Politic

Economic war: how the US are killing the Russian economy

In the financial market of the Russian Federation to panic. On Friday at the opening of trading on the Moscow exchange rate of the American currency exceeded 67 rubles. It is at least 2016.

Экономическая война: как США убивают российскую экономику

The Russian currency has been declining for several consecutive days. Most stock market analysts attributed the weakening of the ruble with the expectation of new us sanctions.

Prime Minister Dmitry Medvedev has said that the introduction of a new American harsh sanctions against Russia will mean a Declaration of economic war.

“If you follow something like the prohibition of banks or use a particular currency, it can be called absolutely right, it is a Declaration of economic war. And this war is necessary, will need to react — economic means, political means, and, if necessary, by other methods. And our American friends should understand it”, — said the head of the Russian government on Thursday.

He recalled that Russia in the last hundred years has existed in a permanent sanctions pressure. In his opinion, is an element of unfair competition.

Recall that in early August, a group of senators and members of the house of representatives introduced in Congress a bill containing clauses prohibiting American residents to buy new Russian debt securities, limiting dollar transactions of banks with state participation of the Russian Federation. On Wednesday, the US state Department has announced its intention to impose new sanctions against Russia in response to “the case Skrypalia”.

Despite the fact that the details of the new restrictions and the list of restrictions is not yet released, already announced that the sanctions will affect technology and cooperation between the two countries in space, aviation and partly for energy. The state Department emphasizes that the restrictions will come into force on 22 August.

The first phase will be a ban on exports to Russia of goods related to national security. As noted by NBC, we are talking about electronic devices of double purpose and their components, including those used in the aviation industry.

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In a communiqué the state Department notes that the restrictions on cooperation in space will be introduced very point. “In space we co-operate, but where it is dependent. In this sense we will consider each position separately,” reads the document.

In the state Department assured that the technology for civil aviation sanctions is not affected, but it is possible that they will appear during the second wave of restrictions.

The second wave of sanctions could follow 90 days after the first. It will minimize the amount of imports and exports, reducing the level of diplomatic relations and imposing a number of restrictions in the financial sector. In this case, will also be a ban on flights to USA aircraft Russian Rosaviakosmos.

The sky under sanctions

Currently, the Russian aviation industry is heavily dependent on the supply of equipment from the United States. New liners SSJ-100 and MS-21 high percentage of foreign components, including us. In the industry admit that new restrictions can affect the production of civil aircraft.

The aircraft Corporation “Dry” quite a lot of components from the United States, they can be theoretically replaced by other imports, but it will take a lot of time, plus, possibly, will require a new certification. It may temporarily suspend the manufacture of the liner. In addition, you will have to re-solve the issue with tech support already delivered aircraft. Foreign components in the MS-21 is theoretically also possible to replace, but all this takes time, which will also affect the timing of the project.

For example, in MS-21 aircraft has an engine PW-1400G, developed by the American company Pratt & Whitney. Russian developers are still finalizing the local equivalent of the PD — 14 engine.

It is also important to understand the format of the sanctions: whether they are direct — or even indirect affect non-us companies cooperating with Russia in certain areas, as is happening with Iran. In this case, the Russian aircraft industry will fare much worse.

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Clash of the titans

In Russia uteshaet myself that to serious sanctions against business aviation industry in the end will not come. Because it is unprofitable to America.

The answer to such sanctions by Russia will, most likely, a ban on the supply of titanium products. On the territory of Russia operates a joint venture of domestic manufacturer of titanium “VSMPO-AVISMA” and the American Corporation Boieng. When the Russian parliamentarians in the spring and discussed possible counter-sanctions against the US and suggested the measures include restrictions on exports of rare earth metals, “VSMPO-AVISMA” first sounded the alarm.

Speaking in General, last year the trade turnover between Russia and the United States increased by 15.8% to $23.1 billion, according to the local economic development. In this case, the balance of trade, about which so faces Donald trump, is clearly in favor of Washington. So, at the end of 2017, Russian exports increased by 14.7% and amounted to $10.6 billion, and imports increased by 16.8% to $12.5 billion.

In 2017, the United States occupied the sixth place among foreign trade partners of Russia and the 10th place in terms of export and third highest import volumes.

The basis of Russian export in the US was the same titanium and articles thereof, petroleum products, aluminum, iron, platinum, engines and power plants, mineral fertilizers. In the U.S., Russia bought drones, vehicles and spare parts, medicines, medical devices, immune serum, turbojet and turboprop engines, gas turbine. To trade with Russia, the Americans banal profitable.

The plane does not fly in Washington

“Now from Washington we can expect anything, this is a highly unpredictable participant in international Affairs”, — said the press Secretary of the President Dmitry Peskov, commenting the possible ban on direct flights to the United States.

A senior state Department spokesman during a telephone briefing, August 9, assured journalists that the US does not plan to introduce direct sanctions against the Russian air carrier “Aeroflot”, however, in the case of the second wave of sanctions “landing” in the US, its aircraft and the supply of American goods will be prohibited, as the carrier is a state.

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Aeroflot is now the only company flying direct flights between the US and Russia. She flies to new York, Los Angeles, Miami and Washington. Before direct flights were also American made Delta, but since March she has refused direct flights to Russia.

Currently, the United States are in the top-15 countries, where the Russians fly more often. However, in the first half of 2018, the demand for flights from Russia to the United States decreased by 12% compared to the same period last year, and ticket price fell by 3%, which is likely due to the increase of the period of visa, as well as the closure of the US Consulate General in St. Petersburg..

Most customers already flying with transfers, so that in the event of a ban on direct flights of “Aeroflot”, in fact, little will change. At the “Aeroflot”, according to analysts, the ban on direct flights to the US will not be much impact: this direction is, according to various estimates, only between 2% and 5% of the proceeds of the carrier.

Much more harm can the weakening of the ruble.

A significant part of costs of carriers directly or indirectly depend on the dollar / ruble exchange rate in 2014 and 2015, the depreciation of the rouble led to losses, and investors fear that the situation could be repeated.

The announcement of new sanctions on August 8-9, collapsed and the Russian stock market and national currency. In the next several months if the sanctions rhetoric has not softened the dollar may reach the mark of 70 rubles, analysts predict. What mark will be able to stop the fall and what happens if it comes to really tough sanctions, nobody knows.

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Trayan Markevich
Trayan Markevich has been a reporter on the news desk since 2013. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Quebec Times, Trayan Markevich worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella.

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