By Andrew Foxall, The Henry Jackson Society
Western sanctions against Russia, first imposed in March, have strengthened that significant body of Russia’s elite who want to see a much more state-led style of development. During last week’s Valdai Club meeting in Sochi, President Putin argued that sanctions would help Russia’s ambitions by reducing its economic dependence on the West.
While Russia’s emphasis on self-sufficiency pre-dates the Ukraine crisis, its statism has intensified as Russia’s economy has started to show the strain of sanctions. Read more
As western governments impose sanctions on Russia, international majors with interests in the country have stayed out of the fray, saying it’s business as usual. France’s Total, for one, was not going to let the Ukraine crisis halt plans to finalize a deal with Russian Lukoil this week that paves the way for exploration of tight oil reserves in western Siberia.
Total has entered a joint venture with Lukoil to explore the tight oil potential of the Bazhenov formation in western Siberia, the French company said on Friday. Lukoil will have a controlling 51 per cent interest of the project, with Total holding the remaining 49 per cent. After conducting seismic surveys this year, the partners expect to begin drilling in 2015. Read more
With European stores looking empty, commercial real estate investors have turned to Russia where shoppers are still out in force.
After splashing out more than $1bn to buy a mall in Saint Petersburg last year, Morgan Stanley has returned to the Russian market to buy an even more expensive retail outlet in Moscow. Read more
Canada’s Barrick Gold, the world’s largest gold producer, has said goodbye to Russia. On Thursday it sold for £79.5m ($128m) its 20.4 percent stake in Highland Gold, the Russian gold miner in which billionaire Roman Abramovich is the dominant shareholder.
Institutions snapped up the stock at 120 pence per share – not a great return for Barrick which bought in at up to 230p a share. But the Canadians won’t mind too much – they gave up long ago on trying to use Highland as a serious vehicle for entering the forbidding Russian mining industry. Read more