Crypto-ban. Wait three years before the trial. Super ambitious! Losing the market
January 21, 2022
Crypto-ban
The Bank of Russia issued a Consultation Paper, which proposed a challenging option for regulating the cryptocurrency market: To impose a comprehensive ban on all operations with them in Russia—mining, issuance, circulation, exchange. The authors of the report were not confused by the fact that they propose to follow the path that only two countries in the world have chosen so far, China and Iran.
The report’s authors argued their position with a wide range of factors, from the high volatility of cryptocurrency prices to the threat of implementing energy transition plans and creating favorable conditions for criminal operations, money laundering, and terrorist financing.
The report suggests imposing penalties for violating the ban. In 1960, in the Soviet Union, the criminal codes of the republics (ridiculously, there was no unified criminal code in the country) introduced punishment for violating the bans on foreign currency transactions, including the death penalty. This did not stop Soviet citizens from buying dollars, marks, and pounds.
In presenting the report, Elizaveta Danilova, director of the Bank of Russia’s Financial Stability Department, softened the tone somewhat and said that
Bank of Russia didn’t discuss its proposals with other agencies,
Bank of Russia believes that punishment for violating bans can be limited to fines,
Bank of Russia doesn’t propose to ban Russians from owning cryptocurrencies and acquiring them in foreign jurisdictions. “As a body responsible for financial stability in Russia, as a regulator of the financial sector in Russia, we think it is imperative to ban the use of Russian financial infrastructure to acquire cryptocurrency. We believe that this will help remove a significant part of the risks and lead to the fact that cryptocurrency will not be so popular.”
Navy has found something to do, as well
The Russian Ministry of Defense has announced plans to hold a large-scale exercise of the Russian Navy in January-February 2022.
“The exercises will cover the waters of the seas adjacent to the Russian territory, as well as operationally essential areas of the World Ocean. Separate activities will take place in the waters of the Mediterranean, the North Sea, the Sea of Okhotsk, the northeast Atlantic Ocean, and the Pacific Ocean.
“In total, more than 140 warships and support vessels, more than 60 aircraft, 1,000 units of military equipment, about 10,000 militaries will participate in the events.
“The main focus of the exercise is to practice the actions of the Navy and Air and Space Forces to protect Russian national interests in the world’s oceans, as well as to counter military threats to the Russian Federation from maritime and oceanic directions.”
We should not be surprised that some part of this exercise will take place in the Black Sea near the coast of Ukraine.
Wait three years before the trial
The Investigative Committee of Russia has finished investigating the criminal case against a former Russian government minister, Mikhail Abyzov, and sent the case to the prosecutor’s office to confirm the indictment. If approved, the case will go to court. Along with Abyzov, there are 11 other defendants.
Mikhail Abyzov has been a successful businessman for many years and, in 2012, was appointed Minister of the Russian Government. The accusation against him has two parts. First, as the beneficiary of one of the companies, he is accused of having sold financial assets at an inflated price. This part of the accusation sounds more than dubious: A commercial transaction in which the buyer did not contest and the amount of the damage referred to by the investigation is not supported by any documents. The second part of the charge sounds more serious. However, the investigation has not presented any evidence to support its position: Abyzov is accused of continuing commercial activities (managing the assets he owned) while he was a minister. But even in this case, even if the minister is guilty of this, I have significant doubts about the impartiality of the investigation, which accuses Abyzov of money laundering of the proceeds from criminal activity.
Abyzov was a member of the team of Dmitry Medvedev, former president and former prime minister of Russia, now deputy secretary of the Russian Security Council. Immediately after Abyzov’s detention and indictment, Medvedev bizarrely commented on the incident:
“I did hear that there was, and still is, a certain conflict between him and the creditors, which, apparently, eventually got such a criminal legal development as well. That’s probably a bad thing. But now there is no other option for the development of events. Since the conflict wasn’t resolved in the civil law field through the court, lawsuits, etc., the only way to resolve this conflict will be via investigation and a court verdict. I am not going to remind you of the well-known legal principles; they are clear to everyone.”
Indeed, Mikhail Abyzov and his companies have been involved in several court disputes concerning commercial issues. Some of these have been completed, and some are ongoing. Abyzov lost some and won others. And that seemed normal. What seems abnormal is that the former president and former prime minister, a lawyer by education, considers it normal that a criminal case is opened and one of the participants in a commercial dispute is arrested. However, this is probably what “well-known legal principles” are all about.
The former minister was arrested almost three years ago, in March 2019, and has been in custody all this time. Abyzov became the second minister to be criminally prosecuted [but after he left office]. The first was the Economy Minister Alexei Ulyukaev, who was sentenced to eight years in prison in late 2017.
Win-win business
Rosatom and Armenia signed a memorandum of cooperation agreeing to discuss building new Russian-designed nuclear power units at the Armenian NPP.
The Armenian NPP was launched in 1976 and stopped its operation after a powerful earthquake in December 1988. The second unit of the NPP was restored and resumed operation at the end of 1995; the first unit is still not in operation.
The interests of the parties are apparent. Rosatom is looking to increase its portfolio, the bulk of which is financed by the federal budget. Armenia is interested in expanding the capacity of its energy system, reducing dependence on imported gas (which is the source of more than 40% of the country’s electricity production) and achieving the goals of decarbonization of the economy.
As they say, at your [Rosatom’s] expense, we are ready for anything!
At the same time, Rosatom signed an agreement with Kyrgyzstan to start negotiations on constructing a small nuclear power plant in that country.
Ambitious!
Prime Minister Mikhail Mishustin once again voiced the task of ensuring technological independence from foreign components in aircraft building and promised to allocate budget funds for its solution.
“It is crucial to ensure complete technological independence from the use of imported products, from foreign materials, components that do not yet have domestic counterparts.
“Solving this problem will remove possible risks for the development of this vital industry for the country, exclude delays in bringing new-generation aircraft to the market, prevent further production failures due to unfair competition from some foreign companies.”
After that, Mishustin said that the Russian authorities are waiting for the products of the Russian aircraft industry to compete in the global market, and to accelerate this work, “mechanisms of advanced financing of civilian aircraft building sector are actively used.”
Sounds nice! But... as they say in Russia, wait three years for the promised! In this case, I am ready to wait 10 years, forecasting the planes built exclusively with Russian technologies and Russian components will not be competitive in foreign markets. Unless, of course, the world market is more extensive than Iran + Venezuela + North Korea.
Super ambitious!
The Russian authorities intend to set a goal of creating a high-tech supersonic passenger aircraft that would be able “to reduce the flight time to the Far East, Australia, South Korea, and Japan. Such aircraft will be created with the use of advanced scientific solutions,” Mikhail Mishustin, the Prime Minister, proclaimed.
Russia’s leading aviation science center TsAGI, in 2017, presented its conceptual design for a supersonic aircraft, which was a part of the international HEXAFLY-INT project. The concept was designed to carry from 20 to 80 passengers, which, given the higher fuel costs, would make the flight 5-10 times more expensive than on existing aircraft. Today, the Russian Government subsidizes passenger fares from the Far East; I find it hard to believe that such a project has any obvious business prospects.
Losing the market
Gazprom’s strange commercial policy, which sees no need to sell more gas in Europe when prices have skyrocketed, is paying off—the company is losing market share. According to Gas Infrastructure Europe (GIE), since the beginning of the year, LNG imports to the European Union have been 50% bigger than the amount of gas delivered by Gazprom.