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As growth returns, Russia sticks to tough economic policies

As growth returns to Russia’s economy, policy makers make clear that tough monetary and fiscal policies prioritising inflation reduction are to be continued.

Alexander Mercouris

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Alexey Kudrin, Russia’s former Finance Minister and hero of the Western and Russian financial establishment and media, has now also said what The Duran previously reported – Russia has exited recession.

Latest figures from Rosstat (Russia’s statistical agency) confirm this.  GDP in August was at the same level as in August 2015, whilst industrial output grew by 0.7% and agricultural output by 0.5% with the Russian Agriculture Minister recently informing Putin that Russia will have a record harvest this year.

Inflation continues to fall at a faster rate than almost all independent forecasters predicted.  Though final figures for September have not yet been published, annualised rate of inflation in Russia as of the end of September was certainly no higher than 6.5% and is probably well below this figure.  The Central Bank is predicting that inflation at the end of the year will be 5.5-5.6%, which is in line with its current underlying rate.

Investment decline slowed in August and the Central Bank is claiming that an improvement in investment trends is underway.

Real incomes in August however continued to fall, with Rosstat reporting the fall as 0.7%.  (Some reports claimed preposterously that the fall was 7%.  Presumably some people ‘corrected’ the actual figure by moving a decimal point).

The fall in real incomes is the deliberate consequence of the government’s anti-inflation policy which by limiting economic activity through its tough monetary and fiscal policy is keeping the growth in wages below the continuing rise in prices.  The decline in real incomes reduces demand, which all other things being equal over time makes prices and therefore inflation fall still further.

The fact output is rising as real incomes fall incidentally shows something else: the economy is becoming more competitive.  It is also undoubtedly a reason why despite the recession unemployment never rose significantly (it peaked at 5.8% and has now fallen back to 5.2% in a country where the labour participation rate is currently 70%).

There are several reasons why during the recession unemployment in Russia never took off.  One is the decline in the working age population caused by the 1990s demographic crisis.  Another is the return of migrant workers during the recession to Central Asia, leaving vacancies free for Russian workers.  However the most important reason almost certainly is that by accepting a fall in their real incomes Russian workers did not price themselves out of their jobs.

Like the Central Bank Kudrin is reported as saying that growth will be slow initially, though he predicts it will rise to 3-4% “within five years”.  The Interfax report of his comments does not say whether Kudrin said why this would be so.  However The Duran has explained it previously: despite denials it is the tough monetary and fiscal policy the government and the Central Bank are following in order to bring inflation down to 4% by the end of next year.

On this subject Central Bank Chairman Nabiullina provided further clarity during a press conference in September

She admitted that the underlying inflation rate in Russia is now 5-6% and that it will not rise above this range even if interest rates are reduced and monetary policy is eased.  In other words there is space for cutting interest rates and easing monetary policy if the priority were to strengthen the recovery and increase growth.

The reason interest rates are being kept high is because the government’s and the Central Bank’s priority is not to strengthen the recovery and to increase short term growth.  It is to reduce inflation from its current underlying rate of 5-6% to 4% by the end of next year, and to keep it there indefinitely.  Here is what Nabiullina said about this

“It should be stressed once again that inflation risks are not understood to be the risks of inflation strengthening. Inflation will continue its downward movement – we are fully confident here, as well as market participants are. These risks consist in the rates of inflation ‘getting stuck’ at around 5%-6%, failing to reach the target level needed to enable a more favourable environment for economic growth.

We are sure that we will be able to reduce inflation to the target level even in case of the inflation risks materialising. As I say so, I want to emphasise that our target is to reach not a one-off mark of but a steady level of inflation. Yes, the task on hand is to deliver on its reduction to 4% in 2017. Yet, what we mean is not to have this level registered at a certain point in time, but to ensure that inflation resides sustainably around this mark of four per cent. And it is not a magic figure of some kind, yet a new level of price stability, inflation expectations and credibility in macroeconomic policy.”

(bold italics in the original)

In other words, as The Duran has explained, the government and the Central Bank are – quite consciously – accepting a trade-off: lower growth in the short term in return for sustainably lower inflation and higher and better quality growth in the future.  Nabiullina explained it again

“Living in a high price and income growth environment may seem to be more customary and even attractive. Yet, this is a deceptively easy and, obviously, a non-performing direction. What needs to happen is a change in our conventional ideas on what should be price growth in the economy. No less important is it for businesses to continue on the path of performance improvement, for the structure of the economy to upgrade and for competition to advance. These all would create a strong foundation to enable reduction in inflation and to spur economic growth of a higher grade.”

Moreover at a recent meeting to discuss budget policy Putin made clear that the policy has his full support

“The macroeconomic environment remains challenging. In fact, the Russian economy is gradually recovering from the downturn, but the positive trends are still fragile. Make no mistake, we need to create a macroeconomic environment that would foster economic growth, while keeping in place the downward trend in consumer inflation. In the medium term, the inflation rate should decrease to 4 percent.”

In a world where Central Banks around the world prioritise short term growth seemingly over everything else, are trying to increase inflation rather than reduce it.

Where there is quantitative easing, zero or even negative interest rates, and serious talk of ‘helicopter money’, and where the US Federal Reserve agonises over even the tiniest increases in interest rates.

I appreciate it must seem strange to many people that there is a government and a Central Bank in one country who are pursuing diametrically opposite policies of tight budgets and high real interest rates in order to reduce inflation, increase savings, and boost long-term investment so as to make the economy more efficient, productive and competitive over the long term.  However that is the policy Russia has now.

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Tape recorded evidence of Clinton-Ukraine meddling in US election surfaces (Video)

The Duran Quick Take: Episode 114.

Alex Christoforou

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RT CrossTalk host Peter Lavelle and The Duran’s Alex Christoforou take a look at new evidence to surface from Ukraine that exposes a plot by the US Embassy in Kiev and the National Anti-Corruption Bureau of Ukraine (NABU) to leak Paul Manafort’s corrupt dealings in the country, all for the benefit of Hillary Clinton during the 2016 U.S. presidential election.

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Via Zerohedge


Ukraine’s Prosecutor General Yuriy Lutsenko has launched an investigation into the head of the Ukrainian National Anti-Corruption Bureau for allegedly attempting to help Hillary Clinton defeat Donald Trump during the 2016 US election by releasing damaging information about a “black ledger” of illegal business dealings by former Trump campaign chairman Paul Manafort.

The Hill’s John Solomon, Ukrainian Prosecutor General Yuriy Lutsenko

“Today we will launch a criminal investigation about this and we will give legal assessment of this information,” Lutsenko said last week, according to The Hill

Lutsenko is probing a claim from a member of the Ukrainian parliament that the director of the National Anti-Corruption Bureau of Ukraine (NABU), Artem Sytnyk, attempted to the benefit of the 2016 U.S. presidential election on behalf of Hillary Clinton.

A State Department spokesman told Hill.TV that officials aware of news reports regarding Sytnyk. –The Hill

“According to the member of parliament of Ukraine, he got the court decision that the NABU official conducted an illegal intrusion into the American election campaign,” said Lutsenko, speaking with The Hill’s John Solomon about the anti-corruption bureau chief, Artem Sytnyk.

“It means that we think Mr. Sytnyk, the NABU director, officially talked about criminal investigation with Mr. [Paul] Manafort, and at the same time, Mr. Sytnyk stressed that in such a way, he wanted to assist the campaign of Ms. Clinton,” Lutsenko continued.

Solomon asked Lutsenko about reports that a member of Ukraine’s parliament obtained a tape of the current head of the NABU saying that he was attempting to help Clinton win the 2016 presidential election, as well as connections that helped release the black-ledger files that exposed Trump campaign chairman Paul Manafort‘s wrongdoing in Ukraine.

“This member of parliament even attached the audio tape where several men, one of which had a voice similar to the voice of Mr. Sytnyk, discussed the matter.” –The Hill

What The Hill doesn’t mention is that Sytnyk released Manafort’s Black Book with Ukrainian lawmaker Serhiy Leshchenko – discussed in great length by former Breitbart investigator Lee Stranahan, who has been closely monitoring this case.

Serhiy Leshchenko

T]he main spokesman for these accusations was Serhiy Leshchenko, a Ukrainian politician and journalist who works closely with both top Hillary Clinton donors George Soros and Victor Pinchuk, as well as to the US Embassy in Kyiv.

James Comey should be asked about this source that Leshchenko would not identify. Was the source someone connected to US government, either the State Department or the Department of Justice?

The New York Times should also explain why they didn’t mention that Leshchenko had direct connections to two of Hillary Clinton biggest financial backers. Victor Pinchuk, the largest donor to the Clinton Foundation at a staggering $8.6 million also happened to have paid for Leshchenko’s expenses to go to international conferences. George Soros, whose also founded the International Renaissance Foundationthat worked closely with Hillary Clinton’s State Department in Ukraine, also contributed at least $8 million to Hillary affiliated super PACs in the 2016 campaign cycle. –Lee Stranahan via Medium

Meanwhile, according to former Fusion GPS contractor Nellie Ohr, Leshchenko was a source for opposition research firm Fusion GPS, which commissioned the infamous Trump-Russia dossier.

Nellie Ohr, a former contractor for the Washington, D.C.-based Fusion GPS, testified on Oct. 19 that Serhiy Leshchenko, a former investigative journalist turned Ukrainian lawmaker, was a source for Fusion GPS during the 2016 campaign.

“I recall … they were mentioning someone named Serhiy Leshchenko, a Ukrainian,” Ohr said when asked who Fusion GPS’s sources were, according to portions of Ohr’s testimony confirmed by The Daily Caller News Foundation. –Daily Caller

Also absent from The Hill report is the fact that Leshchenko was convicted in December by a Kiev court of interfering in the 2016 US election.

A Kyiv court said that a Ukrainian lawmaker and a top anticorruption official’s decision in 2016 to publish documents linked to President Donald Trump’s then-campaign chairman amounted to interference in the U.S. presidential election.

The December 11 finding came in response to a complaint filed by another Ukrainian lawmaker, who alleged that Serhiy Leshchenko and Artem Sytnyk illegally released the documents in August 2016, showing payments by a Ukrainian political party to Trump’s then-campaign chairman, Paul Manafort.

The documents, excerpts from a secret ledger of payments by the Party of Regions, led to Manafort being fired by Trump’s election campaign.

The Kyiv court said that the documents published by Leshchenko and Sytnyk were part of an ongoing pretrial investigation in Ukraine into the operations of the pro-Russian Party of Regions. The party’s head had been President Viktor Yanukovych until he fled the country amid mass protests two years earlier.

-RadioFreeEurope/Radio Liberty (funded by the US govt.).

So while Lutsenko – Solomon’s guest and Ukrainian Prosecutor is currently going after Artem Sytnyk, it should be noted that Leshchenko was already found to have meddled in the 2016 US election.

Watch:

Meanwhile, you can also check out Stranahan’s take on Leshchenko being left out of the loop.

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‘I will take over as Brexit Party leader’: Nigel Farage back on the frontline

Nigel Farage says that if the UK takes part in European elections, he will lead his new Brexit Party.

RT

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Via RT


Former UKIP leader Nigel Farage has announced that he will lead his new Brexit Party into the European elections if UK MPs decide to delay Brexit beyond May 22.

Farage, who has ostensibly appointed himself leader, told various media, including the BBC and Sky News on Friday morning: “I will take over as leader of the Brexit Party and lead it into the European Elections.”

It comes after the Brexit Party’s leader, Catherine Blaiklock, quit over a series of alleged Islamophobic statements and retweets of far-right figures on social media.

It is not yet thought that Farage has officially been elected as leader, as the party does not, as yet, have a formal infrastructure to conduct such a vote.

The right-wing MEP vowed to put out a whole host of Brexit Party candidates if the UK participates in the upcoming EU elections in May, adding: “If we fight those elections, we will fight them on trust.”

On Thursday night, the EU agreed to PM May’s request for a delaying to Brexit beyond the March 29 deadline. Brussels announced two new exit dates depending on what happens next week in the UK parliament.

The UK will have to leave the bloc on April 12 unless British MPs agree to May’s Brexit deal. If the withdrawal agreement is passed by next week, EU leaders have agreed to grant an extension until May 22.

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Baltics cannot rely on Germany any more

The matter is NATO today is not as strong as it is supposed to be. And it is not only because of leadership blunders.

The Duran

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Submitted by Adomas Abromaitis…

On March 29 Latvia, Lithuania and Estonia will celebrate 15 years of becoming NATO member states. The way to the alliance membership was not simple for newly born independent countries. They have reached great success in fulfilling many of NATO demands: they have considerably increased their defence expenditures, renewed armaments and increased the number of military personnel.

In turn, they get used to rely on more powerful member states, their advice, help and even decision making. All these 15 years they felt more or less safe because of proclaimed European NATO allies’ capabilities.

Unfortunately, now it is high time to doubt. The matter is NATO today is not as strong as it supposed to be. And it is not only because of leadership’s blunders. Every member state does a bit. As for the Baltic states, they are particularly vulnerable, because they fully depend on other NATO member states in their defence. Thus, Germany, Canada and Britain are leading nations of the NATO battle group stationed in Lithuania, Latvia and Estonia respectively.

But the state of national armed forces in Germany, for example, raises doubts and makes it impossible not only defend the Baltics against Russia, but Germany itself.

It turned out, that Germany itself remains dissatisfied with its combat readiness and minister of defence’s ability to perform her duties. Things are so bad, that the military’s annual readiness report would be kept classified for the first time for “security reasons.”

“Apparently the readiness of the Bundeswehr is so bad that the public should not be allowed to know about it,” said Tobias Lindner, a Greens member who serves on the budget and defense committees.

Inspector General Eberhard Zorn said (https://www.reuters.com/article/us-germany-arms/germany-not-satisfied-with-readiness-of-submarines-some-aircraft-idUSKBN1QS1G7) the average readiness of the country’s nearly 10,000 weapons systems stood at about 70 percent in 2018, which meant Germany was able to fulfill its military obligations despite increasing responsibilities.

No overall comparison figure was available for 2017, but last year’s report revealed readiness rates of under 50 percent for specific weapons such as the aging CH-53 heavy-lift helicopters and the Tornado fighter jets.

Zorn said this year’s report was more comprehensive and included details on five main weapons systems used by the cyber command, and eight arms critical for NATO’s high readiness task force, which Germany heads this year.

“The overall view allows such concrete conclusions about the current readiness of the Bundeswehr that knowledge by unauthorized individuals would harm the security interests of the Federal Republic of Germany,” he wrote.

Critics are sure of incompetence of the Federal Minister of Defence, Ursula von der Leyen. Though she has occupied the upper echelons of German politics for 14 years now — and shows no sign of success. This mother of seven, gynecologist by profession, by some miracle for a long time has been remaining in power, though has no trust even among German military elites. Despite numerous scandals she tries to manage the Armed Forces as a housewife does and, of course, the results are devastating for German military capabilities. The same statement could be easily apply for the Baltic States, which highly dependent on Germany in military sphere.

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