by Elena Panina via Foreign Policy
(machine translated from Russian)

via John Helmer

HOT AIR VERSUS HOT CASH – THE EUROPEANS PREFER RUSSIAN LNG TO US LNG johnhelmer.org

By Olga Samofalova, introduced and translated by John Helmer, Moscow
@bears_with

When Ursula von der Leyen (lead image) was nominated in 2019 to be Germany’s candidate to lead the European Commission, German politicians from her own party privately described her as too stupid and potentially too corrupt to be risked inside Germany during the political succession race to succeed Angela Merkel as Chancellor. German military sources say von der Leyen was the stupidest defence minister in German military memory.

Since the war began in February, von der Leyen did not say a true word until November 30, when she announced that Ukrainian military deaths had reached more than 100,000, and civilian fatalities more than 20,000. Within hours these numbers were removed from the published record of her speech. Von der Leyen’s admission implied the war toll of Ukrainian wounded is more than 300,000, and that the sum of military and civilian casualties has already reached half a million. Von der Leyen was confirming Russian estimates and contradicting the Kiev regime’s propaganda.

In September von der Leyen announced her support for a price cap on the international trade in exports of Russian pipeline gas and liquefied natural gas (LNG). Last month she said the European Union is “ready to go” with a price cap on Russian oil exports.

However, the European and Asian gas and oil trade is not only contradicting what von der Leyen is claiming; it is demonstrating they are profiting from her public lies. In the gas market there is new evidence that the French, Dutch and Belgian governments are allowing the purchase of record volumes of imported Russian LNG, and the re-export of this gas at a profit to other European states, including Germany. The arbitrage – that is, the profit from buying Russian LNG at the Russian selling price and then reselling it at a premium to European consumers – is so lucrative, the Chinese are diverting their contracted volumes of Russian LNG to Europe.

Olga Samofalova, the energy market analyst at Vzglyad , reported yesterday on how the markets are defeating the sanctions.

Source: https://vz.ru/

The translation which follows is verbatim, without editing. The illustrations and URL links have been added.

 WHY EUROPE IS BEING SAVED BY RUSSIAN LNG, NOT AMERICAN LNG

December 1, 2022
Text: Olga Samofalova

While pipeline gas supplies from Russia are under scrutiny, the European Union (EU) is quietly buying up more and more volumes of the other Russian gas – that is, liquefied natural gas (LNG). Europe’s costs of importing Russian LNG have soared to record levels, Bloomberg has discovered. How did Russia start supplying more liquefied natural gas to Europe and, most importantly, why do the Europeans themselves see nothing terrible in this?

As you know, Brussels has imposed a Russian coal embargo; an oil embargo will start operating in a week. A number of countries have refused pipeline gas supplies; others have let technical and bureaucratic problems of the “Northern Streams” take their course. They claim not to have noticed the destruction of the Nordstream pipelines or the way in which the Ukraine has been so unaffected by the present situation that it has restored the transit volumes of gas across Ukrainian territory.

At the same time, Europe’s costs for importing Russian LNG in 2022 have soared to a record level, according to Bloomberg. The EU has increased the purchase of LNG from Russia by about 40% over this year. The EU spent a record €12.5 billion ($13 billion) on Russian LNG from January to September – five times more than a year earlier. This is a bitter pill for many countries of the bloc, which imposed tough sanctions on the Kremlin in order to deprive it of funds to conduct its military operations in Ukraine, the western news agency writes.

Source: https://www.bloomberg.com/

Source: https://www.bloomberg.com/

As ship and port tracking data show, growing demand from countries such as France and Belgium has helped make Russia the number-two LNG supplier to northwest Europe this year. In the first place is Qatar, which traditionally supplies LNG to the European region. The current situation is that northwestern Europe accepts significantly more Russian than American LNG, although it was the United States which promised to save the Europeans with its gas after the removal of Russian pipeline supplies.

It should be understood that Belgium, the Netherlands and France accept Russian LNG, but then it is distributed throughout Europe. Among European countries, only the UK and the Baltic states have stopped buying Russian LNG.

Russian LNG will continue to flow to Europe, and most European countries are happy to turn a blind eye to this, says Anne-Sophie Corbeau, a researcher at the Center for Global Energy Policy at Columbia University. Because the EU is faced with a real physical shortage of natural gas, this leads not only to the high cost of the resource, but also to a reduction in the work of industry, and therefore of their demand for fuel.

There are two LNG plants in the north-west of Russia. These are Gazprom’s Portovaya and Vysotsky LNG. However, these are small plants; the first of them started working only this autumn. Accordingly, we are mainly talking about the supply of Novatek’s Yamal LNG to Europe. Initially, the Yamal LNG plant was counting on delivering its supplies to Asia, primarily to China. And until 2022, the main volumes from Novatek did indeed go there.

Why has the situation changed so much this year?

Firstly, for the first time, the European market, not the Asian one, has become the premium market for gas. Until 2022, gas prices in Europe were always lower than in Asia. Now everything is the other way around, so the growth in Russian LNG supplies is explained by the economic or commercial factor, says Igor Yushkov, a leading expert of the National Energy Security Fund, an expert at the Financial University under the Government of the Russian Federation.

The second point is that there are ice restrictions for the supply of Yamal LNG to Asia. “As soon as the navigation season on the Northern Sea Route ends, LNG can only be shipped to Europe. But when the premium market was Asian, often what happened in winter was that Yamal LNG was shipped to Europe by ice-class tanker, , then reloaded on a conventional tanker, and then this LNG cargo went through the Suez Canal to Asia,” explains Yushkov. But this year, all free LNG from the market is being vacuumed up, not by China, but by Europe.

“Therefore, even in the summer, when Novatek Yamal had the opportunity to supply LNG via the Northern Sea Route to the East, the main volumes still went to the European market for economic reasons,” Yushkov adds.

The third reason is the overall increase in the capacity of the Yamal LNG plant, where all four stages are operating at full capacity this year. The design capacity is about 16.5 million tonnes, but by the end of the year, much more will be produced – about 20 million tonnes.

It is noteworthy that almost 16 million tonnes are contracted and have been delivered under long-term contracts to the signing customers. But the gas which the plant produces in excess of these volumes is not under contract and this is going to the spot market. The owner of Yamal LNG, Leonid Mikhelson, has said that the company now earns more from these surpluses, which amount to about 4 million tonnes, than it earns from the contract sale of all the other 16 million tonnes.

This is easily explained. The contracts were signed when LNG prices were significantly lower than they are now. Buyers of Russian LNG under these contracts are in a very favourable position for themselves. But Novatek is already selling the “surplus” at spot prices – and they are many times more expensive.

Source: https://www.bloomberg.com/

“Even the Chinese company CNPC, which has a contract with Novatek, sells part of this LNG on the European market, acting as a trader,” says Yushkov. We are talking about the fact that it is profitable for a Chinese company to resell LNG to Europeans and get a favourable margin on the difference between the purchase price (which is prescribed in the contract) and the spot price at which Europeans buy.

Gas consumption in China has decreased, firstly, due to the ongoing lockdowns this year. Secondly, because of the increase in coal consumption against the background of the withdrawal of the European environmental agenda into the shadows. China has increased its own coal production and increased coal imports from Russia at attractive prices.

Thus, the growth of Russian LNG supplies to Europe is explained by economic factors. And that’s why the EU is quietly increasing its purchase and does not consider this a problem, whereas there is a constant chatter in European political circles about pipeline gas from Russia and the necessity of getting rid of it.

According to Bloomberg, the share of Russian pipeline gas in the region has decreased from 30% in 2021 to 10% in 2022. By contrast, the share of LNG in Russian supplies to Europe is now close to half.

“Europeans do not perceive LNG as a kind of national gas. They do not have the same negative attitude towards LNG as they have towards pipeline gas. Perhaps this is all because of the demonization of Gazprom, which has been obvious for more than a year now. This is because pipeline gas has always come from Russia and from Gazprom until now,” says Yushkov. Whereas LNG was initially perceived as the gas which would rescue everybody from Russian gas. First of all, the United States actively advertised its LNG as the salvation for Europe. In other words, the European perception is all about effective PR and the right headlines in the media, which help to form the public and political distinction between “good gas” and “bad gas”.

Source: https://ycharts.com/
Bloomberg has been reporting the surge in Chinese “discount” buying of Russian LNG.

At the same time, Yushkov notes that, in principle, the Europeans have not refused Russian gas, with the exception of several countries. This is despite the fact that European politicians have talked about reducing the Russian gas share and in a few years’ time abandoning it altogether. However, problems have arisen with the failure to deliver this gas through the pipelines. The reasons for that, as you know, are well known and quite different.

The Yamal–Europe gas pipeline was closed by the Poles due to the nationalization of Gazprom’s share in the pipe operator. Ukraine refused to accept gas through the Sokhranovka pumping station, so only Sudzha has remained.

According to the contract, 109 million cubic meters per day should go through Ukraine, and for now the flow is two and a half times less – 42 million cubic meters. The flow to Germany through Nord Stream-1 gradually stopped by September due to sanctions problems with turbines. The flow through Nord Stream-2 was halted due to the suspension of certification, and then both these pipelines were blown up — in seemingly safe waters of Europe right in front of NATO forces. Europe would be happy to buy Russian gas through the pipelines, but there is no possibility, Yushkov believes. The channels have been completely cut off.

PART 1

After the accident on North Stream 1 and North Stream 2 pipelines the energy balance has changed dramatically. Investigation is not over yet, but there are some hints on main beneficiaries. Despite the fact that gas storage facilities are filled up to 90%, there is still a danger of gas shortage. Storage is used as an additional source in case the regular supplies are delayed or the weather is extremely cold.

▪️The German Federal Network Agency (Bundesnetzagentur) has changed its assessment of the weather situation in the country from “stable” to “tense”, according to a daily overview of the country’s gas supply situation.

▪️The Economist published a statistical model attempting to evaluate how many people could die of cold across Europe. According to their approximation up to 147,000 people can become victims of cold. In comparison to death toll from extremal heat this summer, that reached 20,000, this number is large. But in comparison with 2,283,000 COVID-19 deaths in EU it looks different.

▪️Low temperatures definitely affect death rate, especially for old people living in cities. People start moving less, viruses become more resilient, breath and cardiovascular problems are forming a combination difficult to deal with. But the exerts of The Economist are pointing out that as “the body’s temperature falls, blood thickens and its pressure rises, raising the risk of heart attacks and strokes”. That’s a debatable point. Blood changes its density only when its chemical composition is altered. When temperature drops, blood vessels simply shrink and peripheral circulation slows down, saving body heat. But blood chemical composition is indeed altered as side-effect of the vaccination. And we saw many research data proofing that blood after vaccination becomes more dense and this is the primarily cause of cardiovascular problems, including strokes and heart attacks that eventually result lethal in many cases. Taking this into consideration we can assume that “deaths from cold” are very convenient way to hide deaths from vaccination. If we look at the COVID-19 death toll we see that a lot of people will face cardiovascular problems in the coming years.

▪️How did we find ourselves in this point?

If we try to look just a little further than mass-media messages blaming Putin, we’ll see many structural problems that have been accumulating in EU for decades. Instead of developing conventional energy sources, billions were invested in green agenda. For specialists it’s clear that any green source is not for industrial use. The main limitation of all renewables is fluctuating generation. Industry instead must rely on stable energy sources.

For Germany it ended up with return to coal generation. France underinvested its nuclear reactors fleet for decades, and lost over 50% of nuclear generation in the end. Finland is facing a deep generation crisis after problems with its nuclear plant Olkiluoto 3. Other EU countries that followed the green agenda at the expense of traditional energy are dealing with the same problems. Over 20 years of going green had a strange outcome: US is selling to EU fossil fuels at sky-high prices.

PART II

▪️Can EU manage this energy emergency with LNG terminals?

It can be a solution. But there are some problems. The price of LNG at the Henry Hub, for instance, is hovering over the $2000 level, peaking sometimes to $3500 per 1000 cubic meters of gas. It can hardly be called affordable, especially in comparison with long term pipeline gas contracts. But there is competition for LNG even at these prices. Asian market has been traditionally relying on LNG, while EU faced this situation for the first time. Germany won the battle for some LNG with India, but later China took all Qatar LNG signing a multi-year contract. Egypt can increase supply to Europe just by 8 million mt/year. Finland has to share an LNG terminal with Estonia. In Italy local social movements are opposing to terminal construction. Terminals in Spain are too distant from the main consumers in Germany. France and Germany are trying to strengthen energy cooperation exchanging gas for electricity. But it cannot help to fix overall EU energy balance.

▪️New pipelines?

Algeria needs investment and time, as well as other African countries to increase gas supplies on the EU market. Sea gas exploration on the Israeli and Lebanon shelf has just been started. And gas from there will go to Egypt facilities to make LNG. Azerbaijan is pushing hard on supply increase via its pipeline system, but the disposable gas volume is still relatively small. Poland is trying to control Germany through Baltic Pipe. This project can hardly cover needs of both countries. Local pipeline projects in the Baltic states are dependent either on LNG supplies or on the Baltic Pipe gas reverse.

But there are still couple of options. First is to persuade Norway to provide more gas to the EU market at lower prices. This definitely will not make happy Norway people and government, but it’s worth trying. The second option is to put into operation the huge Groningen gas field. A side effect is uncontrollable seismic activity in Western Europe.

▪️This brief review of the situation in Europe gives quite a pessimistic outlook. Although in South Europe the effects of structural problems can be mitigated, the situation is far from being under control. The EU governments right now are making hard decisions on de-industrialisation. Main energy consumers are industrial plants. And there is no way to save both industry and people. Blaming Putin for our mistakes is not the way out. More professional approach is needed. If the problems above are not addressed now, the situation will remain the same in the coming years.

@songofoil

The leaders of the key European Union countries continue slowly but surely to quarrel. However, there are fewer and fewer common, unifying topics.

And the main anti-Russian energy map is gradually being lost.

Germany and France want to play it completely differently.

Thus, Olaf Scholz said that he intends to allocate €200 billion for the implementation of the domestic energy assistance program. And Emmanuel Macron was outraged by this.

The first one (Scholz) is trying to somehow save the country’s economy by reducing the cost of gas, oil and electricity for consumers. He needs it fundamentally in order to retain power.

And the second (Macron) is furious, because he understands that the “yellow vests” are about to require similar measures. We’ll have to look for money somewhere. In addition, such a policy increases demand, which means that fuel will continue to rise in price. Finally, there is a shortage in Europe. Especially in France, where there are problems with gasoline. And now Germany will become a more attractive consumer for suppliers. The situation will only get worse.

There is another important detail that is not directly related to the relations between Berlin and Paris. This is another precedent. The most serious political and economic decision, capable of affecting the entire EU, was made by one of its member countries, Germany, independently. And Germany didn’t consult anyone. So why can’t others? For example, Hungary. What kind of sanctions can there be against it now, if we do not act according to the rules of double standards?

As for Emmanuel Macron, his current position is gradually becoming clear — to support the unity of the EU, because for all the failures within the country, it will be possible to justify to the population precisely that other members are not in unity on some issues and hence the problems.

When Putin says that so far there has been no need for massive infrastructure strikes or that “everything is going according to plan” (while the AFU successfully counter-attacks), he may well be telling a half-truth. 

Because the conflict affects fundamental processes in the global financial system.

The day before yesterday US Treasury Secretary Yellen said she was concerned about the loss of adequate liquidity in the US government bond market.

Under normal circumstances, US government debt is purchased by:

• the EU at the expense of a surplus trade balance – need to put revenue somewhere;
• Japan – therefore dependent on the States;
• Gulf monarchies – for the sake of arms and protection of the US.

However, with the outbreak of war, Europe’s economy became unprofitable, Japan is selling treasures to save the yen, the [Gulf] monarchies and China because of their alliance with Moscow and fear of their assets being frozen, are slowly withdrawing from US government bonds. 

Suddenly it turns out that there are simply no people left in the world who have free money and the desire to invest in U.S. government debt☝

Washington faces the same problem as London did last week. Government bond rates are below inflation and therefore not profitable to buy.

The UK started buying debt by way of issuance, and the US asked the big banks for help.

Neither the former nor the latter will bail out for long. The longer Europe is unprofitable, the harder it will be for the US to finance its unprofitable national budget.

Russia will not rush into war for the sake of it. The targets are big, a kind of crusade. That’s what Borrell was talking about this week.

Source: @ZeRada1

by Dan Eberhart via Forbes

▪️ The “final death blow” threatens the West due to the introduction of restrictions on the cost of Russian energy resources. Sanctions against Russia “do not bode well for the architects of this policy,” because it is full of shortcomings, Forbes states

▪️ “This plan is good in theory, but in practice it carries a lot of risks. This is happening because politicians cannot understand the mechanisms of the energy markets,” Forbes believes

▪️ Large buyers, in particular China and India, will ignore the restriction. In addition, the price ceiling will provoke a new jump in prices. As a result, the Russian Federation will maintain high revenues from the sale of energy, and the world economy will be “punished”

▪️ The Biden administration and European officials have shown complete incompetence in the conditions of the energy crisis. “And the introduction of a price ceiling can be the final death blow for them,”

▪️ Russia remains a member of OPEC+. The top members of the OPEC+ cartel are fed up with Western interference in energy markets. Saudi Arabia today is more connected with Moscow than with Washington.

▪️It is difficult to overestimate the risk of such a market reaction, especially given that the Biden administration, as well as EU and UK politicians have proved their incompetence in the current energy crisis, and price restrictions can be a coup for them.”

▪️This is because politicians are unable to understand the workings and economics of energy markets. The reality is that the price cap can be easily circumvented. Just ask any oil trader.

Translated from German. Via Welt Express

The economic crisis in Germany is the result of a deliberate provocation by the United States. The Americans brought down the German economy to remove a competitor. In any case, the material deserves attention.

The sanctions imposed against Russia by the EU countries, after the start of a special military operation, began to have a negative impact on the European economy. The sanctions boomerang came as a surprise to the German federal government, most politicians and ordinary voters.

However, as it turned out recently, these consequences of anti-Russian sanctions were unexpected only for the Germans. The United States has calculated all the scenarios in advance, and also deliberately embarked on the path of weakening the German economy.

Back on January 25, a month before the start of the SVO, the RAND company prepared a secret report entitled “Containing Germany for the United States and the world.”

The document was developed for the special services of the United States and the National Committee of the Democratic Party of the United States. The content of the report is quite simple: USA provokes Russia to be able to declare it as an aggressor and to force Germany to enter suicidal sanctions against Moscow.

According to the text of the report, the goal of US policy is to weaken Germany as much as possible. Although Germany remains a country with limited sovereignty, the pace of economic development in the EU depends on the state of the German economy. In the end, the development of Germany can make Europe not only a political, but also an economic competitor of the United States, RAND experts write. This shouldn’t happen.

The German economy is vulnerable because it is based on unlimited access to cheap Russian energy. The sanctions war provoked against Russia can put an end to this. The termination of Russian energy supplies may start a systemic crisis that will be devastating for the German economy.

Another vulnerable point in Germany was one of the ruling parties: the Union-90/Greens.

The Greens have too strong an ideology. According to the report, their representatives will abandon economic pragmatism in favor of their beliefs, and will also become a War Party that could destroy the German economy.

The report accurately predicts the impact of anti-Russian sanctions on the German economy: the loss of 200-300 billion euros in 2022 alone. Along with this, the authors accurately predicted a decline in the euro against the dollar. According to RAND experts, Germany’s GDP will fall by 3-4% per year over the next 5-6 years. Most of the predictions have already come true. Germany is in an economic crisis, the scale of which is comparable to the losses of the German economy after World War II.

It should be noted that Germany was the victim of a provocation by the United States.

The escalation of the conflict in Ukraine was necessary for Washington, including to destroy the economic locomotive of the EU, devalue the euro and stop German industry.

The sanctions that Berlin imposed on Russia were necessary only to please the Americans.

The “German Eagle” is not inclined to believe in conspiracy theory, however, many facts from the article coincide with reality, especially concerning the German “greens”, who take the most aggressive position towards Russia.

The US continues to export Syrian oil. Today, SANA sources reported that the US armed forces, together with local formations controlled by them, carried 137 tankers with oil stolen from Syrian oil fields to their bases on Iraqi territory. On August 14 , they wrote, the US stole 233 tankers.

The interdepartmental coordination headquarters of Russia and Syria condemned the US policy in Syria, in particular the looting of the country’s oil reserves, which is the main cause of the difficult humanitarian situation. It is noted that it is the US sanctions, especially against organizations that are engaged in the reconstruction of water and electricity supply facilities, healthcare and other infrastructure facilities that create difficulties for the country’s recovery.

The United States does not comment on its actions, but simply continues to steal oil and support the separatists.

by John Helmer

A survey of ancient, medieval and modern historians of Europe has so far failed to produce a single example of a war successfully prosecuted on the battlefield when back at staff headquarters the treasurer, banker and auditor were each and all against the army. By contrast, there are many examples of financiers who have been tolerated for playing both sides in war, and who managed to keep their heads and fortunes, even in revolutionary France, the Napoleonic wars, and Adolf Hitler’s Germany.

It is also obvious that the Wall Street bankers and US Treasury officials who have devised the Russian sanctions schemes since 2014, and especially since February 24, don’t aim to attack the Russian oligarchs, bank robbers and grand larcenists who have turned coat and switched sides against the Kremlin. Starting with Mikhail Khodorkovsky, they comprise a long list — Sergei Pugachev, Andrei Borodin, Boris Mints, the Ananiev brothers, Vadim Belyaev, Vladimir Chernukhin, Leonid Lebedev; the list goes on.

The latest to do a runner, fleeing Moscow for his seaside villa on the Ligurian riviera, in Italy, and then residence and citizenship in Israel, is Anatoly Chubais; he was the state treasurer, banker, and auditor all in one for President Boris Yeltsin. He is reported in the Moscow press to be currently under prosecutors’ investigation of offshore bank accounts with stolen state funds suspected of amounting to billions of dollars. Ahead of Chubais’s departure, Moscow reporters have uncovered details of property title transfers for his $3 million Moscow apartment and his $50 million country estate at Odintsovo, outside the city. These have been papered in the names of nominees associated with a steel and pipemaking oligarch in Chelyabinsk. For more details of how Chubais arranged the acquisition of property through a Swiss company cut-out, which then faced court claims for disputed money from Boris Mints and his family, read this. For Chubais’s financial tie to the pipemakers of the Urals, read this.

Chubais is not sanctioned by the US, nor is his protégé, the former finance minister, opponent of defence spending, US candidate for prime minister, and currently the state auditor, Alexei Kudrin.

Read more: http://johnhelmer.net/

Kudrin’s successor as finance minister, still in the job since 2011, is Anton Siluanov; he is under US sanctions, and so are the heads of the state banks, German Gref of Sberbank, Andrei Kostin of VTB, Andrei Akimov of Gazprombank; and Igor Shuvalov of VEB.

Except for his two years of conscription in the Soviet Army in 1985-87, Siluanov has been a finance ministry official since he graduated from the state finance academy at the age of 22. He worked his way up the ranks under ministers Yegor Gaidar, Boris Fyodorov, Alexander Livshits and Chubais – all advocates of the free market reorganization of the Russian economy and unrestricted capital outflow.

In US bureaucratic terminology, Siluanov is more US Office of Management and Budget than US Treasury. He was deputy head of the budget department of the ministry between 1992 and 1997, when he supervised the dismantling of the Russian social welfare and defence budgets required by the IMF’s borrowing terms; delayed payment of pensions and public sector salaries to paper over the revenue shortfall; and dollarized Russian public finance in place of the ruble. In 1998, when the commercial banks were unable to meet their foreign exchange wagers and the Central Bank declared a default on repayment of ministry bonds to service foreign loans, Siluanov was the ministry’s overseer of banking and macro-economic policy; he reported to Kudrin who was first deputy minister at the time. Their roles in the 1998 default and the simultaneous disappearance of several billion dollars in IMF money, have never been disclosed.

In 2011, when Kudrin was attempting to cut the defence budget and publicly trying to replace then-Prime Minister Dmitry Medvedev, he was dismissed and Siluanov replaced him.

Since the military operation commenced on February 24, Siluanov has made few public statements. In one he corrected his record, as well as Kudrin’s, during the 1998 default crisis, and declared the suspension of his own budget balancing rule. “There are huge funds [in the state budget] for pension provision – 600 billion [rubles] this year, one trillion next year, and the same amounts in the future. Money for the special operation — huge resources are also needed. Citizens also need money to support the economy, the total amount of the so-called budget stimulus that we have launched into the economy is 8 trillion rubles. Huge funds. We need these resources to support the economy, to support our citizens.”

Siluanov has also assured foreign bond holders that Russia will remain a “reliable borrower” and continue servicing its foreign state debt without defaulting. His method, he told the Moscow business newspaper Vedomosti this week, is to bypass the US Treasury’s ban on repayment in either the frozen reserve dollars or in unfrozen reserve funds, by invoking the bond contract provision to allow the Russian treasury to pay in any currency other than the US dollar in the event of “a court decision, an order of a court of any jurisdiction or any other decision”. In order to collect their bond coupon payments, Siluanov said, creditors will be able to do so through opening special state bank accounts in rubles.

The heading in the May 29 report of Siluanov’s interview with Vedomosti reads: “Russia will use the scheme of payments for gas in rubles for settlements on the national debt -- Investors will have to open accounts in Russian banks and give instructions for the purchase of currency” – source: https://www.vedomosti.ru/

The domestic critics of Siluanov fault him for this technical approach in wartime, and for his career commitment to following orders, the domestic and foreign ones. “He’s the purser of the Titanic totting up the crew wage bill as his ship goes down,” comments a politician active in the Donbass. “He has no image of the future, so all he can do is to plan for the past. He cares about the image of Russia the reliable borrower which he’s spent thirty years administering as an apparatchik. He believes this is important in the world, because he has no other vision of the financial world other than the US and IMF-dominated global order.”

“By reliable borrower, Siluanov means not only and not so much the Russian Federation as he means himself. There are a lot of people in Moscow, not only Siluanov, who still can’t realize there is now no old world left. The old ‘rules based order’ is being used to destroy Russia. Siluanov is trying the impossible – to defend with the weapons of the other side. The sorry thing is that Siluanov has no conception of the future. He is waiting for Biden to lose, and for the Republicans to come to power when sanctions will begin to be lifted and everything will be the same again.”

There is no US sanction for Elvira Nabiullina, head of the Central Bank. In April the Canadian government had placed her on their sanction list; the Australian government had done the same a few days earlier. The New York Times then followed with a ringing endorsement of Nabiullina by a string of international banking officials and academics, all of them hostile to Russia and in favour of removing Putin. She was reported by the newspaper to be “an important beacon of stability for Russia’s financial system”, “the very model of a modern central banker”, “never been suspected of any corruption”, “personable, focused, always well-prepared, an advocate of market forces (despite her Soviet-era economics education)”, and finally “she is actually doing something that she didn’t sign up for.”

Left to right: Anton Siluanov, state treasurer; Alexei Kudrin, state auditor; Elvira Nabiullina, state banker.

The Financial Times, which now reports on Russia from Riga, Latvia, has never published an interview with Siluanov, nor a direct comment by him; it hasn’t mentioned Kudrin since 2019. Nabiullina continues to take the newspaper’s direct calls and was last reported in print on April 29.

On April 13, just days after the New York Times promotion, the Wall Street Journalpublished a feature on Nabiullina. “I did reach out for an interview with Nabiullina,” said Alexander Osipovich, a Wall Street Journal reporter in New York who has also published in the Moscow Times. “I was told that her schedule is very busy right now and they did not have time to have me sit down with her. I have spoken to a lot of different economists, people who are both inside Russia and out of it, people who have known Nabiullina over the years, and tried to assemble this portrait of her. Of course, the biggest thing is when you can’t get a direct interview is you don’t really know what people think and what’s driving them. And one of the questions that I have that I tried to address, but I don’t think I could fully address was what does she think about the war? What is her take on the invasion, all these awful things that are happening? Does she see herself as abetting it? Does she see her own role in it? I can ask these questions. I can speculate about it, but I don’t really know.”

“ I do think that a lot of people who are from her, sort of her set, her educated kind of Moscow background, economists, academics, people like that, many of them are horrified by the war and very much against it. Those who have gotten out of Russia are open about this. Those who have stayed in Russia generally have kept quiet about it because if you speak up about it nowadays you’ll get arrested…There were a lot of rumours shortly after the war started that she wanted to leave and had submitted her resignation. We were able to confirm that she had tried to resign, but under not fully clear circumstances it seems to have been denied.”

“Clearly, Putin wants to have her around. He seems to believe that she is an effective crisis fighter. She’s good at keeping down inflation. She is a good manager of the economy. And he wants to have her around for longer. I think that basically if she were to leave and some new unknown person were to come into place, that could be another cause of Russian economic instability, which is probably the last thing that Putin wants right now. [Question: What tools does she have to work with given that this economic crisis is caused by factors related to the war, like sanctions?] Her tools are limited. There are only so many things that the Central Bank can do in a situation like this. Russia is facing very big problems, and it will be beyond her power to fix them. But she is definitely going to be part of the team of people trying to fix them… I think that she has sort of cast her lot with Putin for now. She will be there for the foreseeable future, and she has her work cut out for her because Russia’s facing an economic crisis. She is going to be a big part of the efforts to deal with that, but it’s going to be tough.”

The Moscow Times, a Dutch Foreign Ministry-sponsored publication, has published a sharp attack on Nabiullina for remaining loyal. The writer, Anders Aslund, was a protégé of Chubais and for many years on the payroll of Victor Pinchuk, a Ukrainian oligarch. Aslund is currently living in Washington where he is associated with a foundation financed by the US and UK governments, George Soros, and state sources in Kiev.

According to Aslund, “the high interest rates [Nabiullina] has set have not been responsible for relatively low inflation — the major currency crises played a significant role in that — and the Russian population has suffered from her extreme austerity policies. For some reason Western economists who condemn Germany’s comparatively mild austerity policy praise Russia’s far more severe policy.”

“At Putin’s behest, Nabiullina built up Russia’s international currency reserves to $640 billion, while the Russian people have suffered from her extreme austerity policies. It is clear now that this was not a sensible economic policy but preparation for war.”

“Putin’s war in Ukraine has finally shaved off the halo from Nabiullina. By building up the large currency reserves, she effectively allowed Putin to start the war. She did not understand that the reserves could be frozen by the West, although it had done so to several other countries, such as Iran and Libya. When the Western sanctions hit on Feb. 28, she lost her nerve and doubled the Russian interest rate to 20 percent, aggravating the financial panic. She closed down all financial markets for one month. When they opened partially, they were heavily regulated. She has also ended the convertibility of the ruble.”

“Instead of securing macroeconomic stability, she has participated in Putin’s return of the Russian economy to Soviet times and destroyed the CBR. It is widely rumoured that she wants to resign, but that Putin has not accepted her resignation. It might be better for all if he did.”

by Chris Menahan
InformationLiberation

India is buying up cheap sanctioned Russian oil, refining it, then selling it to the US and EU for huge profits, according to a report in the Wall Street Journal.

The US has reluctantly given India permission to buy Russian oil because India has threatened to ditch their alliance with America and ally with China if the US dares to sanction them.

While Americans and Europeans are being forced to pay record prices for gas as “the cost of standing up for freedom,” the free nation of India is buying oil from Russia for a whopping $35 off a barrel and selling it back to us in a hilarious arbitrage scheme.

From WSJ, “Russian Oil Producers Stay One Step Ahead of Sanctions”:

Europe just targeted Russian crude with its toughest sanctions yet, but shippers and refiners are getting the oil to market by obscuring its origins. Some fuels believed to be partially made from Russian crude landed in New York and New Jersey last month.

The cargoes were brought through the Suez Canal and across the Atlantic from Indian refineries, which have been big buyers of Russian oil, according to shipping records, Refinitiv data and analysis by Helsinki-based think tank Centre for Research on Energy and Clean Air.

[…] [India’s] imports have skyrocketed to 800,000 barrels a day since the war began, compared with 30,000 barrels a day previously, according to commodity-markets data company Kpler.

[…] A refinery owned by Indian energy giant Reliance Industries Ltd. bought seven times more Russian crude in May, compared with prewar levels, making up a fifth of its total intake, according to Kpler.

Reliance chartered an oil tanker to carry a cargo of alkylate, a gasoline component, departing from the nearby Sikka port on April 21 without a planned destination. Three days later, it updated its records with a U.S. port and sailed over, discharging its cargo on May 22 in New York.

“What likely happened was Reliance took on a discounted cargo of Russian crude, refined it and then sold the product on the short-term market where it found a U.S. buyer,” said Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air. […]

Reliance didn’t respond to a request for comment. Its joint chief financial officer, Srikanth Venkatachari, said in a May 6 briefing that the company has minimized feedstock cost by sourcing “arbitrage barrels.”

Indian refined oil-product exports, beefed up by cheap Russian supplies, have grown sharply since the beginning of the war. Daily shipments to Europe have risen by a third and by 43% to the U.S. on a quarterly basis.

We are truly the suckers of the world.

Full article at InformationLiberation.