Ukraine/Russia

How sanctions against Russia could backfire

26 May 2022

The threat of financial punishment did not prevent President Vladimir Putin from invading Ukraine. History shows that economic penalties can stoke conflict by pushing countries to be more self-sufficient, Edward Chancellor writes. Investors risk being stuck with stranded assets.

Seizing oligarch assets is a slippery slope

26 May 2022

The EU hopes to confiscate $31 bln of yachts and villas from blacklisted billionaires. Washington is mulling similar steps. However wrong Russia’s invasion of Ukraine may be, short-circuiting the criminal process to seize property risks weakening trust in Western rule of law.

U.S. sanctions give Russia default it doesn’t need

25 May 2022

The Treasury won’t let Moscow pay U.S. bondholders, tipping it into default. The move further isolates Vladimir Putin but will have minimal impact. It’s a surreal twist given Russia can still pay its debts, while battlefield foe Ukraine urgently needs relief but isn’t getting it.

Ukraine’s spare energy can help itself and Europe

20 May 2022

The war-torn nation generates more electricity than it needs, and from carbon-neutral nuclear plants, too. But its links to the EU power grid are sketchy. Helping Ukraine bolster exports to the EU would support Kyiv’s economy while easing the bloc’s energy headache.

EU funds can ease, not end common energy pain

18 May 2022

Brussels has earmarked 300 bln euros to cut fossil fuel ties with Russia. Rising rates make cheap, repurposed Covid-rescue loans more attractive to many EU states, increasing the chance they’ll be used. But higher fuel purchases will still have to come from national budgets.

Using Russian assets in Ukraine would be a mistake

17 May 2022

Seizing $200 bln of central bank reserves frozen by the EU and U.S. could provide financial relief and moral comfort to the war-torn country. But it would also trigger legal fights and give Russia even less reason to back down. Confiscation is no substitute for a realistic plan.

Western companies have 50 bad ways to leave Russia

16 May 2022

Multinationals can sell out like McDonald’s, shut down like Zara owner Inditex or shrink operations like Nestlé. Hopes of finding a Chinese or Indian buyer may prompt some to drag their heels. But the threat of forced nationalisation gives others an incentive to hurry.

Renault’s Russia exit plans mix logic and delusion

10 May 2022

The French carmaker could sell its Russian assets for a symbolic euro with a plan to buy them back at a later date. Its hope for a “return to normal” after the war in Ukraine sounds optimistic, if not delusional. But for now, Renault sheds a burden and avoids the Kremlin’s ire.

Putin’s gas shock is acid test of EU unity

27 Apr 2022

In severing Polish and Bulgarian supply, the Russian leader shattered a fragile equilibrium that had seen European energy buyers fund his war. He hopes other EU states will carry on, dividing the bloc. Instead, Europe should backstop the costly process of ditching Moscow’s fuel.

Russia risk is ghost of banks’ sanctions future

22 Apr 2022

In the hunt for oligarchs and blacklisted firms, U.S. authorities are treating lenders as allies rather than adversaries. Prospective prosecutors may take a different view. Banks with past legal troubles might prefer to shun Russian business. Still, there are lots of grey areas.

Sanctions sound alert for art – and its regulators

20 Apr 2022

Private sales and the use of shell companies make for anonymity. Russians are not top of the art-world heap, but recently imposed financial constraints and the rise of digital assets could change that. U.S. oversight has not kept up. Dealers and watchdogs alike need to wise up.

IMF’s search for Ukraine help should start at home

19 Apr 2022

The Washington-based institution expects Russia’s invasion to cut global growth to 3.6% this year, while keeping inflation higher for longer. It also wants international cooperation to bolster Kyiv’s war-torn economy. In that regard, the fund’s own assistance is falling short.

India’s Russian oil binge carries hidden costs

14 Apr 2022

New Delhi is filling its boots with Moscow’s cheap crude, just as Europe and traders like Vitol start to turn away. The aggressive ramp-up carries longer-term risks. As a keen buyer, India will find it hard to get waivers from sanctions if the West targets Russia’s energy trade.

Stranded jets are least of plane lessors’ problems

14 Apr 2022

Big fleet-owners like AerCap may have to write off $10 bln of planes trapped due to Russian sanctions. Ultimately, though, insurers should cover their losses. A bigger brake on the aircraft-leasing industry’s rapid ascent is the rising cost of debt from jittery lenders.

JPMorgan rolls with early 2022 punches

13 Apr 2022

The giant lender took hits from a slump in financial-market activity and Russia’s invasion of Ukraine, reporting a 42% dive in quarterly profit. Wall Street peers are likely to sport similar bruises. But a strong U.S. economy and rising interest rates will soften the blows.

Russian misinformation will target its economy too

12 Apr 2022

Sanctions may lop as much as 15% off output this year. But Kremlin propaganda and a media crackdown will keep negative GDP and other numbers hidden. That gives extra weight to unorthodox economic indicators like household budgets, freight traffic and online food sales.

SocGen avoids the worst in costly Russian exit

11 Apr 2022

The French bank is selling Rosbank back to the oligarch it bought the unit from 16 years ago. Despite a 3 bln euro writeoff, the hit to its capital ratio is less than half the worst-case scenario it outlined last month. It’s a fitting end to a long and unhappy Russian story.

Fertiliser makers face long wait for free lunch

11 Apr 2022

Soaring gas prices are making products of crop nutrient producers like Norway’s Yara and Austria’s Borealis unaffordable for farmers. Subsidising the companies might be the least bad way to avoid a food inflation crisis. Waiting for grains to fail will store up bigger problems.

Nickel deal upheaval is unfair but reasonable

11 Apr 2022

IGO’s $820 mln bid for miner Western Areas was derailed by KPMG, prompting the buyer to increase its offer by 15%. It’s unclear whether war in Ukraine will alter the nickel market longer-term. Even so, it’s refreshing to see an adviser ditch the usual rubber stamp.

Putin’s finances can survive a European energy ban

8 Apr 2022

The Russian president may cut off gas to Europe, or even face a hydrocarbon export freeze himself. That could mean up to $50 bln less annual revenue, yet Moscow’s reserves and high oil prices will cushion the blow. An embargo would hurt Russia, but not bring Putin to his knees.