Sanctions: most exposed banking systems to Russia

Straight from Zerohedge via Bloomberg Briefs, this chart explains which countries are most exposed to systemic risk in Russia.FCA - Zerohedge

US and European financials faded notably after Europe and then US unveiled new sanctions against Russia today. Most notably, the decision to sanction Russia’s largest banks (and ban trading and capital markets access) has ramifications for the global financial system‘s stability given the increasingly inter-connected nature of the world. For that reason, we thought Bloomberg Briefs’ chart of the most exposed banking systems by nation to any systemic issues in Russia would be useful.


As Maxime Sbaihi reports,

About 74 percent of foreign banks’ claims on Russia originated from Europe in the first quarter, according to the Bank for International Settlements.

French banks had the most claims ($47 billion), followed by the U.S. ($27 billion) and Italy ($26 billion).

Italian banks appeared to be the most exposed in the percentage of the country’s total foreign claims, of those reporting data.

Source: Bloomberg Briefs

*  *  *

With Europe set to wake up to Portugal banking system imploding after BES headlines late today, we are sure Italy’s and France’s banks can handle the additional risk-off…

Reproduced from ZeroHedge


How effective are sanctions?

The EU and US are gearing up to impose new sanctions on Russia, which could target the defence, energy and financial sectors, according to the Guardian and the debate on the effectiveness of sanctions continues.

This story in Reuters analyses how US firms are struggling to follow the latest round of sanctions, which do not state clearly enough how firms should comply.

Sanctions: Hezbollah front company in the crosshairs

The US State Department has slapped a front company which allegedly procured electronic good for the Lebanese Hezbollah terrorist organisation, circumventing trade and financial sanctions.

The State Department’s notice lists names, aliases, alternative addresses and other identifying information for the chairman and CEO of Stars Group Holding as well as three executives employed by the group. Six subsidiaries of Star Holdings were also sanctioned along with their parent company.

The individuals are:

KAMEL MOHAMAD AMHAZ, 04 August 1973, President & Chief Executive Officer, Stars Group Holding

ISSAM MOHAMAD AMHAZ, 04 March 1967, Chairman, Stars Group Holding

AYMAN IBRAHIM, 01 April 1979, General Manager, Unique Stars Mobile Phones LLC

ALI ZEAITER, 24 February 1977,General Manager, Stars International Ltd.


The entities are:









Sanctions: talking Turkish banks with the US Fed

A Turkish bank is about to hand over the details of dollar transactions made in the second half of 2012 to the US Federal Reserve.

Ziraat Bank signed an agreement with the Fed in June 2014 to allow an independent consultant to review all US dollar clearing activity carried out between July 1 2012 and December 31 2012. This will give the US a clear view of who the bank was doing business with and for during that period.

US Federal Reserve

US Federal Reserve

The agreement published on the Fed’s website also requires the bank to submit a written compliance plan to enhance anti-money laundering (AML) requirements under the Bank Secrecy Act, an enhanced customer due diligence (CDD) program and a revised suspicious activity monitoring and reporting system.

This is an extremely powerful statement from the Fed, showing the extent of its reach beyond US borders and into the transactions made by a bank in Turkey with only a branch office in the US.

Although the scrutiny is limited to US dollar clearance transactions, this information alone could reveal the identities of any dealings the bank may have had with sanctioned individuals or entities. As suggested by one Turkish politician, the Fed could be looking for information on transfers connected to Iranian businessman Reza Zarrab from Turkey to Iran.

Zarrab was named in a report from Reuters in April, connecting him to a criminal organisation that allegedly allowed Turkey to bust US sanctions in Iran.

EU sanctions on Iran and the cost of sanctions to the US

Turkey has a history of supporting Iran. A Turkish bank was used as an intermediary for oil payments from India to Iran up to February 2013, when EU sanctions prevented Euro transactions with Iran. Several nations forged an agreement in November 2013, to ease sanctions on Iran. This gives some leeway to India who is seeking to resume using the payment channel as soon as sanctions are lifted.

Man looks at Iranian Oil Tanker

Man looks at Iranian Oil Tanker – Nat Geo image

Meanwhile, a court in Luxembourg has annulled sanctions placed on the Iranian National Iranian Tanker Company (NITC). The firm contested the EU’s 2012 sanctions, claiming the firm is privately owned by Iranian pension funds. In July, a court in Luxembourg decided there was no evidence that NITC was owned by the Iranian government and that the sanctions on NITC represented a ‘manifest error of assessment‘ by the EU. This is a great boost for NITC, who now has to wait another two months for an appeals to come forward before it can resume trading with Europe.

Sanctions on Iran have cost the US government USD$175bn, according to a study made by the National Iranian-American Council published in Time. The losses since the US started sanctioning Iran in the mid 1990s are apparent in US employment rates, particularly in California and Texas. The report comes at a time when western nations are working on a deal with Iran to scale back nuclear operations in return for reduced sanctions.

Source: Today’s Zaman

EU adds 12 to Syria sanctions list

Read the European Union’s Official Journal from June 24th for the full list.

US hits 7 Ukraine rebels with sanctions

WASHINGTON (AP) — The Obama administration imposed sanctions Friday on several pro-Russian separatist leaders in Ukraine, including self-proclaimed rebel mayors, governors and commanders in chief of cities under siege, for refusing to cede to the central government in Kiev. The sanctions came as U.S. officials renewed accusations that Russia is providing the separatists with tanks and heavy weaponry and as Ukraine’s president announced a unilateral ceasefire that Washington urged Moscow to support.

The penalties on seven separatists were intended as a signal that the U.S. will continue to punish those it holds responsible for instability in Ukraine and that the West was still prepared to slap tougher sanctions on Russia’s economic sectors to punish it for stoking unrest in Ukraine should Moscow not take steps to de-escalate the crisis, the officials said.

The White House and State Department welcomed Ukrainian President Petro Poroshenko’s ceasefire announcement even as they denounced Russia for supplying separatists with military gear. White House spokesman Josh Earnest called reports of a new Russian military buildup near the Ukraine border “troubling” and dismissed explanations from the Kremlin that the movement of security forces is related to border security.

“We will not accept any use of Russian military forces, under any pretext, in eastern Ukraine,” Earnest said. He also slammed Russian officials for making what he said were false claims about the Ukrainian government being responsible for poor human rights conditions in eastern Ukraine.

“We see these statements for what they are: an attempt to create pretext for further illegal Russia intervention in Ukraine,” he said. “In fact, responsibility for the deterioration in the human rights situation in Ukraine lies with the armed separatists who are targeting the population, and their backers in Russia.”

President Barack Obama spoke by phone Friday with German Chancellor Angela Merkel, who has been a key interlocutor with Russian President Vladimir, and separately with French President Francois Hollande. The White House said the leaders all praised Poroshenko’s ceasefire, and agreed that Russia’s failure to take immediate steps to calm tensions would result in further penalties from the U.S. and the European Union – a threat the West has been making for months.

Washington last week accused Russia of sending three tanks and several rocket launchers to the separatists and, at the State Department on Friday, spokeswoman Jen Psaki said the U.S. believes Russia is preparing to send in more tanks and artillery from a site in southwest Russia.

“We have information that additional tanks have been prepared for departure from this same deployment site,” she said. “We also have information that Russia has accumulated artillery at a deployment site in southwest Russia, including a type of artillery utilized by Ukrainian forces but no longer in Russia’s active forces and believe Russia may soon provide this equipment to separatist fighters.”

Psaki would not say if the provision of the equipment to the separatists would be a trigger for additional sanctions.

Since Russia annexed Ukraine’s strategic Crimean peninsula in March, the U.S. has imposed sanctions against 71 individuals and entities, including in Russia, for their actions to destabilize Ukraine. The European Union has taken similar steps and next week, U.S. and EU officials will be discussing the possibility of wider sanctions at a series of meetings.

The sanctions imposed on Friday freeze any assets that the seven separatists have in the United States, and prohibit any American firms or businesses from dealing with them. It is a relatively limited slap against the separatists themselves but showed that the U.S. is ready to move forward with more if tensions ratchet back up.

In a statement, the Treasury Department said the sanctions penalize separatist leaders, including Vyacheslav Ponomaryov, who dubbed himself the “people’s mayor” of the eastern Ukraine city of Slovyansk after leading a group who overtook the local government there in early April; his colleague Igor Girkin, the self-described “commander in chief of the Donetsk People’s Republic” in the same town; and Valery Kaurov, who calls himself the “president of Novorossiya.”

Officials said Kaurov has asked Putin to deploy troops to Novorossiya, which translates to New Russia and is a pro-Russian term for a region in southeast Ukraine.

Last month, in an apparent attempt to ease tensions, Putin had pulled back many of his estimated 40,000 Russian troops massed along the border. They appear to have returned over the last week – even as Putin and newly elected Ukraine President Petro Poroshenko discuss Poroshenko’s plan for a unilateral cease-fire and as Putin says he is resisting rebels’ calls for help.

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Source: AP

Iran nuclear talks wrap up – Iran wants punishing UN, Western sanctions lifted

VIENNA: Iran and six world powers left themselves with a lot to do in a short amount of time after a difficult fifth round of nuclear talks ended yesterday, a month before the deadline for a deal. The aim is to secure a mammoth deal by July 20 to reduce the programme and ease fears the Islamic republic will get atomic weapons.

Iran denies wanting the bomb and wants punishing UN and Western sanctions lifted. The parties had “begun the drafting process” and would start the next round of talks on July 2, said a spokesman for EU foreign policy chief Catherine Ashton, who is chief negotiator for the six world powers.

“We have worked extremely hard all week to develop elements we can bring together when we meet for the next round in Vienna,” said the spokesman, Michael Mann. “We presented each other with a number of ideas on a range of issues, and we have begun the drafting process.” Officials on both sides said however that although the drafting process had begun, haggling over language concerning the thorniest problems was being put off until later.

“It has been another really tough round,” said a diplomat from one of the “P5+1″ six powers late Thursday. “That doesn’t surprise me or particularly dismay me since from the very beginning we have always known that if a deal was to be done, it was going to be very difficult,” the envoy said.

A second diplomat said earlier this week that Iran was refusing to budge on most issues.  “It is worrying that there is no evolution on the part of the Iranians on most subjects,” the diplomat told AFP on condition of anonymity, including “major” differences on the key issue of uranium enrichment. “The talks are being held in a serious and productive atmosphere, but progress in drafting the comprehensive agreement has been limited,” one Iranian diplomat told the IRNA news agency.

The trickiest issue is uranium enrichment-the process of making nuclear fuel for civilian purposes but also, when highly purified, for a nuclear weapon. Western countries want Iran to slash the number of centrifuge enrichment machines in order to make it harder for Iran to process enough material for a bomb in a short period of time. Other thorny issues include the duration of the mooted accord, the pace of any sanctions relief and a reactor being built at Arak that might give Iran weapons-grade plutonium.


The negotiations can be extended by up to six months beyond July 20, when an interim deal struck in November expires, but for now both sides were still aiming to get a deal by that date. US President Barack Obama is particularly keen to ensure the deadline is met. He faces midterm elections in the US in November and hopes to silence accusations that the talks are merely giving Iran time to inch closer to the bomb.

“We are absolutely focused on July 20 … We are not interesting in talking about a rollover,” the P5+1 diplomat said, adding it would be a “long time” until such an extension is even discussed. Mark Fitzpatrick, a former US State Department official now at the International Institute for Strategic Studies in London, said it was “not surprising” that difficult topics were being put off until later.

“If there is going to be a breakthrough on the key issues, it won’t come until the last moment,” Fitzpatrick told AFP. Mann said that political directors from the six countries would meet in Brussels on June 26. – AFP

Source: Kuwait Times

Sanctions: Russia may retaliate for Australian sanctions – newspaper

Moscow – Russia could respond to travel bans and asset freezes recently imposed by Australia on a number of Russian officials by introducing its own sanctions against Australia, the Izvestia newspaper reported on Friday, citing the Russian president’s press secretary Dmitry Peskov.

“The mutuality principle remains valid for these matters,” Peskov told the newspaper.

The latest developments should not affect Russia’s work within the G20, he said.

This autumn, the Australian city of Brisbane is expected to host a G20 summit, to be preceded by a G20 business summit there in July, an event in which representatives of Russian companies usually take part, the newspaper said.

However, Russia has not yet received confirmation of the latest sanctions from the Australian authorities, Peskov said.

“As for the extent of their effect on participation in international formats, I do not think that there is clarity in these issues today,” he said.

A Russian Foreign Ministry spokesman, for his part, confirmed in an interview with Izvestia that similar measures could be taken in relation to Australia in response to its sanctions, which were announced by the Australian Foreign Ministry on June 19, according to the newspaper.

The Australian authorities imposed travel bans and asset freezes on 50 Russian citizens and 11 companies that, the Australian government believes, are involved in “the threat to the sovereignty and territorial integrity of Ukraine,” Izvestia said.

Australia’s sanctions list includes Federation Council Speaker Valentina Matviyenko, State Duma Speaker Sergei Naryshkin, Russian presidential chief-of-staff Sergei Ivanov, his two first deputies Vyacheslav Volodin and Alexei Gromov, Deputy Prime Ministers Dmitry Rogozin and Dmitry Kozak, presidential aides Vladislav Surkov, Vladimir Kozhin and Andrei Fursenko, presidential adviser Sergei Glaziyev, as well as Russian MPs Yelena Mizulina and Alexei Pushkov.

These sanctions also apply to the leadership of Crimea, as well as businessmen Yury Kovalchuk, Arkady Rotenberg, Boris Rotenberg and Gennady Timchenko, according to Izvestia.

<<< back


Source: Kyiv Post

Diamonds: Diamond trade eyes direct tie-ups with Russia as threat of US sanctions looms over Moscow

Supply of roughs from Russia to Dubai and Belgium could be severely impacted if the US imposes economic sanctions on Russia, say exporters.

Currently, the industry buys roughs, produced mostly in Russia, from Dubai and Belgium. Last year, Alrosa produced 36.9 million carats of rough. India imported 163.11 million carats of roughs worth $16.34 billion, and exported 36.46 million carats of polished diamonds worth $20.23 billion in 2013.

Imports of roughs

However, direct imports of rough diamonds from Russia to India are modest at about $767 million. India’s exports of gems and jewellery during the calendar year 2013 stood at $36.04 billion.

Alrosa accounts for close to 25 per cent of the world rough diamond output. An estimated 14 out of 15 polished diamonds studded in jewellery globally, are cut and polished in India.

The gem and jewellery industry feels that direct supplies of rough diamonds could boost trade between both countries to $5 billion.

Vipul Shah, Chairman, Gem and Jewellery Export Promotion Council, said that apart from the fear of sanctions, it was in India’s interest to source diamonds directly from Russia.

In fact, he added, Russia is also exploring the possibility of selling roughs directly to China and Dubai, and has signed agreements to explore the possibility. Procedural matters are all that is standing between the two countries, which would sharply increase trade in polished diamonds between the two countries, he said. The gem and jewellery industry has urged the Government to set up notified zones to facilitate global miners such as De Beers, Rio Tinto, Alrosa and others to bring in roughs for auction in India.

Special trade zone

Though roughs can be imported and exported duty-free, miners are reluctant to set up base in India, or trade with India directly due to the country’s complex tax structure.

They prefer to sell roughs to India through other major trading centres such as Belgium, Antwerp and Dubai, said Shah. The GJEPC has suggested that the Government set up a special trading zone at the Bharat Diamond Bourse in Mumbai, and replicate the same in Surat at a later stage.

(This article was published on June 22, 2014)

Source: The Hindu Business Line

Have international sanctions affected Iran’s World Cup?

Sanctions and embargoes aren’t just buzzwords that affect Barcelona’s player transfers and Paris St Germain’s infringements on the Financial Fair Play rules. Laura Jones looks at whether Iran has suffered more than most in their preparations for the World Cup.

What if sanctions and embargoes were in place because your country is deemed to be a threat to the security of other countries?

This is the current situation in Iran.

Iran has extensive financial and trade sanctions in place against it, imposed by the European Union (EU) and the United Nations (UN) and enforced by governments across the globe. These embargoes are designed to penalise the Iranian government for refusing to suspend its uranium enrichment programme.

The reasoning behind the sanctions is to cut off any trade or funding that could be use to acquire materials for the continuation of the country’s nuclear programme. The impact is having a bearing on the entire Iranian population where poverty is on the increase and businesses are failing because they are also prohibited by the trade sanctions.

Iran reached the 2014 World Cup with a 1-0 win over South Korea - this will be just their fourth World Cup

However, there is a dispute about whether the national football team is suffering the same fate, or if the lack of preparation for the World Cup is a product of incompetence by the Iran Football Federation (FFI).

As oil companies are finding it difficult to import the necessary equipment to export its natural resource, Iran’s national team has been discovering that to be able to prepare adequately for the world’s biggest football stage they also need better kit.

Players have been allocated one tracksuit during the World Cup preparations. They have also been ordered by the FFI not to swap shirts with opposition players during the tournament.

According to the President of the FFI, Ali Kafaschian, they are “not giving the players a shirt for every game. The players need to be economical with the shirts.”

It will be interesting to see if the are any repercussions for the player who defies this command by swapping his shirt with Lionel Messi, when Iran play Argentina on the 21 June.

In 2011, Queiroz signed a deal to coach the Iran national football team until the end of the 2014 FIFA World Cup

The current Iran coach, Carlos Queiroz, has been publicly apoplectic about the quality of the training kit. Before the qualifying games against Qatar and South Korea the kit supplied to the team sounded like the remnants of the box at school when you’d forgotten your PE kit. Football boots were supplied but not in the correct sizes for the players and the socks allegedly shrunk during the humidity of the game. As the former Manchester United coach observed “this could have put Iran out of the World Cup.”

A bad workman blames his tools but when footballers are playing in shoes too large for them and socks that are shrinking on their feet as they play, you can’t help but feel a little embarrassed for the players.

The kit issues and the lack of quality opposition in the run up to the World Cup have been blamed on the UN sanctions. This has certainly been the view of Western media but Middle Eastern journalists are less convinced. Mani Djazmi, an Iranian-born BBC journalist, doesn’t believe the international sanctions are affecting the national team. He thinks the blame lies with “an incompetent FA.”

There are suggestions that the Iranian FA is overrun with officials that are focussing on everything but improving the team, yet claiming it is in the best interests of the squad. This is why Carlos Queiroz has been so vocal in his dismay, so much so that the FA has alleged that the Iran coach has been pocketing money from lucrative warm up games. An allegation he firmly denies. If Queiroz is right then being seen as an international pariah is helpful cover for an incompetent FA.

Djazmi highlights the domestic leagues, where it is more obvious that the financial restrictions are having an impact. Players have complained of not being paid for months and they have either left the country to play in Persian Gulf leagues or continued to play without pay.

Iran appeared at their first World Cup in 1978

Serbian footballer Goran Lovre claimed that his club Esteghlal were holding him hostage by keeping his passport and refusing to pay him. In a case reminiscent of French footballer, Zahir Belounis, trapped in Qatar. Lovre looked for sanctuary at the Serbian embassy but the matter was quickly resolved with a settlement and a release from his contract.

As we have seen in previous World Cups, football can be used as a tool of unity. There are mixed reports coming from Tehran about whether the government is using the Brazilian tournament as propaganda.

Former international footballer, Hassan Nayeb-Agha, who played in first Iran squad to qualify for the World Cup in 1978, believes the government are:

“Dealing with a totally disenchanted and disgruntled population, in particular among the young people, (they are) trying to use the World Cup as a tool.The regime’s objective is to pretend as though it is an advocate of sports, sportsmen and Iranian national team – and in the process they hope to appease the growing animosity Iranians and the youth in particular have for the regime.”

The police in Iran have allegedly tightened their grip on supporters enjoying the World Cup. Cafes in the capital Tehran have been banned from screening the games and mixed gender cinemas will not be allowed to show the games either. According to BBC journalist, Djazmi, Iranian’s don’t traditionally gather in numbers to watch games because large organised gatherings are prohibited. Most supporters watch the matches in their own homes. On that score everything seems to be business as usual. Not that the citizens of Iran will take comfort in this.

Djazmi leaves me with the thoughts of one of his friends.

“Iran can run out of petrol and people would grumble, but if Iran was banned from FIFA there would be blood on the streets.”

Maybe the Iran FA should have invested more in the national squad after all.


Source: Offside Rule