy central bank chief Andrei Kozlov was walking to his car after playing soccer when two men opened fire, pumping bullets into his head and neck and killing his driver.

Days before the murders, the man leading Russia’s fight against money laundering had shut down a scheme used to funnel $1.6 billion of dirty funds abroad, including at least $112 million via Vienna-based Raiffeisen Zentralbank Oesterreich AG, according to Russian and Austrian investigators.

It was a trickle in a flood of illegal outflows that would reach $52 billion in 2012 alone, according to former central bank Chairman Sergey Ignatiev. Such flows are now in the cross hairs of President Barack Obama’s efforts to penalize Vladimir Putin for annexing Crimea and to halt his incursions into Ukraine. Obama signed a law on aid to Ukraine this month that includes a clause that allows the U.S. to go after assets of Russian officials and their allies who are deemed complicit in “significant corruption.”

“This is a declaration of war by the Obama administration on the current governing Russian elite,” Ariel Cohen, senior fellow at the Heritage Foundation, a Washington-based research group, said by phone from New York. “There will be a lot of people potentially targeted.”

Photographer: Andrey Rudakov/Bloomberg

The two-headed eagle symbol of Russia’s central bank sits on ruble banknotes… Read More

Money Game

One possible weapon in this new battle is Dmitry Firtash, 48, the billionaire Ukrainian and major Raiffeisen client who was arrested in Vienna last month on U.S. bribery charges, according to Mark Galeotti, a Russian organized crime expert at New York University who advises regulators on money laundering.

A longtime ally of Viktor Yanukovych, the ousted Ukrainian president who fled to Russia in February, Firtash made his fortune as a middleman in OAO Gazprom’s secretive gas trade with Ukraine, conduit for 15 percent of Europe’s supply and the most corrupt country on the continent, according to Transparency International. He’d be an invaluable asset to the U.S. if he agrees to cooperate because he knows how Russian officials have shifted billions of dollars into banks abroad, Galeotti said.

Financial Warfare: an Alternative to Military Force

“Firtash knows the way the game is played, the way the money is moved,” Galeotti said in an interview in Moscow.

Ignatiev told lawmakers last June that money laundering in Russia, ranked the most corrupt major economy by Transparency International, was so pervasive that fighting it consumed more of his time than formulating monetary policy. In his last address to parliament before stepping down after a decade in the post, he highlighted one network in which 1,173 shell companies channeled $24 billion to foreign banks.

‘Almost Anyone’

About half of all illegal capital flight, including bribes to bureaucrats and revenue from criminal syndicates, “appears to be controlled by one well-organized group of people,” Ignatiev told the Vedomosti newspaper in a rare interview in February 2013, without elaborating. Ignatiev, 66, is now an adviser to his successor, Elvira Nabiullina.

The wording of the new U.S. law is so broad it could apply to “almost anyone” close to Putin, 61, said Masha Lipman, an analyst at the Carnegie Moscow Center who’s co-written academic articles on Putin with former U.S. Ambassador Michael McFaul.

The U.S. today imposed sanctions on 17 Russian companies and seven individuals, including Igor Sechin, CEO of OAO Rosneft, the country’s largest oil producer. That adds to the more than two dozen officials and billionaires penalized last month for being what the Treasury Department called part of Putin’s inner circle.

‘Body Blow’

An agreement to disarm pro-Russian rebels and anti-Russian groups in Ukraine that both countries signed with the U.S. and the European Union is on the brink of collapse. Secretary of State John Kerry said Russia was trying to impose its will on Ukraine by the “barrel of a gun and the force of a mob.”

Russia is already on the verge of recession, so the U.S. can inflict major damage with industry-wide sanctions, according to John Herbst, a former U.S. ambassador to Ukraine.

“Even without European support, U.S. sanctions against the Russian financial sector would deal a body blow to the nation’s economy,” Herbst said by e-mail.

 

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Bloomberg

U.S. Said to Sanction Seven Russians, 17 Companies

The Obama administration will sanction seven Russians and 17 companies, including some involved in the financial, energy and infrastructure sectors, according to a congressional official briefed on the actions.

President Barack Obama said today in Manila that the U.S. is “moving forward with an expanded list of individuals and companies that will be affected by sanctions. They will remain targeted. It will also focus on some areas of high-tech defense exports to Russia.”

European Union representatives have discussed similar penalties, a European Commission spokeswoman said. The announcements of expanded measures came as Gennady Kernes, the mayor of Ukraine’s second-largest city Kharkiv, was shot in the back and rushed to hospital for surgery. It also followed the seizure of international military inspectors by pro-Russian separatists last week.

In the worst confrontation with the U.S. and its European allies since the Cold War, Russia has started military exercises on Ukraine’s border where the North Atlantic Treaty Organization says Putin is massing about 40,000 troops in a potential preparation for invasion. That conflicts with an April 17 agreement signed in Geneva aimed at solving the standoff, according to U.S. and EU officials.

Photographer: Scott Olson/Getty Images

Pro-Russian activists take control of TRK Donbass television station on April 27, 2014 in Ukraine.

‘Expanded List’

“Later today, there will be an announcement made, and I can tell you that it builds on the sanctions that are already in place,” Obama told a news conference in the Philippine capital Manila today. “We are going to be moving forward with an expanded list of individuals and companies that will be affected by sanctions. They will remain targeted. It will also focus on some areas of high-tech defense exports to Russia.”

The U.S. list may include people inside Putin’s inner circle such as Alexey Miller, chief executive of gas-export monopoly OAO Gazprom and his deputy Alexander Medvedev, as well as Igor Sechin, CEO of oil company OAO Rosneft, according to people familiar with developments.

Representatives of the 28 EU states met to discuss extending a “stage two” black list, spokeswoman Pia Ahrenkilde Hansen said in Brussels today. German Deputy Foreign Minister Gernot Erler said in an interview on ZDF television yesterday he had “the impression” that the EU would extend visa bans and asset freezes to “maybe another 15 people.”

Asset Freezes

“We’ve already taken action, we’ve already introduced travel bans and asset freezes on certain individuals,” U.K. Chancellor of the Exchequer George Osborne said in Paris after meeting his German, French, Italian and Spanish counterparts. “European countries are discussing further such action today following the statement from the G-7.”

 

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So far, the West’s reaction to Russia’s annexation of Crimea has been rather chivalrous. Freeze a few assets here, travel restrictions for a dozen people there, and of course have Visa and MasterCard stop providing services for a few Russian banks.

Putin then said Russia will explore launching its own credit cards, similar to Japan’s JCB and China’s UnionPay. Nice try. While these two companies have pretty good traction in their home market, they are dwarfed by American plastic.

According to research by Nilson, MasterCard processed more than $8 trillion of the world’s credit card transactions in 2011. Visa came second at around $3 trillion and UnionPay third with a little more than $2 trillion. The reason: MasterCard and Visa are accepted everywhere in the world, where the other two are pretty much local only.

Either way, banning a few Russian banks from processing Visa or Master for a while or Russia launching its own alternatives won’t change a lot in the grand scheme of things. However, the direction where this conflict is going is interesting.

The Nuclear Option
International payments between banks are processed via the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a little known member-owned cooperative based in Belgium.

If you have ever sent an international wire transfer, you will likely have entered a so-called Business Identifier Code, or BIC in short. It is part of SWIFT’s system for processing payments.

 

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Sanctions expand: Obama goes after more wealthy Russians and a ‘crony bank,’ freezes assets and denies US access in response to Ukraine crisis

  • President signed new executive order authorizing the U.S. to sanction ‘a whole slew’ of wealthy Russians and a bank that holds their assets
  • New move freezes assets of new targets and prohibits them from doing business in the United States
  • The bank will be denied access to U.S. dollars
  • Additional sanctions would also go into place if Vladimir Putin invades more of Ukraine or other nations
  • White House aims to cripple Russian economy including financial services, energy, metals and mining, defense and related material, and engineering

By David Martosko, U.s. Political Editor

President Barack Obama has signed a new executive order that authorizes his administration ‘to impose sanctions not just on individuals but on key sectors of the Russian economy,’ he said Thursday morning.

Speaking on the South Lawn of the White House before boarding Marine One en route to Florida, he also announced a new raft of anti-Moscow choke-holds that the White House is attempting immediately to ‘impose additional costs on Russia.’

‘We’re imposing sanctions on more senior officials of the Russian government … [and] other individuals who provide material support’ to them, Obama said in a brief statement.

He also announced new sanctions on Bank Rossiya, which he said ‘provides material support to these individuals.’

 

President Barack Obama addresses the Ukraine crisis at the White House Thursday, announcing new sanctions against Russian officials and a bank that holds their assets, and an executive order authorizing the government to make more moves

President Barack Obama addresses the Ukraine crisis at the White House Thursday, announcing new sanctions against Russian officials and a bank that holds their assets, and an executive order authorizing the government to make more moves

Showman: Russian President Vladimir Putin (L) spoke Tuesday at a rally celebrating his annexation of Crimea and Sevastopol after what the U.S> and other governments called an 'illegal referendum'

Showman: Russian President Vladimir Putin (L) spoke Tuesday at a rally celebrating his annexation of Crimea and Sevastopol after what the U.S> and other governments called an ‘illegal referendum’

Obama spoke for just a few minutes before boarding Marine One on the South Lawn of the White House, en route to Florida for an economic speech and a Democratic Party fundraiser

The Treasury Department’s Office of Foreign Assets Control listed the new targets on its website as Obama spoke.

‘We’ve continued to be deeply concerned’ about Russian President Vladimir Putin’s actions, he said.

‘We’ve seen an illegal referendum in Crimea [and] an illegitimate move by the Russians to annex Crimea.’

Putin’s moves, he said, ‘have been rejected by the international community and by the government of Ukraine.’

 

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US sanctions list against Russian officials is unacceptable – Kremlin

Published time: March 20, 2014 19:47
President Vladimir Putin's spokesman Dmitry Peskov (RIA Novosti/Aleksey Nikolskyi)

President Vladimir Putin’s spokesman Dmitry Peskov (RIA Novosti/Aleksey Nikolskyi)

Washington’s sanctions list against Russia is unacceptable, the Kremlin stated on Thursday. It comes after US President Barack Obama announced a new executive order slamming sanctions on top Russian officials in response to Crimea joining Russia.

“Finding some of the names on this list causes nothing but an extreme embarrassment, but no matter what the names are, finding any lists is unacceptable for us,” President Vladimir Putin’s spokesman, Dmitry Peskov, said on Thursday.

He added that Russia’s retaliation to the new sanctions will not take long.

“In any case, Russia’s reaction to these lists will be based on a reciprocity principle and will not be long in coming.”

The second round of sanctions imposed on Thursday singles out 20 top Russian political figures and businessman, among whom is Sergey Ivanov, head of the Kremlin administration.

Ivanov reacted to the news with humor, Peskov said, adding that this is not the first time that a Western country has barred him from entering.

“While I cannot say anything about the reaction of others, but as far as Sergey Ivanov, he reacted with humor. In his earlier professional life, during more than 20 years of service in the first headquarters of the KGB, and then Russian Foreign Intelligence Service, as a result of operational activity he has already been denied entry to most Western countries, so he is no stranger to this,” said Peskov.

 

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The G8 is dead declares Merkel as Europe prepares to ramp up EU sanctions against Russia

  • EU leaders are set to meet in Brussels to discuss developments in Ukraine
  • German Chancellor Angela Merkel says EU will impose more sanctions on Russia after its troops seized majority control of Crimea
  • She also told the German parliament the G8 forum is suspended indefinitely

By Suzannah Hills

The European Union is set to impose further sanctions on Russia following its decision to annex Crimea as German Chancellor Angela Merkel today declared the G8 ‘is dead’.

EU leaders are set to meet in Brussels today to discuss how to deal with the developments in Crimea after Russian troops seized majority control of the peninsula.

In an address to the German Parliament in Berlin this morning, Merkel said the EU was readying further sanctions and that the G8 forum of leading economies has been suspended indefinitely.

Russia holds the presidency of the G8 and President Vladimir Putin was due to host his counterparts, including President Barack Obama, at a summit in Sochi in June.

But Merkel today declared the G8 will not meet again until the situation in Ukraine has been resolved.

 

Response: German Chancellor Angela Merkel has announced the EU will impose further sanctions on Russia

Response: German Chancellor Angela Merkel has announced the EU will impose further sanctions on Russia

The G8 is dead': German Chancellor Angela Merkel tells the lower house of parliament in Berlin the G8 forum has been suspended indefinitely

The G8 is dead’: German Chancellor Angela Merkel tells the lower house of parliament in Berlin the G8 forum has been suspended indefinitely

German Chancellor Angela Merkel addresses lawmakers at the lower house of parliament in Bundestag, Berlin, on Thursday ahead of a meeting of EU leaders in Brussels

German Chancellor Angela Merkel addresses lawmakers at the lower house of parliament in Bundestag, Berlin, on Thursday ahead of a meeting of EU leaders in Brussels

Merkel: G8 does not exist at present

‘So long as there aren’t the political circumstances, like now, for an important format like the G8, then there is no G8,’ Merkel said. ‘Neither the summit, nor the format.’

Earlier this week, the EU and the United States slapped sanctions on certain individuals that were involved in what they say was the unlawful referendum in Crimea over joining Russia.

Cancelled: Russian President Vladimir Putin was due to host the G8 summit in Sochi in June

Cancelled: Russian President Vladimir Putin was due to host the G8 summit in Sochi in June

 

 Moscow formally annexed Crimea earlier this week in the wake of the poll. The Black Sea peninsula had been part of Russia for centuries until 1954 when Soviet leader Nikita Khrushchev transferred it to Ukraine.

Russian forces effectively took control of Crimea some two weeks ago in the wake of the ouster of Ukraine’s pro-Russia president, Viktor Yanukovych, after months of protests and sporadic violence.

The crisis erupted late last year after Yanukovych backed out of an association deal with the EU in favor of a promised $15 billion bailout from Russia. That angered Ukrainians from pro-European central and western regions.

 

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Sanctions tit-for-tat: Moscow strikes back against US officials

Published time: March 20, 2014 15:37
Edited time: March 20, 2014 17:40

RIA Novosti / Alexander Vilf

RIA Novosti / Alexander Vilf

Russia’s Foreign Ministry has published a reciprocal sanctions list of US citizens, consisting of 10 names, including: House of Representatives Speaker John Boehner, Senator J. McCain; and advisers to President Obama D. Pfeiffer and C. Atkinson.

THE LIST OF OFFICIALS AND LAWMAKERS

These officials, along with another five named by the Foreign Ministry, are banned from entering the country.

The move comes in response to US sanctions imposed against Russian officials after the March-16 referendum in Crimea, which Washington considered “illegitimate.”

“In response to sanctions imposed by the US Administration on 17 March against a number of Russian officials and deputies of the Federal Assembly as a “punishment” for support of the referendum in Crimea, the Russian foreign Ministry announces the introduction of reciprocal sanctions against a similar number of US officials and lawmakers,” reads the statement published on the Foreign Ministry’s website.

The Ministry reiterates that Russia has “repeatedly” stressed using sanctions is a “double-edged thing” and it will have a “boomerang” effect against the US itself.

“Treating our country in such way, as Washington could have already ascertained, is inappropriate and counterproductive,” the statement said.

The statement continued: “Nevertheless, it looks like the American side continues to blindly believe in the effectiveness of such methods, taken from the arsenal of the past, and does not want to face the obvious: the people of Crimea, in a democratic way in full accordance with international law and UN regulations, voted to join Russia, which respects and accepts this choice. You may like this decision or not, but we are talking about a reality, which needs to be taken into consideration.”

 

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Author Baycrest

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BERLIN Thu Mar 13, 2014 6:35am EDT

(Reuters) – China’s top envoy to Germany has warned the West against punishing Russia with sanctions for its intervention in Ukraine, saying such measures could lead to a dangerous chain reaction that would be difficult to control.

In an interview with Reuters days before the European Union is threatening to impose its first sanctions on Russia since the Cold War, ambassador Shi Mingde issued the strongest warning against such measures by any top Chinese official to date.

“We don’t see any point in sanctions,” Shi said. “Sanctions could lead to retaliatory action, and that would trigger a spiral with unforeseeable consequences. We don’t want this.”

The interview was conducted on Wednesday, the same day that the EU agreed a framework for sanctions that would slap travel bans and asset freezes on people and companies accused by Brussels of violating the territorial integrity of Ukraine.

German Chancellor Angela Merkel, who has taken the lead in trying to mediate in the crisis, has said the measures, which mirror steps announced by the United States, will be imposed on Monday unless Russia accepts the idea of a “contact group” to resolve the crisis diplomatically.

Using her toughest rhetoric since the crisis began, she warned in a speech in parliament on Thursday that Russia risked “massive” political and economic damage if it did not change course in the coming days.

Russia’s Deputy Economy Minister Alexei Likhachev responded by promising “symmetrical” sanctions by Moscow.

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Oil Pump
Courtesy of Atlantic Sentinel

First it was the United States, which threatened Russia with economic sanctions and even a removal from the G-8 over their intervention in Ukraine and the Crimea. And now, on March 13, Europe appears to have finally gotten on board as well as the EU officially voted to impose their own form of sanctions on the Eur-Asian Superpower for the first time since the Cold War.

However, like with the Syrian crisis of last September, Russia is quickly retaliating with their own economic threats, and one major action that they could undertake as a response is to discard the Petro-Dollar and demand physical gold as payment for energy purchases in both oil and natural gas.

Just as the Iranians did under U.S. sanctions just a few years ago.

The biggest factor driving gold prices at the moment is the increasing tension between the West and Russia over Ukraine. The EU agreed on a framework yesterday for its first sanctions on Russia since the Cold War.

Russian government officials and businessmen are bracing for sanctions resembling those applied to Iran, and should Russian foreign exchange reserves and bank assets be frozen as is being suggested, then Russia would likely respond by wholesale dumping of their dollar reserves and bonds, and could opt to only accept gold bullion for payment for their gas, oil and other commodity exports. – Silver Doctors

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Moscow won’t exclude sanctions to counter US and EU – Ministry

Published time: March 13, 2014 10:31
Edited time: March 13, 2014 15:08

RIA Novosti / Aleksandr Vilf

RIA Novosti / Aleksandr Vilf

Russia is ready to retaliate with counter sanctions against the EU and US if they go ahead with economic measures against Russia over tension in Crimea, the Russian Economic Ministry has said.

“We hope that there will only be targeted political sanctions, and not a broad package affecting economic trade,” Deputy Economic Development Minister Aleksey Likhachev said.

“Our sanctions will be, of course, similar,” he added.

One way Russia plans on shielding itself from pending sanctions is by boosting trade in other currencies, not the US dollar.

“We need to increase trade volume conducted in national currencies. Why, in relation to China, India, Turkey and other countries, should we be negotiating in dollars? Why should we do that? We should sign deals in national currencies- this applies to energy, oil, gas, and everything else,” Aleksey Ulyukaev, the Minister of Economic Development said in an interview with the Vesti 24 TV channel.

The Duma, Russia’s parliament, is drafting legislation to allow Moscow to freeze assets of Western companies and individuals in the event sanctions are imposed following the Crimea referendum vote on March 16.

The bill would give “the president and government opportunities to defend our sovereignty from threats,” according to its author, Andrey Klishas, as quoted by RIA Novosti on March 5.

The US Congress has already denounced Russia’s actions in Ukraine. On Tuesday, lawmakers passed a resolution that urges the US to “to work with our European allies and other countries to impose visa, financial, trade and other sanctions on senior Russian Federation officials, majority state-owned banks and commercial organizations, and other state agencies, as appropriate.”

 

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Enlarge Photo

Photo by: Marko Drobnjakovic

A woman walks past a local bank set on fire in Kiev’s Independence Square, the epicenter of the country’s unrest, in Ukraine on Feb. 25. The Obama administration is hoping the crisis in Ukraine will breathe new life into its stalled efforts to pass legislation reforming the International Monetary Fund in Congress this year. (associated press)

Administration sees crisis in Ukraine as opportunity to pass IMF reforms

By Patrice Hill-

The Washington Times

The crisis in Ukraine has unexpectedly breathed new life in the Obama administration’s stalled efforts to pass legislation reforming the International Monetary Fund in Congress this year.

Administration aides have seized on the crisis as an opportunity to piggyback the reforms to the global financing agency long sought by President Obama, which give a greater voting share on the IMF board to rising developing economies such as China and Brazil, onto a bill providing $1 billion in loan guarantees for Ukraine’s West-leaning government.

The aid package — and the IMF’s potential role in aiding the new government in Kiev — will likely come up when Mr. Obama meets for the first time with new Ukrainian Prime Minister Arseniy Yatsenyuk at the White House Wednesday.

Under the administration’s assistance plan, the IMF would lead Western efforts to provide Ukraine with as much as $35 billion in loans in exchange for Ukraine adopting much-needed reforms in its corruption-riddled economy. But the quick action that is needed to help Ukraine avert a default within months may be jeopardized if Congress continues to block the reform bill with its $63 billion increase in the IMF’s lending authority.

Moreover, Treasury Secretary Jack Lew said the U.S. cannot take an aggressive leading role in addressing the crisis, as many in Congress demand, unless lawmakers acts on the reforms. The U.S. in the past has had effective veto power over IMF programs, but the administration’s failure to obtain additional lending power to the international agency from Capitol Hill has been eroding its influence there.

“It is imperative that we secure passage of IMF legislation now so we can show support for the IMF in this critical moment and preserve our leading influential voice in the institution,” Mr. Lew told the Senate Finance Committee, noting that many members of Congress have been “at the forefront of international calls in urging the Fund to play a central and active first-responder role in Ukraine.”

Credibility at stake

International finance analysts say the U.S. will lose credibility in the eyes of the world if it continues to call for action to help the new government in Kiev while holding back the IMF reforms that make that possible. In addition to the IMF receiving increased lending authority in the bill, Ukraine would get greater authority to borrow funds it needs from the IMF to stabilize its ailing economy.

“Since it was the U.S. that spearheaded the 2010 IMF reforms, the legitimacy of U.S. leadership is at stake,” said Jo Marie Griesgraber, executive director of New Rules for Global Finance. “Congressional approval is the only remaining impediment” preventing the reforms from taking effect, she said, as most of the IMF’s other 136 members have already approved them.

“We have heard the calls from Congress for stronger U.S. leadership on Ukraine. This would be an excellent time for Congress to approve the IMF reforms,” she said. “This is a win-win for members of Congress who wish to strengthen U.S. global leadership, specifically its position on Ukraine vis—vis Russia, without additional costs to U.S. taxpayers.”

The administration and IMF proponents argue that the increased IMF lending authority would do little to increase the budget deficit since it involves a reprogramming of funds already approved by Congress for emergency IMF loans during the 2009 financial crisis.

While Republican leaders earlier this year were willing to accept the reforms, they sought unsuccessfully for concessions from the administration in return. Some Republican members of Congress have balked at the legislation, contending that the $314 million on-budget cost is not negligible while the IMF lending programs leave U.S. taxpayers open to potentially large costs if borrowers do not repay their loans — something that has never happened in the IMF’s history.

“According to the Congressional Research Service, the U.S. has never lost money on quota commitments. In fact, there is some nominal interest earned on these commitments,” said Ms. Griesgraber.

 

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Bloomberg

 

Ukraine Aid Measure Approved With IMF Link House Opposes

 

By Derek Wallbank and David Lerman Mar 12, 2014 7:26 PM CT

The Senate Foreign Relations Committee approved an aid package for Ukraine that will face opposition from Republicans over changes in U.S. funding for the International Monetary Fund.

The Democratic-led panel voted 14-3 today for a bill that would give Ukraine $1 billion in loan guarantees it’s seeking as Russian forces occupy the Crimean peninsula. It also would authorize sanctions against Ukrainians and Russians deemed responsible for corruption and violence.

The measure, which had bipartisan support in the panel, “sends a message to Russia and the world that we support Ukraine,” said Democratic Senator Robert Menendez of New Jersey, the panel’s chairman.

U.S. House Speaker John Boehner earlier today rejected attempts by Democrats and the Obama administration to tie additional funds for the IMF to a Ukraine aid package.

“This IMF money isn’t necessary for dealing with this Ukraine crisis that we see today,” Boehner, an Ohio Republican, told reporters in Washington. House Republicans have resisted proposals to increase funds for the IMF for years.

The IMF overhaul is backed by the Obama administration, chief executive officers of major U.S. companies and Republican former secretaries of state Henry Kissinger and Condoleezza Rice, who have said funding the IMF would help Ukraine.

Senate Timing

Ukraine’s prime minister, Arseniy Yatsenyuk, went to the Capitol tonight after meetings in Washington with President Barack Obama and Secretary of State John Kerry. Speaking to reporters after he met in a closed-door session with Foreign Relations Committee members, Yatsenyuk said he wasn’t concerned about the time that it might take for Congress to approve the requested economic assistance.

“It always takes time to make good things,” he said.

He called the U.S. pledge of $1 billion in loan guarantees “the first real and concrete step how to stabilize the situation in my country, and we praise it.”

While Senate Majority Leader Harry Reid told reporters he hoped the measure approved today can be taken up by the full Senate tomorrow, Adam Jentleson, a spokesman for the Nevada Democrat, said the legislation may not be considered before members leave for a break until March 24. The Senate may depart as soon as tomorrow.

Three Republicans voted against the Senate measure in the committee: Senators James Risch of Idaho, John Barrasso of Wyoming and Rand Paul of Kentucky.

 

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The New Republic

ECONOMICS MARCH 13, 2014

If Ukraine Defaults, They Can Blame House Republicans

Ukraine needs loans to avoid a default and they need them fast. Last week, Secretary of State John Kerry pledged $1 billion to support Ukraine, but that money is now caught up in a political fight in Congress. Democrats want to include long-overdue reforms to the International Monetary Fund that would allow Ukraine to borrow more from the fund, but Republicans are opposed – unless, of course, Democrats will agree to a one-year delay of an IRS rule. “Let’s make sure we all understand something: The IMF money has nothing to do with Ukraine,” House Speaker John Boehner said on Thursday. But they do: They’d allow Ukraine to borrow 60 percent—around $600 million—more from the IMF.

In 2010, the G20 countries agreed to changes to the IMF that would transfer $63 billion from an emergency fund to the main fund and give emerging countries a larger representation on the board. For the U.S., the implications are minor. It does not increase our contributions to the fund and slightly reduces our voting power, but we retain veto power over major policy decisions. More than 130 countries have already approved of these reforms, but they cannot go into effect until Congress passes them.

 

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The New Zealand Herald

 

IMF team to remain in Ukraine

WASHINGTON (AP) The head of the International Monetary Fund says an IMF fact-finding team in Ukraine will begin negotiations with authorities to develop an economic reform program that could lead to financial help from the lending organization.

Christine Lagarde said Thursday the team that went to Ukraine March 4 and normally would return to Washington to report to the IMF board will now remain until March 21.

 

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Anti-government protesters gather on and around barricades at a road block in central Kyiv, Ukraine, Jan. 26, 2014. (SERGEI SUPINSKY/AFP/Getty Images)

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Bloomberg

Ukraine Braces for March on Parliament as Putin Resumes Bailout

By With assistance from Patrick Donahue Feb 17, 2014 4:01 PM CT

Ukraine’s opposition will march on parliament to pressure lawmakers struggling to end a deadly three-month political standoff, jeopardizing compromises that eased tensions over the past week.

Vitali Klitschko, a former boxing champion, and Arseniy Yatsenyuk, a lawmaker and former central banker, plan to lead thousands of demonstrators today on the first mass action outside their Independence Square compound since Jan. 19, when the last attempt to reach parliament erupted in clashes with police.

“If politicians don’t make a decision tomorrow, we the people will,” Serhiy, a 23-year-old from the Lviv region near Poland, said inside the encampment yesterday, wearing camouflage and a bulletproof vest adorned with a paper “self defense” badge.“We’ve had enough. We’re fighters. We haven’t come here to listen to talks. If we decide to act, we’ll act.”

Klitschko and Yatsenyuk are seeking to overturn constitutional changes that strengthened Russia-backed Yanukovych’s powers and put Ukraine on a path toward European Union membership. The standoff began Nov. 21, when Yanukovych pulled out of a free-trade deal with the EU, opting instead for President Vladimir Putin’s offer of $15 billion of aid and cheaper gas. It turned bloody on Jan. 22, when three activists were shot dead.

Russian ‘Hardball’

Russia, which stopped buying bonds from Ukraine’s cash-strapped government after Yanukovych’s Russian-born prime minister, Mykola Azarov, resigned on Jan. 28, said yesterday it will resume purchases this week. Russian Finance Minister Anton Siluanov made the announcement just as Klitschko and Yatsenyuk were meeting with German Chancellor Angela Merkel to seek financial and political backing to form a new government.

“Russia is playing hardball,” Alexander Valchyshen, head of research at Investment Capital in Kiev, said by phone. “Russia gave a clear signal that it knows who’ll be the next prime minister, that it’s ready to financially support him, and that no other players are acceptable here.”

Yanukovych, 63, will submit his candidate for prime minister this week, Speaker Volodymyr Rybak told reporters yesterday, after meeting with the president. Yatsenyuk rejected Yanukovych’s offer to become premier on Jan. 25.

Merkel Sympathy

Merkel told Yatsenyuk and Klitschko yesterday that the EU will “do everything” it can to help Ukraine out of the crisis, according to government spokesman Steffen Seibert. She also expressed sympathy for the “legitimate concerns” of Ukrainians, Seibert said in Berlin.

The standoff has hurt Ukraine’s bonds and helped push its foreign-exchange reserves to a seven-year low. The yield on the nation’s dollar debt due in June fell 83 basis points to 22.157 percent yesterday, according to data compiled by Bloomberg. The hryvnia weakened 0.9 percent to 8.86 per dollar, extending this year’s loss to 7 percent.

“Let’s form columns here at 8 a.m. on Tuesday and march to parliament,” Oleh Tyahnybok, who heads the nationalist Svoboda party in parliament, told tens of thousands of protesters at Independence Square on Feb. 16. “We need you to press them.”

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MOXNEWSd0tC0M MOXNEWSd0tC0M

 

Published on Jan 13, 2014

January 12, 2014 MSNBC News

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White House Punishes More Firms Over Iran Sanctions

WASHINGTON — Under pressure from Congress to demonstrate that it is not easing up on sanctions on Iran’s oil sector or on its nuclear and missile programs, the Obama administration on Thursday announced an expanded list of companies and individuals that it said it would target to block their trading activities around the world.

Among the newly penalized companies is a Singapore-based firm called Mid Oil Asia, which is accused of helping the National Iranian Tanker Company make payments for services through money transfers that made no mention of the vessels that were aided, or their Iranian ownership. Another Singapore company, Singa Tankers, is accused of helping Iran make “urgent payments.” The location of both companies is notable because Singapore often prides itself on running a carefully regulated shipping and banking system.

Five companies are accused of helping Iran’s nuclear and missile program, including an Iranian firm, the Eyvaz Technic Manufacturing Company, that the United States said had procured some of the most sensitive and hard-to-build components for Iran’s nuclear centrifuges. The centrifuges are the machines that, spinning at supersonic speeds, enrich uranium; over the years the United States has sought to undermine the effort with sanctions, faulty parts and cyberattacks.

Another firm is accused of helping Iran obtain components for its heavy-water reactor facility, which officials fear will ultimately give Iran another pathway to a bomb capability, using plutonium.

The administration’s announcement of its enforcement actions appeared to be timed to set the stage for a Senate Banking Committee hearing on the Iran nuclear talks and the United States sanctions policy on Thursday morning.

Wendy R. Sherman, the senior State Department official who led the American delegation at the nuclear talks with Iran, and David S. Cohen, the senior Treasury Department official who oversees the enforcement of sanctions on Iran, testified to the panel.

The aim of the interim agreement that was reached last month in Geneva is to freeze much of Iran’s nuclear program for six months so that international negotiators can pursue a more comprehensive accord.

That interim agreement, however, has not yet formally gone into effect. Ms. Sherman said that the precise start date was being taken up in technical talks, but that the agreement should start to take effect in the next several weeks.

The interim agreement can also be extended for an additional six months by mutual consent if negotiators need more time to pursue a follow-on agreement.

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Clock ticking on Iran talks, possible further U.S. sanctions

By Tom Cohen, CNN
updated 4:39 PM EST, Mon January 13, 2014
Watch this video

STORY HIGHLIGHTS
  • NEW: President Obama says “now is not the time for new sanctions”
  • Iran to limit its nuclear program in exchange for sanctions relief starting January 20
  • Talks will continue on a broader deal to prevent Iran from developing nuclear weapons
  • A bipartisan proposal in Congress calls for imposing new conditional sanctions on Iran

Washington (CNN) — The clock is ticking on an interim nuclear deal with Iran, as well as efforts in Congress to pass new sanctions for greater leverage in global negotiations on a comprehensive accord.

Sunday’s announcement that a six-month interim agreement formally begins on January 20 means that Iran must dismantle or freeze some of its nuclear program and open it to more international inspections in return for limited relief from crippling international sanctions.

Assuming all goes as planned, further negotiations between Iran and the United States, France, Russia, China, Great Britain and Germany will seek a broader agreement intended to prevent Tehran from developing a nuclear weapon.

Meanwhile, pro-Israel members of Congress are seeking additional sanctions against Iran that would take effect if the talks break down.

Israel considers Iran’s potential nuclear capability an existential threat, and has made clear it would attack militarily if it believed Tehran could develop such weapons of mass destruction.

The question is whether the steps Iran is taking under the interim deal will blunt or bolster the congressional push for more sanctions.

President Barack Obama warns that approving new sanctions legislation now would undermine the talks, and he has promised to veto such a measure if it came to his desk.

“Now is not time for new sanctions,” Obama told reporters on Monday.

He warned the continuing negotiations with Iran would be “difficult” and “challenging,” adding that “ultimately this is how diplomacy should work.”

A bipartisan proposal that would impose new U.S. sanctions — but put off implementing them to allow time for negotiations to continue — has the support of 59 Senators so far, a senior Senate aide told CNN last week.

According to the aide, the informal count for the measure introduced by Democratic Sen. Robert Menendez of New Jersey and Republican Sen. Mark Kirk of Illinois surpasses 75 votes — more than enough for the Democratic-led Senate to override the promised presidential veto.

It takes a two-thirds majority of both the House and Senate to approve a law over a president’s objection. The GOP-led House would have a much easier time of reaching that threshold.

The Obama administration argues the six-month interim deal includes sufficient safeguards in the form of new compliance verification by the U.N. nuclear energy watchdog — the International Atomic Energy Agency — to make further sanctions unnecessary at this time.

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Iran’s nuclear scale down begins Jan. 20

U.S. hails implementation of Iran deal

Businesses benefit from Iran’s nuclear accord

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The IMF wants you to pay 71% income tax

Tax

December 12, 2013 
Sovereign Valley Farm, Chile

The IMF just dropped another bombshell.

After it recently suggested a “one-off capital levy” – a one-time tax on private wealth as an exceptional measure to restore debt sustainability across insolvent countries – it has now called for “revenue-maximizing top income tax rates”.

The IMF’s team of monkeys has been working around the clock on this one, figuring that developed nations can increase their overall tax revenue by increasing tax rates.

They’ve singled out the US, suggesting that the US government could maximize its tax revenue by increasing tax brackets to as high as 71%.

Coming from one of the grand wizards of the global financial system, this might be the clearest sign yet that the whole house of cards is dangerously close to being swept away.

Think about it– solvent governments with healthy economies don’t go looking to steal 71% of people’s wealth. They’re raising this point because these governments are desperate. And flat broke.

The ratio of public debt to GDP across advanced economies will reach a historic peak of 110% next year, compared to 75% in 2007.

That’s a staggering increase. Most of the ‘wealithest’ nations in the West now have to borrow money just to pay interest on the money they’ve already borrowed.

 

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Pols respond to Iran nuclear deal

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This Is How The Left And Right Reacted To The Breakthrough Iran Nuclear Deal

Nov. 24, 2013, 12:38 AM

Barack Obama IranREUTERS/Joshua Roberts

A major breakthrough deal was reached between Iran and six world powers on Saturday, which President Barack Obama said would help “prevent Iran from building a nuclear weapon.”Soon after the deal was announced — an interim agreement easing some sanctions in exchange for Iran’s suspension of high-grade uranium enrichment — many members of Congress and other political leaders shared their views on social media.

Some Republicans were critical of the program, most notably Sen. Lindsey Graham (R-S.C.), who tweeted, “Unless the agreement requires dismantling of the Iranian centrifuges, we really haven’t gained anything.”

“Deal appears to give Iran billions in exchange for cosmetic concessions that don’t fully freeze or significantly roll back nuclear program,” tweeted Sen. Mark Kirk (R-Ill.).

And Republican Sen. John Cornyn took some flak for dismissing the breakthrough deal as a political ploy when he tweeted, “Amazing what [White House] will do to distract attention from [Obamacare].”

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