Russians laughing at sanctions? Pure bluster [View all]

[ProSense]

Yesterday, word spread that the Russians were laughing in the face of sanctions. Yet the events leading up to the sanctions tell a different story.

Russia capital flight $45-50 bln this year, full year may be $130 bln -Goldman

(Reuters) - Capital flight from Russia has risen sharply since the start of this year to $45-$50 billion, Goldman Sachs said on Thursday, predicting full-year outflows could be as much as $130 billion, or double 2013 levels..its calculations show capital outflows have jumped 60 percent from year-ago levels as the economy slows and the threat of Western sanctions bites. It also slashed its forecast for Russian economic growth this year to 1 percent.

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"The Achilles heel of the Russian economy remains the flow abroad of Russian capital following any shock. We would also think that any sanctions or even the threat of sanctions will be ultimately targeted at these flows," Goldman analysts Clemens Grafe and Andrew Matheny said in a note.

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Grafe and Matheny calculate that total net private capital outflows amounted to $45-50 billion in the year to date, or more than a 10th of Russia's economic output in the first 2014 quarter. The outflows also represent a big jump over the $28 billion that left the country in the first three months of 2013...Their models indicate total capital outflows for the year of $130 billion.

If confirmed, the data indicates growing pressure on the Russian economy which is already showing its slowest growth since 2008. Official data shows capital flight was $62.7 billion in 2013, with outflows totalling $420 billion since 2008.

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http://www.reuters.com/article/2014/03/13/ukraine-crisis-russia-capital-idUSL6N0MA2N720140313

Russian Richest Face Margin Calls With Billions at Stake

By Robert LaFranco and Alex Sazonov

Alexander Lebedev is concerned.

“Russian businessmen are very scared,” the 54-year-old former billionaire, who served in the Soviet embassy in London during the Cold War and owns Russia’s National Reserve Corp., said by phone. “There are risks to the Russian economy. There could be margin calls, reserves might be drawn down, exchange rates may fall and prices will rise. This worries me.”

Billionaires in Russia and Ukraine risk further losses as market volatility and the threat of Iran-style economic sanctions intensify following Russia’s incursion into Crimea. Since Feb. 28, the day unidentified soldiers took control of Simferopol Airport in southern Ukraine, Russia’s 19 richest people have lost $18.3 billion, according to the Bloomberg Billionaires Index, a daily ranking of the world’s 300 richest wealthiest people.

“The instability caused by the situation in Crimea could be a problem for the oligarchs,” Yulia Bushueva, who helps manage $500 million at Arbat Capital in Moscow, said in a telephone interview. “If a billionaire pledged their stakes in publicly traded companies as collateral for a line of credit, they could face margin calls and have to re-negotiate with banks.”

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The European Union last week froze the assets of 18 Ukrainians, including “hundreds of millions of euros” in the Netherlands controlled by former President Viktor Yanukovych and his son, Oleksandr, Dutch Finance Minister Jeroen Dijsselbloem said March 6...Dmitry Firtash, a 48-year-old Ukrainian billionaire who made his fortune importing Russian natural gas, was arrested in Vienna Wednesday by an organized-crime unit of the Austrian police on a warrant issued by the U.S. Federal Bureau of Investigation, according to a statement by the country’s Interior Ministry.

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http://www.bloomberg.com/news/2014-03-14/russian-richest-face-margin-calls-with-billions-at-stake.html

Russian government admits economy in crisis as Ukraine weighs

By Darya Korsunskaya and Lidia Kelly

(Reuters) - Russia's government acknowledged for the first time on Monday that the economy was in crisis, undermining earlier attempts by officials to suggest albeit weakening growth could weather sanctions over Ukraine.

Moscow markets wait to see the full scale of western measures over the seizure of Ukraine's Crimea and support of its referendum to join Russia, after losing billions of dollars in recent weeks in state and corporate money.

For weeks, Russian officials have said the confrontation between Moscow and the West over Ukraine that threatens economic sanctions and asset freezes would "weigh on the economy".

Although not speaking directly about the impact from the conflict, Deputy Economy Minister Sergei Belyakov said on Monday the economy was in trouble.

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http://www.reuters.com/article/2014/03/17/us-russia-economy-crisis-idUSBREA2G0RF20140317

Doesn't seem funny yet.

Russian upper house speaker calls U.S. sanctions "political blackmail"

(Reuters) - The speaker of Russia's upper house of parliament on Monday denounced as "political blackmail" U.S. sanctions imposed by the White House on her and 10 other Russian and Ukrainian officials over Moscow's takeover of Crimea.

"This is an unprecedented decision. Such a thing was unheard of even during the Cold War," Valentina Matviyenko, 64, Russia's leading female politician and its third highest-ranking figure, told the Interfax news agency.

"This is political blackmail," Matviyenko said, adding that the sanctions would not hurt her as she said she held "no accounts and no property abroad."

http://uk.reuters.com/article/2014/03/17/ukraine-crisis-usa-matviyenko-idUKL6N0ME43Q20140317

No, that doesn't seem like laughing.