Breakdown of the Black Family and Its Consequences

Weekly — 8 March 2022

Emigration and economic collapse

Hello! This week we continue to look at the economic and political fallout for Russia — and Russians — of the fighting in Ukraine. The four stories we focus on are: the emigration of journalists, Information technology specialists and other professionals ; the plummet of the ruble afterwards Western sanctions on the Key Bank; ongoing turmoil on stock markets ; and the growing list of Western businesses that accept announced they are leaving Russia .

A statement from The Bell: The risks for journalists working in Russian federation rose exponentially terminal calendar week after a law was passed that punishes the spread of 'faux news' with up to 15 years in jail. It'due south already well known that Russian officials refuse to depict events in Ukraine as a 'state of war', preferring the term 'special military performance'. As a upshot, nosotros are halting all direct coverage of Russia's 'special military operation' in Ukraine until further observe — although nosotros volition, of course, continue to report on its far-reaching economic, political and social consequences. If you find that we're beingness circumspect about our choice of language and topics — you're correct. We are. At the moment nosotros believe that's the only way we can protect our journalists, and continue to function as a media outlet.

A new emigration

Fearful of the economic and political consequences of fighting in Ukraine, possible conscription, and rumors of martial police force, thousands of Russians are thinking near leaving. As European airspace is now closed to Russian shipping and some coronavirus travel restrictions remain in place, exit options are express. Western sanctions mean most of Russia's civilian aircraft will soon be grounded, and plane tickets are irresolute hands at prices that would have been unthinkable just a few weeks ago.

• "My colleagues bought one-way tickets from Moscow to [the Armenian majuscule] Erevan for 135,000 rubles ($1,400). This is the new reality," said Pavel Smirnov, a relocation skilful at How-do-you-do Move. Such a ticket would previously accept likely toll no more than ten,000 rubles. Prices for air tickets have risen as much as 30 percent over the last week, according to the Association for Russian Tour Operators.
• The most pop destinations for Russians exiting the country are Turkey and the South Caucasus countries of Armenia, Georgia and Republic of azerbaijan. Russians practise non need visas to enter any of these states, and Russian is widely spoken in the South Caucasus. The founder of the Retomagic app, Mark Krasotin, is one of those who re-located in recent days. "The determination to move was a no-brainer considering our app is international and has users all over the earth. Nosotros were worried that they would begin to block the App Store and Google Play and our work would become technically impossible," he said.
• Merely it's not but IT professionals who have fled: hundreds of journalists have too left the land fearing political persecution every bit the Kremlin imposes wartime censorship. Over the last week, a series of prominent independent media outlets — including television channel Dozhd and radio station Ekho Moskvy — have announced a suspension of their activities, or been forced to shut-downwardly entirely. The Russian authorities have also begun blocking major social networks, including Twitter and Facebook.
• Nevertheless, nigh journalists left because of a law passed Friday by the Russian parliament that includes draconian punishments for those found guilty of spreading 'simulated news' — including upwards to 15 years in prison. For the moment, it's unclear how the law will work in practise, but, immediately after the get-go of Russia'south 'special armed services operation' in Ukraine, journalists were officially warned to written report on events using only official Russian sources. In theory, whatever other information that was reported could be divers equally 'fake news'. Of course, the police is probable to be used selectively — only everyone in Russian federation has reason to be afraid.
• Those who are still in Russian federation have little fourth dimension left to make up one's mind whether they will leave. The Western sanctions imposed on Russian airlines hateful there will soon exist few planes left able to fly (well-nigh of the aircraft used by Russian airlines are Airbus or Boeing and are leased from European Spousal relationship countries, or insured by European companies). Russia'south Federal Agency for Air Transport said Saturday information technology was recommending all Russian airlines halt international flights because in that location was a growing run a risk that their planes would be seized when abroad. By Tuesday, the only way to leave Russian federation by air is probable to be on foreign carriers like Turkish Airlines that continue to operate in Russia.

Sanctions on Key Bank transport ruble into tailspin

The Russian ruble is experiencing a tape collapse. It ended terminal week down twenty percent against the dollar and the euro, at one point Thursday hit 117 to the U.Due south. dollar (before the beginning of Russia'due south 'special military operation' in Ukraine it was less than 80 against the greenback). Moscow Stock Exchange halted trading until March nine, only in the international forex market the ruble on Monday hitting 153 to the dollar.

Major currency moves began Monday following the imposition of sanctions on the Russian Central Depository financial institution — which meant information technology could no longer support the ruble by selling its reserves.

Unlike its counterparts in Iran and Syria, the Russian Central Banking concern was not added to Washington'south SDN-list (which means total isolation from the U.S. financial system), simply the U.South., European Spousal relationship, Canada, United Kingdom and Japan have all banned it from operating. That meant the Fundamental Banking company's reserves of U.Due south. dollars, euros, pounds sterling and Japanese yen became inaccessible almost overnight, depriving information technology of one of its main tools to influence the exchange rate.

After the announcement of sanctions on the Central Banking company, one past one, the credit rating agencies began announcing that Russian federation would be downgraded:

• S&P on Monday lowered Russia's rating from the investment-grade BBB- to junk rating BB+ (below investment level). 4 days later information technology downgraded Russia again – this time to CCC- (indicating a significant take a chance of default).
• Moody'southward downgraded Russia on Thursday past vi notches, from Baa3 to B3 (below investment grade). Then, on Sunday, it downgraded Russia once more to Ca, the second lowest rating possible, citing a growing run a risk of default.
• Fitch gave Russia the junk B rating Wed.

"It was previously thought that information technology was practically incommunicable to sanction the Key Depository financial institution —particularly because of the extent to which the [Russian] economy is integrated into world financial markets and the size of the Central Bank's gold reserves," said Sofia Donets, the master economist at investment banking company Renaissance Capital.

Russian federation's international reserves — including aureate — were terminal calendar month valued at $643.two billion. Of that, the Primal Banking concern'due south gilded holdings were $132.iii billion. Less is known near the breakup of the currency reserves, but the latest available data (from ane July) shows that the Key Depository financial institution held $96 billion, $189 worth of euros, $38 billion worth of pounds sterling and $33 worth of Japanese yen. Eu foreign policy chief Josep Borrell said last weekend that the G7 (U.South., Canada, French republic, Germany, Italy and Japan) was able to freeze about half of the Central Bank's reserves as "they are in the banks of G7 countries". In this way, the Central Bank has lost access to near $250 billion of its currency reserves — leaving only $77 billion worth of Chinese yuan and its aureate reserves.

Other tools available to the Central Bank to support the ruble include interest rates and capital controls. Both have already been used: involvement rates were hiked by a record twenty percent Monday, and the list of capital controls is growing all the time.

Carnage on the stock markets

There are few doubts that the Russian stock marketplace has suffered its worst week in its history. Withal, it'south impossible to say this for certain because trading on the Moscow Exchange was suspended Monday and is non expected to begin again until Midweek (Monday and Tuesday this week are public holidays in Russian federation). Both Russian and strange investors have been 'stuck' in ruble assets.

• Short-selling was banned 24 February. And the Central Bank ordered brokers Thursday to take a commission of no less than 30 percent from individuals selling rubles (this was reduced to 12 per centum the following day). For organizations, the committee is too 12 per centum. In addition, the Key Bank banned the short-selling of euros Thursday and the National Settlement Depository halted operations with euros, pounds sterling, Swiss francs and Canadian dollars.
• There are fifty-fifty more than draconian restrictions for non-residents. The Cardinal Banking company has banned brokers from selling any securities for foreigners, who will as well not receive dividends or coupon payments (including from government bonds).
• Russian banks targeted by Western sanctions – including land-owned VTB, Otkritie and Sovkombank – can no longer purchase securities issued by foreign companies. Nonetheless, they can still trade Russian securities, sell strange securities and withdraw funds every bit normal. U.S. broker Interactive Brokers warned its Russian clients last weekend their accounts could exist frozen.
• Russian companies listed on the London Stock Exchange saw their shares become worth near cypher: country-owned bank Sberbank's shares vicious to $0.05 (compared to $14.76 on Feb. xvi) and privately-owned oil giant LUKoil nosedived to $0.72 (from $92.64 on Feb. sixteen). Many expect a collapse of a similar scale when stock markets finally re-open in Russia.

The Russian market place is at present anathema to foreign investors. Alphabetize provider MSCI said Wednesday information technology would driblet Russian stocks from its widely-followed emerging market place indices. Minutes later, index provider FTSE Russell said it would follow suit.

• The decision past the alphabetize providers will likely lead to an outflow of near $20 billion from Russian stock markets, according to analysts at investment bank JPMorgan. But it'southward not clear how much money investors volition actually exist able to extract — considering not-residents have been forbidden from selling Russian securities.
• Central Banking concern data suggests that about half of Russian shares are endemic past foreigners, according to Aleksandr Kudrin, the chief strategist at Aton investment group.
• In its statement announcing Russia'due south exclusion MSCI said the Russian marketplace is now "uninvestable." Russia volition be redesignated with a standalone condition.

Amid all this turmoil, the Russian regime announced measures to help the stock market survive. The regime said Tuesday that 1 trillion rubles from the National Wealth Fund has been allocated to buy the shares of Russian companies. "This enormous sum is equivalent to virtually 7.five percent of the free-float shares on the Moscow Exchange," said Vasily Karpunin, an annotator at investment company BKS. "If non-residents are not allowed to sell… these measures could have a very positive effect on stocks. Above all, blue-scrap stocks."

Western business organization scramble to exit Russia

The list of Western companies that are leaving Russia grows by the hr: from electronics visitor Samsung, to Swedish furniture-maker IKEA, adaptation site Airbnb and oil giants BP, Exxon Mobil and Beat. In many cases, there is unlikely to be a auction — the company's offices, or manufacturing facilities will simply be liquidated. Aware of the risks of mass redundancies this poses, Russia has threatened foreign companies with what amounts to nationalization. The government said in a argument that foreign companies looking for an exit have three options:

• Re-think and remain in Russian federation.
• Let foreign shareholders to handover their avails to Russian partners, which means they could, at some indicate in the future, render to the Russian market place. Some investors have already chosen this option, according to Kremlin aide Andrei Belousov.
• Complete their shutdown and burn all their employees — but the Russian authorities volition treat this as 'deliberate bankruptcy' (thus giving them the right to arbitrate to relieve jobs). Criminal prosecutions in cases of 'deliberate bankruptcy' are also possible.

Peter Mironenko, Howard Amos

Edited by Howard Amos

brownfroby1946.blogspot.com

Source: https://thebell.io/en/emigration-amp-economic-collapse/

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