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COLLAPSE OF RUBLE - JUDGMENT DAY FOR ARMENIA
Trend Daily Economic News, Azerbaijan
December 16, 2014 Tuesday 9:22 PM GMT +4
Baku, Azerbaijan, Dec. 16
By Elmira Tariverdiyeva - Trend:
To put all eggs in one basket is one of the worst ways for unstable
economies to try to strengthen the positions in the modern world. The
collapse of the economy, accompanied by unprecedented growth of the
crisis tendencies, slowly but surely appears in Russia. And it does
not matter what the real cause of the catastrophic situation was in
the Russian economy. Western sanctions, imposed in connection with
the events in Ukraine or the fact that the Central Bank of Russia just
found a good opportunity to put the blame on the eternal "ideological
enemies" and simply revealed the "economic bubble" inflatable by the
country for many years are among these reasons. This led to the fall
of the ruble, i.e., the ruble is committed to its real value.
However, the current article is not about Russia, but concerns those
countries which bet only on the Russian market as the fates decree or
because of a lack of foresight. Unfortunately, it can not reciprocate
to former exporters today.
The issue of replacing the market for supplied goods is not a big
problem for such a country as Turkey. But the situation is catastrophic
for the countries which do not maintain the trade relations with any
country except Russia.
Such countries include not only Armenia which has been in the economic
blockade for many years due to the stupidity of its authorities and
gets small dividends from the sale of products to Russia, but also
for instance, Belarus. Iran can also join these countries in the
near future.
Right after the sanctions imposed on Russia and the process of ruble's
collapse began, Yerevan found itself in a deplorable situation. This
was expected, since Armenia's weak economy is too strongly tied to
the economy of the 'Big Brother'.
As a result of the crisis, Russia saw a sharp decline in the volume
of money which Armenian migrants send home, let alone the small volume
of export from Armenia to Russia.
Yerevan was enthusiastically preparing to increase the volume export
of its agricultural products to Russia yet in August and this issue
was discussed by Armenian Prime Minister Hovik Abrahamyan in Moscow.
However, instead of the significant impetus to the country's economic
development, today Armenia faces as many as 10 percent increase
in product prices as of December and dismal prospects to sell its
agricultural products to another country. But to which country?
It should be noted that 70 percent of Armenian agricultural products
was traditionally bought by Russia.
Today, all countries are aware that the exporters, mainly those
oriented to the Russian market are in a hopelessly bad situation.
After the 'Black Monday' in Russia, that is, December 15, when the
Russian ruble plummeted by 10 percent in one day, the Belarusian
President Alexander Lukashenko sounded an alarm and demanded the
Belarusian government to immediately start searching new markets
and not to take into account the Russian market as a major buyer of
Belarusian goods.
"Although Russia is our brotherly country, we should not pray all the
time to the Russian market," Lukashenko said. "You see, their market
collapsed, and we collapsed right after that."
"Yes, we used to sell up to 85 percent, and today it is 40-45 percent,"
Lukashenko added.
To get away from the main buyer of Belarusian goods is actually quite
difficult. Today neither Ukraine, which was one of the main markets
for Belarusian products, nor Kazakhstan are ready to buy Belarusian
tractors, dump trucks, vehicles etc., due to their attachment to the
Russian market.
And the dairy products of Belarus, in general, were not bought in
such quantities by anyone except for Russia.
The same can be said about Iran, which has just only become inspired
by the new opportunities in the Russian market.
Russian authorities, being under a food embargo imposed Aug. 7, 2014,
began in response to Western sanctions to negotiate for the import
substitution, including with Iran.
Moscow promised Tehran that it will replace the food volumes, dropping
due to the retaliatory sanctions, and even gave several companies
the permission to export food products to Russia.
However, a frightening situation arose by mid-December - suppliers,
with whom Russian traders had previously agreed, have goods worldwide,
which the Russians are simply unable to pay for. One cannot even speak
of the opening of new markets and purchases of Iranian or any other
products in such a situation. As they say, beggars can't be choosers.
Isn't the statement of the Director of the Trade Development of Iran
Valiollah Afhamiraomd, made December 2 at a meeting of the board of
representatives of the Chamber of Commerce, Industries and Mines of
Iran, connected with this fact? He said that despite the steps taken
by Iran and Russia, the volume of trade between the two countries
still remains unsatisfactory.
By the way, one more touch - with the election of new president in
Iran, the country has got a chance to boost its economic policy, not
oriented to the West and Tehran will use it very soon. Recently,
in early December, Iranian President Hassan Rouhani noted the
special importance of the project at the opening ceremony of the
Iran-Turkmenistan-Kazakhstan railway, held with the participation of
the presidents of the three countries.
"Today we have taken an important step in meeting the needs of the
region and the development of regional states," he said. "However,
it is only the first step, and it should be further developed."
So, it is most likely that in the near future Iran, having realized
the futility of trying to increase the volume of trade with Russia,
will direct its energy in a completely different direction and pay
its attention to other markets.
From: A. Papazian
Trend Daily Economic News, Azerbaijan
December 16, 2014 Tuesday 9:22 PM GMT +4
Baku, Azerbaijan, Dec. 16
By Elmira Tariverdiyeva - Trend:
To put all eggs in one basket is one of the worst ways for unstable
economies to try to strengthen the positions in the modern world. The
collapse of the economy, accompanied by unprecedented growth of the
crisis tendencies, slowly but surely appears in Russia. And it does
not matter what the real cause of the catastrophic situation was in
the Russian economy. Western sanctions, imposed in connection with
the events in Ukraine or the fact that the Central Bank of Russia just
found a good opportunity to put the blame on the eternal "ideological
enemies" and simply revealed the "economic bubble" inflatable by the
country for many years are among these reasons. This led to the fall
of the ruble, i.e., the ruble is committed to its real value.
However, the current article is not about Russia, but concerns those
countries which bet only on the Russian market as the fates decree or
because of a lack of foresight. Unfortunately, it can not reciprocate
to former exporters today.
The issue of replacing the market for supplied goods is not a big
problem for such a country as Turkey. But the situation is catastrophic
for the countries which do not maintain the trade relations with any
country except Russia.
Such countries include not only Armenia which has been in the economic
blockade for many years due to the stupidity of its authorities and
gets small dividends from the sale of products to Russia, but also
for instance, Belarus. Iran can also join these countries in the
near future.
Right after the sanctions imposed on Russia and the process of ruble's
collapse began, Yerevan found itself in a deplorable situation. This
was expected, since Armenia's weak economy is too strongly tied to
the economy of the 'Big Brother'.
As a result of the crisis, Russia saw a sharp decline in the volume
of money which Armenian migrants send home, let alone the small volume
of export from Armenia to Russia.
Yerevan was enthusiastically preparing to increase the volume export
of its agricultural products to Russia yet in August and this issue
was discussed by Armenian Prime Minister Hovik Abrahamyan in Moscow.
However, instead of the significant impetus to the country's economic
development, today Armenia faces as many as 10 percent increase
in product prices as of December and dismal prospects to sell its
agricultural products to another country. But to which country?
It should be noted that 70 percent of Armenian agricultural products
was traditionally bought by Russia.
Today, all countries are aware that the exporters, mainly those
oriented to the Russian market are in a hopelessly bad situation.
After the 'Black Monday' in Russia, that is, December 15, when the
Russian ruble plummeted by 10 percent in one day, the Belarusian
President Alexander Lukashenko sounded an alarm and demanded the
Belarusian government to immediately start searching new markets
and not to take into account the Russian market as a major buyer of
Belarusian goods.
"Although Russia is our brotherly country, we should not pray all the
time to the Russian market," Lukashenko said. "You see, their market
collapsed, and we collapsed right after that."
"Yes, we used to sell up to 85 percent, and today it is 40-45 percent,"
Lukashenko added.
To get away from the main buyer of Belarusian goods is actually quite
difficult. Today neither Ukraine, which was one of the main markets
for Belarusian products, nor Kazakhstan are ready to buy Belarusian
tractors, dump trucks, vehicles etc., due to their attachment to the
Russian market.
And the dairy products of Belarus, in general, were not bought in
such quantities by anyone except for Russia.
The same can be said about Iran, which has just only become inspired
by the new opportunities in the Russian market.
Russian authorities, being under a food embargo imposed Aug. 7, 2014,
began in response to Western sanctions to negotiate for the import
substitution, including with Iran.
Moscow promised Tehran that it will replace the food volumes, dropping
due to the retaliatory sanctions, and even gave several companies
the permission to export food products to Russia.
However, a frightening situation arose by mid-December - suppliers,
with whom Russian traders had previously agreed, have goods worldwide,
which the Russians are simply unable to pay for. One cannot even speak
of the opening of new markets and purchases of Iranian or any other
products in such a situation. As they say, beggars can't be choosers.
Isn't the statement of the Director of the Trade Development of Iran
Valiollah Afhamiraomd, made December 2 at a meeting of the board of
representatives of the Chamber of Commerce, Industries and Mines of
Iran, connected with this fact? He said that despite the steps taken
by Iran and Russia, the volume of trade between the two countries
still remains unsatisfactory.
By the way, one more touch - with the election of new president in
Iran, the country has got a chance to boost its economic policy, not
oriented to the West and Tehran will use it very soon. Recently,
in early December, Iranian President Hassan Rouhani noted the
special importance of the project at the opening ceremony of the
Iran-Turkmenistan-Kazakhstan railway, held with the participation of
the presidents of the three countries.
"Today we have taken an important step in meeting the needs of the
region and the development of regional states," he said. "However,
it is only the first step, and it should be further developed."
So, it is most likely that in the near future Iran, having realized
the futility of trying to increase the volume of trade with Russia,
will direct its energy in a completely different direction and pay
its attention to other markets.
From: A. Papazian