Economy
In reply to the discussion: Weekend Economists ask the Question of the Year (so far) July 11-12 2015 [View all]MattSh
(3,714 posts)By Robert Berke, Oilprice.com:
In a previous article on Oilprice, I questioned whether western sanctions imposed on Russia were being regularly breached by E.U. and Asian companies, noting that sanctions only work if all countries unite behind them.
In June, the Financial Times reported that only one year after being imposed, the sanctions are eroding. It seems that government and business policies are pulling in opposite directions, despite the sanction regime being clear on the activities that are banned, as explained by Forbes:
Last July (14), the E.U. banned its companies from signing any new financing deals with Russia. In September, the E.U. placed even more restrictions on Russias access to E.U. capital markets. The sanctions state that individuals and corporations from the E.U. are banned from providing loans to five major Russian state-owned banks, including Sberbank and VTB Bank, and the three state owned energy companies, of which Gazprom tops the list.
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These potentially sanction busting deals were announced at the St. Petersburg Economic Forum:
BP buys 20% of Rosneft-owned oil reserves in E.Siberia, in a $700 million deal, creating new Asian-bound oil partnership
Rosneft and Indian state-run Oil and Natural Gas Corp signed long-term deals.
Gazprom and Royal Dutch Shell are building a global alliance
Gazprom signed an agreement with the Greek government to pursue its Turkish Stream Pipeline
Gazprom signed a 300 million euro loan with Unicredit Bank of Austria
Gazprom held discussions with Engie (formerly GDF Suez) over gas pipelines to France
The capper came at the St Petersburg Economic Forum, where the Saudis arrived, offering to be a full-fledged finance partner in Russias energy development, in exchange for Russian nuclear expertise and military arms. Two weeks later, the Saudis raised the bet with a five-year, $10 billion investment in Russias agriculture, retail, and real estate sectors.
It is one thing to see Russia replace the West with China as client, partner, and financier of energy development; its quite another to see Russia swap western finance for Middle Eastern finance, sourced from one of the Wests strongest allies. That is likely to cause major concerns in western banking circles.
Complete story at - http://wolfstreet.com/2015/07/09/eu-asia-ignore-russia-sanctions-us-companies-left-behind/