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Russia has halted all gas supplies to European countries including Turkey and Greece.

The move comes amid a deepening rift between Russia and Ukraine, which hosts a pipeline supplying gas from its bigger neighbour to countries across Europe.

Bulgaria and Macedonia also reported that all supplies of Russian gas had been cut, while Romania’s pipeline operator said that its supplies had been cut by 75 per cent.

Related articles:
- Ukraine: Russia stops sending gas to Europe (AP)
- EU faces deepening energy crunch over Russian gas (Reuters)
- Gazprom Halts Gas Supply to Europe Via Ukraine Pipes (Bloomberg)

Bulgaria’s finance ministry said the country was facing a crisis. Petar Dimitrov, the economy and energy minister, said: “Russia and Ukraine must find an urgent solution because the energy systems of dozens of countries are at risk.”

The European Commission condemned the cuts as “completely unacceptable”. In an unusually strongly worded statement, it demanded that Russia restore supplies “immediately”.

Russia ordered a reduction in gas flow to Europe via Ukraine on Monday, a measure it said was to stop its neighbour from stealing fuel. Ukraine said the move would jeopardise supplies to the rest of Europe, which is facing freezing temperatures.

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Tags: Economy, EU, Gas, Gazprom, Government, Politics, Russia, Ukraine

Vladimir Putin, Russia’s prime minister, yesterday ordered Gazprom, the Russian energy giant, to reduce gas supplies to Ukraine bound for Europe in a move that escalates the dispute between the two countries, writes Isabel Gorst in Moscow .

Gazprom claims Kiev has been stealing gas from transit pipelines since it cut off supplies to Ukraine on January 1 after talks about a new gas deal collapsed.

Mr Putin ordered Alexei Miller, chief executive of Gazprom, to cut supplies to the Ukrainian transit system by the same volume as Ukraine had taken.

Naftogaz, Ukraine’s state gas company, said it had been notified by Gazprom that it would cut transit supplies to Europe by 65.3m cubic metres a day to 221.8m cubic metres per day. “Gazprom has in fact cut volumes of transit gas to European customers,” Naftogaz said.

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Tags: Economy, Gas, Gazprom, Politics, Russia, Ukraine, Vladimir Putin

A Ukrainian worker at a gas storage and transit point in Boyarka, outside Kiev (Sergei Chuzavkov/AP)

Nine countries in and around Europe have now reported problems with their gas supply as a result of Russia’s dispute with the Ukraine, after Slovakia, Greece and Croatia today disclosed they were experiencing drops in gas pressure.

The development comes as an emergency mission from the European Commission in Brussels and the Czech Presidency of the EU left this morning, bound for Kiev for talks with the Ukrainian authorities as the international crisis deepened.

The delegation of Czech diplomats and senior European officials also plans to meet senior officials from Gazprom, the Russian state gas monopoly, which cut supplies to Ukraine on January 1

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Tags: Gas, Gazprom, Politics, Russia, Ukraine

Gazprom chief executive says full gas shipments to European Union will continue uninterrupted

Russia cut natural gas deliveries to Ukraine today after negotiations failed to resolve a dispute over unpaid bills and the price for supplies this year.

Gazprom, the Russian state-owned gas provider, lowered pressure at 7am GMT in pipelines to Ukraine which also carry in transit about 80% of Russian gas consumed by other countries in Europe.

Ukraine said yesterday that it had paid $1.5bn (£1bn) in debts for supplies in November and December but Gazprom said it had not received that money from RosUkrEnergo, an intermediary company. It is also demanding a further $600m in fines which Ukraine said it is not yet prepared to pay.

The last time exports were terminated - in January 2006 - there was an immediate impact elsewhere in Europe as Ukraine allegedly siphoned off gas meant for onward transit. But the Gazprom chief executive, Alexei Miller, said it would continue full shipments to the European Union, which gets about a quarter of its gas from the Russian company, most of it through pipelines that cross Ukraine.

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Tags: Economy, Gas, Gazprom, Politics, Russia, Ukraine

• States and companies target developing nations
• Small farmers at risk from industrial-scale deals

Rich governments and corporations are triggering alarm for the poor as they buy up the rights to millions of hectares of agricultural land in developing countries in an effort to secure their own long-term food supplies.

The head of the UN Food and Agriculture Organisation, Jacques Diouf, has warned that the controversial rise in land deals could create a form of “neo-colonialism”, with poor states producing food for the rich at the expense of their own hungry people.

Rising food prices have already set off a second “scramble for Africa”. This week, the South Korean firm Daewoo Logistics announced plans to buy a 99-year lease on a million hectares in Madagascar. Its aim is to grow 5m tonnes of corn a year by 2023, and produce palm oil from a further lease of 120,000 hectares (296,000 acres), relying on a largely South African workforce. Production would be mainly earmarked for South Korea, which wants to lessen dependence on imports.

“These deals can be purely commercial ventures on one level, but sitting behind it is often a food security imperative backed by a government,” said Carl Atkin, a consultant at Bidwells Agribusiness, a Cambridge firm helping to arrange some of the big international land deals.

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Tags: Abu Dhabi, Cambodia, China, Economy, Egypt, Environment, Food, Food Prices, food supply, Government, Indonesia, Kuwait, Libya, Madagascar, Politics, Qatar, U.N., Ukraine

Turkey is reported to be in negotiations with the International Monetary Fund for a $40 billion loan. Very shortly, the Baltic States and at least a dozen developing countries will be filing for IMF handouts. But how will the venerable lender of last resort fund itself?

According to a fact sheet posted on its website in October, the IMF had $200 million available for emergency loans to the third-world, and another $50 billion in “additional resources”. But the IMF’s liquidity is rapidly dwindling. Between the crisis facilities concluded with Ukraine, Hungary, Serbia, Iceland and Pakistan, and the expected spate of new loan requests, the IMF should be running out of money within the first quarter of next year. Quite simply, unless the rich nations (including American tax-payers) can add to the IMF’s funding capabilities, the global recession will cause unprecedented havoc, chaos, hunger and turmoil in the world’s poverty pockets.

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Tags: Derivatives, Derivatives market, Economy, Financial Crisis, Iceland, IMF, Pakistan, Politics, Recession, Serbia, Turkey, Ukraine

The Hungarian National Bank stands in Budapest, Hungary, on Oct. 16, 2008. Photographer: Balint Porneczi/Bloomberg News

Oct. 31 (Bloomberg) — Imre Apostagi says the hospital upgrade he’s overseeing has stalled because his employer in Budapest can’t get a foreign-currency loan.

The company borrows in foreign currencies to avoid domestic interest rates as much as double those linked to dollars, euros and Swiss francs. Now banks are curtailing the loans as investors pull money out of eastern Europe’s developing markets and local currencies plunge.

“There’s no money out there,” said Apostagi, a project manager who asked that the medical-equipment seller he works for not be identified to avoid alarming international backers. “We won’t collapse, but everything’s slowing to a crawl. The whole world is scared and everyone’s going a bit mad.”

Foreign-denominated loans helped fuel eastern European economies including Poland, Romania and Ukraine, funding home purchases and entrepreneurship after the region emerged from communism. The elimination of such lending is magnifying the global credit crunch and threatening to stall the expansion of some of Europe’s fastest-growing economies.

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Tags: Banks, Credit Crisis, Credit Crunch, Economy, emerging markets, Hungary, IMF, Meltdown, Poland, Romania, Ukraine

The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money.

IMF’s work in countries such as Turkey is only just beginning

The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia.

Neil Schering, emerging market strategist at Capital Economics, said the IMF’s work in the great arc of countries from the Baltic states to Turkey is only just beginning.

“When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The Fund may soon have to start calling on the West for additional funds,” he said.

Brad Setser, an expert on capital flows at the Council for Foreign Relations, said Russia, Mexico, Brazil and India have together spent $75bn of their reserves defending their currencies this month, and South Korea is grappling with a serious banking crisis.

“Right now the IMF is too small to meet the foreign currency liquidity needs of the larger emerging economies. We’re in a dangerous situation and there is the risk of extreme moves in the markets, as we have seen with the Brazilian real. I hope policy-makers understand how serious this is,” he said.

The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA’ bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits.

The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world’s central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis.

“The IMF can in theory create liquidity like a central bank,” said an informed source. “There are a lot of ideas kicking around.”

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Tags: Bank for International Settlements, Bankruptcy, Belarus, Bonds, Central Bank, Debt, Dominique Strauss-Kahn, Economy, Financial Crisis, GDP, Government, Hungary, Iceland, IMF, Liquidity, Pakistan, Politics, Romania, Russia, Serbia, Taxpayers, Turkey, Ukraine

Russia’s financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.

S&P has cut its outlook for Russia, which has been propping up the rouble: a man on a phone passes a board displaying currency exchange rates in Moscow Photo: Reuters

Russia’s financial crisis is escalating with lightning speed as foreigners pull funds from the country and the debt markets start to price a serious risk of sovereign default.

The cost of insuring Russian bonds against bankruptcy rocketed to extreme levels yesterday. Spreads on credit default swaps (CDS) reached 1,123, higher than Iceland’s debt before it sought a rescue from the International Monetary Fund.

Moves by Hungary, Ukraine and Belarus to seek emergency loans from the IMF have now set off a dangerous chain reaction across Eastern Europe.

Romania had to raise overnight interest rates to 900pc on Wednesday to stem capital flight, recalling the wild episodes of Europe’s ERM crisis in 1992. The CDS spreads on Ukraine’s debt have topped 2,800, signalling total revulsion by investors.

Rating agency Standard & Poor’s issued a downgrade alert on Russian bonds yesterday, warning that a series of state rescue packages worth $200bn (£124bn) could start to erode the credit-worthiness of the state.

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Tags: Debt, Derivatives, Derivatives market, Dmitry Medvedev, Financial Crisis, Hungary, IMF, Romania, Russia, Standard & Poor's, Ukraine

Ukraine, Hungary, and Serbia are all in emergency talks with the International Monetary Fund, raising fears that an exodus of foreign investors will set off a systemic crisis across Eastern Europe.

A team of IMF trouble-shooters rushed to Kiev on Wednesay to draw up a possible standby loan to help Ukraine stabilize its bank after a panic run on deposits this month. Continue reading »

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