The Coronavirus and Russia sanctions

The coronavirus alters almost everything. That includes the potential for new or enhanced US sanctions on Russia. In practical terms, the Congress simply has more — and more important — issues to fill its time. Still, the Kremlin’s constitutional revisions, oil price war and cyber fiddling provide enough political motivation to keep the question very much alive.

COVID-19 in Russia

Summary: Given the impact of Covid-19 for the country, the economy and for investors in Russia, we are initiating a regular series of updates covering the crisis. We will issue regular updates with news of government actions and analysis of what these mean for the economy and investors.

Oil Price Impact on Russia and Saudi: Basic Facts & Scenarios

Second part review. This is the second part of our review of the expected impact from the ending of the OPEC+ agreement. The key conclusion is that while Moscow is in a much better financial position today than is Saudi Arabia, or Russia’s position in 2014 (see our previous report Oil War: Who blinks first?), Russia stands to lose a lot more than Saudi Arabia over a full year in terms of export revenue as a result of the promised surge in both Saudi and Russia oil.

Presidential term limit clock is reset – no lame ducks allowed

Major Constitutional change. The Duma on March 10th voted through the “Tereshkova amendment” to the Constitution which will allow President Putin to serve another two terms in office after the amendments to the Russian Constitution are passed. Voting on the changes to the Constitution is scheduled for April 22nd.

Oil price war: Who will blink first?

Oil war commenced. Russia fired the first shot in an oil price war by refusing to expand the existing OPEC+ deal. Saudi Arabia moved the conflict forward with the weekend announcement that it will not only not extend the existing deal, which ends March 31st, but will open the taps and sell cheap oil. Over the short-term the oil price looks set to test the January 2016 level of US$29.50 per barrel.

Country snapshot Mongolia March 2020

Growth declined in 2019. Despite the surge in coal exports to China last year, GDP growth dropped to 5.1% for the year, from 6.9% in 2018 and 8.6% in 1Q19. Delays with the Oyu Tolgoi expansion and problems in other sectors, such as agriculture, balanced out the coal growth.

Country Snapshot Iran February 2020

On the international banking black list. On February 21st the FATF lifted the suspension on Iran and restored full restrictions, effectively blocking international banks from dealing with Tehran. That action led to a kneejerk 14% decline in the “street” value of the rial versus the US dollar. That risks spiking inflation again while deepening and extending the recession.

Russia In Context: Demographics and incomes create an agreeable sense of urgency

Demographics threat cannot be ignored. Russia’s natural population declined by 300,000 last year and that number is expected to grow each year in this decade. The problem is the big fall in the number of females of child-bearing age. This is a legacy of the 1990s migration and economic crisis. This is the reason why President Putin spent most of his recent Federal Assembly Address talking about the need for remedial actions and why US$47 billion has been allocated in the National Projects program.