The beginning of the year — the traditional time of the arrival of “black swans”. The term entered into circulation at the time the American economist Nassim Taleb, and in exchange practice it denotes future events, having significant impact, but difficult to forecast. How combat will be coming in 2018? It depends on whether timely recognized its risks and adequate responses.
photo: Alex geldings
What cannot be
The predictions are different. There is a dull gray, where the official language is repeated repeatedly Chicane. Are written as if the author just had a session with otherworldly forces, having secret knowledge, and confused, and before I forget, in a hurry to pass heard, not caring justification. Are written specifically to shock. The authors, under the pretext of catching “black swans” to describe something that simply cannot be. This genre is rather entertaining.
These are the predictions at the end of each year publishes, for example, the Danish Saxo bank, specifically qualifies this by adding that this production is not an official forecast. For 2018 Saxo bank as is “unlikely, but underrated” events called, for example, the transition of the Federal reserve system of the United States under the control of the administration of Donald trump. It is certainly a risk, but its probability is negligible: even timid attempts in this direction fail under the possible impeachment of the American President.
Another “prediction” — the emergence of “nefteyuani”. The question immediately arises: why should the already increasingly ageusia yuan took the prefix “oil”? The Russian reader, overfed with information about the Russian-Chinese opposition to American geopolitical dictates, can click: here European banks see the prospect of joint strike Beijing and Moscow on the dollar! Alas, Saxo bank a different story. Economic ties between China and the U.S. are so closely intertwined that seriously tear them not interested, no one of the parties. All the more prosaic. The prefix to the yuan appeared, first, the risk became even more risky, and secondly, on the basis of the possible success of the oil futures denominated in yuan. The risk is not politically motivated, which the Bank did not say and that financial markets are overloaded with different tools, and their sudden restructuring could cause an avalanche-like gatherings of quotations, the new crisis.
If to leave alone the specific feeder for “black swans”, built in Saxo bank, what are the real risks in 2018, could face the Russian economy?
Chronologically, the first risk is the new U.S. sanctions. They are expected to. While the most actively discussed two components: a ban on American investments in Russian government bonds and a substantial extension of the list fall under the sanctions of individuals along with freezing their assets.
The first risk applies to the financing of the deficit of the Russian Federal budget, as well as on the currency market and the ruble, which has been maintained along with the price of oil, investment by foreigners in domestic government bonds, whose income is significantly above the average for the financial market. The obvious replacement to investors non-resident is the activity of the Bank of Russia. But not the only one. Possible consequences: higher inflation expectations and an increase in the share of the state in the financial market. Both contradicts the official economic policy.
The period of the ruble (in the absence of growth in oil prices), in turn, will lead to a range of consequences. There is a positive support domestic producers through import restrictions and capacity building of Russian exports, including non-primary. The latest extension, according to the Center for strategic research under the direction of Alexei Kudrin, a key factor as the development of our economy in the short term, and the necessary structural changes in it.
There are negative — reduced standard of living at the expense of reducing the share of imports, reduction of import of machinery and equipment, which hampers the upgrade of the database industry; the possible rise in inflation.
However, a bigger impact does not cause macroeconomic risks new sanctions, and saving money of persons who fall under these sanctions. Here is a characteristic of the Russian business elite paradox. On the one hand, under the sanction of those who, according to American intelligence, particularly contributed to strengthening the military capabilities of Russia. On the other hand, it appears that these figures are significant assets in the United States and the West in General.
As one consistent with the others? Humdrum. It is clear that we are talking primarily about big business. A large Russian business is closely associated with the state. Otherwise it can not be, if you agree with the estimates on which our economy is 70% controlled by the state. The success of participation in state programs largely depends on the quality of relationships “in the upper respiratory tract”. What these connections stronger, so, according to the American logic, more reason for the sanctions. And as luck would have it turns out that a significant part of the assets of the most distinguished in the implementation of government orders is in the West. “Elite” we have obtained with a double bottom.
The government is preparing to facilitate the return of prodigal capital through the issuance of foreign currency bonds. Macroeconomic meaning that those who return to their historical homeland money can to some extent compensate prohibited by sanctions, the contribution of foreign investors in Russian government bonds. However, that replacement is complete, there are doubts. Risks will increase.
War and peace
Currency bonds — a reaction to the new sanctions, but the war logic of sanctions requires more: retaliation. Although if the answer is on the principle of “a tooth for a tooth”, it quickly becomes clear that the “teeth” of the Russian economy for this is insufficient.
What could be a new contractee? To prohibit the export of hydrocarbons in the country, declared Russian sanctions — so in the best case to give a significant portion of oil and gasoducto intermediaries, and at worst — to put its economy on the brink of survival. This is akin to suicide.
Still under discussion, in particular, refusal to pay debts to those countries that will impose on the American model of new sanctions against Russia. But on the state level debt is negligible, but if the prohibition to pay debts will apply to the Russian company, against them will begin on the courts, the seizure of assets. In these circumstances, the expansion of exports supported by the period of the ruble, it becomes problematic because it will require loans from buyers, and if you will not be allowed to repay their debts, a blow to the exporters. In any case, the new counter is a new risk for the Russian economy.
The most dangerous thing in the war of sanctions is war itself, which stop the growth of the intensity of the confrontation becoming increasingly difficult. A small example: even in the case that the counter will be limited to a waiver of payment on the public debt, the question arises: what to do in case of waiver of sanctions with accrued interest and penalties?
While gradually building up a tolerance to the fact that the sanctions — if not forever, then certainly for a long time. It’s addictive to the strategic defeat of Russia. Sanctions hamper its development at a time when it desperately needs to accelerate technological, social and economic growth, without which it risks being on the sidelines of the “fourth industrial revolution”. And this directly affects the vital interests of future generations, which is ending to put at stake the war of sanctions. Hence, the strategic goal of stopping this war.
The new government — a new course?
Chronologically, the new sanctions follow the risks associated with the formation of a new Government of the Russian Federation, which will be after the presidential election on March 18, 2018. The question is to what extent the formation of the new Cabinet will be in line with counter-sanctions. In other words, whether it’s a Cabinet war. While the war of sanctions. Whether to keep your post, for example, Dmitry Rogozin, famous generals in the phrase: “Tanks do not need a visa”? Will the government of his followers?
Yet outweigh hopes that the choice in favor of transition to a mobilization model of the economy is not going to happen. In persons this is confirmed by his reappointment to another five years of Elvira Nabiullina for the post of Chairman of the Central Bank. But the risk of the Cabinet of new faces with a new, much more aggressive approaches remain.
Oil will not give?
The price of oil — a traditional area of risk for Russia. But it is curious that in 2018 all major man-made risks. It’s not only sanctions, counter-sanctions, the choice of the future political course, but even to a considerable extent and the price of oil.
Their current relatively high level — the fruit of the agreement OPEC+, a demiurge which, together with Saudi Arabia was Russia. It extended for the whole of 2018. The risk, however, that in June, the parties should consider the mechanism of termination and exit. On the one hand, such a mechanism should be definitely developed while the agreement is valid. On the other hand, there is a danger that once the mechanism will appear, will be willing to use it. And that wish could be Russia. Our country has expressed interest in the speedy termination of the agreement.
Here there is a clash of interests of the Federal budget, for which the anchor of the price level provided by the agreement, is extremely important, and the interests of oil companies, which are interested to invested in the expansion of production capital was not omertvlenie. They believe in payback its cost and at reduced prices.
Interesting position, energy and economic development. First openly supported the lobbying of the oil companies. The second opposed the agreement OPEC+. In the limit of oil production subordinates Maxim Oreshkin saw one of the reasons for the slowdown in economic growth in November 2017. The paradox is that when this agreement was not and the race was the production of “black gold” on the background of the prices are significantly lower today, the same economic development seen in low oil prices one of the reasons for the economic downturn.
Russia’s withdrawal from OPEC+ or early termination of the agreement can lead to a drop in oil prices, and is an obvious threat to the economic interests of our country. This development can be seen as the result of active intervention in economic policy and even geopolitics (such a move could damage the growing relations of Russia and Saudi Arabia) from oil generals acting in the interests of their companies to the detriment of filling of the Federal budget.
And this is a risk beyond 2018: the risk of substitution of state interests with interests of officials, including those at the head of the state-owned companies.
Igor NIKOLAEV, Director of the Institute of strategic analysis FBK:
— The main risk factors for the Russian economy in 2018 will be the aggravation of the external political environment, including the strengthening of anti-Russian sanctions and a possible drop in oil prices due to increasing shale oil production in the United States and the threat of collapse of agreement on production cuts made by OPEC+. As our economy remained raw, she will naturally react negatively to it.
Yakov MIRKIN, head of the Department of international capital markets, Institute of world economy and international relations Russian Academy of Sciences:
— The first risk, which could face the Russian economy is the world price of raw materials. Being a financial product, they strongly depend on the fluctuations of the dollar and the Euro. The following risk factors — geopolitical shocks. In particular, the factor of North Korea, invisibly impacting the global economy at the expense of unpredictability. In addition, problems may arise for the ruble, inflation, and investment banks, if you turn the flow of hot money, which now goes to the Russian economy from abroad.
Andrei NECHAYEV, former Minister of Economics:
— In addition to the external factors associated with the intensification of anti-Russian sanctions against Russia can play a drop in oil prices. According to the forecasts of the US Department of energy production in the country in 2018 will reach 10 million barrels a day, and some experts say even more — 11-12 mln If so, then the United States became the largest producer of oil. Therefore, OPEC will no longer interested in the extension of the agreement to limit production, and this can again “drop” the barrel. The questions raised and the banking sector, where large banks actively sanitize.
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