Deutsche Bank: The Eurozone Will Endure Harsh Sanctions Against Russia

22.05.2014

German economists have calculated the possible losses from the sanctions against the Kremlin in the case of escalation of the situation in Ukraine. Their conclusion: the West can afford to be assertive.

“The economics of sanctions: the West can afford to show assertiveness,” is the name of the investigation published recently by the analytic center Deutsche Bank (DB Research). A group of experts of the biggest bank in Germany, led by its head economist David Wolkerst-Landau, calculated the possible losses from the economical sanctions against Russia, to which the European Union and the USA may resort in case of further escalation of the situation in Ukraine.

The main conclusion of the investigation is already reflected in its name: the leading Western economists are able to withstand the consequences of both the sanctions against Russia and the possible responsive action on Moscow’s part without significant losses for themselves. Only a full suspension of export to the EU of Russian energy resources or a default of the Russian Federation would constitute real danger. However both of these options are considered to be highly improbable by the German experts. Meanwhile they are pointing out the problems that may arise in individual EU states and European economical industries as a result of the ‘sanction war.’

To begin with, Deutsche Bank experts are analyzing the current state of the Russian economy. They name capital outflow as one of its typical characteristics, which has been observed in Russia for many years now, however which has increased significantly in the recent time. This is a “severe blow for the already weakened Russian economy,” emphazises the investigation. Another consequence of the conflict with Ukraine and an indirect result of the sanctions already imposed against individual people, banks and companies, was the significant price increase on financial resources for loaners from Russia.

The Russian Recession and European Export

The authors of the investigation note that as a result of devaluation of the ruble, inflation has increased on one hand. However, on the other hand, this augmented the revenues of the budget of the Russian Federation, as a result of which “the government received certain opportunities to augment state expenditures.” This will allow the Russian government to “limit the economical consequences of the further escalation of the current crisis,” notes the investigation.

“A long-term conflict in Ukraine and the continuation of uncertainty are already enough by themselves to provoke recession,” opine the experts of DB Research. However, if the West is to implement ‘significant’ financial and economical sanctions against Russia, the country, taking everything into account, “will fall into deep recession,” says the investigation. Its authors do not exclude that in this case economical stagnation in Russia may reach 10%, just how it has been after the default in 1998 or during the crisis of 2008-2009.

The possible recession in Russia will influence European exporters, however quite unequally. The fall in demand will be felt the most by “some small countries at the eastern borders of the Eurozone,” for example, Estonia and Finland, whose export to Russia constitutes over 10%. Meanwhile, for France, Italy and Spain, the losses will be insignificant, as the Russian part in their export does not surpass 2,5 percent, and the export percentage in the GDP of these countries itself is relatively small.

Risks for Germany

“The only big country of the Eurozone which has significant trade connections with Russia is Germany,” emphasizes the investigation of DB Research. 3,3% of German export go to the Russian market. It is most important for German equipment builders (5% from all export supplies) and car builders (4%). However, German clothing producers are most dependent on Russia (5,5%).

Taking this into account, even a dramatic fall of the Russian market will lead, according to the calculations of the authors of the investigation, to the slowing of economical growth in Germany within the limits of 0,5 percent points. “This should not be disregarded, however this can be dealt with,” think DB Research experts.

The Biggest Losses are Threatening French Banks

As to the financial sector, in absolute numbers the biggest risks from the “sanction war” will be suffered by French banks. Their loan demands to lenders in Russia and investments into Russian stocks constitute about 51 billion US Dollars. If one is to speak of relative numbers, the biggest measures are demonstrated by Austria, the Netherlands and Italy. Such risks of the German and Spanish banks are called “quite limited” by the authors of the investigation.

However, overall the European bank sector is much more vulnerable to the implementation of much harsher sanctions against Russia than the American or Japanese one. The worst case scenario, according to the analysts, would be Russia’s inability to pay or its full isolation from the international finance system. However even in this case the consequences for the Russian economy would be much more serious than for the Western countries, DB Research experts are convinced. – DW

http://www.dw.de/deutsche-bank-єврозона-витримає-жорсткі-санкції-проти-росії/a-17654746

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How Much Propaganda Can You Get Into 15 Minutes of News?

By Boris Reitschuster So much propaganda, in 15 minutes of news:   The main ‘news stories’ on Russia’s ‘First Channel’, tonight:

• Germany is a nation occupied by the United States of America. Germany cannot even promote someone to Colonel without American approval.

• The United States has spent $5 billion on the putsch in Ukraine.

• The goal of the United States is to force Ukraine into NATO; and install a missile defense system in Ukraine.

• America dreams about destroying Russia with a nuclear first strike; but to do so America needs a missile defense system in Ukraine.

• Most important for America are the areas along the Ukraine-Russia border, but the people there are against the USA.  Therefore the Ukrainian Army is currently exterminating these people, with American consent.

The problem: people who listen to such lies, every day, at some point start to believe some or all of them. At the moment the best reporting on German TV, radio and in print is to summarize – in ten to fifteen lines – the main news of Russian State TV, as above.  Information about the current propaganda on Russian TV would hugely aggravate lobbying by Putin-defenders. By ‘Focus’ reporter Boris Reitschuster, https://www.facebook.com/reitschuster edited by Jon Barrow

German ‘Putin’s Network’ against Ukraine (from European press)

Radiosvoboda, 06.05.2014

European newspapers inform about changes in forecasts of NATO leaders in respect of Russia’s next steps in Ukraine. As the Alliance’s Supreme Commander Philip Breedlove says, “currently Russia is unlikely to directly invade Ukraine” and predicts that Putin “heads for discrediting the Ukrainian government and organizing the riots and unrest in order to pave the way for a separatist movement”. The press also reports about U.S. financial and diplomatic ‘assault forces’ landing in Europe to coordinate new large-scale economic sanctions against Russia with the EU countries leaders. The observers also analyze Germany’s proposal to convene a new round of negotiations on Ukraine in Geneva and draw attention to the so-called ‘Putin’s network’ in Germany, which speaks out against the rights of Ukrainians to independence and justifies Russia’s annexation of Crimea.

Der Spiegel lies about Ukraine

By Thomas Theiner

The German weekly Der Spiegel has always been notorious for its biased reports, but a recent article in its print edition reaches new heights of propaganda and defamation.

Ukrainians as seen by Der Spiegel

Currently, Der Spiegel is toeing the Kremlin line and publishing one report after another, besmirching Ukraine, the Ukrainian people, and the Ukrainian government, while whitewashing Putin’s actions and ideology. Their recent article, “Halbautomatische Gewehre: Ukraine wickelt Waffengeschäfte über Deutschland ab” (Semi-automatic rifles: Ukraine concludes weapon deals through Germany) is a blatant example of their malicious attitude towards the truth. 

Seven Decades Ago, the Soviet Union Entered the War as the Chief “Accomplice of Hitlerism”

Oleksandr Paliy for UP Tuesday, September 1, 2009, 12:01

When the current Russian government throws angry accusations of “accomplices to Nazism”, it should have first removed the plank from its own eye.

One could start with the fact that through the SS Division “Galicia”, which was indeed formed as a collaborating military force, came through barely 22 thousand Ukrainians. At the same time, the collaborationist formation of Russian “Vlasovs” alone numbered from 0.5 to 0.8 million Russians, and their membership at the end of the war exceeded 120,000 people. This occurred despite the fact that the entire territory of Ukraine was fully occupied by the Fascists, while only a small western part of Russia suffered occupation.

Russia / Germany: Deja Vu?

Russia	Germany
1991 – Loses the Cold War. Russia becomes the successor to the USSR. Loses significant territory. Partial demilitarization.	1918 – Loses World War One. Germany becomes the successor to the German Empire. Loses significant territory. Partial demilitarization. Forced to pay reparations.
1991-1997 – Gaidar’s “shock reforms”. Struggle with negative consequences of collapse of the USSR, hyperinflation, separatism (Chechen War), and attempts to overturn existing government (political crisis of 1993).	1919-1928 – Liberal reforms. Struggle with negative consequences of war, hyperinflation, separatism (Bavarian Soviet Republic, 1919), and attempts to overturn existing government (Communist protests).
1998 – Worldwide economic crisis.	1929 – Worldwide economic crisis.
1999 – Following a wave of revanchist sentiments, Yeltsin appoints a young KGB corporal, Vladimir Putin, as president. Putin wins the 2000 elections.	1933 – Following a wave of revanchist sentiments, young leader of (Nationalist Socialist German Worker’s Party (NSDAP), Adolf Hitler, comes to power.
2000s – United Russia, the ruling party, is strengthened across all branches of government.	1930s – the NSDAP, the ruling party, is strengthened across all branches of government
2001 – Signing of the Shanghai Organization of Cooperation (a Eurasian political, economic and military organisation founded by the leaders of Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan).	1935 – Signing of the Anti-Comintern Pact (an anti-communist pact concluded between Nazi Germany and the Empire of Japan).
2000s – Rapid economic growth. Increase in financing and modernization of defense branch.	1930s – Rapid economic growth. Increase in financing and modernization of defense branch.
2014 – Winter Olympics in Sochi:  Russia finishes in first place.	1936 – Summer Olympics in Berlin:  Germany finishes in first place.
2014 – Russian troops enter and establish control over Crimea under the pretense of protecting the Russian-speaking population.	1938 – Anschluss of Austria and annexing Sudetenland under the pretense of protecting the German-speaking population.

1+1 correspondent in Germany writes complaint about pro-Russian expert Rahr

Natalka Fibrig, correspondent for the Ukrainian television channel 1+1 in Germany, and Lesya Yurchenko, a freelance journalist in Bonn, sent an angry letter to German broadcast network ARD’s television channel Das Erste [The First] demanding that they stop distorting facts in news stories about Ukraine.