Articles | New Business Age | Leading English Monthly Business Magazine of Nepal

TFA Impasse In WTO: An Opportunity Could Be Missed

Nov 30, -0001 0 5 minutes 55 seconds to read

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Ukraine Crisis: Russian Economy In Peril

Nov 30, -0001 0 6 minutes 27 seconds to read

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	&nbsp;</div>
<div>
	<strong>--By Sanjeev Sharma</strong></div>
<div>
	&nbsp;</div>
<div>
	The landmark agreement to liberalize global trade has hit a gridlock after India refused to accept the pact following the country&#39;s disagreement on food subsidies. The Trade Facilitation Agreement (TFA) or the Bali Package, agreed by the Ninth Ministerial Conference of the World Trade Organisation (WTO), held in Bali, Indonesia on 3-7 December, 2013, would have been the first deal to reform global trade in two decades. The trade protocol which came as a result of relentless negotiations over the decades, basically aims to lower global trade barriers.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Upon its implementation, the TFA, ambits to smoothen trading between developing and developed economies by lowering import tariffs and farm subsidies. The Bali accord includes measures that would formally put an end to developed nations&rsquo; stiff import quotas of agro products from the developing countries. Rather, the importing nations would only be allowed to levy tariffs on amount of agricultural imports exceeding particular limits. Similarly, provisions related to streamlining and reforming customs bureaucracies is another major aspect of TFA that are targeted to facilitate global trade. The pact is expected to add USD 1 trillion to global GDP along with generating 21 million jobs worldwide. The deal also covers measures to preferential treatment and greater market access, issues that have been long-raised by developing and least developed countries (LDCs).&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	However, the accord&#39;s far-reaching impacts have been halted for the time being. India, one of the WTO&#39;s prominent members, has long insisted to keep the farm subsidies intact. India&#39;s assertion seems to be primarily fueled by the fears that removal of such government subvention would hurt the country&#39;s agricultural output. As the prices of agro commodities in the global market are likely to become more competitive after the implementation of TFA, India is reluctant to amend the current provisions of agricultural subsidies. The country which is the world&#39;s 2nd largest farm producer also ranks 10th among the major agricultural exporters.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Aided by supportive policy impetus alongside sufficient rainfall and massive stockpiles, India&#39;s exports of agricultural products stood at USD 29.3 billion in the first 11 months of the fiscal year 2013-14. The previous FY saw the Indian agro exports totaling USD 31.86 billion. The country is witnessing consistently rising agro and food export outpacing rise in other exports. Government data shows that the share of agricultural commodities in India&rsquo;s overall export basket rose to 10.66 per cent in FY 2012-13 from 7.06 per cent in 2009-10. &nbsp;Similarly, according to the WTO&#39;s statistics, India&#39;s share of global export (USD 1.66 trillion) and import (USD 1.82 trillion) of agricultural and food products stand at 2.07 per cent and 1.24 per cent, respectively. The country&#39;s increasing share of global export indicates that India is becoming a net exporter of agro products.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Another aspect of India&#39;s apprehension is related to food security. The world&#39;s third largest economy is also feeding its vast poor population with cheap food. The discontinuation of government grants could prove more difficult to provide low-priced foods to its poor citizens. India, which has been expanding its food subsidy programmes over the years, launched a massive programme to provide subsidised food to two-thirds of its population or 810 million people in mid-2013. The programme is expected to double the country&#39;s annual food subsidy bills by about USD 23.9 billion. Subsidising food grains carry huge electoral significance in India as the government and major political aspirants have repeatedly promised to feed poverty ridden population at giveaway prices.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The country is one of the largest hoarders of food grains in the world. Various reports suggest that India&#39;s grain stockpiles currently stand at about a whopping 70 million tons. It not only helps to supply subsidised food grains but also to check the prices in the global market. The fall in world-food stockpile is considered one of the contributing factors to the global food crisis of 2007-08. Political and social unrests were seen in many nations due to the dramatic rise in food prices. India has demanded freedom to subsidise and stockpile food grains in an exchange to the signing of TFA.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/wf1(1).jpg" style="width: 550px; height: 364px; margin-left: 10px; margin-right: 10px;" /></div>
<div>
	&nbsp;</div>
<div>
	Ever since its inception in 1995, the WTO has faced big hurdles to achieve its objectives. The organisation which came as as a replacement of General Agreement on Tariffs and Trade (GATT), has always been in a rock and a hard place when it comes to negotiations &nbsp;between its members. The uncertainty over the Doha Development Agenda (DDA) is an example of such obstacle. Commenced in 2001, the DDA&#39;s aim to liberalise global trade by lowering trade barriers has not been able to bear fruits as numerous talks have resulted in failures. Deep divisions between developed and developing nations over contentious issues such as agriculture, removing industrial tariff and non-tariff barriers of trade and services are considered as the impediments to DDA&#39;s progress. During the intense talks, developed nations led by United States accompanied by the European Union (EU) and Japan maintained their positions relating to quota-free access to the exports of developing countries and LDCs. Similarly, a group of developing nations and LDCs, led by the emerging bloc of China, India, Brazil and South Africa demanded greater freedom to agricultural subsidies and larger quota-free access to their specific exports. The demands and counter demands of member nations resulted in the stalling of WTO&#39;s trade talks in 2008. The multilateral trade negotiations have not resumed since then.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The TFA, which targets to harmonize global trade by slashing the customs red tape is a part of DDA. So, implementing the Bali package is not only imperative to its provisions but also to make progress on DDA and rescue WTO from the brink of failure. However, India&#39;s insistence has created an impasse in the organisation. The lockdown led to the expiration of deadline to ratify the deal by member nations on July, 31st. Talks are said to have been taking place to end the current stand-off, but narrowing the differences to resolve the problem seems difficult for the time being as Robert Azevedo, WTO&#39;s Director General puts it, &quot;The fact we do not have a conclusion means that we are entering a new phase in our work &ndash; a phase which strikes me as being full of uncertainties.&rdquo; Similarly, Patrick Low, WTO&#39;s former Chief Economist, mentions, &quot;The WTO is a victim of flawed procedural requirements. A single government can block progress across the board.&quot; &quot;Paralysis at the WTO is likely to reinforce the view that preferential trade arrangements are a substitute for inclusive multilateralism rather than a complement. That would be bad news for the world economy.&quot;</div>',
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			'title' => 'Ukraine Crisis: Russian Economy In Peril',
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	&nbsp;</div>
<div>
	<div>
		<strong>--By Sanjeev Sharma</strong></div>
	<div>
		&nbsp;</div>
	<div>
		As the crisis in Ukraine continues to drag on, Russian economy is increasingly showing signs of sliding into recession. The annexation of Crimean peninsula and unrest in eastern Ukraine - termed by many as the adventurism of Russian President Vladimir Putin - also brought severe economic costs to the northern Eurasian giant. The worst standoff between Russia and the west since the end of cold war has sparked outflow of foreign investments from the Russian economy. Official data suggest that Russia witnessed net capital outflow amounting to USD 63 billion in the first quarter of 2014, more than double from the same period of last year. Similarly, GDP projections for this year also points to the fact that the country is swiftly descending into recession. Last month Russian finance minister Anton Siluanov warned the country is facing &#39;most difficult economic circumstances since the 2008 crisis.&#39; Siluanov in a government briefing estimated GDP growth to be 0.5 per cent or perhaps around zero in 2014. He was echoed by economy minister Alexei Ulyukayev who informed the parliament that national output contracted by 0.5 per cent in the first quarter this year compared to the fourth quarter of 2013.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		The unfolding of new chapters in Ukraine crisis and alleged Russian involvement is also affecting the sentiments of Russian investors very badly. After the ouster of Ukraine&#39;s pro-Russian president Viktor Yanukovych in February, the country&#39;s stock market plunged to multi-year lows. Amid the political turmoil in Ukraine and western sanctions placed against some influential people close to president Putin, Russia&#39;s heavyweight stock indicator, the RTS Index has lost its value by more than 21 percent in 2014. The Ruble is also in deep trouble as the currency weakened by capital flight has devalued by almost 10 per cent since mid-January. Meanwhile, in the wake of newly erupted geo-political tensions yields of long-term Russian government bonds have sky rocketed increasing the cost of public borrowing. The fear of investors seems to be driven by escalation of chaos in Ukraine which could further lead Russia into tighter sanctions or start of armed conflict in the region.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		Russia enjoyed a healthy economic growth in the 2000s. In between 1999-2010 the country saw average GDP growth at 5.42 per cent. Despite the turbulence in Europe and United States alongside bleak global macroeconomic scenario, Russia was able to achieve respectable growth rates- 4.2 per cent in 2011 and 3.4 per cent in 2012- compared to its western peers. The country after experiencing a tumultuous decade following the collapse of Soviet Union in the early 90s largely benefitted from the era of &#39;commodity super cycle.&#39; Gas, oil, coal, timber and metals along with precious metals and stones topped Russia&#39;s exports led by the rise in demand especially in emerging markets as well as the concerns over the long-term supply availability. This resulted in the double-digit spike in commodity prices in the last decade and exporting nations accumulated substantial amount of wealth. The vast natural reserves of such minerals in Ural Mountains, Siberia and the Far East gave the country an edge to rise to the spot of top supplier. Before the US toppled down Russia in oil exports in 2013, the nation was the largest non-OPEC oil exporter in the world. Similarly, Russia is the world&#39;s largest natural gas exporter accounting 20 per cent of the total production in the world. Likewise, services sector also boomed in 90s and 2000s, ultimately becoming the largest sector which accounts for 58 per cent of the country&#39;s GDP. Apart from these, traditional exports of arms and military hardware also played vital role in the Russian economy.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		<img alt="" src="/userfiles/images/wf1.JPG" style="width: 550px; height: 303px; margin-left: 10px; margin-right: 10px;" /></div>
	<div>
		&nbsp;</div>
	<div>
		The sound economic growth was made possible by political stability. Vladimir Putin, who came to the center stage of Russian power play in the late 90s was hailed for ending chaotic economic and social environment. After crushing Islamic insurgencies in Chechnya and Dagestan,the strongman gained widespread popularity among ordinary Russians and quickly turned into an influential figure in global politics. Under Putin&#39;s leadership, the fragile economy stabilized resulting in huge inflow of foreign investments in the former communist nation. Russian economy wasn&#39;t seen much affected by the crises in US and Europe due to effective integration of short-term macroeconomic policies.</div>
	<div>
		&nbsp;</div>
	<div>
		However, for the time being, good times seem to have passed away for Russia in the post-crisis world. The success story did not last long as the country&#39;s GDP growth slumped to 1.3 per cent in 2013. Sluggish demand in Europe and US coupled with slowing economic activities in emerging markets has asserted considerable pressure in the nation&#39;s economy. Amid the sovereign debt crisis, energy demand in Europe fell significantly- mainly caused by decline in factory activities- hurting the major Russian export. Investments from US and elsewhere also turned away due to macroeconomic uncertainties and depressed domestic demand. The slump in domestic demand, as per a report by a reputed global research firm Capital Economics, clearly indicates weakening growth in Russia&#39;s industrial production and retail sales in the first quarter of 2014. The economic sluggishness and ongoing Ukraine crisis has exposed long-term structural problems within the Russian economy, including low labour productivity, heavy reliance on energy exports and state-dominance of private sector.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		If the current turmoil continues for long time, the associated political risks are more likely to hamper the country economically. The long time Russian power card of energy exports is unlikely to help in this scenario. In case of broader western sanctions, if Kremlin opts to close or taper the gas supply to Europe, the first victim will be Russia itself as the nation&#39;s major income source dry out. Apart from that, the annexation of Crimea and Ukraine crisis has raised urgency among European nations to reduce their energy dependency on Russia. In the past several weeks, EU lawmakers have discussed to find long-term solutions for fulfill their countries energy demands. Like the shale oil and gas boom in US and North America, Europe is also looking forward to exploit the new energy source. Likewise, more punitive measures by US could include stopping of American investments which will further deplete the Russian forex reserves leaving the country into cash strapped situation. In this event, surge in inflation due to further devaluation of Ruble will add more pain to the country&#39;s fragile economy.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		Nevertheless, Russia won&#39;t be left alone to be affected by this. The one time superpower will exert its force to retaliate the western sanctions which will undoubtedly have spiral effects in the global economy. Europe, the main consumer of Russian gas is likely to take the major punch in an event of supply closure. Starved of energy, European industrial production will come to a grinding halt which is gradually picking up speed after years of severe stagnation. Likewise, energy prices will shoot upward affecting every country in the world. US will also feel strong reverberations of the sanctions against Russia and its counter by the Kremlin. US companies operating in Russia- banking, manufacturing, mining, retail stores and restaurant chains in particular- are seen as the most vulnerable to the negative geopolitical developments. The Ukraine crisis has unfolded in a time when global economy is trying to get back on its feet. However, the newly erupted geopolitical tension is seriously threatening the global recovery to get down on its knees again.</div>
</div>
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	&nbsp;</div>
<div>
	<strong>--By Sanjeev Sharma</strong></div>
<div>
	&nbsp;</div>
<div>
	The landmark agreement to liberalize global trade has hit a gridlock after India refused to accept the pact following the country&#39;s disagreement on food subsidies. The Trade Facilitation Agreement (TFA) or the Bali Package, agreed by the Ninth Ministerial Conference of the World Trade Organisation (WTO), held in Bali, Indonesia on 3-7 December, 2013, would have been the first deal to reform global trade in two decades. The trade protocol which came as a result of relentless negotiations over the decades, basically aims to lower global trade barriers.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Upon its implementation, the TFA, ambits to smoothen trading between developing and developed economies by lowering import tariffs and farm subsidies. The Bali accord includes measures that would formally put an end to developed nations&rsquo; stiff import quotas of agro products from the developing countries. Rather, the importing nations would only be allowed to levy tariffs on amount of agricultural imports exceeding particular limits. Similarly, provisions related to streamlining and reforming customs bureaucracies is another major aspect of TFA that are targeted to facilitate global trade. The pact is expected to add USD 1 trillion to global GDP along with generating 21 million jobs worldwide. The deal also covers measures to preferential treatment and greater market access, issues that have been long-raised by developing and least developed countries (LDCs).&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	However, the accord&#39;s far-reaching impacts have been halted for the time being. India, one of the WTO&#39;s prominent members, has long insisted to keep the farm subsidies intact. India&#39;s assertion seems to be primarily fueled by the fears that removal of such government subvention would hurt the country&#39;s agricultural output. As the prices of agro commodities in the global market are likely to become more competitive after the implementation of TFA, India is reluctant to amend the current provisions of agricultural subsidies. The country which is the world&#39;s 2nd largest farm producer also ranks 10th among the major agricultural exporters.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Aided by supportive policy impetus alongside sufficient rainfall and massive stockpiles, India&#39;s exports of agricultural products stood at USD 29.3 billion in the first 11 months of the fiscal year 2013-14. The previous FY saw the Indian agro exports totaling USD 31.86 billion. The country is witnessing consistently rising agro and food export outpacing rise in other exports. Government data shows that the share of agricultural commodities in India&rsquo;s overall export basket rose to 10.66 per cent in FY 2012-13 from 7.06 per cent in 2009-10. &nbsp;Similarly, according to the WTO&#39;s statistics, India&#39;s share of global export (USD 1.66 trillion) and import (USD 1.82 trillion) of agricultural and food products stand at 2.07 per cent and 1.24 per cent, respectively. The country&#39;s increasing share of global export indicates that India is becoming a net exporter of agro products.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Another aspect of India&#39;s apprehension is related to food security. The world&#39;s third largest economy is also feeding its vast poor population with cheap food. The discontinuation of government grants could prove more difficult to provide low-priced foods to its poor citizens. India, which has been expanding its food subsidy programmes over the years, launched a massive programme to provide subsidised food to two-thirds of its population or 810 million people in mid-2013. The programme is expected to double the country&#39;s annual food subsidy bills by about USD 23.9 billion. Subsidising food grains carry huge electoral significance in India as the government and major political aspirants have repeatedly promised to feed poverty ridden population at giveaway prices.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The country is one of the largest hoarders of food grains in the world. Various reports suggest that India&#39;s grain stockpiles currently stand at about a whopping 70 million tons. It not only helps to supply subsidised food grains but also to check the prices in the global market. The fall in world-food stockpile is considered one of the contributing factors to the global food crisis of 2007-08. Political and social unrests were seen in many nations due to the dramatic rise in food prices. India has demanded freedom to subsidise and stockpile food grains in an exchange to the signing of TFA.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/wf1(1).jpg" style="width: 550px; height: 364px; margin-left: 10px; margin-right: 10px;" /></div>
<div>
	&nbsp;</div>
<div>
	Ever since its inception in 1995, the WTO has faced big hurdles to achieve its objectives. The organisation which came as as a replacement of General Agreement on Tariffs and Trade (GATT), has always been in a rock and a hard place when it comes to negotiations &nbsp;between its members. The uncertainty over the Doha Development Agenda (DDA) is an example of such obstacle. Commenced in 2001, the DDA&#39;s aim to liberalise global trade by lowering trade barriers has not been able to bear fruits as numerous talks have resulted in failures. Deep divisions between developed and developing nations over contentious issues such as agriculture, removing industrial tariff and non-tariff barriers of trade and services are considered as the impediments to DDA&#39;s progress. During the intense talks, developed nations led by United States accompanied by the European Union (EU) and Japan maintained their positions relating to quota-free access to the exports of developing countries and LDCs. Similarly, a group of developing nations and LDCs, led by the emerging bloc of China, India, Brazil and South Africa demanded greater freedom to agricultural subsidies and larger quota-free access to their specific exports. The demands and counter demands of member nations resulted in the stalling of WTO&#39;s trade talks in 2008. The multilateral trade negotiations have not resumed since then.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The TFA, which targets to harmonize global trade by slashing the customs red tape is a part of DDA. So, implementing the Bali package is not only imperative to its provisions but also to make progress on DDA and rescue WTO from the brink of failure. However, India&#39;s insistence has created an impasse in the organisation. The lockdown led to the expiration of deadline to ratify the deal by member nations on July, 31st. Talks are said to have been taking place to end the current stand-off, but narrowing the differences to resolve the problem seems difficult for the time being as Robert Azevedo, WTO&#39;s Director General puts it, &quot;The fact we do not have a conclusion means that we are entering a new phase in our work &ndash; a phase which strikes me as being full of uncertainties.&rdquo; Similarly, Patrick Low, WTO&#39;s former Chief Economist, mentions, &quot;The WTO is a victim of flawed procedural requirements. A single government can block progress across the board.&quot; &quot;Paralysis at the WTO is likely to reinforce the view that preferential trade arrangements are a substitute for inclusive multilateralism rather than a complement. That would be bad news for the world economy.&quot;</div>',
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	&nbsp;</div>
<div>
	<div>
		<strong>--By Sanjeev Sharma</strong></div>
	<div>
		&nbsp;</div>
	<div>
		As the crisis in Ukraine continues to drag on, Russian economy is increasingly showing signs of sliding into recession. The annexation of Crimean peninsula and unrest in eastern Ukraine - termed by many as the adventurism of Russian President Vladimir Putin - also brought severe economic costs to the northern Eurasian giant. The worst standoff between Russia and the west since the end of cold war has sparked outflow of foreign investments from the Russian economy. Official data suggest that Russia witnessed net capital outflow amounting to USD 63 billion in the first quarter of 2014, more than double from the same period of last year. Similarly, GDP projections for this year also points to the fact that the country is swiftly descending into recession. Last month Russian finance minister Anton Siluanov warned the country is facing &#39;most difficult economic circumstances since the 2008 crisis.&#39; Siluanov in a government briefing estimated GDP growth to be 0.5 per cent or perhaps around zero in 2014. He was echoed by economy minister Alexei Ulyukayev who informed the parliament that national output contracted by 0.5 per cent in the first quarter this year compared to the fourth quarter of 2013.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		The unfolding of new chapters in Ukraine crisis and alleged Russian involvement is also affecting the sentiments of Russian investors very badly. After the ouster of Ukraine&#39;s pro-Russian president Viktor Yanukovych in February, the country&#39;s stock market plunged to multi-year lows. Amid the political turmoil in Ukraine and western sanctions placed against some influential people close to president Putin, Russia&#39;s heavyweight stock indicator, the RTS Index has lost its value by more than 21 percent in 2014. The Ruble is also in deep trouble as the currency weakened by capital flight has devalued by almost 10 per cent since mid-January. Meanwhile, in the wake of newly erupted geo-political tensions yields of long-term Russian government bonds have sky rocketed increasing the cost of public borrowing. The fear of investors seems to be driven by escalation of chaos in Ukraine which could further lead Russia into tighter sanctions or start of armed conflict in the region.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		Russia enjoyed a healthy economic growth in the 2000s. In between 1999-2010 the country saw average GDP growth at 5.42 per cent. Despite the turbulence in Europe and United States alongside bleak global macroeconomic scenario, Russia was able to achieve respectable growth rates- 4.2 per cent in 2011 and 3.4 per cent in 2012- compared to its western peers. The country after experiencing a tumultuous decade following the collapse of Soviet Union in the early 90s largely benefitted from the era of &#39;commodity super cycle.&#39; Gas, oil, coal, timber and metals along with precious metals and stones topped Russia&#39;s exports led by the rise in demand especially in emerging markets as well as the concerns over the long-term supply availability. This resulted in the double-digit spike in commodity prices in the last decade and exporting nations accumulated substantial amount of wealth. The vast natural reserves of such minerals in Ural Mountains, Siberia and the Far East gave the country an edge to rise to the spot of top supplier. Before the US toppled down Russia in oil exports in 2013, the nation was the largest non-OPEC oil exporter in the world. Similarly, Russia is the world&#39;s largest natural gas exporter accounting 20 per cent of the total production in the world. Likewise, services sector also boomed in 90s and 2000s, ultimately becoming the largest sector which accounts for 58 per cent of the country&#39;s GDP. Apart from these, traditional exports of arms and military hardware also played vital role in the Russian economy.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		<img alt="" src="/userfiles/images/wf1.JPG" style="width: 550px; height: 303px; margin-left: 10px; margin-right: 10px;" /></div>
	<div>
		&nbsp;</div>
	<div>
		The sound economic growth was made possible by political stability. Vladimir Putin, who came to the center stage of Russian power play in the late 90s was hailed for ending chaotic economic and social environment. After crushing Islamic insurgencies in Chechnya and Dagestan,the strongman gained widespread popularity among ordinary Russians and quickly turned into an influential figure in global politics. Under Putin&#39;s leadership, the fragile economy stabilized resulting in huge inflow of foreign investments in the former communist nation. Russian economy wasn&#39;t seen much affected by the crises in US and Europe due to effective integration of short-term macroeconomic policies.</div>
	<div>
		&nbsp;</div>
	<div>
		However, for the time being, good times seem to have passed away for Russia in the post-crisis world. The success story did not last long as the country&#39;s GDP growth slumped to 1.3 per cent in 2013. Sluggish demand in Europe and US coupled with slowing economic activities in emerging markets has asserted considerable pressure in the nation&#39;s economy. Amid the sovereign debt crisis, energy demand in Europe fell significantly- mainly caused by decline in factory activities- hurting the major Russian export. Investments from US and elsewhere also turned away due to macroeconomic uncertainties and depressed domestic demand. The slump in domestic demand, as per a report by a reputed global research firm Capital Economics, clearly indicates weakening growth in Russia&#39;s industrial production and retail sales in the first quarter of 2014. The economic sluggishness and ongoing Ukraine crisis has exposed long-term structural problems within the Russian economy, including low labour productivity, heavy reliance on energy exports and state-dominance of private sector.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		If the current turmoil continues for long time, the associated political risks are more likely to hamper the country economically. The long time Russian power card of energy exports is unlikely to help in this scenario. In case of broader western sanctions, if Kremlin opts to close or taper the gas supply to Europe, the first victim will be Russia itself as the nation&#39;s major income source dry out. Apart from that, the annexation of Crimea and Ukraine crisis has raised urgency among European nations to reduce their energy dependency on Russia. In the past several weeks, EU lawmakers have discussed to find long-term solutions for fulfill their countries energy demands. Like the shale oil and gas boom in US and North America, Europe is also looking forward to exploit the new energy source. Likewise, more punitive measures by US could include stopping of American investments which will further deplete the Russian forex reserves leaving the country into cash strapped situation. In this event, surge in inflation due to further devaluation of Ruble will add more pain to the country&#39;s fragile economy.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		Nevertheless, Russia won&#39;t be left alone to be affected by this. The one time superpower will exert its force to retaliate the western sanctions which will undoubtedly have spiral effects in the global economy. Europe, the main consumer of Russian gas is likely to take the major punch in an event of supply closure. Starved of energy, European industrial production will come to a grinding halt which is gradually picking up speed after years of severe stagnation. Likewise, energy prices will shoot upward affecting every country in the world. US will also feel strong reverberations of the sanctions against Russia and its counter by the Kremlin. US companies operating in Russia- banking, manufacturing, mining, retail stores and restaurant chains in particular- are seen as the most vulnerable to the negative geopolitical developments. The Ukraine crisis has unfolded in a time when global economy is trying to get back on its feet. However, the newly erupted geopolitical tension is seriously threatening the global recovery to get down on its knees again.</div>
</div>
<p>
	&nbsp;</p>',
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			'title' => 'TFA Impasse In WTO: An Opportunity Could Be Missed',
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	&nbsp;</div>
<div>
	<strong>--By Sanjeev Sharma</strong></div>
<div>
	&nbsp;</div>
<div>
	The landmark agreement to liberalize global trade has hit a gridlock after India refused to accept the pact following the country&#39;s disagreement on food subsidies. The Trade Facilitation Agreement (TFA) or the Bali Package, agreed by the Ninth Ministerial Conference of the World Trade Organisation (WTO), held in Bali, Indonesia on 3-7 December, 2013, would have been the first deal to reform global trade in two decades. The trade protocol which came as a result of relentless negotiations over the decades, basically aims to lower global trade barriers.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Upon its implementation, the TFA, ambits to smoothen trading between developing and developed economies by lowering import tariffs and farm subsidies. The Bali accord includes measures that would formally put an end to developed nations&rsquo; stiff import quotas of agro products from the developing countries. Rather, the importing nations would only be allowed to levy tariffs on amount of agricultural imports exceeding particular limits. Similarly, provisions related to streamlining and reforming customs bureaucracies is another major aspect of TFA that are targeted to facilitate global trade. The pact is expected to add USD 1 trillion to global GDP along with generating 21 million jobs worldwide. The deal also covers measures to preferential treatment and greater market access, issues that have been long-raised by developing and least developed countries (LDCs).&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	However, the accord&#39;s far-reaching impacts have been halted for the time being. India, one of the WTO&#39;s prominent members, has long insisted to keep the farm subsidies intact. India&#39;s assertion seems to be primarily fueled by the fears that removal of such government subvention would hurt the country&#39;s agricultural output. As the prices of agro commodities in the global market are likely to become more competitive after the implementation of TFA, India is reluctant to amend the current provisions of agricultural subsidies. The country which is the world&#39;s 2nd largest farm producer also ranks 10th among the major agricultural exporters.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Aided by supportive policy impetus alongside sufficient rainfall and massive stockpiles, India&#39;s exports of agricultural products stood at USD 29.3 billion in the first 11 months of the fiscal year 2013-14. The previous FY saw the Indian agro exports totaling USD 31.86 billion. The country is witnessing consistently rising agro and food export outpacing rise in other exports. Government data shows that the share of agricultural commodities in India&rsquo;s overall export basket rose to 10.66 per cent in FY 2012-13 from 7.06 per cent in 2009-10. &nbsp;Similarly, according to the WTO&#39;s statistics, India&#39;s share of global export (USD 1.66 trillion) and import (USD 1.82 trillion) of agricultural and food products stand at 2.07 per cent and 1.24 per cent, respectively. The country&#39;s increasing share of global export indicates that India is becoming a net exporter of agro products.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Another aspect of India&#39;s apprehension is related to food security. The world&#39;s third largest economy is also feeding its vast poor population with cheap food. The discontinuation of government grants could prove more difficult to provide low-priced foods to its poor citizens. India, which has been expanding its food subsidy programmes over the years, launched a massive programme to provide subsidised food to two-thirds of its population or 810 million people in mid-2013. The programme is expected to double the country&#39;s annual food subsidy bills by about USD 23.9 billion. Subsidising food grains carry huge electoral significance in India as the government and major political aspirants have repeatedly promised to feed poverty ridden population at giveaway prices.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The country is one of the largest hoarders of food grains in the world. Various reports suggest that India&#39;s grain stockpiles currently stand at about a whopping 70 million tons. It not only helps to supply subsidised food grains but also to check the prices in the global market. The fall in world-food stockpile is considered one of the contributing factors to the global food crisis of 2007-08. Political and social unrests were seen in many nations due to the dramatic rise in food prices. India has demanded freedom to subsidise and stockpile food grains in an exchange to the signing of TFA.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/wf1(1).jpg" style="width: 550px; height: 364px; margin-left: 10px; margin-right: 10px;" /></div>
<div>
	&nbsp;</div>
<div>
	Ever since its inception in 1995, the WTO has faced big hurdles to achieve its objectives. The organisation which came as as a replacement of General Agreement on Tariffs and Trade (GATT), has always been in a rock and a hard place when it comes to negotiations &nbsp;between its members. The uncertainty over the Doha Development Agenda (DDA) is an example of such obstacle. Commenced in 2001, the DDA&#39;s aim to liberalise global trade by lowering trade barriers has not been able to bear fruits as numerous talks have resulted in failures. Deep divisions between developed and developing nations over contentious issues such as agriculture, removing industrial tariff and non-tariff barriers of trade and services are considered as the impediments to DDA&#39;s progress. During the intense talks, developed nations led by United States accompanied by the European Union (EU) and Japan maintained their positions relating to quota-free access to the exports of developing countries and LDCs. Similarly, a group of developing nations and LDCs, led by the emerging bloc of China, India, Brazil and South Africa demanded greater freedom to agricultural subsidies and larger quota-free access to their specific exports. The demands and counter demands of member nations resulted in the stalling of WTO&#39;s trade talks in 2008. The multilateral trade negotiations have not resumed since then.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The TFA, which targets to harmonize global trade by slashing the customs red tape is a part of DDA. So, implementing the Bali package is not only imperative to its provisions but also to make progress on DDA and rescue WTO from the brink of failure. However, India&#39;s insistence has created an impasse in the organisation. The lockdown led to the expiration of deadline to ratify the deal by member nations on July, 31st. Talks are said to have been taking place to end the current stand-off, but narrowing the differences to resolve the problem seems difficult for the time being as Robert Azevedo, WTO&#39;s Director General puts it, &quot;The fact we do not have a conclusion means that we are entering a new phase in our work &ndash; a phase which strikes me as being full of uncertainties.&rdquo; Similarly, Patrick Low, WTO&#39;s former Chief Economist, mentions, &quot;The WTO is a victim of flawed procedural requirements. A single government can block progress across the board.&quot; &quot;Paralysis at the WTO is likely to reinforce the view that preferential trade arrangements are a substitute for inclusive multilateralism rather than a complement. That would be bad news for the world economy.&quot;</div>',
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			'created' => '2014-10-10',
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			'description' => 'The landmark agreement to liberalize global trade has hit a gridlock after India refused to accept the pact following the country's disagreement on food subsidies. The Trade Facilitation Agreement (TFA) or the Bali Package, agreed by the Ninth Ministerial Conference of the World Trade Organisation (WTO), held in Bali, Indonesia on 3-7 December, 2013, would have been the first deal to reform global trade in two decades. The trade protocol which came as a result of relentless negotiations over the decades, basically aims to lower global trade barriers.',
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			'article_category_id' => '215',
			'title' => 'Ukraine Crisis: Russian Economy In Peril',
			'sub_title' => '',
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			'content' => '<div>
	&nbsp;</div>
<div>
	<div>
		<strong>--By Sanjeev Sharma</strong></div>
	<div>
		&nbsp;</div>
	<div>
		As the crisis in Ukraine continues to drag on, Russian economy is increasingly showing signs of sliding into recession. The annexation of Crimean peninsula and unrest in eastern Ukraine - termed by many as the adventurism of Russian President Vladimir Putin - also brought severe economic costs to the northern Eurasian giant. The worst standoff between Russia and the west since the end of cold war has sparked outflow of foreign investments from the Russian economy. Official data suggest that Russia witnessed net capital outflow amounting to USD 63 billion in the first quarter of 2014, more than double from the same period of last year. Similarly, GDP projections for this year also points to the fact that the country is swiftly descending into recession. Last month Russian finance minister Anton Siluanov warned the country is facing &#39;most difficult economic circumstances since the 2008 crisis.&#39; Siluanov in a government briefing estimated GDP growth to be 0.5 per cent or perhaps around zero in 2014. He was echoed by economy minister Alexei Ulyukayev who informed the parliament that national output contracted by 0.5 per cent in the first quarter this year compared to the fourth quarter of 2013.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		The unfolding of new chapters in Ukraine crisis and alleged Russian involvement is also affecting the sentiments of Russian investors very badly. After the ouster of Ukraine&#39;s pro-Russian president Viktor Yanukovych in February, the country&#39;s stock market plunged to multi-year lows. Amid the political turmoil in Ukraine and western sanctions placed against some influential people close to president Putin, Russia&#39;s heavyweight stock indicator, the RTS Index has lost its value by more than 21 percent in 2014. The Ruble is also in deep trouble as the currency weakened by capital flight has devalued by almost 10 per cent since mid-January. Meanwhile, in the wake of newly erupted geo-political tensions yields of long-term Russian government bonds have sky rocketed increasing the cost of public borrowing. The fear of investors seems to be driven by escalation of chaos in Ukraine which could further lead Russia into tighter sanctions or start of armed conflict in the region.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		Russia enjoyed a healthy economic growth in the 2000s. In between 1999-2010 the country saw average GDP growth at 5.42 per cent. Despite the turbulence in Europe and United States alongside bleak global macroeconomic scenario, Russia was able to achieve respectable growth rates- 4.2 per cent in 2011 and 3.4 per cent in 2012- compared to its western peers. The country after experiencing a tumultuous decade following the collapse of Soviet Union in the early 90s largely benefitted from the era of &#39;commodity super cycle.&#39; Gas, oil, coal, timber and metals along with precious metals and stones topped Russia&#39;s exports led by the rise in demand especially in emerging markets as well as the concerns over the long-term supply availability. This resulted in the double-digit spike in commodity prices in the last decade and exporting nations accumulated substantial amount of wealth. The vast natural reserves of such minerals in Ural Mountains, Siberia and the Far East gave the country an edge to rise to the spot of top supplier. Before the US toppled down Russia in oil exports in 2013, the nation was the largest non-OPEC oil exporter in the world. Similarly, Russia is the world&#39;s largest natural gas exporter accounting 20 per cent of the total production in the world. Likewise, services sector also boomed in 90s and 2000s, ultimately becoming the largest sector which accounts for 58 per cent of the country&#39;s GDP. Apart from these, traditional exports of arms and military hardware also played vital role in the Russian economy.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		<img alt="" src="/userfiles/images/wf1.JPG" style="width: 550px; height: 303px; margin-left: 10px; margin-right: 10px;" /></div>
	<div>
		&nbsp;</div>
	<div>
		The sound economic growth was made possible by political stability. Vladimir Putin, who came to the center stage of Russian power play in the late 90s was hailed for ending chaotic economic and social environment. After crushing Islamic insurgencies in Chechnya and Dagestan,the strongman gained widespread popularity among ordinary Russians and quickly turned into an influential figure in global politics. Under Putin&#39;s leadership, the fragile economy stabilized resulting in huge inflow of foreign investments in the former communist nation. Russian economy wasn&#39;t seen much affected by the crises in US and Europe due to effective integration of short-term macroeconomic policies.</div>
	<div>
		&nbsp;</div>
	<div>
		However, for the time being, good times seem to have passed away for Russia in the post-crisis world. The success story did not last long as the country&#39;s GDP growth slumped to 1.3 per cent in 2013. Sluggish demand in Europe and US coupled with slowing economic activities in emerging markets has asserted considerable pressure in the nation&#39;s economy. Amid the sovereign debt crisis, energy demand in Europe fell significantly- mainly caused by decline in factory activities- hurting the major Russian export. Investments from US and elsewhere also turned away due to macroeconomic uncertainties and depressed domestic demand. The slump in domestic demand, as per a report by a reputed global research firm Capital Economics, clearly indicates weakening growth in Russia&#39;s industrial production and retail sales in the first quarter of 2014. The economic sluggishness and ongoing Ukraine crisis has exposed long-term structural problems within the Russian economy, including low labour productivity, heavy reliance on energy exports and state-dominance of private sector.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		If the current turmoil continues for long time, the associated political risks are more likely to hamper the country economically. The long time Russian power card of energy exports is unlikely to help in this scenario. In case of broader western sanctions, if Kremlin opts to close or taper the gas supply to Europe, the first victim will be Russia itself as the nation&#39;s major income source dry out. Apart from that, the annexation of Crimea and Ukraine crisis has raised urgency among European nations to reduce their energy dependency on Russia. In the past several weeks, EU lawmakers have discussed to find long-term solutions for fulfill their countries energy demands. Like the shale oil and gas boom in US and North America, Europe is also looking forward to exploit the new energy source. Likewise, more punitive measures by US could include stopping of American investments which will further deplete the Russian forex reserves leaving the country into cash strapped situation. In this event, surge in inflation due to further devaluation of Ruble will add more pain to the country&#39;s fragile economy.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		Nevertheless, Russia won&#39;t be left alone to be affected by this. The one time superpower will exert its force to retaliate the western sanctions which will undoubtedly have spiral effects in the global economy. Europe, the main consumer of Russian gas is likely to take the major punch in an event of supply closure. Starved of energy, European industrial production will come to a grinding halt which is gradually picking up speed after years of severe stagnation. Likewise, energy prices will shoot upward affecting every country in the world. US will also feel strong reverberations of the sanctions against Russia and its counter by the Kremlin. US companies operating in Russia- banking, manufacturing, mining, retail stores and restaurant chains in particular- are seen as the most vulnerable to the negative geopolitical developments. The Ukraine crisis has unfolded in a time when global economy is trying to get back on its feet. However, the newly erupted geopolitical tension is seriously threatening the global recovery to get down on its knees again.</div>
</div>
<p>
	&nbsp;</p>',
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	&nbsp;</div>
<div>
	<strong>--By Sanjeev Sharma</strong></div>
<div>
	&nbsp;</div>
<div>
	The landmark agreement to liberalize global trade has hit a gridlock after India refused to accept the pact following the country&#39;s disagreement on food subsidies. The Trade Facilitation Agreement (TFA) or the Bali Package, agreed by the Ninth Ministerial Conference of the World Trade Organisation (WTO), held in Bali, Indonesia on 3-7 December, 2013, would have been the first deal to reform global trade in two decades. The trade protocol which came as a result of relentless negotiations over the decades, basically aims to lower global trade barriers.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Upon its implementation, the TFA, ambits to smoothen trading between developing and developed economies by lowering import tariffs and farm subsidies. The Bali accord includes measures that would formally put an end to developed nations&rsquo; stiff import quotas of agro products from the developing countries. Rather, the importing nations would only be allowed to levy tariffs on amount of agricultural imports exceeding particular limits. Similarly, provisions related to streamlining and reforming customs bureaucracies is another major aspect of TFA that are targeted to facilitate global trade. The pact is expected to add USD 1 trillion to global GDP along with generating 21 million jobs worldwide. The deal also covers measures to preferential treatment and greater market access, issues that have been long-raised by developing and least developed countries (LDCs).&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	However, the accord&#39;s far-reaching impacts have been halted for the time being. India, one of the WTO&#39;s prominent members, has long insisted to keep the farm subsidies intact. India&#39;s assertion seems to be primarily fueled by the fears that removal of such government subvention would hurt the country&#39;s agricultural output. As the prices of agro commodities in the global market are likely to become more competitive after the implementation of TFA, India is reluctant to amend the current provisions of agricultural subsidies. The country which is the world&#39;s 2nd largest farm producer also ranks 10th among the major agricultural exporters.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Aided by supportive policy impetus alongside sufficient rainfall and massive stockpiles, India&#39;s exports of agricultural products stood at USD 29.3 billion in the first 11 months of the fiscal year 2013-14. The previous FY saw the Indian agro exports totaling USD 31.86 billion. The country is witnessing consistently rising agro and food export outpacing rise in other exports. Government data shows that the share of agricultural commodities in India&rsquo;s overall export basket rose to 10.66 per cent in FY 2012-13 from 7.06 per cent in 2009-10. &nbsp;Similarly, according to the WTO&#39;s statistics, India&#39;s share of global export (USD 1.66 trillion) and import (USD 1.82 trillion) of agricultural and food products stand at 2.07 per cent and 1.24 per cent, respectively. The country&#39;s increasing share of global export indicates that India is becoming a net exporter of agro products.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	Another aspect of India&#39;s apprehension is related to food security. The world&#39;s third largest economy is also feeding its vast poor population with cheap food. The discontinuation of government grants could prove more difficult to provide low-priced foods to its poor citizens. India, which has been expanding its food subsidy programmes over the years, launched a massive programme to provide subsidised food to two-thirds of its population or 810 million people in mid-2013. The programme is expected to double the country&#39;s annual food subsidy bills by about USD 23.9 billion. Subsidising food grains carry huge electoral significance in India as the government and major political aspirants have repeatedly promised to feed poverty ridden population at giveaway prices.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The country is one of the largest hoarders of food grains in the world. Various reports suggest that India&#39;s grain stockpiles currently stand at about a whopping 70 million tons. It not only helps to supply subsidised food grains but also to check the prices in the global market. The fall in world-food stockpile is considered one of the contributing factors to the global food crisis of 2007-08. Political and social unrests were seen in many nations due to the dramatic rise in food prices. India has demanded freedom to subsidise and stockpile food grains in an exchange to the signing of TFA.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	<img alt="" src="/userfiles/images/wf1(1).jpg" style="width: 550px; height: 364px; margin-left: 10px; margin-right: 10px;" /></div>
<div>
	&nbsp;</div>
<div>
	Ever since its inception in 1995, the WTO has faced big hurdles to achieve its objectives. The organisation which came as as a replacement of General Agreement on Tariffs and Trade (GATT), has always been in a rock and a hard place when it comes to negotiations &nbsp;between its members. The uncertainty over the Doha Development Agenda (DDA) is an example of such obstacle. Commenced in 2001, the DDA&#39;s aim to liberalise global trade by lowering trade barriers has not been able to bear fruits as numerous talks have resulted in failures. Deep divisions between developed and developing nations over contentious issues such as agriculture, removing industrial tariff and non-tariff barriers of trade and services are considered as the impediments to DDA&#39;s progress. During the intense talks, developed nations led by United States accompanied by the European Union (EU) and Japan maintained their positions relating to quota-free access to the exports of developing countries and LDCs. Similarly, a group of developing nations and LDCs, led by the emerging bloc of China, India, Brazil and South Africa demanded greater freedom to agricultural subsidies and larger quota-free access to their specific exports. The demands and counter demands of member nations resulted in the stalling of WTO&#39;s trade talks in 2008. The multilateral trade negotiations have not resumed since then.&nbsp;</div>
<div>
	&nbsp;</div>
<div>
	The TFA, which targets to harmonize global trade by slashing the customs red tape is a part of DDA. So, implementing the Bali package is not only imperative to its provisions but also to make progress on DDA and rescue WTO from the brink of failure. However, India&#39;s insistence has created an impasse in the organisation. The lockdown led to the expiration of deadline to ratify the deal by member nations on July, 31st. Talks are said to have been taking place to end the current stand-off, but narrowing the differences to resolve the problem seems difficult for the time being as Robert Azevedo, WTO&#39;s Director General puts it, &quot;The fact we do not have a conclusion means that we are entering a new phase in our work &ndash; a phase which strikes me as being full of uncertainties.&rdquo; Similarly, Patrick Low, WTO&#39;s former Chief Economist, mentions, &quot;The WTO is a victim of flawed procedural requirements. A single government can block progress across the board.&quot; &quot;Paralysis at the WTO is likely to reinforce the view that preferential trade arrangements are a substitute for inclusive multilateralism rather than a complement. That would be bad news for the world economy.&quot;</div>',
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			'description' => 'The landmark agreement to liberalize global trade has hit a gridlock after India refused to accept the pact following the country's disagreement on food subsidies. The Trade Facilitation Agreement (TFA) or the Bali Package, agreed by the Ninth Ministerial Conference of the World Trade Organisation (WTO), held in Bali, Indonesia on 3-7 December, 2013, would have been the first deal to reform global trade in two decades. The trade protocol which came as a result of relentless negotiations over the decades, basically aims to lower global trade barriers.',
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		'Article' => array(
			'id' => '2779',
			'article_category_id' => '215',
			'title' => 'Ukraine Crisis: Russian Economy In Peril',
			'sub_title' => '',
			'summary' => null,
			'content' => '<div>
	&nbsp;</div>
<div>
	<div>
		<strong>--By Sanjeev Sharma</strong></div>
	<div>
		&nbsp;</div>
	<div>
		As the crisis in Ukraine continues to drag on, Russian economy is increasingly showing signs of sliding into recession. The annexation of Crimean peninsula and unrest in eastern Ukraine - termed by many as the adventurism of Russian President Vladimir Putin - also brought severe economic costs to the northern Eurasian giant. The worst standoff between Russia and the west since the end of cold war has sparked outflow of foreign investments from the Russian economy. Official data suggest that Russia witnessed net capital outflow amounting to USD 63 billion in the first quarter of 2014, more than double from the same period of last year. Similarly, GDP projections for this year also points to the fact that the country is swiftly descending into recession. Last month Russian finance minister Anton Siluanov warned the country is facing &#39;most difficult economic circumstances since the 2008 crisis.&#39; Siluanov in a government briefing estimated GDP growth to be 0.5 per cent or perhaps around zero in 2014. He was echoed by economy minister Alexei Ulyukayev who informed the parliament that national output contracted by 0.5 per cent in the first quarter this year compared to the fourth quarter of 2013.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		The unfolding of new chapters in Ukraine crisis and alleged Russian involvement is also affecting the sentiments of Russian investors very badly. After the ouster of Ukraine&#39;s pro-Russian president Viktor Yanukovych in February, the country&#39;s stock market plunged to multi-year lows. Amid the political turmoil in Ukraine and western sanctions placed against some influential people close to president Putin, Russia&#39;s heavyweight stock indicator, the RTS Index has lost its value by more than 21 percent in 2014. The Ruble is also in deep trouble as the currency weakened by capital flight has devalued by almost 10 per cent since mid-January. Meanwhile, in the wake of newly erupted geo-political tensions yields of long-term Russian government bonds have sky rocketed increasing the cost of public borrowing. The fear of investors seems to be driven by escalation of chaos in Ukraine which could further lead Russia into tighter sanctions or start of armed conflict in the region.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		Russia enjoyed a healthy economic growth in the 2000s. In between 1999-2010 the country saw average GDP growth at 5.42 per cent. Despite the turbulence in Europe and United States alongside bleak global macroeconomic scenario, Russia was able to achieve respectable growth rates- 4.2 per cent in 2011 and 3.4 per cent in 2012- compared to its western peers. The country after experiencing a tumultuous decade following the collapse of Soviet Union in the early 90s largely benefitted from the era of &#39;commodity super cycle.&#39; Gas, oil, coal, timber and metals along with precious metals and stones topped Russia&#39;s exports led by the rise in demand especially in emerging markets as well as the concerns over the long-term supply availability. This resulted in the double-digit spike in commodity prices in the last decade and exporting nations accumulated substantial amount of wealth. The vast natural reserves of such minerals in Ural Mountains, Siberia and the Far East gave the country an edge to rise to the spot of top supplier. Before the US toppled down Russia in oil exports in 2013, the nation was the largest non-OPEC oil exporter in the world. Similarly, Russia is the world&#39;s largest natural gas exporter accounting 20 per cent of the total production in the world. Likewise, services sector also boomed in 90s and 2000s, ultimately becoming the largest sector which accounts for 58 per cent of the country&#39;s GDP. Apart from these, traditional exports of arms and military hardware also played vital role in the Russian economy.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		<img alt="" src="/userfiles/images/wf1.JPG" style="width: 550px; height: 303px; margin-left: 10px; margin-right: 10px;" /></div>
	<div>
		&nbsp;</div>
	<div>
		The sound economic growth was made possible by political stability. Vladimir Putin, who came to the center stage of Russian power play in the late 90s was hailed for ending chaotic economic and social environment. After crushing Islamic insurgencies in Chechnya and Dagestan,the strongman gained widespread popularity among ordinary Russians and quickly turned into an influential figure in global politics. Under Putin&#39;s leadership, the fragile economy stabilized resulting in huge inflow of foreign investments in the former communist nation. Russian economy wasn&#39;t seen much affected by the crises in US and Europe due to effective integration of short-term macroeconomic policies.</div>
	<div>
		&nbsp;</div>
	<div>
		However, for the time being, good times seem to have passed away for Russia in the post-crisis world. The success story did not last long as the country&#39;s GDP growth slumped to 1.3 per cent in 2013. Sluggish demand in Europe and US coupled with slowing economic activities in emerging markets has asserted considerable pressure in the nation&#39;s economy. Amid the sovereign debt crisis, energy demand in Europe fell significantly- mainly caused by decline in factory activities- hurting the major Russian export. Investments from US and elsewhere also turned away due to macroeconomic uncertainties and depressed domestic demand. The slump in domestic demand, as per a report by a reputed global research firm Capital Economics, clearly indicates weakening growth in Russia&#39;s industrial production and retail sales in the first quarter of 2014. The economic sluggishness and ongoing Ukraine crisis has exposed long-term structural problems within the Russian economy, including low labour productivity, heavy reliance on energy exports and state-dominance of private sector.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		If the current turmoil continues for long time, the associated political risks are more likely to hamper the country economically. The long time Russian power card of energy exports is unlikely to help in this scenario. In case of broader western sanctions, if Kremlin opts to close or taper the gas supply to Europe, the first victim will be Russia itself as the nation&#39;s major income source dry out. Apart from that, the annexation of Crimea and Ukraine crisis has raised urgency among European nations to reduce their energy dependency on Russia. In the past several weeks, EU lawmakers have discussed to find long-term solutions for fulfill their countries energy demands. Like the shale oil and gas boom in US and North America, Europe is also looking forward to exploit the new energy source. Likewise, more punitive measures by US could include stopping of American investments which will further deplete the Russian forex reserves leaving the country into cash strapped situation. In this event, surge in inflation due to further devaluation of Ruble will add more pain to the country&#39;s fragile economy.&nbsp;</div>
	<div>
		&nbsp;</div>
	<div>
		Nevertheless, Russia won&#39;t be left alone to be affected by this. The one time superpower will exert its force to retaliate the western sanctions which will undoubtedly have spiral effects in the global economy. Europe, the main consumer of Russian gas is likely to take the major punch in an event of supply closure. Starved of energy, European industrial production will come to a grinding halt which is gradually picking up speed after years of severe stagnation. Likewise, energy prices will shoot upward affecting every country in the world. US will also feel strong reverberations of the sanctions against Russia and its counter by the Kremlin. US companies operating in Russia- banking, manufacturing, mining, retail stores and restaurant chains in particular- are seen as the most vulnerable to the negative geopolitical developments. The Ukraine crisis has unfolded in a time when global economy is trying to get back on its feet. However, the newly erupted geopolitical tension is seriously threatening the global recovery to get down on its knees again.</div>
</div>
<p>
	&nbsp;</p>',
			'published' => true,
			'created' => '2014-05-07',
			'modified' => '2014-09-08',
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			'description' => 'The worst standoff between Russia and the west since the end of cold war has sparked outflow of foreign investments from the Russian economy.',
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Currency	Unit	Buy	Sell
U.S. Dollar	1	121.23	121.83
European Euro	1	131.65	132.31
UK Pound Sterling	1	142.47	143.18
Swiss Franc	1	124.29	124.90
Australian Dollar	1	71.69	72.05
Canadian Dollar	1	83.90	84.32
Japanese Yen	10	10.94	11.00
Chinese Yuan	1	17.17	17.26
Saudi Arabian Riyal	1	32.27	32.43
UAE Dirham	1	33.01	33.17
Malaysian Ringgit	1	27.36	27.50
South Korean Won	100	9.77	9.82

Currency

Unit

Buy

Sell

U.S. Dollar

121.23

121.83

European Euro

131.65

132.31

UK Pound Sterling

142.47

143.18

Swiss Franc

124.29

124.90

Australian Dollar

71.69

72.05

Canadian Dollar

83.90

84.32

Japanese Yen

10.94

11.00

Chinese Yuan

17.17

17.26

Saudi Arabian Riyal

32.27

32.43

UAE Dirham

33.01

33.17

Malaysian Ringgit

27.36

27.50

South Korean Won

100

9.77

9.82

Fine Gold	1 tola	77000.00
Tejabi Gold	1 tola	76700.00
Silver	1 tola	720.00

Petrol	1 Liter	106.00
Diesel	1 Liter	95.00
Kerosene	1 Liter	95.00
LP Gas	1 Cylinder	1375.00

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