Weekend Economists Toast the Apostle of Ireland March 14-16, 2014

[Demeter]

28. PUTINOMICS (WILL BEAT THE SOCKS OFF EVERYTHING ELSE)

Russian companies withdraw billions from west, say Moscow bankers MARCH 14

http://www.ft.com/intl/cms/s/0/ffea2660-ab9e-11e3-aad9-00144feab7de.html?siteedition=intl

Russian companies are pulling billions out of western banks, fearful that any US sanctions over the Crimean crisis could lead to an asset freeze, according to bankers in Moscow.

Sberbank and VTB, Russia’s giant partly state-owned banks, as well as industrial companies, such as energy group Lukoil, are among those repatriating cash from western lenders with operations in the US. VTB has also cancelled a planned US investor summit next month, according to bankers.

The flight comes as last-ditch diplomatic talks between Russia’s foreign minister and the US secretary of state to resolve the tensions in Ukraine ended without an agreement....It also emerged on Friday that Russia’s top 10 billionaires, led by Alisher Usmanov, had lost a combined $6.6bn of their net worth over the past week, according to research firm Wealth-X. Russian equities, which showed more weakness on Friday, have lost 20 per cent of their value since the start of the year.

“You don’t need to have sanctions in place to cause economic turmoil,” said Christopher Granville, managing director of Trusted Sources, an emerging markets research firm. “The expectation is enough.”

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Russia Wields $160 Billion Stick in Crimea Sanctions Standoff

http://www.bloomberg.com/news/2014-03-14/russia-wields-160-billion-stick-in-crimea-sanctions-standoff.html

Vladimir Putin’s control over $160 billion in oil and natural gas exports may be his most potent weapon in Russia’s face-off with Europe and the U.S. over Ukraine.

As Crimea prepares to vote Sunday on whether to return to Russian control, the U.S. and its European allies have few levers to deter Putin’s Ukrainian venture. Threats of visa bans and asset freezes haven’t rattled the Kremlin thus far -- six hours of face-to-face talks between the top U.S. and Russian diplomats ended yesterday without a deal.

Russia, the world’s largest oil producer, exported $160 billion worth of crude, fuels and gas-based industrial feedstocks to Europe and the U.S. in 2012. While shutting the spigot on Russian energy exports would starve the Moscow government of essential flows of foreign cash, the price may be too high for European consumers and it may not alter Putin’s plans, said Jeff Sahadeo, director of Carleton University’s Institute of European, Russian and Eurasian Studies.

“In the short term, this would be very difficult to do and it’s not clear it would even affect Russian behavior,” Sahadeo said in a phone interview from Ottawa. If the West “puts down the card of energy sanctions, it becomes a question of who blinks first.” MORE