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Newsweek
6 hours ago
- Business
- Newsweek
Russia's Economy Facing Triple Threat
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Russia's economy faces the triple threat of a banking crisis, companies forgoing dividend payouts and a sharp downturn in growth as the sanctions-hit country experiences continued turbulence due to President Vladimir Putin's full-scale invasion of Ukraine. The Kremlin-linked Center for Macroeconomic Analysis and Short-Term Forecasting (CMASF) has warned of problems in the banking sector which include an increased likelihood of a run on banks, although it said a full-blown crisis has not happened yet. The CMASF has told Newsweek that a volatile stock market was one factor contributing to jitters. Newsweek has contacted Russia's Finance Ministry for comment. This stock image from January 11, 2025, shows notes of Russia's currency, the ruble. This stock image from January 11, 2025, shows notes of Russia's currency, the It Matters Russia's economy has so far weathered much of the western-led sanctions that were aimed at punishing Putin for his aggression and starving his war machine. However, relatively decent growth fueled by Putin's record military spending has been marred by inflation and a worker shortage impacted by those fleeing the draft and troop losses in Ukraine as experts warn of longer terms problems for the economy. What To Know The CMASF said in a report this week there is an increased likelihood of "a systemic banking crisis" in Russia. Such a crisis would involve at least one of three things; a run of the banks by depositors, non-performing loans exceeding 10 percent of total banking assets, or large-scale bank recapitalizations exceeding 2 percent of the country's GDP. None of those conditions have been met so far, but the risks are growing, it said. In emailed comments to Newsweek, the CMASF said a sharp increase in the volatility of the main index of the Russian stock market (MOEX) is a good indicator of greater economic uncertainty people feel. This week, Russia's stock market took a sharp dive following the threat by President Donald Trump of new sanctions and his jibe after Moscow's drone and missile barrage of Ukraine that Putin was "crazy." The CMASF also told Newsweek a sharp increase in the ratio of money supply to the monetary base reflects the increasing pressure on the liquidity of the Russian banking system. These factors taken together can increase vulnerability and the likelihood of banks experiencing "cash gaps". Fight and Flight In April, the CMASF warned there was an increased possibility of "depositor flight" or a run on the banks. This was caused in part by the prospect of an economic downturn due to Russia's Central Bank setting a key interest rate of 21 percent to curb inflation of 10.2 percent amid warnings this will stifle lending and investment. Russian Firms Forego Dividends It comes as the boards of two dozen Russian companies advised against paying out dividends to shareholders due to declining export revenues and sanctions. State statistics agency Rosstat said that in 2024, Russian companies generated total earnings of 30.4 trillion rubles ($381.1 billion) down 6.9 percent compared with 2023, or a 15 percent drop when adjusted for inflation. Firms in mining and energy are among those foregoing dividend payments. such as Gazprom, Norilsk Nickel, NLMK and Severstal, but other could follow suit, the Vedomosti business daily reported. The outlet reported that the suspension of dividends is linked not only to worse market conditions but also to the high cost of borrowing. Boris Grozovski, an expert on Russia's economy at the Wilson Center think tank, told Newsweek in January that the high key interest rate had put Russian companies in a very difficult position. Rising costs, higher energy tariffs, higher gasoline costs, higher wages, higher transportation and logistics costs, meant that net profits are decreasing, he added. Growth Slump As corporate borrowers are struggling to service their debt and more households accumulate bad loans, Rosstat said last week that growth in the first quarter of 2025 was only 1.4 percent. This is three times less than 4.5 percent in the final quarter of 2024 and almost four times less than 5.4 percent for the same period last year. The Russian economy faces not just a slowdown, but a likely recession, independent outlet The Bell reported, adding that latest official data suggests the economy could dip into negative growth as early as this summer. What People Are Saying Center for Macroeconomic Analysis and Short-Term Forecasting: "The current situation is characterized by the 'resonance' of several negative signals and trends indicating an increase in macro-financial risks." What Happens Next Although GDP growth has slowed, much depends on whether there is a peace deal in Ukraine which could see Trump restore trade between the U.S. and Russia. Kyiv and its allies want Washington to maintain economic pressure on Russia and U.S. lawmakers are drawing up a new list of possible sanctions, adding to anticipation on whether this could force Putin to the negotiating table.
Mint
20-05-2025
- Business
- Mint
From weapons and oil to financial institutions: UK hits Russia with 100 sanctions as Trump-Putin call yields no progress
The United Kingdom has announced a sweeping package of 100 new sanctions against Russia, just a day after a high-stakes phone call between US President Donald Trump and Russian President Vladimir Putin failed to produce a breakthrough on a ceasefire in Ukraine. With Moscow showing no signs of de-escalation, Britain and its European allies are ramping up economic pressure in a bid to curtail Russia The latest measures include restrictions on the supply chain of Russia's military, particularly weapons systems such as the Iskander missile, which the UK says has been used indiscriminately against civilian areas in Ukraine. The UK has also sanctioned 14 additional members of the Kremlin-linked Social Design Agency (SDA), a key player in Russian disinformation campaigns. Senior SDA figures had previously been targeted in an earlier sanctions round. In a move to further cripple Russia's economic resilience, 46 financial institutions accused of helping Moscow evade previous sanctions have been added to the blacklist. The St Petersburg Currency Exchange and the Russian Deposit Insurance Agency are among those now subject to restrictions. The UK also turned its attention to the so-called 'shadow fleet' — tankers used to bypass the G7-imposed $60 per barrel oil price cap. Eighteen more ships used to transport Russian oil covertly have been sanctioned in an effort to choke off one of the Kremlin's key revenue streams. With Washington yet to act, European leaders pressed ahead. 'We have repeatedly made it clear that we expect one thing from Russia — an immediate ceasefire without preconditions,' said German Foreign Minister Johann Wadephul in Brussels. As Russia rejected that demand, Wadephul warned: 'We will have to react. We also expect our U.S. allies not to tolerate this.' European Commission President Ursula von der Leyen confirmed a further sanctions package is in the works. 'It's time to intensify the pressure on Russia to bring about the ceasefire,' she posted on X. The lack of immediate US sanctions following the Trump-Putin call has irritated European allies. France's Foreign Minister Jean-Noël Barrot declared: 'Let us push Vladimir Putin to put an end to his imperialist fantasy.' Trump, who has repeatedly promised to end the war in 24 hours if reelected, portrayed his two-hour call with Putin as progress, saying Russia and Ukraine are ready to negotiate. But officials in Kyiv and Brussels disagree. This new sanctions package is part of a broader effort by the UK and its allies to increase the cost of Russia's invasion of Ukraine, now in its third year. The move comes as European nations push for stronger international unity on the issue, amid frustration over the limited response so far from the United States. 'We urge [Putin] to agree a full, unconditional ceasefire right away so there can be talks on a just and lasting peace,' Britain's Foreign Minister David Lammy said, while calling the Russian leader a 'warmonger.' Russia, for its part, rejected the new wave of pressure. 'Russia will never bow to ultimatums,' Foreign Ministry spokeswoman Maria Zakharova said, reiterating that Moscow is willing to continue talks based on its own terms. Russia has stated that the 'ball is in Kyiv's court,' but Ukraine President Volodymyr Zelensky and European leaders remain wary, accusing Moscow of using diplomacy to delay while continuing its attacks.
BBC News
29-04-2025
- Business
- BBC News
Malta's golden passport scheme breaks EU law, top court rules
Malta's so-called golden passport scheme that lets people become citizens through financial investment is contrary to European law, the EU's top court has EU commission took Malta to court in 2022 over the scheme, which grants foreigners a Maltese passport and thereby the right to live and work in any EU country in return for paying at least €600,000 (£509,619), buying or renting property of a certain value, and donating €10,000 to EU's Court of Justice said the scheme "amounts to rendering the acquisition of nationality a mere commercial transaction".Malta's government has not yet responded to the ruling, which former Prime Minister Joseph Muscat called "political". He said he believed the scheme could continue with "some changes".The country risks hefty fines if it does not comply with the EU's Court of Justice said "the acquisition of Union citizenship cannot result from a commercial transaction."Malta has repeatedly insisted that it was correct in its interpretation of EU treaties, Reuters news agency 2022, it suspended the scheme for Russian and Belarusian nationals in the wake of Russia's invasion and Europe's crackdown on Kremlin-linked ruling goes against a report last October from the court's Advocate General at the time, Anthony Collins. He said the commission had failed to prove that EU law requires a "genuine link" between the person and the country to grant lawful citizenship, adding it is for each member state to decide who is "to be one of their nationals and, as a consequence, who is an EU citizen".Although each EU member state determines how they grant nationality, the court said Malta's scheme "jeopardises the mutual trust" between member EU has previously called on countries to end the practice, noting that investor citizenship schemes carried "inherent" security issues, as well as risks of money laundering, tax evasion and corruption.
Yahoo
17-04-2025
- Politics
- Yahoo
Trump's DC attorney pick made over 150 appearances on Kremlin propaganda outlets
U.S. President Donald Trump's candidate for the U.S. attorney for the District of Columbia, Ed Martin, appeared more than 150 times on Russian state-run propaganda outlets RT and Sputnik between 2016 and 2024, the Washington Post reported on April 16. Martin frequently offered views on RT and Sputnik that aligned with Kremlin narratives, including echoing Moscow's grievances about NATO and the war against Ukraine. His media presence included appearances as recently as 2024. In early 2022, nine days before Russia's full-scale invasion of Ukraine, Martin told RT's global network there was "no evidence" of a troop buildup on Ukraine's border and accused U.S. officials of ignoring Russia's security concerns. Just hours before the U.S. launched missile strikes on Syria in April 2017 in response to a chemical weapons attack that killed 90 civilians, Martin told RT America that Russian-backed Syrian dictator Bashar al-Assad may not be responsible. Martin's selection to lead the D.C. U.S. Attorney's Office — the country's largest federal prosecutor's office — has alarmed former national security officials. They noted the position holds broad authority over high-profile cases, including those involving espionage, public corruption, and domestic extremism. Martin currently serves as U.S. attorney for the District of Columbia ad interim. A spokesperson for Martin's office, Neil McCabe, defended the nomination. "President Trump made a brilliant choice in selecting Ed Martin to serve a full, permanent term as United States Attorney for the District of Columbia," McCabe told the Washington Post. Martin's frequent use of Kremlin-linked platforms drew condemnation from national security experts who say such appearances help legitimize and amplify Russian propaganda aimed at undermining the U.S. and its allies. The revelations come as Trump's administration pushes a rapprochement with Moscow. While Trump continues to praise Russian President Vladimir Putin's willingness to negotiate a ceasefire in Ukraine, the Kremlin has ramped up deadly attacks, including a ballistic missile strike on Sumy on Palm Sunday on April 13 that killed 35 civilians. Read also: Putin praises Musk as visionary, likens him to Soviet-era space icon Korolov We've been working hard to bring you independent, locally-sourced news from Ukraine. Consider supporting the Kyiv Independent.
Euronews
11-04-2025
- Business
- Euronews
European companies risk sanctions breaches amid surge in shady transactions, report claims
ADVERTISEMENT The number of European companies unwittingly involved in business transactions with countries or entities subject to sanctions is growing, with a notable surge taking place since 2022 and the start of Russia's war in Ukraine. That uptick was first outlined in the "Kleptotrace" report by Transcrime , a research centre at the Catholic University of Milan, which was presented this week to Europol, the EU police cooperation agency based in The Hague. The study was co-funded by the European Union and focused mainly on sanctions imposed by the bloc on Russia and Kremlin-linked oligarchs since 2014, the year of Moscow's unilateral annexation of Crimea, which have been ramped up since the 2022 full-scale invasion. The report illustrates how dense, shadowy networks of intermediary companies — often fictitious and represented by frontmen — are operating in jurisdictions not aligned with the sanctions regimes and have turned sanctions into lucrative money-making machines. Rescuers work on the site of a factory bombed by Russian forces in Dnipro, 10 April, 2025 AP Photo Companies at risk Unsuspecting European companies, especially small and medium-sized enterprises (SME), often fall foul of these schemes, as they lack the necessary tools and security infrastructure to recognise potential risk partners. "The measures were introduced very quickly and the larger economic operators were able to set up adaptation systems," Giovanni Nicolazzo, a researcher at Transcrime and co-author of the report, explained to Euronews. "Small and medium-sized companies, on the other hand, continue to have difficulties in assessing the sanction risk of their stakeholders," he added. Obtaining reliable information about the organisations companies do business with costs time and money. And in the absence of automated systems, it then becomes a matter for transnational investigations using professional firms — often involving lawyers and accountants — which can leave an SME with an exorbitant bill. The exterior view of the Europol headquarters in The Hague, 2 December, 2016 AP Photo "In addition to identifying the company's owner, it is necessary to reconstruct the entire supply chain, right down to the end users," Nicolazzo said. "Those who do not have access to adequate tools or databases end up relying on simple self-declarations by the supplier or customer, which alone are not enough." But for experts and investigators, a self-declaration is too easy to submit and not a sufficient enough background check. The sectors most exposed to this type of incident are electronic components, mechanical engineering, aeronautics and technologies for both civil and military purposes. The European Union has initiated a process to help companies with this process. Called the EU Sanctions Helpdesk , it aims to assist primarily SMEs to conduction due diligence on who exactly they're working with. Companies and anonymous shareholdings According to Transcrime's research, the very ownership structures of many European companies could belong to entities subject to sanctions. ADVERTISEMENT At the time Russia's full-scale invasion of Ukraine started, thousands of companies within the EU and in Ukraine and other European countries were owned by at least 342 nationals of the Russian Federation who were subject to sanctions. The Kleptotrace report also says that in the first months of 2022, almost 10,000 companies were owned by sanctioned persons. And these are just the official, known figures. However, the responsibility for implementing sanctions remains at the national level, and sometimes, that is insufficient. ADVERTISEMENT Two men walk past a currency exchange office in Moscow after the US sanctioned the Moscow Exchange, 13 June, 2024 AP Photo Stephen Piccinino, an official of the Malta Financial Services Authority, says that in wartime circumstances "a state that is serious about enforcing sanctions should investigate the activities of large conglomerates in its national territory." "Be particularly careful if it possesses resources such as precious metals. And above all, check for internal corruption, particularly if there are any domestic politicians with past links to sanctioned individuals or entities," Piccinino told Euronews. A statistical update is currently being carried out by the Transcrime research centre. Although the final figures aren't yet available, researchers conclude that the number of companies linked to sanctioned Russian entities — either directly or indirectly — may not have decreased sufficiently since 2022. ADVERTISEMENT Global finance, local corruption The dense network of global financial markets offers protected channels to those wanting to evade sanctions. Very often, these are the same routes used by organised crime for money laundering operations, as revealed by Europol in its EU Serious and Organised Crime Threat Assessment 2025 report published in March. Experience and banking contacts accumulated by corrupt political sectors are crucial to sanctions evasion networks. "If, for example, I am a corrupt politician from a European country and I want to conclude a transaction to build energy infrastructure in a sanctioned country, I can conclude the contractual agreement, and I receive the payments via a risky but non-sanctioned country to the terminal bank account in my country, because I know that my bank does not do the necessary checks," Piccinino explained. Russian President Vladimir Putin during a meeting at the Kremlin in Moscow, 9 April, 2025 Vyacheslav Prokofyev/Sputnik Piccinino further explained that in his experience, intermediary banks are located "in well-known countries" such as Caribbean nations and are financial entities already in contact with "banks that do not apply the so-called know-your-customer procedures and also have poor transaction control systems." ADVERTISEMENT According to Transcrime, most frequently under the lens of national authorities are sectoral sanctions evasions, which account for 80% of all evasion cases. Sectoral sanctions are measures against entire industrial or service sectors. The companies involved are often intermediary companies — or so-called paper companies — that formally exist but have no real economic activity, with fictitious headquarters and insubstantial assets. "Often these are entities that would have no economic justification for acquiring such assets. A thorough audit would reveal suspicious addresses, links with other similar companies and the absence of indicators of real operations," Nicolazzo clarified. Related EU expands sanctions against Russia to ban luxury goods and energy investments As sanctions bite, how much economic pain is Putin willing to take? EU sanctions Russian officials accused of 'systematic' sexual violence against Ukrainian women According to the Kleptotrace report, on average, three paper companies and at least five countries are involved between the seller and the buyer in every transaction that circumvents sanctions. ADVERTISEMENT The payment methods are those typical of organised crime, namely bank transactions through offshore accounts and the exchange of luxury goods, such as large pieces of jewellery, real estate, and shares. Europol has already highlighted how difficult it is to effectively restrict economic exchanges in the context of high interdependence between states, private companies and transnational criminal networks.
