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Buzz Barometer: New Sanctions & Bailout Plan In Spotlight
February 8, 2015 21:16

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The international press continues to keep Russia under microscope, with the focus on political and economic costs of Russia’s alleged role in the Ukraine crisis.
Reuters reports on the sanctions likely to be introduced against Russian individuals and entities.
However, the EU doesn’t want to burn bridges and has refrained to blacklist key government officials, like Defense Minister Sergey Shoigu as some have suggested. Instead, the bloc is set to sanction Deputy Defence Minister Anatoly Antonov.
The New York Times gives an overview of the bailout measures tabled by the Russian government to kick-start the failing economy and sooth the devastating effects of the sanctions, including ban on access to Western capital.
According to author Neil MacFarquhar, the plan is “a laundry list of half-measures and a vague promise of a 10 percent budget cut that economists almost unanimously dismissed as inadequate.”
“That plan is nonsense," Russian oligarch Alexander Y. Lebedev was quoted as saying, describing it as throwing away money to rescue some of Russia's worst companies. "Lots of words and little specific."
"They are trying to get by, manage it strategically and hope that oil prices rise, hope they can make a few adjustments and it will all go away," said Kenneth S. Rogoff, an economics professor at Harvard University who recently attended a high-level economics conference in Moscow. "There is no appetite for fundamental reform. They are just going to wait."
The big question is whether $385 billion in government reserves will be enough to plug the holes
Rogoff, a former chief economist for the International Monetary Fund, noted that governments habitually underestimate how fast they will go through their financial reserves when they race to bail out banks, save major state corporations and douse flames throughout an ailing economy.
“Last year, for example, the Central Bank of Russia said it had shelled out more than $80 billion to shore up the value of the ruble on currency markets,” says the piece.
"If oil prices stay low, under $70 per barrel, they are going to run out of money sooner rather than later," Rogoff told the New York Times.


Author: Mikhail Vesely


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