WASHINGTON, April 22. /Offset. TASS Daria Karamysheva, Anna Dementieva/. The topic of sanctions was the key for Russia at the annual spring meeting of the International monetary Fund and the world Bank, which was held from 17 to 22 April in Washington. Russia raised the question about the effect of sanctions on the global economy at a meeting of G20 Finance Ministers and condemned their use, equating the sanctions to protectionism.
Imposed by the West limit were also a topic of discussion at the bilateral meeting of the Minister of Finance of Russia Anton Siluanov with his American counterpart Steven by Machinim. This meeting was the first for heads of financial departments of the two countries in 2014.
Sanctions against Russia were introduced in 2014, the United States and the European Union (as well as some other countries, including Japan) due to the events in Crimea and Eastern Ukraine. Later the sanctions had been extended.
The U.S. government 6 April 2018 announced new sanctions against several Russian officials, businessmen and companies. Among them was the head of “Gazprom” Alexey Miller, the head of VTB Andrey Kostin, the owner of “Renova” Viktor Vekselberg, the General Director “Surgutneftegaz” Vladimir Bogdanov, Board member of “SIBUR” Kirill Shamalov, businessmen Igor Rotenberg and Oleg Deripaska, Suleiman Kerimov.
In the list of companies, several related Deripaska: Agroholding “Kuban”, “the EuroSibEnergo”, “RUSAL”, the holding “Russian machines” and “GAZ Group”, the investment company B-Finance, holdings Basic element and En+. In addition, the list includes the group “Renova” Vekselberg “Ladoga management” Shamalov Bank “Russian financial Corporation” (owned by “Rosoboronexport” is also mentioned in the list), and NPV Engineering “Gazprom Burenie” Rotenberg.
Sanctions equal protection
The Minister of Finance of the Russian Federation in his speech at the meeting of G20 Finance Ministers condemned the use of economic sanctions against Russia and a number of other countries, equating them to protectionism. “The policy is replaced by the introduction of the sanctions regimes that, in our opinion, is contrary to the principles of “twenty”, – said Siluanov told reporters.
The Minister recalled that the sanctions negatively affect not only Russia. Limitations of “RUSAL” first hit Europe and is positively reflected in the shares of the US companies that produce aluminum, said Siluanov. This, in his opinion, demonstrates the fact that the sanctions used by some countries as a protectionist measure.
The Russian Minister said that many of his colleagues of the “Big twenty” at a meeting of the G20 and the IMF have called for the rejection of protectionism. Evaluation of Ministers was tougher than the previous G20 meetings, said the head of the Russian Ministry of Finance.
In Argentina, at a meeting a month and a half ago, the question was raised neutrally – Finance Ministers and Central Bank heads of the group of twenty countries discussed the fight against protectionism in calmly, despite the fact that the participants were expecting a “showdown” against the imposition of US duties on steel and aluminum.
At last year’s G20 summit in Hamburg the participants until the last moment could not guarantee inclusion in the final communiqué of the meeting of the item on the fight against protectionism because of the position of US President Donald trump, who has repeatedly threatened to impose duties on steel and cars made in Mexico. In the end, the G20 leaders could agree on the inclusion of an item on the fight against protectionism in the final communiqué, while recognizing the role of protective measures in trade and supremacy of the norms of the world trade organization (WTO) in determining principles of international trade. Trump supported the document in which it is, in particular, urged not to impose duties in circumvention of WTO rules.
A few months later, 8 March 2018, trump signed a decree on introduction of import duties on steel and aluminum in the amount of 25% and 10% respectively. The decree came into force on 23 March. During the initial stage, exception made for Canada and Mexico, with whom Washington is negotiating the revision of the terms of the agreement to North American free trade area (NAFTA).
The United States and Russia met on the sidelines in Washington
A landmark event of the spring meeting was a bilateral meeting of Ministers of Finance of Russia and the United States. According to the Russian Minister, colleagues at the meeting we discussed approving the theme. According to the press service of the U.S. Treasury, the meeting was held at the initiative of the Russian side and the Ministers discussed issues involving the DPRK, Syria and Ukraine.
In addition, the head of the Russian Ministry of Finance held a traditional meeting with foreign investors, is devoted primarily to the debt policy of Russia. Siluanov said that at this time investors were mostly interested in the situation in Russia and the sanctions, and the Russian government’s plans for cooperation with the sanctions enterprises. Foreign investors asked questions about the financial and fiscal policy, including debt policy of Russia in conditions of sanctions. According to Siluanov, the meeting was attended by mostly American investors.
Russia and the United States refused to recapitalise the world Bank
A breakthrough event of the spring meetings of the IMF and the world Bank was the adoption of a decision on its recapitalization, which was under discussion for several years. Shareholders of the world Bank group on Saturday, April 21, decided to increase the capital by $13 billion, Of which $7.5 billion are designed to the International Bank for reconstruction and development (IBRD), $5.5 billion for the International Finance Corporation (IFC). The world Bank is confident that it will reinforce the capacities of the institutions fighting poverty in the world, particularly in the areas that need the most help.
However, according to Deputy Finance Minister of Russia Sergei Storchak, Russia and the USA have declared that will not participate in the recapitalization of the world Bank. The United States will be able to maintain its influence in the Bank, despite the fact that the failure of their share is eroded and reduced from 20% to 15%. According to the Russian Deputy Minister, the United States proposed to amend the articles of agreement, in which the blocking stake will be reduced from 20% to 15%, which will allow Americans to continue to carry out its decisions.
Russia has refused to capitalization of the Bank because of the disagreement with the international development Agency (IDA, part of the WB group – approx. TASS) is funded by the neediest of shareholders – borrowers of the world Bank. The second big reason for Russia’s refusal from participation in the recapitalization of the Bank was a ban on the activities of the world Bank in Russia.
The growth of the global economy under threat
Increased tension in the area of trade, the unprecedented high level of world debt and growing financial vulnerabilities threaten growth of the global economy, said international monetary and financial Committee (IMFC) in its communiqué following the meeting.
The Committee came to the conclusion that the problems of the demographic and productivity growth can reduce the potential for higher and more inclusive growth in the future. Now, according to them, global growth has increased and is becoming more widespread, due to the rapid pace of development of investment and trade. In the short term, the risks are generally balanced, but will continue to shift towards economic downside over the next few quarters.
However, they emphasize that the window of opportunity remains open and must immediately use it to conduct political measures and reforms that support the ongoing recovery, improve its sustainability and growth in the medium term.
In the opinion of the governing body of the IMF, taking into account risks to financial stability, accommodative monetary policy should continue where inflation remains weak, and gradually phased out where it is expected that inflation will return to target Central banks. Fiscal policy needs to be flexible and supportive of economic growth, to restore the reserves if necessary to avoid Pro-cyclical, to create space for investment in infrastructure and productive skills of the workforce, and to ensure that public debt relative to GDP was on the path of sustainable development.
In turn, the Finance Ministry sees a risk that about a dozen countries with fragile economies are in predbankrotnom condition because of the deep problems in debt policy. According to Deputy Minister of Finance Sergey Storchak of the group of twenty countries and the IMF as soon as possible to establish a mechanism that would not allow lending (crisis prevention). First and foremost, we are talking about the countries of Africa and Latin America, he said. According to Storchak, unmanageable debts is only a symptom of deeper problems of the financial policy pursued by specific sovereigns.
The next meeting of the International monetary Fund and the world Bank decided to hold on October 31 in Bali (Indonesia).