russia economic crisis - will it affect KHL?

[Jussi]

Ukraine had no choice, the EU/IMF gave them a horrific offer, would only give them small loans if Ukraine increased gas prices by 40% and froze income growth. The country would have spiraled out of control. Ukraine is not better of which ever way they turn. The Ukrainian government (Well the Oligarchs behind the Party of Regions) wants to join the EU don't forget that. However they want to keep the President in power for the 2015 elections, if they took the EU/IMF offer no way would they win the next election. Not that difficult to figure out.

With regards to Russia being in an economic 'crisis' it is far from a crisis or recession. If this is a recession then it is a very strange one with unemployment so low. The government's priority at the present time is inflation, reducing inflation is essential to Russia if the economy is to go undergo structural reform. With interest rates remaining so high, fiscal policy so tight because of the budget rule and credit expansion deliberately checked as part of the anti inflation policy in the absence of strong external demand it is simply unrealistic to expect the economy not to respond by slowing down to a crawl. This is what an anti inflation policy is supposed to do. Inflation has fallen by approximately 1% this year and it will need to fall by another % before any relaxation in policy. Anyway, Russia has enough in the reserve fund to survive another big crisis.

I have been working in Russia for seven years, with regards to Putin, I was not a fan of him, I still am not but I do understand why he has support in Russia. From the options available in Russia and looking at all the other parties policies along with the progress Russia made from the 90's it is not difficult to understand why he has support especially in a middle class that is conservative.

That seems the most insightful view of this yet. Just curious, you've been working in Russia but I take you're not Russian?

About Ukraine, the view I've gotten is that the trade agreement with EU would have been more of a sign or a gesture to Ukrainians that they'd be part of Europe rather than Russia hence why so many people were for it.

As for Putin, while everyone admits he's not running thing in a "perfect way", the other options are even poorer. The fear is that one day those poorer options will get in power. Also as BalticWarrior sort of suggested, Putin's administration isn't exactly helping in creating a competent opposition by shutting them down so easily. There isn't a chance or atmosphere for better options to develop.

 

[Killion]

...Also as BalticWarrior sort of suggested, Putin's administration isn't exactly helping in creating a competent opposition by shutting them down so easily. There isn't a chance or atmosphere for better options to develop.

Putin came of age in the shadowy world of the old Soviet Intelligence Services as you well know Jussi, wherein he learned the crafts of subterfuge & obfuscation so no, no real opposition does exist. If you understand Russia & Russians at all, not to hard to understand why not huh?. This guys a "real" Russian... That being said, the art of deceit is honed to a far sharper edge in Western Democratic rather than in Semi-Democratic/Autocratic Systems as Russia currently operates under & both he & his regime are often vilified & cast in a bad light by western media. You really have to read between the lines & dig deep to get to the truth about anything... Anyway, at this time in Russian history, Im good with Putin, the way he operates & handles things, so ya, I too side with the Conservative Middle Classes as mentioned above. I think he's done very well for the country & will continue to do so, the KHL itself a vehicle for the purposes of economic expansion & pan Russian influence throughout Northern & Western Europe. Strikes me as being the right guy, right place, right time. But do I like "everything" he does?. Does anyone anywhere when it comes to politico's regardless their stripe or level of office? Not so much. All a matter of degrees.

 

[Dynamo81]

That seems the most insightful view of this yet. Just curious, you've been working in Russia but I take you're not Russian?

My mother moved/fled the Soviet Union in the early 80's shortly after I was born. Ethnically she is Ukrainian. I spent my entire life in the West (Australia, excluding six months in the USA) up until 2006 when I had the opportunity to work in Russia. At the time in specific fields such as mine expats were offered a lot more money in Russia than back in the West due to being in high demand. Without knowing a word of Russian and almost nothing about Russia I thought I would spend 18 months in Russia earn some good money and return home. Although I disliked it at first I slowly grew fond of the country and have been generally happy with my decision to stay longer. I have also visited Finland on numerous occasions

EU would have been more of a sign or a gesture to Ukrainians that they'd be part of Europe rather than Russia hence why so many people were for it.

That is correct but it should also be noted that Ukraine is very split, Western Ukraine is very nationalistic it has always been Pro EU/Western Integration from what I understand. Eastern Ukraine has always leaned towards Russia. This is one of the main reasons Ukraine failed to make any progress after the fall of the USSR (Ukraine never managed to reattain its Soviet-era level of per capita output). Ukraine’s cultural cleft between Russian Orthodox East and Uniate West prohibited any ruler’s level of popular support be at 50% of the population. This constant problem with political legitimacy, experienced by both pro-Western and pro-Russian Presidents, stymied reform efforts and attempts to reign in oligarch power. It is a never ending circus, and very sad as the people suffer. The Donbass oligarchs want to clean their money and secure their wealth through integration into the West. This was one of the main reasons Ukrainian TV channels were propagandizing the benefits of EU association. They only changed their mind when they saw the horrific offer the EU/IMF gave them.

As for Putin, while everyone admits he's not running thing in a "perfect way", the other options are even poorer. The fear is that one day those poorer options will get in power. Also as BalticWarrior sort of suggested, Putin's administration isn't exactly helping in creating a competent opposition by shutting them down so easily. There isn't a chance or atmosphere for better options to develop.

This is true, although I have found a lot of the reporting in the Western Media to be overblown or not representing the true opposition parties in Russia. A lot of progress has been made under Putin, but a lot of progress is still required. I do hope when Putin leaves office in 2018, Russia has two legitimate parties. As I said he is no angel but I can see why he has support in Russia.

 

[Sokil]

That is correct but it should also be noted that Ukraine is very split, Western Ukraine is very nationalistic it has always been Pro EU/Western Integration from what I understand. Eastern Ukraine has always leaned towards Russia. This is one of the main reasons Ukraine failed to make any progress after the fall of the USSR (Ukraine never managed to reattain its Soviet-era level of per capita output). Ukraine’s cultural cleft between Russian Orthodox East and Uniate West prohibited any ruler’s level of popular support be at 50% of the population. This constant problem with political legitimacy, experienced by both pro-Western and pro-Russian Presidents, stymied reform efforts and attempts to reign in oligarch power. It is a never ending circus, and very sad as the people suffer. The Donbass oligarchs want to clean their money and secure their wealth through integration into the West. This was one of the main reasons Ukrainian TV channels were propagandizing the benefits of EU association. They only changed their mind when they saw the horrific offer the EU/IMF gave them.

This is overstated. There is no Orthodox/Uniate divide in the country at all, Greek Catholicism is basically Catholic Orthodoxy, it's just a different head of the organization. This isn't Yugoslavia with Roman Catholic Croatia vs. Orthodox Serbia. Ukraine, religiously, has 4 main churches and it's usually Ukrainian Orthodox (Moscow patriarchate) vs. Ukrainian Orthodox (Kiev patriarchate), Ukr. Autcephalous Orthodox Church, and Greek Catholic.

The west is very pro EU and pro west, but the east, while Russian speaking, is not "pro-Russian" to a fault. Opinion polls still put the country at 15-20% wanting to join the Customs Union, and the rest of the east wanting to join the EU (just not right now). Divsionally, Crimea is a hotbed of pro-Russian sentiment (despite being 50% Ukrainian, the pro-Russian side here is very vocal, like how west Ukraine is very vocal) and the Donbass (which is controlled by the oligarchs / state, and doesn't really have much passion one way or the other - it's lethargic)

"This was one of the main reasons Ukrainian TV channels were propagandizing the benefits of EU association. They only changed their mind when they saw the horrific offer the EU/IMF gave them. "

First off, apparently the EU was going to offer 19 billion euros in loans had they signed.
http://online.wsj.com/news/articles/SB10001424052702304367204579266562556357206

Second, initial EU offers were based in reality. They know if they offered bailout money it would just go to a Swiss bank account and the country would be economically no better off. The EU wanted reforms (which alone would have injected tens of billions of dollars a year into the country - because the damn thing is so corrupt) and were giving Ukraine a chance to open its trade up to the world's largest economy. Ukraine currently has free trade with Russia/CIS and it pales in comparison to what Ukraine does with the EU if you subtract gas imports.

The gas deal is good for the president and the oligarch Firtash, but not the country or the people. The discount will not be made to them.

PS: I find it funny that you say that reporting the news is "propaganda". Also, the media never changed its mind, they've been given free reign by ownership groups to just report everything the past few months and this still holds. The only actual (literal, lying) propaganda comes from the state sponsored news and, of course, Russia.

 

[Dynamo81]

I have to get ready to work soon but I will respond to some of your points. I will also add I don't care what happens to the Ukraine as it plays no role in my life, I don't live there and it does not play any role in my work in Moscow. EU accession or Customs Union accession won't solve many of the problems Ukraine faces. As I have stated before it is embarrassing that the Ukraine never managed to reattain its Soviet-era level of per capita output. This is mainly due to the population being divided so long on Pro-West or Pro-Russian leadership which stopped much needed reform. Pro - West leaders replaced by Pro-Russian and so on.

With regards to support for the EU the Kyiv International Institute of Sociology conducted a poll in September.
http://www.kiis.com.ua/?lang=ukr&cat=reports&id=196&page=1
41% voted for the EU
35% voted for the Customs Union

First off, apparently the EU was going to offer 19 billion euros in loans had they signed.

http://online.wsj.com/news/articles/SB10001424052702304367204579266562556357206
Why wasn't this stated openly before the deal with Russia? The only thing made public by the EU and IMF was a statement in October that the European Union are ready to provide a 610 million euro credit if Ukraine signs a new agreement with the International Monetary Fund. Some people are saying that this 19 billion loan would have stretched over 7 years but the rest of the money would not be available until these reforms were in place, these reforms would have thrown Yanukovich out of power (He does not want that) because I'm sure no Ukrainian wants a 40% increase in gas prices and their incomes to be frozen and the other demands made. The country has to roll over or repay $10.8 billion in foreign debt by the end of 2014, an almost impossible task given that capital markets are effectively closed. Foreign reserves have fallen by 30 per cent this year to $20.6 billion, This is around 2 months of imports My propagandizing point was that Yanukovich and his Oligarchs are Pro-EU integration. Channels owned by Donbass Oligarchs (Who back Yanukovich) were promoting EU accession in Ukraine. I highly doubt they wanted to fall into Russia's hands.

The EU wanted reforms (which alone would have injected tens of billions of dollars a year into the country - because the damn thing is so corrupt) and were giving Ukraine a chance to open its trade up to the world's largest economy. Ukraine currently has free trade with Russia/CIS and it pales in comparison to what Ukraine does with the EU if you subtract gas imports.

I don't see how the Ukraine would get 10 Billion from these reforms (Which I'm sure would result in people protesting too), care to tell me? Unless I misunderstood your point.

What is Ukraine going to do with 23% of its economy relying on exports to Russia (These make up only 5% of Russia's imports)? Russia will have no choice but to impose tariffs on Ukrainian imports. Russia does not, after all, wish to have to compete with European goods on level territory at this stage. Where will they find $10.8 billion by 2014?

Anyway, I have enjoyed this discussion. Good we are not getting personal I feel our debate will only go in circles from now on

 

[Siberian]

Putin is probably the best Russian ruler in centuries, if his health allows he will make Russia a much better place at the end of his time. I also believe there is no other single politician in the world who has so much capabilities to turn things around. I mean Putin makes every other politician look like minion when he is the room. The improvement that Russia has gone through since 1999 is non-measurable. From a complete hole with an average salary of 50 bucks, overwhelming poverty, malnutrition-ed army, gangsters and killers ruling the country, he turned this place into a much better place. Just remember what happened to Russian hockey when drunken Yeltsin was selling off Russia's resources to tycoons with connections. I want Putin to stay for 25 more years if he could.

 

[Jussi]

Putin is probably the best Russian ruler in centuries, if his health allows he will make Russia a much better place at the end of his time. I also believe there is no other single politician in the world who has so much capabilities to turn things around. I mean Putin makes every other politician look like minion when he is the room. The improvement that Russia has gone through since 1999 is non-measurable. From a complete hole with an average salary of 50 bucks, overwhelming poverty, malnutrition-ed army, gangsters and killers ruling the country, he turned this place into a much better place. Just remember what happened to Russian hockey when drunken Yeltsin was selling off Russia's resources to tycoons with connections. I want Putin to stay for 25 more years if he could.

But aren't you French?

 

[obskyr]

With regards to Russia being in an economic 'crisis' it is far from a crisis or recession. If this is a recession then it is a very strange one with unemployment so low. The government's priority at the present time is inflation, reducing inflation is essential to Russia if the economy is to go undergo structural reform. With interest rates remaining so high, fiscal policy so tight because of the budget rule and credit expansion deliberately checked as part of the anti inflation policy in the absence of strong external demand it is simply unrealistic to expect the economy not to respond by slowing down to a crawl. This is what an anti inflation policy is supposed to do. Inflation has fallen by approximately 1% this year and it will need to fall by another % before any relaxation in policy. Anyway, Russia has enough in the reserve fund to survive another big crisis.

Unemployemnt in Russia isn't going to stay on the current level for sure, that's how metallurgical industries in particular are going to deal with the export crisis. Which isn't even about the current external demand, the problem for many sectors of the Russian economy is effective exchange rate of ruble recovering too soon after the crisis. And that indeed is one of the outcomes of the Russian inflation targeting monetary policy.

 

[Sokil]

I just read that Spartak is experiencing financial difficulties - is it serious?

 

[Hockeyfan31*]

Let's hope so, **** club that no one cares about, hence average attendance around 100 lol, deserve to be in vhl

 

[Peter25]

I just read that Spartak is experiencing financial difficulties - is it serious?

The bank that sponsored them lost it's license. Without financial help Spartak will certainly not be able to play in the KHL.

 

[Fugu]

Closing this. KHL Expansion discussion has an ongoing thread.

Please let's not get into the politics behind it, but concentrate on the economic matters and affects to the league itself.