By John Helmer, Moscow

In Ukrainian villages they still say a dog won’t cry if you beat him with a bone. In the Zaporozhye region of eastern Ukraine, there are exceptions – bones on which even dogs fear to choke. The Zaporozhye Alumina and Alumimium Combine (ZALK) is an example. Owned by the Russian aluminium monopoly, Rusal, it has been closed since 2009 because Rusal judges it is unprofitable to operate. That has been a bone of contention between Rusal and the Ukrainian authorities for almost a decade.

This week, the State Property Fund of Ukraine announced it has begun “enforcement proceedings by the executive service after the decision of the highest court to return the [ZALK] shares to the state. We are following the process.” The Ukrainian Supreme Court ruled on March 11 to renationalize Rusal’s shares in ZALK.

Oleg Deripaska (lead image, left), the chief executive of Rusal, says through a spokesman he will appeal the Supreme Court ruling in the international courts. Rusal is “a bona fide purchaser of the plant”, the company spokesman told a Moscow wire service.
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by Editor - Tuesday, March 17th, 2015
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By John Helmer, Moscow

The International Monetary Fund (IMF) has decided to give the Ukrainian banks R&R&R – that’s rest from regulation and refinancing. Inspection of the foreign exchange book, unwinding related-party credits, recovery of non-performing loans, and obligatory recapitalization, which were all conditions of the Fund’s 2014 Ukraine loan, have been relaxed. The new loan terms announced by the IMF last week, postpone reform by the commercial banks until well into 2016. In the meantime, the IMF says it will allow about $4 billion of its loan cash to be diverted to the treasuries of the oligarch-owned banks. That is almost one dollar in four of the IMF loan to Ukraine.
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by Editor - Monday, March 16th, 2015
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By John Helmer, Moscow

The International Monetary Fund (IMF) has agreed on a scheme of war financing for Ukraine. For the first time, according to Fund sources, the IMF is not only violating its loan repayment conditions, but also the purposes and safeguards of the IMF’s original charter.

IMF lending is barred for a member state in civil war or at war with another member state, or for military purposes, according to Article I of the Fund’s 1944-45 Articles of Agreement. This provides “confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.”

To deter Russian and other country directors from voting last week against the IMF’s loan, and releasing their reasons in public, the IMF board has offered Russia the possibility of, though not the commitment to repayment for Gazprom’s gas deliveries, and the $3 billion Russian state bond which falls due in December.
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by Editor - Sunday, March 15th, 2015
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By John Helmer, Moscow

For the first time Moscow analysts have issued precise estimates of the ferrous scrap sold in the domestic Russian market by the major scrap companies, and identified the market shares of the leading companies by name. The disclosures also confirm that the state-owned Russian Railways (RZhD) is one of largest scrap producers and traders in the market, trailing three of the large steel groups – Novolipetsk, Magnitogorsk, and Evraz – but far ahead of the scrap operators which are independently owned.

Reliable is not, however, the term to use for volumes of scrap either in the domestic or export trade. What is missing is not only a measure of the size of the black trade in scrap, but also the reluctance of everyone, including the industry analysts in Moscow, London, and Washington, to acknowledge, let alone count the value of what is going on.
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by Editor - Thursday, March 12th, 2015
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By John Helmer, Moscow

Next to prostitution, collecting scrap metal is the oldest trade in the world. Like prostitution, it prefers to do its business in the dark.

Because it’s so easy and cheap to turn sex and stolen goods into cash, the expensive capital requirement for both lines of business is in protection from price competitors and asset raiders. This helps to explain why at least half the Russian ferrous scrap trade is controlled by the seven oligarchs who run the largest steel and pipemaking mills. Of the other half, among the so-called independent scrap traders, the state-owned Russian Railways (RZhD) is dominant. That’s a fact which noone dares to report.
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by Editor - Sunday, March 8th, 2015
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By John Helmer, Moscow

When you have been the target of assassination by a powerful figure in Russia, as I have, and you survive the hit, as I did, you learn one thing or two things before; more in retrospect. One is that the Moscow police act quickly and competently, as they would elsewhere – so swiftly, in fact, that the powerful figure may not have the time to close down the investigation before the evidence can be saved. A second is that even hits ordered by powerful figures generate a trail of planning and positioning they didn’t intend to leave behind, pointing to their identity, and that in turn to their motive. A third is that in Moscow assassinations the place of ambush is always selected to raise the probability of success for the assassins, the hit, and the getaway – never the chances of survival for the victim. The fourth is that if the target is lucky, the assassination plan is interrupted by an unforeseeable mistake in placement or timing; a weapon fault; a passing witness; or a lucky circumstance.

On the physical evidence of what happened in the 30 minutes preceding the February 27 murder of Boris Nemtsov, the probability of his being attacked on Bolshoi Moskovoretsky Bridge was one in thirty-six (less than 3%). Nemtsov wasn’t just unlucky: his assassins were correspondingly fortunate, more than they could have planned.
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by Editor - Tuesday, March 3rd, 2015
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By John Helmer, Moscow

The President of Cyprus Nicos Anastasiades agreed last week with President Vladimir Putin on what is reported in London and Washington to be a military basing agreement with Russia for Russia’s naval and air forces in the Mediterranean. In the aftermath, Putin did all the talking to the press, making it clear, if not explicit, that in current Russian strategy, Cyprus is far more important than Greece.

Returning home to Cyprus on the weekend, Anastasiades has disclosed no papers with his signature, assuring his party supporters – among them, the anti-Russian voter bloc on the island – that so far as military terms are concerned, he has signed nothing new. The Cyprus Mail, an anti-Russian newspaper, called Anastasiades’s trip to the Kremlin a “fizzle”. A source close to the Cyprus presidency comments that the idea of a Russian base agreement in Cyprus “is agitprop. It’s all a lot of bull.”
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by Editor - Monday, March 2nd, 2015
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By John Helmer, Moscow

The Kremlin doesn’t want to say so exactly. But right now it is as reluctant to support the Greek Government in its conflict with Germany, as Joseph Stalin and the Soviet Politburo wanted to back the Greek Communist Party during the Greek civil war between 1946 and 1949. So, when Foreign Minister Sergei Lavrov (right) met in Moscow with Greek Foreign Minister Nikos Kotsias (left) two weeks ago, he offered Athens a hypothetical conditional: “Russia is also in a tough financial situation caused by a unilateral illegitimate policy of our Western colleagues. However, if the government of Greece ever comes up with any requests then, as Finance Minister Anton Siluanov said, they will, of course, be considered…”

Speaking a few hours before on Athens television, the new Greek Defense Minister Panos Kammenos proposed the Greek hypothetical conditional: “if we see that Germany remains rigid and wants to blow apart Europe, then we have the obligation to go to Plan B. Plan B is to get funding from another source. It could the United States at best, it could be Russia, it could be China or other countries.”

Asked to say what Greek Government requests Finance Minister Siluanov is considering, the ministry spokesman said today – nothing. That’s to say, the Greeks haven’t proposed a Plan B, and if they do, the Russian response will be — nothing. The Russian reason – the new Greek Government, like its predecessors, is regarded by the Kremlin as a US client, engaged in secret dealings with Washington which would put a Russian loan, if it were extended, at risk of being wasted, or lost.
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by Editor - Thursday, February 26th, 2015
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By John Helmer, Moscow

Oleg Deripaska (left), chief executive of the Russian state aluminium monopoly Rusal, makes a practice of thriving when everyone else is suffering. That’s because the Russian government and the state banks cast a more protective cover over heavy debtors when times are bad than when times are better.

Rusal owes $9 billion, a sum that has been greater than its stock market capitalization for much of the past year. But since January 1 Rusal’s share price has been doing so well, the company has issued notices to the Hong Kong Stock Exchange claiming it is innocent of any hanky panky. If Deripaska isn’t protesting too much, what then is driving Rusal’s apparent recovery so far this year?
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by Editor - Tuesday, February 24th, 2015
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By John Helmer, Moscow

Victor Pinchuk, the Ukrainian oligarch who took sides for the European Union (EU) against Russia, is running out of money, company officials admitted last week in a confidential briefing.

Pinchuk has been forced to provide his company with $20 million in emergency cash to stave off insolvency, but bondholders and banks owed more than $1 billion have not been paid. Although company officials admit that Interpipe, their pipemaking business in Dniepropetrovsk, has not been attacked directly by the fighting in Donbass, they say they are now cut off from supplies of scrap steel for smelters, electricity, and coal from Lugansk and Donetsk. As a result, Pinchuk is now planning to lay off at least 3,000 workers – one-fifth of his Dniepropetrovsk workforce. A brewing worker rebellion and bankruptcy action by unpaid bondholders are part of what one Interipe executive calls Pinchuk’s “fundamental risk”.

The timing of the disclosures could not be worse for Pinchuk, or for Dniepropetrovsk — until now the bastion of Igor Kolomoisky, Pinchuk’s commercial rival and governor of the region. Pinchuk was the target in the US last week as US newspapers opened investigations into the flow of money Pinchuk has directed to the Clinton Foundation, and to lobbying for commercial and political favours from Hillary Clinton and State Department officials directing the Kiev administration.

According to Interpipe sources, neither the EU nor the US is buying enough Pinchuk pipes to offset the shutout in the Russian market, and the collapse of demand in Azerbaijan and Kazakhstan. The drop in the global oil price has triggered sharp cutbacks in oilfield spending and pipe demand in the US and the Middle East. The American shale oil boom has proved no good for Pinchuk too, because shale oil drilling requires premium pipes which Interpipe doesn’t manufacture.
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by Editor - Sunday, February 22nd, 2015
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