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ECONOMY UPGRADE: Russia’s economic management receives multiple endorsements

Successful eurobond sale in September, credit upgrade by Fitch, and sharp improvement in World Bank Ease of Doing Business ranking, all confirm effectiveness of Russian government’s economic policies, amidst strengthening recovery.

Alexander Mercouris

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As economic recovery in Russia continues to gain hold, Russia has received authoritative endorsement both for its successful macroeconomic policies and for its rapidly improving business conditions.

The US credit rating agency Fitch on 14th October 2016 upgraded Russia’s rating from BBB- (negative) to BBB- (stable).

Normally I pay no attention to ratings decisions by US credit rating agencies, which have been proved repeatedly wrong, and which in Russia’s case are blatantly politicised. 

Back in 2015, during the worst period of the recession, I pointed out how obviously and completely wrong the decisions of the US credit rating agencies to downgrade Russia’s credit rating at that time were.

The market clearly agrees with me.  Fitch’s Russia rating is only just investment grade, whilst those of S&P and Moody’s actually give Russia a junk rating.  In spite of this – and as I predicted – Russia’s last eurobond issue in September was six times oversubscribed, with almost the entirety of the issue on this occasion sold to US investors.  Even the Western financial media has been finally forced to admit that Russia’s latest eurobond issue was a success.

If I refer to Fitch’s latest upgrade of Russia’s rating, it is not because I agree with Fitch’s rating of Russia (I don’t) but because of what Fitch has to say about Russia’s economic policy

“Russia has implemented a coherent and credible policy response to the sharp fall in oil prices. A flexible exchange rate, inflation targeting, fiscal consolidation and financial sector support have allowed the economy to adjust and domestic confidence to return gradually. The strength and quality of the policy response stands out relative to those of other oil producers similarly affected by the oil price shock.”

(bold italics added)

In other words Russia has responded to the oil price fall intelligently and successfully – more so than have the other oil producers. 

In his State of the Union address of 20th January 2015 US President Obama famously gloated

“today, it is America that stands strong and united with our allies, while Russia is isolated with its economy in tatters.”

Judging by the success of its latest eurobond issue, and the credit upgrade Russia has just been given by Fitch, neither the market nor even Fitch agree with him.

Meanwhile Russia’s World Bank Ease of Doing Business ranking continues its rapid rise. 

In 2011 Russia’s ranking was 123 in the survey out of 183.  By 2014 it had risen to 62 out of 189, by 2015 to 51 out of 189, and in this year’s survey it has risen again to 40 out of 190. 

When I discussed last year’s survey I made the point that the dramatic improvement in Russia’s World Bank Ease of Doing Business ranking is simply incompatible with Russia being the corrupt kleptocracy of the West’s imagination

“In corrupt kleptocratic oligarchies courts do not function efficiently, contracts are not performed and enforced, rights of minority shareholders are not protected, and people are not able to register their property easily and do not pay their taxes.”

I also pointed out that the rapid improvement of Russia’s World Bank Ease of Doing Business ranking proves that the claim that Russia is not “reforming” its economy is quite simply wrong.  Russia is not only continuously reforming its economy, but it is doing so successfully

“……the demand for more and more “reforms” simply ignores the fact that reforms are in fact being carried out.

Anyone who reads through the World Bank’s annual surveys will see that they are all about “reforms”. It is precisely because Russia is carrying out “reforms” that its ranking is rising so fast.

To be clear, modernising the court system, introducing a new bankruptcy law, simplifying procedures for connecting to the electricity supply, and passing laws on registering property and on administering bankruptcy, are reforms.

They may lack the drama of breaking up Gazprom, but academic research, historical experience and the World Bank all say the same thing: it is these sort of unexciting reforms that in the end are the ones that make a difference and which produce results.

In other words Russia is reforming, and it is doing so successfully, in a methodical and purposeful way.

Doing so requires hard work and unremitting attention to detail. The Russian authorities deserve credit for successfully doing it, not the criticism for doing nothing that they normally get.”

I also made an extended point about what Russia’s ranking in the World Bank Ease of Doing Business survey says about the overall level of Russia’s society and economy.  The continued advance in Russia’s ranking to 40th in the world shows that this point remains valid, so I reproduce it here in full

“The second point is that if one looks at what sort of countries now outrank Russia in the survey, it turns out that they are – broadly speaking – the three Asian industrial giants: Japan, Taiwan and South Korea, the two Asian city states of Hong Kong and Singapore, and the traditional and well established industrialised societies of the West: the US, the three rich countries of the British commonwealth (Canada, Australia and New Zealand) and most (though not all) the states of the EU – in sum what was once called “the first world”.

If one removes the one indicator where Russia scores especially badly, Trading Across Borders – for which there are special reasons (see above) – Russia becomes even more clearly aligned with these “first world” countries rather than with those countries that make up what used to be called “the third world”.

The Russian government’s target is to achieve 20th place in the World Bank’s ease of doing business survey by 2018. That may be too optimistic, though it is worth pointing out that the target for this year was 50th, which Russia only missed by one place.

If Russia does achieve a ranking of 20th in the world by 2018 then it will be right in the middle of the “first world” group of countries rather than just outside it. At that point it will also have one of the best business climates in the world.

Even if Russia does not achieve 20th position by 2018, the pace of improvement in the rankings is so fast it suggests Russia will break in fully in terms of quality of its business climate into the list of “first world” countries before long.”

Inevitably, as Russia’s position in the World Bank Ease of Doing Business survey has rapidly improved, some commentators both in the West and Russia have cast doubt on the survey, even though its methodology is rigorous (originating apparently with Harvard University) and even though it is based on thorough field work.   Needless to say these are the same commentators who regularly cited the survey when Russia’s ranking in it was poor.

There is in fact no reason to think the rapid rise in Russia’s position in the survey does not reflect actual business conditions.  As I said in my discussion of last year’s survey, its results were anecdotally confirmed to me in a meeting I had with a group of local businessmen in Perm. 

A far more authoritative person has now come forward and said the same thing.  This is German Gref, the single individual who is perhaps best informed about conditions for businesses in Russia because he is the CEO of Sberbank, Russia’s biggest bank, which is the national (as opposed to local) bank that small businesses in Russia are most likely to look to for credit. 

Gref stands politically at the farthest liberal end of the spectrum of Russia’s political and economic establishment, and he is far from shy about criticising the government, which he does frequently.  Yet in a meeting with Putin on 4th August 2016 he confirmed the improvement in business conditions in Russia

“I think that the environment that we will have in place by the end of 2016, when all of the legal amendments take effect, will mean that Russia will be offering one of the most interesting and technologically convenient environments for small businesses.”

(bold italics added)

Because of the extremely poor relations between the West and Russia, Russia’s economy and its economic management are continuously and relentlessly criticised in a way which plays well to Western prejudice but which grossly distorts understanding of the country and its government.

Russia’s highly conservative macroeconomic policies emphasising tight budget discipline (the federal budget deficit at the peak of the recession was 3% of GDP, roughly the same as that of the US and below that of Britain during their ‘recoveries’, with the Russian government planning to cut the deficit by 1% of GDP over each coming year), low taxes (income tax is levied at a flat rate of 13%), high real interest rates (currently around 4% above inflation), open financial markets, low debt (government debt in Russia is 17.7% of GDP compared to 104% in the US, 229% in Japan, 89% in Britain, 96% in France and 71% in Germany), low external debt (roughly 20% of Russia’s GDP, compared to 114% of the US’s, 570% of Britain’s, 220% of France’s, 145% of Germany’s and 60% of Japan’s) and floating exchange rate, have in reality enabled Russia – as Fitch says – to adjust rapidly and very successfully to the fall in oil prices.

At the same time the rapid improvement in business conditions shown by the rapid rise of Russia’s ranking in the World Bank Ease of Doing Business survey shows that Russia is also working hard and successfully at getting its microeconomic conditions right.

In other words the people who run Russia’s economy know their job and by and large they do it well. 

That does not mean they are infallible.  In my opinion interest rates are far too high, with the 4% inflation target for next year in danger of becoming a fetish. 

However compared to the appalling mismanagement one sees elsewhere, far from being the collapsing kleptocratic empire of Western fancy, Russia looks like an island of stability and good sense.

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Why did Trump recognize the Golan Heights as Israeli territory?

The Duran Quick Take: Episode 116.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris examine the reasons behind US President Trump’s sudden recognition of the Golan Heights as Israeli territory.

Following Trump’s statements as US President, acting Israeli Foreign Minister is saying that Trump will make it official and sign an executive order to recognize Israel’s sovereignty over the Syrian border territory on Monday.

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Via DW

Israel says White House officials are preparing an official document to codify support for Israel’s sovereignty of the Golan Heights, which will be signed by US President Donald Trump on Monday.

The signing of the decree will be witnessed by Israeli Prime Minister Benjamin Netanyahu during talks with Trump at the White House, Israel’s acting foreign minister, Israel Katz (pictured), said in a Tweet.

“Tomorrow, President Trump, in the presence of PM Netanyahu, will sign a decree recognizing Israel’s sovereignty on the Golan. Israel-US ties are closer than ever,” Katz said.

Israel seized the strategic plateau from Syria in the 1967 Middle East war, subsequently annexing it in 1981 in a move never recognized by the international community.

Trump’s tweet annoys allies

Trump broke with decades of US Middle East policy when he posted a Tweet on Thursday that said it was time to accept Israel’s widely-contested claim to the border territory.

The decision has been criticized by many US allies — Germany, Britain, France and the EU have all said they still consider the Golan Heights to be “occupied” by Israel.

Syria and other states in the region said the recognition, if confirmed, would violate international law.

Netanyahu has long pushed for Washington’s endorsement, and many analysts see Trump’s comments as a campaign gift ahead of Israel’s April 9 election.

In 2017, Trump drew condemnation throughout the Middle East when he recognized the disputed city of Jerusalem as Israel’s capital.

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Russia Gives US Red Line On Venezuela

Political force is out. Military force is out. Respect international law and Venezuela’s sovereignty. That’s Russia’s eminently reasonable ultimatum to Washington.

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Authored by Finian Cunningham via The Strategic Culture Foundation:


At a high-level meeting in Rome this week, it seems that Russia reiterated a grave warning to the US – Moscow will not tolerate American military intervention to topple the Venezuelan government with whom it is allied.

Meanwhile, back in Washington DC, President Donald Trump was again bragging that the military option was still on the table, in his press conference with Brazilian counterpart Jair Bolsonaro. Trump is bluffing or not yet up to speed with being apprised of Russia’s red line.

The meeting in the Italian capital between US “special envoy” on Venezuelan affairs Elliot Abrams and Russia’s deputy foreign minister Sergei Ryabkov had an air of urgency in its arrangement. The US State Department announced the tête-à-tête only three days beforehand. The two officials also reportedly held their two-hour discussions in a Rome hotel, a venue indicating ad hoc arrangement.

Abrams is no ordinary diplomat. He is a regime-change specialist with a criminal record for sponsoring terrorist operations, specifically the infamous Iran-Contra affair to destabilize Nicaragua during the 1980s. His appointment by President Trump to the “Venezuela file” only underscores the serious intent in Washington for regime change in Caracas. Whether it gets away with that intent is another matter.

Moscow’s interlocutor, Sergei Ryabkov, is known to not mince his words, having earlier castigated Washington for seeking global military domination. He calls a spade a spade, and presumably a criminal a criminal.

The encounter in Rome this week was described as “frank” and “serious” – which is diplomatic code for a blazing exchange. The timing comes at a high-stakes moment, after Venezuela having been thrown into chaos last week from civilian power blackouts that many observers, including the Kremlin, blame on American cyber sabotage. The power grid outage followed a failed attempt by Washington to stage a provocation with the Venezuelan military over humanitarian aid deliveries last month from neighboring Colombia.

The fact that Washington’s efforts to overthrow the elected President Nicolas Maduro have so far floundered, might suggest that the Americans are intensifying their campaign to destabilize the country, with the objective of installing US-backed opposition figure Juan Guaido. He declared himself “acting president” in January with Washington’s imprimatur.

Given that the nationwide power blackouts seem to have failed in fomenting a revolt by the civilian population or the military against Maduro, the next option tempting Washington could be the military one.

It seems significant that Washington has recently evacuated its last remaining diplomats from the South American country. US Secretary of State Mike Pompeo commented on the evacuation by saying that having US personnel on the ground “was limiting” Washington’s scope for action. Also, American Airlines reportedly cancelled all its services to Venezuela in the past week. Again, suggesting that the US was considering a military intervention, either directly with its troops or covertly by weaponizing local proxies. The latter certainly falls under Abrams’ purview.

After the Rome meeting, Ryabkov said bluntly: “We assume that Washington treats our priorities seriously, our approach and warnings.”

One of those warnings delivered by Ryabkov is understood to have been that no American military intervention in Venezuela will be tolerated by Moscow.

For his part, Abrams sounded as if he had emerged from the meeting after having been given a severe reprimand. “No, we did not come to a meeting of minds, but I think the talks were positive in the sense that both sides emerged with a better understanding of the other’s views,” he told reporters.

“A better understanding of the other’s views,” means that the American side was given a red line to back off.

The arrogance of the Americans is staggering. Abrams seems, according to US reporting, to have flown to Rome with the expectation of working out with Ryabkov a “transition” or “compromise” on who gets the “title of president” of Venezuela.

That’s what he no doubt meant when he said after the meeting “there was not a meeting of minds”, but rather he got “a better understanding” of Russia’s position.

Washington’s gambit is a replay of Syria. During the eight-year war in that country, the US continually proffered the demand of a “political transition” which at the end would see President Bashar al Assad standing down. By contrast, Russia’s unflinching position on Syria has always been that it’s not up to any external power to decide Syria’s politics. It is a sovereign matter for the Syrian people to determine independently.

Nearly three years after Russia intervened militarily in Syria to salvage the Arab country from a US-backed covert war for regime change, the American side has manifestly given up on its erstwhile imperious demands for “political transition”. The principle of Syrian sovereignty has prevailed, in large part because of Russia’s trenchant defense of its Arab ally.

Likewise, Washington, in its incorrigible arrogance, is getting another lesson from Russia – this time in its own presumed “back yard” of Latin America.

It’s not a question of Russia being inveigled by Washington’s regime-change schemers about who should be president of Venezuela and “how we can manage a transition”. Moscow has reiterated countless times that the legitimate president of Venezuela is Nicolas Maduro whom the people voted for last year by an overwhelming majority in a free and fair election – albeit boycotted by the US-orchestrated opposition.

The framework Washington is attempting to set up of choosing between their desired “interim president” and incumbent Maduro is an entirely spurious one. It is not even worthy to be discussed because it is a gross violation of Venezuela’s sovereignty. Who is Washington to even dare try to impose its false choice?

On Venezuela, Russia is having to remind the criminal American rulers – again – about international law and respect for national sovereignty, as Moscow earlier did with regard to Syria.

And in case Washington gets into a huff and tries the military option, Moscow this week told regime-change henchman Abrams that that’s a red line. If Washington has any sense of rationale left, it will know from its Syria fiasco that Russia has Venezuela’s back covered.

Political force is out. Military force is out. Respect international law and Venezuela’s sovereignty. That’s Russia’s eminently reasonable ultimatum to Washington.

Now, the desperate Americans could still try more sabotage, cyber or financial. But their options are limited, contrary to what Trump thinks.

How the days of American imperialist swagger are numbered. There was a time when it could rampage all over Latin America. Not any more, evidently. Thanks in part to Russia’s global standing and military power.

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With RussiaGate Over Where’s Hillary?

Hillary is the epitome of envy. Envy is the destructive sin of coveting someone else’s life so much they are obsessed with destroying it. It’s the sin of Cain. She envies what Trump has, the Presidency.

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Authored by Tom Luongo:


During most of the RussiaGate investigation against Donald Trump I kept saying that all roads lead to Hillary Clinton.

Anyone with three working brain cells knew this, including ‘Miss’ Maddow, whose tears of disappointment are particularly delicious.

Robert Mueller’s investigation was designed from the beginning to create something out of nothing. It did this admirably.

It was so effective it paralyzed the country for more than two years, just like Europe has been held hostage by Brexit. And all of this because, in the end, the elites I call The Davos Crowd refused to accept that the people no longer believed their lies about the benefits of their neoliberal, globalist agenda.

Hillary Clinton’s ascension to the Presidency was to be their apotheosis along with the Brexit vote. These were meant to lay to rest, once and for all time, the vaguely libertarian notion that people should rule themselves and not be ruled by philosopher kings in some distant land.

Hillary’s failure was enormous. And the RussiaGate gambit to destroy Trump served a laundry list of purposes to cover it:

  1. Undermine his legitimacy before he even takes office.
  2. Accuse him of what Hillary actually did: collude with Russians and Ukrainians to effect the outcome of the election
  3. Paralyze Trump on his foreign policy desires to scale back the Empire
  4. Give aid and comfort to hurting progressives and radicalize them further undermining our political system
  5. Polarize the electorate over the false choice of Trump’s guilt.
  6. Paralyze the Dept. of Justice and Congress so that they would not uncover the massive corruption in the intelligence agencies in the U.S. and the U.K.
  7. Isolate Trump and take away every ally or potential ally he could have by turning them against him through prosecutor overreach.

Hillary should have been thrown to the wolves after she failed. When you fail the people she failed and cost them the money she cost them, you lose more than just your funding. What this tells you is that she has so much dirt on everyone involved, once this thing started everyone went along with it lest she burn them down as well.

Burnin’ Down da House

Hillary is the epitome of envy. Envy is the destructive sin of coveting someone else’s life so much they are obsessed with destroying it. It’s the sin of Cain

She envies what Trump has, the Presidency.

And she was willing to tear it down to keep him from having it no matter how much damage it would do. She’s worse than the Joker from The Dark Knight.

Because while the Joker is unfathomable to someone with a conscience there’s little stopping us from excising him from the community completely., even though Batman refuses.

Hillary hates us for who we are and what we won’t give her. And that animus drove her to blackmail the world while putting on the face of its savior.

And that’s what makes what comes next so obvious to me. RussiaGate was never a sustainable narrative. It was ludicrous from the beginning. And now that it has ended with a whimper there are a lot of angry, confused and scared people out there.

Mueller thought all he had to do was lean on corrupt people and threaten them with everything. They would turn on Trump. He would resign in disgrace from the public outcry.

It didn’t work. In the end Paul Manafort, Michael Cohen and Roger Stone all held their ground or perjured themselves into the whole thing falling apart.

Andrew Weissman’s resignation last month was your tell there was nothing. Mueller would pursue this to the limit of his personal reputation and no further.

Just like so many other politicians.

Vote Your Pocketbook

With respect to Brexit I’ve been convinced that it would come down to reputations.

Would the British MP’s vote against their own personal best interests to do the bidding of the EU?

Would Theresa May eventually realize her historical reputation would be destroyed if she caves to Brussels and betrays Brexit in the end?

Always bet on the fecklessness of politicians. They will always act selfishly when put to the test. While leading RussiaGate, Mueller was always headed here if he couldn’t get someone to betray Trump.

And now his report is in. There are no new indictments. And by doing so he is saving his reputation for the future. And that is your biggest tell that HIllary’s blackmail is now worthless.

They don’t fear her anymore because RussiaGate outed her as the architect. Anything else she has is irrelevant in the face of trying to oust a sitting president from power.

The progressives that were convinced of Trump’s treason are bereft; their false hope stripped away like standing in front of a sandblaster. They will be raw, angry and looking for blood after they get over their denial.

Everyone else who was blackmailed into going along with this lunacy will begin cutting deals to save their skins. The outrage over this will not end. Trump will be President when he stands for re-election.

The Wolves Beckon

The Democrats do not have a chance against him as of right now. When he was caving on everything back in December it looked like he was done. That there was enough meat on the RussiaGate bones to make Nancy Pelosi brave.

Then she backed off on impeachment talk. Oops.

But the Democrats have a sincere problem. Their candidates have no solutions other than to embrace the crazy and go full Bolshevik. That is not a winning position.

Trump will kill them on ‘socialism.’

The Deep State and The Davos Crowd stand revealed and reviled.

If they don’t do something dramatic then the anger from the rest of the country will also be palpable come election time. Justice is not done simply by saying, “No evidence of collusion.”

It’s clear that RussiaGate is a failure of monumental proportions. Heads will have to roll. But who will be willing to fall on their sword at this point?

Comey? No. McCabe? No.

There is only one answer. And Obama’s people are still in place to protect him. I said last fall that “Hillary would indict herself.” And I meant it. Eventually her blackmail and drive to burn it all down led to this moment.

The circumstances are different than I expected back then, Trump didn’t win the mid-terms. But the end result was always the same. If there is no collusion, if RussiaGate is a scam, then all roads lead back to Hillary as the sacrificial lamb.

Because the bigger project, the erection of a transnational superstate, is bigger than any one person. Hillary is expendable.

Lies are expensive to maintain. The truth is cheap to defend. Think of the billions in opportunity costs associated with this. Once the costs rise above the benefits, change happens fast.

If there is any hope of salvaging the center of this country for the Democrats, the ones that voted against Hillary in 2016, then there is no reason anymore not to indict Hillary as the architect of RussiaGate.

We all know it’s the truth. So, the cheapest way out of this mess for them is to give the MAGApedes what they want, Hillary.

And hope that is enough bread and circuses to distract from the real storm ahead of us.

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