The Greanville Post • Vol. IX | The New Chinese Dream

What’s in a name, rather an ideogram? Everything. A single Chinese character – jie (for “between”) – graphically illustrates the key foreign policy initiative of the new Chinese dream.

In the upper part of the four-stroke character – which, symbolically, should be read as the roof of a house – the stroke on the left means the Silk Road Economic Belt, and the stroke on the right means the 21st century Maritime Silk Road. In the lower part, the stroke on the left means the China-Pakistan corridor, via Xinjiang province, and the stroke on the right, the China-Myanmar-Bangladesh-India corridor via Yunnan province.

Chinese culture feasts on myriad formulas, mottoes – and symbols. If many a Chinese scholar worries about how the Middle Kingdom’s new intimation of soft power may be lost in translation, the character jie – pregnant with connectivity – is already the starting point to make 1.3 billion Chinese, plus the overseas Chinese diaspora, visualize the top twin axis – continental and naval – of the New Silk Road vision unveiled by President Xi Jinping, a concept also known as “One Road, One Belt”.
In practical terms, it also helps that the New Silk Road will be boosted by a special, multi-billion-dollar Silk Road Fund and the new Asian Infrastructure Investment Bank (AIIB), which, not by accident, has attracted the attention of European investors.

The New Silk Road, actually roads, symbolizes China’s pivot to an old heartland: Eurasia. That implies a powerful China even more enriched by its environs, without losing its essence as a civilization-state. Call it a post-modern remix of the Tang, Sung and early Ming dynasties – as Beijing deftly and recently stressed via a superb exhibition in the National Museum of China consisting of rare early Silk Road pieces assembled from a range of regional museums.

In the past, China had a unifying infrastructure enterprise like the Great Wall. In the future it will have a major project of unifying Eurasia via high-speed rail. When one considers the breadth of this vision, depictions of Xi striving to be an equal of Mao Zedong and Deng Xiaoping sound so pedestrian.

Complete story at - The Greanville Post • Vol. IX | The New Chinese Dream

Russia Rebounds, Despite Sanctions - Bloomberg View

By Matthew A. Winkler

Sanctions meant to punish Russia for snatching Crimea from Ukraine one year ago were supposed to hurt Russian business. And they did. Russian stocks, bonds and commodities had the worst performance in 2014 of those in any emerging market.

That was then. Now the picture is changing, with investors starting to favor Russia in 2015. The ruble, which became the world's most volatile currency last year after President Vladimir Putin's land grab, is stabilizing. The swings in its value narrowed this year more than any of the other 30 most-traded currencies.

Investors in Russian government securities denominated in rubles have earned the equivalent of 7 cents on the dollar so far this year, as measured by the Bloomberg Russia Local Sovereign Bond Index. In contrast, anyone holding similar government debt in emerging markets across-the-board has lost 1.1 percent in 2015.

The picture is even rosier for Russia's corporate bondholders; they've had a 7.3 percent total return in 2015, leading the gains in the index for emerging market corporate bonds compiled by Bloomberg. And while shareholders in the global emerging market stocks measured by the MSCI Emerging Market Index gained 1.7 percent this year, the 50 Russian stocks in the Micex index are up 11.9 percent -- better than the Standard & Poor's 500 or any other North American market.

The ruble's relative value helps explain why there are some signs of confidence in Russia. Although the ruble remains the most volatile of the 31 most-traded currencies this year, its swings are narrowing. This is visible in implied volatility, a measure of traders' bets on how much the currency's value will change day-to-day. After surging in late 2014 amid the widening Ukraine crisis, the ruble now is fluctuating the way it did in 2009.

Complete story at - Russia Rebounds, Despite Sanctions - Bloomberg View

Is Russia Planning a Gold-Based Currency? - Russia Insider

The “perfect-storm” of geopolitical instability, diplomatic isolation, severe currency depreciation, and economic decline now confronting Russia has profoundly damaged Moscow's international standing, and possibly for the long-term.

Yet, it is precisely such conditions that may push the country’s leadership into taking the radical step that will secure its world-player status once and for all: the adoption of a gold-exchange standard.

Though a far-fetched idea at first glance, many factors suggest that remonetization in gold may be a logical next step for Moscow.

First, for years Moscow has been expressing its unwillingness to remain at the monetary mercy of the US and its NATO allies and this view has been most vehemently expressed by President Putin’s long-time economic advisor, Sergei Glazyev.

Russia is prepared to play strategic hardball with the West on the issue: the governor of Russia’s central bank took the unusual step last November of presenting to the international media details of the bank’s zealous gold-buying spree.

The announcement, in sharp contrast to that institution’s more taciturn traditions, underscores Moscow’s outspoken dismay with dollar hegemony; its timing suggests coordination with the top rungs of government to present gold as a possible currency-war weapon.

Second, despite international pressure, Russia has been very wary of the sell-off policies that led the UK, France, Spain, and Italy to unload gold over the past decade during unsuccessful attempts to prop up their respective ailing economies — in particular, of then-Prime Minister Gordon Brown’s sell-off of 400 metric tons of the country's reserves at stunningly low prices.

Moscow’s surprise decision upon the onset of the ruble’s swift decline in early December 2014 to not tap into the country’s gold reserves, now the world's sixth largest, highlights the ambitiousness of Russia’s stance on the gold issue. By the end of December, Russia added another 20.73 tons, according to the IMF in late January, capping a nine-month buying spree.

Complete story at - Is Russia Planning a Gold-Based Currency? - Russia Insider

Is the Irritating Twit that Is Anders Aslund Ever Going to Tire of Getting Russia Economy Wrong? - Russia Insider

Anders Aslund proves me wrong, over and over again. Every time I think I’ve seen the stupidest, most pedantic, most off-the-wall leap for mediocrity from the atrophied pecan in his head, he surpasses his previous foamy wild-eyed assessment of reality.

Rodeo clown dressed as economist. All of it delivered in that whiny Swedish accent that makes him sound like he needs to be changed, and put straight to bed for a nap. I hasten to add that the Swedish accent is not annoying in all its speakers – pretty much only Aslund and the Swedish Chef from “The Muppets”, to whom he bears an astonishing resemblance.

And it doesn’t end with physiognomy; they share a similar grasp of economics and government.

I can’t wait, I’m lowering interest rates, my people say:
“King, how are you such a genius?
There’s a roof overhead and food on our plates!”
It’s laissez-faire, I don’t even care
Let’s make Friday part of the weekend.”
– Moxy Fruvous, from “King of Spain”

Hey, remember when Aslund was president of that country; Jeez, what was it called?

Anyway, he became president way back in the late 90’s, almost further back than pterodactyls can remember, it’s not surprising that the details are a little fuzzy.

I do remember that when he became president, the country was on the ropes: the inflation rate was around 27% (now it’s 11.4%), the unemployment rate was 12% (now it’s 5.2%), and per-capita GDP was about $3,500.00 USD (now it’s $7,000.00 USD).

Adjusted for PPP, it’s about $25,000.00 per year, the highest it’s ever been. Personal income tax rate was a flat rate of 13%, and it still is.

In how many other countries has the electorate seen its tax rates remain the same for 14 years?

Complete story at - Is the Irritating Twit that Is Anders Aslund Ever Going to Tire of Getting Russia Economy Wrong? - Russia Insider

11 Predictions of Economic Disaster in 2015 from Top Experts All over the Globe | The Daily Sheeple

Will 2015 be a year of financial crashes, economic chaos and the start of the next great worldwide depression? Over the past couple of years, we have all watched as global financial bubbles have gotten larger and larger. Despite predictions that they could burst at any time, they have just continued to expand. But just like we witnessed in 2001 and 2008, all financial bubbles come to an end at some point, and when they do implode the pain can be extreme. Personally, I am entirely convinced that the financial markets are more primed for a financial collapse now than they have been at any other time since the last crisis happened nearly seven years ago. And I am certainly not alone. At this point, the warning cries have become a deafening roar as a whole host of prominent voices have stepped forward to sound the alarm. The following are 11 predictions of economic disaster in 2015 from top experts all over the globe…

#1 Bill Fleckenstein: “They are trying to make the stock market go up and drag the economy along with it. It’s not going to work. There’s going to be a big accident. When people realize that it’s all a charade, the dollar will tank, the stock market will tank, and hopefully bond markets will tank. Gold will rally in that period of time because it’s done what it’s done because people have assumed complete infallibility on the part of the central bankers.”

#2 John Ficenec: “In the US, Professor Robert Shiller’s cyclically adjusted price earnings ratio – or Shiller CAPE – for the S&P 500 is currently at 27.2, some 64pc above the historic average of 16.6. On only three occasions since 1882 has it been higher – in 1929, 2000 and 2007.”

#3 Ambrose Evans-Pritchard, one of the most respected economic journalists on the entire planet: “The eurozone will be in deflation by February, forlornly trying to ignite its damp wood by rubbing stones. Real interest rates will ratchet higher. The debt load will continue to rise at a faster pace than nominal GDP across Club Med. The region will sink deeper into a compound interest trap.”

#4 The Jerome Levy Forecasting Center, which correctly predicted the bursting of the subprime mortgage bubble in 2007: “Clearly the direction of most of the recent global economic news suggests movement toward a 2015 downturn.”

Complete story at - 11 Predictions of Economic Disaster in 2015 from Top Experts All over the Globe | The Daily Sheeple

Gold Rises After Unusual Russian Central Bank Gold Buying Announcement

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#Gold Rises After Unusual Russian Central Bank Gold Buying Announcement http://t.co/hwcdJJYvjX#Russia#Putinpic.twitter.com/I0brsikn8o
— Mark O'Byrne (@MarkTOByrne) November 19, 2014

Wolf Richter: Italy’s Crazy New Economy from Hell | naked capitalism

Yves here. Italy provides an intriguing example of how austerity inflicts damage on businesses. Here, one of the ways that the government is making its fiscal deficit look better is by paying companies that provide services to it slowly, or not at all.

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.

Italy is a country of entrepreneurs and of vibrant small enterprises. Or was. Now these businesses are dying.

Of its 5.3 million companies (as of December 31, 2013), 3.3 million are small, often family-owned outfits, according to Rome-based credit information provider Cerved Group. And another 900,000 are sole proprietorships, or 17% of all companies, a larger percentage than anywhere else in the EU, ahead of France (12%), Spain (10%), and Germany (10%). The remaining 1 million companies are corporations of all sizes.

And life in Italy has been exceedingly tough for small outfits.

Consumer spending has dropped sharply since the onset of the crisis. Industrial production continued its downward spiral in September and is down 0.5% for the first nine months of 2014 over the same period a year ago. Unemployment is 12.6%, and rising. Youth unemployment is at a catastrophic 43%, up from an already terrible 26% in 2010.

It doesn’t help that the government refuses, and I mean refuses – due to “technical” problems, as a minister explained – to pay its long overdue bills to these already strung-out businesses. It’s a shell game to lower Italy’s overall indebtedness and thus pacify the financial markets and Italy’s masters in Brussels [Italy “Would Love To” But Can’t Pay Its Bills This Year].

So this shouldn’t come as a surprise, given that the largest customer in the country, the government, refuses to pay its bills to the members of the private sector which then can’t pay their own bills: in September, non-performing loans held by Italian banks jumped 19.7% from a year ago, according to the Bank of Italy. At the same time, loans to the private sector dropped 2.3%.

Complete story at - Wolf Richter: Italy’s Crazy New Economy from Hell | naked capitalism

Russia jumps 30 positions in 2014 Doing Business Ranking | Russia Beyond The Headlines

The World Bank has presented its annual Doing Business Ranking, which ranks the countries with the most attractive business regulations. Russia is in 62nd position, 30 places higher than last year.

There are 189 countries on the list. Russia is between Greece and Moldova, and as in last year's ranking, stands ahead of the other BRICS countries (China is in 90th place, Brazil in 120th).

Doing Business in Russia now easier than in China, says World Bank

Among the main obstacles to doing business in Russia is still the low level of investor protection and barriers in trade operations and construction. However, the World Bank noted the reforms that were carried out in 2013-2014, which simplified the registration of enterprises (including the cancelation of mandatory prepayment of authorized capital) and the registration of property (including the reduction of periods for providing government services).

Each country's rank is based on a survey of companies (there are 10,200 respondents) using 10 parameters. In last year's ranking Russia was in 92nd place, having progressed from the previous year by 20 positions.

This year's sudden leap up the ranking is mainly a result of a new calculation method. For the first time the ranking included not only an assessment of the ease of doing business in Moscow, but also St. Petersburg, which was very favorable for Russia.

If this year's method had been applied last year, the difference would have been only two points. The leaders of the ranking were not influenced by the new method, however: Singapore came in first, as it had done last year, and the top five positions were occupied by New Zealand, Hong Kong, Denmark and South Korea.

Complete story at - Russia jumps 30 positions in 2014 Doing Business Ranking | Russia Beyond The Headlines

Russian news: The Rouble, A Perfect Storm - Russia Insider

The economic sanctions enacted against Russia have proved a spectacular failure, hardening Russian resolve, enhancing Mr Putin’s popularity, but especially, causing greater economic pain to the European Union than to Russia.

Although the Russian market accounts for only a few percent of European GDP, at a time when the EU is teetering on the brink of renewed recession (inter alia, German economic indicators are now falling off a cliff) those few points can spell the difference between muddling-through and collapse.

The tame Western media find themselves desperate to produce a narrative showing the success of the sanctions regime – much as they did for various Washington policy initiatives: from the invasions of Iraq (Mission Accomplished!) and Afghanistan, to the war on “Terror”.

Russian GDP is indeed flat-lining – this predates the sanctions and can be attributed primarily to falling commodity prices and collapsing demand as Russia’s Western export markets slump into recession. If anything, the Russian countersanctions are driving import substitution, providing some support to industrial activity.

The Russian Rouble has depreciated by about 17% against the dollar over the course of 2014, due to a number of factors – the Western sanctions do not happen to being among them:

Complete story at - Russian news: The Rouble, A Perfect Storm - Russia Insider

Will the Ukraine Crisis Tank Europe's Fragile Economy? | The National Interest

It seems that with the shelling of a school in the Kievsky district of Donetsk on Wednesday (bringing the death toll in eastern Ukraine to well over 3,500), the ceasefire between Kiev and the Russian-backed separatists will likely not hold. And while most of the attention with regard to the economic costs associated with the continuing conflict has focused on how high a price the West should oblige Russia to pay for its role in arming the rebels, more attention ought to be paid to what the Ukraine crisis may have in store for the increasingly fragile eurozone economies, as well as the consequent risk it may pose to the not-particularly-robust U.S. economy.

Concurrent with the deteriorating conditions on the ground in eastern Ukraine, the desire in Europe to forge ahead with a diplomatic solution to the crisis seems oddly attenuated. Yesterday, only hours after the shelling in Donetsk, EU Commission president Manuel Barroso issued a strongly worded rejection of Russian president Vladimir Putin’s call for the re-negotiation of the EU-Ukraine Association Agreement in order to address Moscow’s concerns over how the agreement will impact its economy.

Barroso’s economic acumen seems to be about on par with his political acumen; readers may recall it was he who in December 2013 called on the then peaceful anti-government protesters in Kiev to the barricades, summoning them to “have the courage and go out and fight.” In any event, the idea that the eurozone, the United States and Japan together have enough leverage to maneuver Russia towards their preferred outcome via sanctions on trade and energy has been given wide currency over the course of the ongoing crisis. It is a claim that merits closer scrutiny.

As winter approaches (and readers might take note that Kiev is at roughly the same latitude as Calgary), the ramifications of Kiev’s “European choice” are becoming clear. An agreement between Ukraine’s Naftogaz and Russia’s Gazprom in 2009 gave Kiev the option to purchase Russian natural gas at a significant discount in the short term, while agreeing to pay a (possibly) higher-than-market price in the medium term. The claim the Moscow is squeezing Kiev and forcing it, in the words of one correspondent, to pay a price “far higher than what most European countries pay” neglects to mention that (1) Ukraine agreed to pay that price in return for lower-than-market priced gas in the 2009, (2) Ukraine owes Russia, by some estimates, between 3.5 and 5 billion dollars in back payments and (3) for twenty years Ukraine has extracted, according to one analyst, “huge rents in the form of cheap or free gas from Russia” by leveraging its position as the primary transit hub for Europe’s supply of natural gas. In other words, Ukraine has proved to be a significant transit risk for a generation, hence the concerted push by several major EU countries including Spain, Italy and France for the timely completion of the South Stream pipeline that would bypass Ukraine altogether.

The situation Ukraine itself now faces is little short of dire. Because of the war and its failure to pay Gazprom, Russia cut off the supply of gas to Ukraine on June 15. As a result, by January, Ukraine’s gas storages should be empty. Yet on Saturday, Ukraine rejected an EU-brokered deal between Moscow and Kiev that would have resumed the transit of gas to Ukraine over the coming six months in return for a payment of $3.1 billion. Russia claims the $3.1 billion will go towards paying down Kiev’s outstanding debt, while Kiev insists that the sum should be considered a prepayment for the coming shipment. The dispute has sparked fears among countries in southeastern Europe that Kiev will—as it did in January 2006 and January 2009—siphon off quantities of natural gas that are meant to flow to them.

Complete story at - Will the Ukraine Crisis Tank Europe's Fragile Economy? | The National Interest

Russian Economy Keeps Growing - Russia Insider

Doing quite nicely, thank you

The narrative in the western media is that Russia's economy is stumbling due to sanctions, but this is incorrect. Russia's economy is actually growing, according to global investment banks. Deutsche Bank predicted 0.5% for the 3rd quarter.

Here's fresh evidence. Russia’s PMI just posted its second gain for 2014 and its third gain in the past 14 months. It should be noted, however, that manufacturing only makes up around 16% of the Russian economy and thus changes in this indicator will not necessarily predict changes in GDP as a whole.

And here is EU PMI by comparison:



Complete story at - Russian Economy Keeps Growing - Russia Insider

More Than Just Gas: Is This Natural Resource The Reason For The Ukraine Civil War? | Zero Hedge

Earlier today, we got a definitive confirmation that when Obama was talking about "costs" when jawboning on the ongoing Ukraine civil war, he envisioned not only Germany, and thus Europe, both of which are teetering on the edge of a triple-dip recession due to Russian sanctions, but Ukraine itself. The reason: the Ukraine economy appears to have ground to a halt following an overnight report that the war-torn country's industrial output plummeted 21.4% Y/Y in August, above the 18% estimate, and some 12.7% on a monthly basis. As the chart below shows, this was the biggest drop in industrial production since the global crisis of 2009 and followed a 12% fall year-on-year in July.





As the FT further added, according to an EBRD forecast earlier today, the Ukrainian economy will contract 9% this year, a far greater contraction than assumed in the IMF's bailout (odd how that always happens). Accordingly, this "makes sustainability of Kiev's government debts much more doubtful, and has sparked concerns that the country will eventually be forced to default and restructure."

As skepticism grows that Ukraine will be the next Greece, only without the backstop safety net of the EUR currency, bondholders are starting to get skeptical, and overnight the yield on Ukraine bonds due April 2023 slid to 10.61%, the highest in 4 months on rising fears of a default.

Complete story at - More Than Just Gas: Is This Natural Resource The Reason For The Ukraine Civil War? | Zero Hedge

Russian Domestic Manufacturing is Booming - Russia Insider

In the first 7 months of 2014 imports were down 5.1% (almost all of which are manufacturing and machinery) compared to domestic production of the same produce which was up 2.4%.

The reasons for this are two-fold; first, a weaker ruble actually stimulates the industrial part of the Russian part economy while for many years has been crowded out by an over-valued exchange rate, and second, the long-term dynamics of domestically producing has attracted a raft of investment.

For instance, the auto market shows an enormous divergence between domestic and imported growth rates. Domestic car production has fallen by 0.7% in the first seven months of the year as a result of poor demand, but this is nothing compared to the more than 30% fall in imports. Domestically made cars are simply more cost competitive.

The trend is set to continue even as the demand side of the market recovers, domestic car production is expected to expand by 2.5% next year while imports are expected to fall a further 7.2%.

Complete story at - Russian Domestic Manufacturing is Booming - Russia Insider

12 Reasons Putin is So Popular - Russia Insider

1. Per capita GDP went up from $1,300 in 1999 to $13,000 in 2011 and is over $16,000 now.

2. Forex reserves have gone up from £12 billion in 1999 to £470 billion today.

3. Russia’s unemployment rate was 14.6% in 1999. Today it is 4.9%. In 1999 in the US it was 4.1%. Today it is 6.2%. In the euro area it is 11.6%.

4. In 1999 Russia imported wheat. Today Russia is a wheat exporter.

5. Russia’s economy is growing whilst the euro area’s economy is struggling.

6. Russian male life expectancy in 1999 was 58. Today it is 65

7. In 1999 Russia’s birth rate was 8.30. The US birth rate in 2000 was much higher at 14.1. Today Russia has a higher birth rate than the US.

8. In 1999 Russia’s population was declining. Today it is growing and has done so continuously since 2009.

9. For the first time in history a car can drive from Moscow to Vladivostok on a decent road, symbolic of huge improvements in infrastructure.

10. Under Putin Russia no longer gets pushed around but hits back.

11. More Russians than ever say they are optimistic about their future.

12. Putin’s approval ratings are sky high at 84 %. Obama’s are 39%. Cameron’s are 35%. Hollande’s are 13%!. Only Merkel’s aren't downright embarrassing at 64%.

Complete story at - 12 Reasons Putin is So Popular - Russia Insider

Statistics tell the tale: Irreplaceable losses for the Ukrainian economy | SLAVYANGRAD.org

Author: Olga SHELKOVA | 27.08.2014

Translated from Russian, by Maria Razdiak
Edited by Ken Griffith and S. Naylor
Original article: http://odnarodyna.com.ua/node/24311

[Olga Shelkova is an independent economic journalist, primarily analysing, the events of the CIS (The Commonwealth of Independent States).]

The published results by the Goskomstat (Federal Bureau of Statistics) of changes to the Ukrainian economy during the first half of 2014 can be shocking. But the most important figures in the situation at hand are not the fact that the GDP fell 4.5% , nor even that the gross domestic product is predicted to fall -7% by the end of the year, but the irreplaceable losses concealed by these frigid statistics—the losses that will destroy the actual possibility of a Ukrainian economic recovery in the future.

********

We are speaking primarily about the collapse of the industrial sector, which is accelerating. During the period from January to June, the volumes of industrial production shrank by 5.8%, while July alone brought that sector down by another 12%. The most profound damage was suffered by the coal sector (-28.7%), the automobile production (-23.8%), the chemical manufacture (-22.2%), the oil refining sector (-15.9%), the rubber industry (-13.8%), metallurgy (-12.3%), and furniture production (-12.5%). Clutched by war, the Lugansk and Donetsk regions have lost 56% and 28.5%, respectively, of their industrial potential. The crisis of the component supply from Donbass in turn led to the collapse of the industrial giant of Zaporozhie (ZAZ). This enterprise lowered its production volume by 98.9%, and by October will probably stop all manufacturing, leaving 21,000 workers out of the street.

The industrial potential was also dented by the fall in exports to Russia, which ranged from 25% to 70% over the different sectors. For example, automobile production lost 40% of all exports, metallurgy – 32.6%, agricultural – 37%.

It must be noted that these horrific statistical indicators include the period during which Ukraine had a legitimate government, and economic relationships with Russia were actively developed. With the complete severance of economic ties with the Russian Federation by the Kiev Junta, the pace of industrial collapse will only accelerate.

********

The state of the agricultural sector, for which Kiev has great hopes, is no better. The first quarter of 2014 showed a 3.9% decrease in the volume of agricultural productivity, while the amount of produce fell by 17.6%. The fall in plant production during the six months totaled 30.1%. Grain production (not including corn, as the marketing year for such starts and finishes in September) shrunk by 2.1 times (i.e. more than half), winter and spring wheat – 4.8 times, rye – 27.5 times, grain legumes – 2.3 times, rapeseed – by 36.5%, the collection of fruit and berries – 11.8%, cattle livestock – 3.2%.

Specialists predict an estimated a 10% fall in the gross output of grain, which will lower the export potential by 7%; while Ukrainian agriculture by the end of the year may shrink by 10-15%.

Complete story at - Statistics tell the tale: Irreplaceable losses for the Ukrainian economy | SLAVYANGRAD.org

Ukrainian industry ravaged by war — Novorossiya News Agency

The Russian-backed insurgency in the Donbass region of east Ukraine is forcing numerous industrial giants to suspend operations. With the region accounting for over 25% of Ukrainian exports, the effect will hit hard currency revenues and the embattled hryvna.

The flashpoint marking the start of the industrial collapse in Donbass was the Lysychansk oil refinery, which in mid-July went up in a huge pillar of black smoke. Symbolic as that explosion at Ukraine's second-largest refinery was, however, it will actually have little impact since the facility had already been mothballed for over two years.

More troubling is the eerie emptiness in regional capital Luhansk, a formerly bustling industrial centre home to over 400,000. Half the population is estimated to have fled, with water, food and power shortages only compounding the constant shelling in recent weeks. Alongside hundreds of other companies, locomotive maker Luhanskteplovoz - the town's largest employer with a work force of around 6,000 - closed its doors early August after its power was cut.

Gorlivka, an industrial town of around 250,000 about an hour's drive from the city of Donetsk, is another industrial centre turned ghost town as it is surrounded by Ukrainian forces laying siege to rebels. The country's largest chemicals producer, Stirol, halted production in early May due to the risk of an environmental catastrophe, according to owner Ostchem - the holding group of oligarch Dmitro Firtash.

Ostchem categorically denies statements made on August 12 by the locally-based press secretary of Stirol, who spoke of a potential toxic disaster if Kyiv were to continue its offensive. Ostchem claims he spoke under pressure from the local rebel leadership.

Complete story at - Ukrainian industry ravaged by war — Novorossiya News Agency

Ukraine’s transition to EU trade standards will cost €165bn - Putin — RT Business

Switching over to EU trade standards will cost Ukraine €165 billion over the next 10 years, Russian President Putin warned at a meeting with President Petro Poroshenko in Minsk on Tuesday.

Russia will be forced to cancel all preferential trade agreements for Ukraine’s imports and switch to a standard regime when it ratifies its EU trade association agreement in September, the President said.

“In full accordance with the terms of agreement with the CIS free trade zone and WTO standards, we will be forced to cancel preferential imports from Ukraine,” Putin said.

In response, Ukrainian President Petro Poroshenko said that he would like to establish a monitoring group to assess the actual damage of Ukraine’s association with the EU.

“Today we can agree to set up a monitoring group that will assess real and not hypothetical potential damage,” said Poroshenko. “After this damage is calculated we can put in protection mechanisms.”

Moscow has warned Kiev that signing the Association Agreement (AA) with the EU would be economic suicide, and Moscow is also poised to suffer a €2 billion blow, according to Putin.

“Entire sectors of industry and agriculture business will be hugely impacted, and there will be negative implications on the pace of economic growth and employment,” the Russian President said.

Losses will not only be absorbed by Russia, but also by Customs Union members Belarus and Kazakhstan, he added.

The Minsk talks are the first meeting between Putin and Poroshenko since early June when the two informally met on the sidelines of the World War II commemoration ceremony in Normandy.

Complete story at - Ukraine’s transition to EU trade standards will cost €165bn - Putin — RT Business

Ukraine moves step closer to default - Fitch — RT Business

The Fitch ratings agency has downgraded Ukraine one step closer to default grade, as the Ukrainian currency the hryvnia hits a record low, and the economy balances on the brink of a collapse.

Fitch cut the long-term local currency Issuer Default Rating (IDR) of Ukraine from B-,signifying a default risk, to CCC, where default is a real possibility, and affirmed its long-term foreign currency IDR at CCC, it said in a statement on Friday.

The downgrade came amid deteriorating economic outlook due to the ongoing military conflict in Ukraine.

“Although the government has recaptured territory from the rebels, conflict may persist or intensify, delaying economic revival and damaging productive assets,” says Fitch’s statement.

The Ukrainian currency has lost 39 percent against the US dollar this year, on Friday reaching an all-time low at 13.7 hryvnia to the dollar. Last week the hryvnia lost 3.1 percent, while in August the currency fell by 9.4 percent.

Complete story at - Ukraine moves step closer to default - Fitch — RT Business

Ukraine’s economy: Broken down - FT.com

Plumes of smoke darken the sky above a sunflower seed crushing factory outside Donetsk, the largest stronghold of the Russian-backed separatists surrounded by Ukraine’s advancing army. “It was hit by Grad missiles,” says a rebel waving his machinegun as he guards a checkpoint next to a bullet-riddled bus.

The $80m plant, opened in 2000 by Cargill, was one of the first big greenfield investments into independent Ukraine, a symbol of a new era of more open markets and future prosperity. It was abandoned by the US agriculture group’s employees after being stormed by pro-Russian gunmen. Now ablaze, it is testament to the vast damage done to a war-torn and bureaucracy-choked economy slipping deeper into recession.

While the international focus in recent months has been on the armed strife in eastern Ukraine and the geopolitical stand-off with Moscow, another dilemma is looming large for Kiev and its western backers: Ukraine’s economy is in tatters .

At best, the International Monetary Fund and other western backers are likely to have to step in with more loans to help the government staunch its fiscal deficit. At worst, the $17bn IMF programme signed in April could fall apart, possibly forcing the country to default and restructure its debts. That would further deepen the economic turmoil in Ukraine and stain the reputation and credibility of the fund in the wake of its problematic Greek programme.

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Complete story at - Ukraine’s economy: Broken down - FT.com

CrossTalk: Mounting costs of Ukraine Crisis