By John Helmer, Moscow

Stealth warfare against the Russian economy may be encouraging capital outflows, but for Russians on the home front, glasses are still being raised with a growing volume of sparkling wine or champagne going down the hatch. Abrau-Durso, the only Russian winemaker listed on a public stock exchange, is also going up, and like the bubbles, defying threats from Washington.

Even if falling consumer incomes and worsening economic prospects threaten the rate of growth in Russian consumption, Russia is “still the most promising country in the world for the consumption of wine products,” declares Vadim Drobiz, director of the Centre for Research on Federal and Regional Markets for Alcohol (TsIFRRA) in Moscow. “This remains the fact even if the entire world is tired of wine, and economic crisis is pushing down on consumption. Seventy years ago, in France, Italy, Spain, Portugal, Argentina, and Chile annual wine consumption was between 120 and 150 litres per capita. Now they drink 40 litres. In principle, this decline will continue, as wine is replaced by beer and strong alcohol. In 1985 in Russia, we consumed 21 litres, but now 4.5. We’ve declined by almost five times over the 25 years. Although the figures have been even lower: in 1995 the consumption was 3 litres of wine per capita. So we are improving since then.”
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by John Helmer - Monday, June 2nd, 2014
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By John Helmer, Moscow

The US Navy’s current Russia containment tactic in the Black Sea has been unable to negotiate refuelling from naval or civilian fuel tankers while under way at sea, and requires port calls for fuel every seven days. The Navy has announced that its missile cruiser, USS Vella Gulf, put into the Bulgarian port of Varna on May 30. The vessel entered the Black Sea, 180 nautical miles to the south, on May 23. The illustration from the bridge of the Vella Gulf as it approached Varna is a US Navy photograph by Mass Communication Specialist 3rd Class Edward Guttierrez III For the delay of the Vella Gulf in reaching the Black Sea, click.

According to the US Navy press release, Vella Gulf’s presence in Bulgaria reaffirms the United States’ commitment to strengthening ties with NATO allies and partners, while working toward mutual goals of promoting peace and stability in the region. While in Bulgaria, the Navy says the Vella Gulf crew will participate “in community relations events at the Bulgarian Naval Academy and a local orphanage, visit the Bulgarian Naval Museum and tour the historic city of Varna.”
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by John Helmer - Sunday, June 1st, 2014
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by John Helmer - Thursday, May 29th, 2014
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By John Helmer, Moscow

There has long been a fear on the Russian side that South Africa will sell as much platinum and palladium as it can mine, threatening the market price of both metals, and leaving Russia holding very large, very secret stocks of dwindling value. From the Russian point of view, that’s not a unilateral sacrifice Russia should accept; nor a unilateral advantage South Africa should be allowed to take.

Together, Russia and South Africa (SA) produce almost 90% of the world’s platinum supply (5.7 million ounces); 80% of the palladium supply (6.4 million oz). So there has been a natural inclination for the principal producers – Norilsk Nickel in Russia; Anglo Platinum, Impala, Lonmin and Northam in South Africa – to test the scope for price-supportive cooperation in the market, instead of price-damaging competition. The Russian and South African governments have naturally inclined in the same direction.
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by John Helmer - Thursday, May 29th, 2014
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By John Helmer, Moscow

Radoslaw Sikorski (Radek for short) commenced his campaign to be elected High Representative for Foreign Affairs and Security Policy for the European Union in 2009. For openers, he engaged an American graduate student to pronounce him “a strong contender for the position”, “steely-eyed”, and “a dark horse candidate”. Five years is a long time in politics, and in the meantime Sikorski’s campaign to be elected NATO secretary-general, replacing the Dane, Anders Fogh Rasmussen, was lost.

From the jaws of this defeat Sikorski has now engaged the deputy editor of the Financial Times, John Thornhill, to promote Sikorski as a runner for Catherine Ashton’s post as the current High Representative (aka foreign minister). According to Thornhill’s promo, published on May 24, Sikorski has suffered so much for his all-European convictions recently, he now has “a slight tic under his right eye”.
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by John Helmer - Monday, May 26th, 2014
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By John Helmer, Moscow

Russian Customs reports this week that imports of steel pipes from Ukraine have dropped by 50% or more, compared to 2013. Steel industry sources in Moscow are predicting the Russian market may have closed to Ukrainian steelmakers, as Gazprom and Rosneft, the largest buyers of pipes, are directed by the Kremlin to buy instead from domestic pipemills.

By contrast, Interpipe, based in Dniepropetrovsk and owned by Victor Pinchuk (image), is reporting that within two years it expects the current conflict to have blown over. Sales to the Russian market, Pinchuk’s principal income-earner, will recover to the tonnage and revenue levels the company was achieving before July of 2013, according to the latest Interpipe forecast. That is when the Kremlin halted favourable import-quota arrangements for Ukrainian pipes, and imposed penalty import duties. Interpipe was already loss-making before the Russian market began to close. The year-end loss for 2013 has not yet been released by Interpipe. Counting both operating losses and writedowns of asset value, industry analysts and traders say this week the loss figure is between $100 and $200 million. “A perfect storm” is the way Interpipe is describing its financial situation to creditors.
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by John Helmer - Thursday, May 22nd, 2014
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By John Helmer, Moscow

Two Russian steelmaking oligarchs, Alexei Mordashov (above, left) of Severstal, and Igor Zyuzin (right) of Mechel, went to court early this month over a debt of $4 million. The debt stems from a contract for delivery of Mechel-made metallurgical coke to Severstal’s steelmill in Dearborn, Michigan. The court is the US District Court for the Northern District of Illinois, Eastern Division, in Chicago. The claim was filed by Severstal’s local lawyers on May 5.

Russian reporting of the case this week noted the irony in the situation that both Mordashov and Zyuzin are trying to sell the companies which are now facing each other in court as plaintiff and defendant. As yet unreported is the Kremlin directive, informally but directly from President Vladimir Putin to the control shareholders of Russia’s large metals and minerals companies, not to take their business disputes to foreign courts. The order, confirmed by insiders at a well-known metal company, has been put in the context of the threat the Russian economy is now facing from US sanctions over the conflict in Ukraine.
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by John Helmer - Tuesday, May 20th, 2014
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By John Helmer, Moscow

Hercules can thank the lucky stars on Mount Olympus that his name isn’t used these days for the clinical condition of megalomania turning homicidal, accompanied by manic-depressive swings, transvestism, sadism, etc. A number of generals in the last world war – George Patton, Curtis LeMay – thought they were herculean in one sense, and were herculean in the other.*
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by John Helmer - Tuesday, May 20th, 2014
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By John Helmer, Moscow

If the programme of US sanctions cuts Russian military industries off from imports from the Ukraine, the new costs imposed on the Russian side may turn out to be less than the price of the sacrifice on the Ukrainian side. According to Russian military sources, that’s because, starting last year the Kremlin ordered the transfer to Russia of as much Ukrainian military design and production capacity as can be bought with hard currency across the frontier. The immediate priority, the sources say, are Ukrainian companies producing engines for aircraft, ships and submarines; turbines for power plants; and electronic components and control systems for guided munitions.

Vaycheslav Boguslayev, chairman of the board of Motor Sich, the principal supplier of engines for Russian combat helicopters, has confirmed a plan to establish a “joint engineering centre” with Russian aircraft engine manufacturers. Motor Sich will not comment in detail on what this centre will do, and how far it may go to substitute for manufacture of the engines on Ukrainian territory. According to a recent statement by Boguslayev provided by his Moscow spokesman, 51% of the new enterprise will be owned by the Russian side, 49% by Motor Sich.
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by John Helmer - Sunday, May 18th, 2014
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By John Helmer, Moscow

The USS Vella Gulf is the latest US Navy warship to be deployed in what Washington is calling its “mission to reassure NATO allies and Black Sea partners of America’s commitment to strengthen and improve interoperability while working towards mutual goals in the region… It demonstrates our commitment to our … allies to enhance security, readiness and capabilities.”
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by John Helmer - Sunday, May 18th, 2014
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