Russia cuts off natural gas supplies to Ukraine
Russian state-owned gas firm Gazprom says it has cut off supplies to Ukraine after negotiators failed to resolve a payment dispute before a key deadline expired.
Representatives from Ukraine, Russia and the European Union held meetings over the weekend in an effort to avert the crisis, but no agreement was reached.
Gazprom said Monday that Ukraine’s total debt is $4.5 billion. The state-owned gas firm will now only deliver gas that Ukraine has paid for in advance.
“At this moment no payments for old debt or June were paid,” said Gazprom spokesman Sergey Kupriyanov. “All charts show zeroes.”
Both sides said they have filed claims with an international arbitration court in Stockholm.
While Gazprom hiked the price it charges Ukraine by about 80% to $485.50 per thousand cubic meters of gas in April, some concessions have been offered during recent talks. Gazprom charged European countries an average of $377.50 per thousand cubic meters in 2013.
The gas dispute between Moscow and Kiev has escalated as relations between the two countries have deteriorated.
Europe and the U.S. have imposed sanctions on Russia for its annexation of Crimea, while analysts have accused Russia of using natural gas supplies as a political tool.
In recent weeks, violence has again flared in eastern Ukraine as government forces clashed with pro-Russian militants. The military conflict was clearly having an effect on gas negotiations.
“We will not subsidize Russian Gazprom,” Ukrainian Prime Minister Arseniy Yatsenyuk said Monday. “Ukrainians will not take out of their pockets $5 billion annually for Russia to use this money to buy weapons, tanks and jets and bomb Ukrainian territories.”
Europe relies on Russia for more than 30% of its gas, and half of that is pumped through Ukraine. Analysts worry that a disruption in supplies to Ukraine could hurt European companies and households.
Kupriyanov said Monday that “gas designated for European consumers is flowing in full accordance with the contract’s figures.”
It’s been called the most valuable item in the world by weight. The British Guiana One-Cent Magenta just became the most expensive stamp ever sold.
The stamp, weighing just 0.04 grams, was auctioned by Sotheby’s Tuesday, bringing in $9.48 million, just shy of the price range expected by Sotheby’s experts, but still enough to break the world record. Until then, the most expensive stamp ever sold was the Treskilling Yellow, which broke records when it sold for $2.2 million in 1996.
The stamp is famous in collector’s circles, and while the winning bidder has chosen to remain anonymous, David Redden, the vice chairman of Sotheby’s, told CNNMoney before the auction that he suspected the top bidder would be someone who had been a stamp collector from a young age, just like he was.
“I could well imagine someone who collected stamps as a child, always knew about this particular stamp, has now created some real wealth for themselves, and they think, ‘My goodness. I can actually pay tribute to that little child who I was once upon a time and buy the greatest stamp in the world,'” he said.
After the auction, Redden kept mum about details of the buyer, saying only that the buyer was a “collector,” not an investor.
Redden said the auction house was pleased with the outcome. “This is the most valuable item in the world by weight,” he said. “It’s just a tiny piece of paper.”
The history of this stamp is famous among collectors:
In 1856, a postmaster in British Guiana (now Guyana, on the northern coast of South America), ran out of stamps, and the shipment of a new batch was late. He asked a local newspaper to print an emergency issue of several stamps to hold him over. Among them was the British Guiana One-Cent Magenta, and only one of its kind is still known to exist today.
The stamp was first discovered by a 12-year-old boy in 1873, 17 years after it was printed. The boy, a stamp collector himself, couldn’t find a reference to the stamp in his catalog and sold it for six shillings — about $50 today.
After that, the stamp passed through several owners for nearly the next century, until it was bought by American millionaire (and convicted murderer) John E. du Pont, who snapped it up for $935,000 in 1980. He died in prison in 2010, and his estate brought the stamp to auction.
According to Redden, stamp collecting is a sort of gateway drug to collecting other items of value, like fine art or antiques.
“So many collectors, whether they collect paintings or works of art, began life as stamp collectors,” he said.
Passionate stamp enthusiasts are still active, both online and off, but organized stamp collecting seems to have waned in the past couple decades.
“Our membership has fallen over the past 15, 20 years … it’s pretty close to flat right now,” said Ken Martin, the executive director of The American Philatelic Society. The organization works to recruit new members through social activities and educational outreach.
Stamp collecting remains a potentially worthwhile financial investment. Researchers who studied stamp appreciation of British stamps from 1900-2008 found that “returns are higher than those on bonds but below those on equities.”
The researchers, Elroy Dimson and Christopher Spaenjers, said that the risk of stamp collecting is relatively low, and said they found that the annualized return on stamps was similar to returns on art investments, coming in at 7% in nominal terms, or 2.9% in real terms.
After the auction Tuesday, Sotheby’s David Redden held the stamp, clutching its glass encasement with his white-gloved hands. For him, the sale was bittersweet. “I have to say I’m a little sad to see it go,” he said. ” When I was eight years old this was the most precious object in the entire world, and I never dreamed I would have it in my hands.”
In good times and bad, the world’s financial system has long been able to rely on one thing: that the United States government would pay back its debt on time.
This assumption has made short-term government debt the most basic building block of the financial system, as reliable as a dollar bill.
In recent days, however, the fiscal impasse in Congress has been testing investors’ confidence. As a result, investors have been shifting their money out of the $1.7 trillion market for the short-term government debt known as Treasury bills, worried, for the moment at least, that they may not be the risk-free asset they have known.
Indeed, it now costs more for the United States to borrow money for a month than it does for the average highly rated American company to do so.
“These bills are like the center of gravity for the financial universe — they really are,” said Lee A. Sachs, a former Treasury official who now runs the lending firm Alliance Partners. “Defaulting on these would be like the laws of physics being repealed.”
Many investors are cautious about reading too much into the recent changes in the Treasury bill market, given that it is one narrow corner of the financial world. More visible markets, like stocks, are still showing relatively little concern about a default.
But traders and bankers are watching movements in the price of Treasury bills because they could show the first tremors of a potential earthquake if Congress fails to raise the government’s borrowing limit. Treasury Secretary Jacob J. Lew has said that after Oct. 17, the Treasury will no longer be able to borrow more money and may not be able to pay all of its bills.
No one is questioning yet whether the government will, at some point, pay back all the money it has borrowed. Investors are, however, entertaining doubts about whether Washington will pay back money on the date it has promised, a fundamental expectation that helps lubricate day-to-day transactions in the financial system.
“That is a very big change in perception,” said Clifford D. Corso, chief executive of the trading firm Cutwater Asset Management. “So much of the world relies on that certainty of date of payment. That chain is a very large and dangerous one to monkey around with.”
The clearest sign of the changing perceptions has come in the prices for the bills that the Treasury Department is supposed to repay in the days right after the debt ceiling is set to be reached.
Normally, as the day of repayment for a Treasury bill gets closer, the chances of getting repaid go up and the bill becomes worth more to investors. Now, however, the opposite is happening, and the bills are becoming worth less than they were previously, making them available for a discount on their face value.
The discount on bills to be paid on Oct. 24 has grown by 400 percent since the beginning of the month; on Wednesday, it jumped 24 percent. That has brought the price that the government has to pay to borrow money for a month to three times what the average AA-rated American company has to pay, according to Federal Reserve data. Typically, the United States government can borrow money for less than big corporations.
Confidence in investments widely considered to have little or no risk has been periodically shattered in the recent past. Until 2008, most investors thought they could not lose money on mortgage-backed bonds that carried a rating of AAA. Last year, investors were forced to rethink their belief that countries in the European Union would always repay their debt.
The trust in debt issued by the United States, however, has always run deeper because of the size of the economy and the presumed ability of the government to print as much money as it needs. This has meant that during the last two big crises, most investors sought out Treasury debt as the ultimate safe haven.
So far, despite mounting worries over the standoff in Washington, investors have not been turning away from Treasury debt altogether. They have largely remained confident that the government will pay back its longer-term debt on time, keeping the prices of those bonds stable.
But any debt set to come due in late October or November has recently become much less popular. And the concern has been stretching further into the future. On Wednesday, investors were even shunning bonds due for payment in December.
A primary way that banks and companies use Treasury bills is in managing their day-to-day needs for cash. Banks that need cash borrow against their Treasury bills overnight, in what is known as a repurchase agreement.
Mr. Corso, who helps facilitate these transactions, said that institutions making these trades have recently been refusing to accept Treasury bills due in October and November as collateral. The mutual giant Fidelity Investments is among the market participants that have said they are avoiding debt around the dates of a possible default.
But most investors say that the current issues are only a shadow of the problems that would be likely to hit if the government actually failed to pay any of its debt on time.
The Secretary General of the Organization for Economic Cooperation and Development, Angel Gurria, said on Wednesday that “putting the world’s primary risk-free asset into doubt would have negative repercussions throughout the global financial system. These effects would of course feed back on the U.S. economy.”
In the longer term, the fear is that a default would dent the willingness of foreign investors to use Treasury bonds as a place to park their money. Their desire to do so today has made the dollar the world’s most widely used currency.
In remarks prepared for a hearing on Thursday, the head of the industry group formutual funds, Paul Schott Stevens, said that if a payment was delayed for as little as a few days, “investors will learn a lesson that cannot and will not be unlearned.”
“That lesson is simple: Treasury securities are no longer as good as cash,” Mr. Schott Stevens said.
Even if members of Congress do come to a compromise before a missed payment, the current turmoil could do long-term damage to the investor confidence.
Andrew Milligan, the Scottish head of global strategy at Standard Life Investments, said: “I came to the U.S. markets for certainty, but I’m not getting that.”
“At the margin,” he said, “people are looking for other places to keep their cash.”
A Bharti-Walmart store in Chandigarh, India. Wal-Mart Stores is ending its joint venture with Bharti, buying out its stake.
MUMBAI — Wal-Mart Stores gave up on India’s huge market on Wednesday, announcing that it had indefinitely delayed its once-ambitious plans to open hundreds of superstores across the country.
The announcement adds to the gloom enrobing the Indian economy. Growth has slowed sharply and the value of the rupee has fallen starkly in recent months. It also suggests that the government’s efforts to lure more foreign investment are failing, but the governing United Progressive Alliance’s plan has never been popular with India’s politically vocal retailers.
Wal-Mart, the Bentonville, Ark., company that is the world’s largest retailer, also announced that it was ending its joint effort with Bharti Enterprises of India to operate 20 wholesale “cash and carry” stores that sell to other businesses like retailers, hotels and restaurants. Wal-Mart plans to buy Bharti’s 50 percent stake in the venture, and the two companies will operate independent businesses in India. That Wal-Mart kept the wholesale business, long seen as a way to learn about India’s fragmented retailing sector, suggests it has not entirely ended its hopes of eventually selling at a retail level.
In 2007, Wal-Mart announced with great fanfare that along with Bharti, it planned to open “hundreds” of stores, the kind of ambitious proposition that many international companies hatched early in the century as hopes blossomed that India would soon join China as an emerging economic colossus. But many of those same companies have quietly shelved their expansion plans after complex market conditions — spotty electricity, poor roads and government ineptitude — frustrated hopes of rapid profits.
Wal-Mart’s chief executive for Asia, Scott Price, said this week that the Indian government’s regulations requiring foreign retailers to buy 30 percent of products from local small and midsize businesses were the “critical stumbling block” to opening its trademark consumer stores.
“I don’t understand how this 30 percent small and medium enterprise can be executed,” Mr. Price said in an interview on Monday at the Asia-Pacific Economic Cooperation forum in Bali, Indonesia, The Associated Press reported.
He said that Indian retailers were not required to follow the same rule, which made it too difficult for outsiders to make money, because no enterprise small enough to meet the government’s requirements had the capability to produce on the scale that a giant retailer requires.
“For Wal-Mart, there has been frustration brewing for a long time about the obstacles to doing business in India and the changing configurations of what it could do and what it couldn’t do,” said Devangshu Dutta, chief executive of Third Eyesight, a retail consulting firm based in Bangalore. “To just continue to pump in money without reflecting on this would be pointless.”
American executives and politicians have been expressing growing impatience with India’s fitful efforts to open and modernize its economy. The government sought to address some of this frustration with a series of overhauls over the last year that ministers hoped would lead major international retailers to invest substantial sums in improving the country’s retail infrastructure, which is predominately mom-and-pop shops. So far, no company has.
Only 4 percent of India’s $500 billion retail market is controlled by large, Western-style chain stores. In China, the share is about 20 percent and in Brazil 36 percent. India’s tiny operators have few of the inventory controls of their larger brethren, and much of the country’s food spoils before reaching consumers — an unfortunate reality in a nation in which nearly half of all children are malnourished.
With national elections scheduled for next year, there is little hope that any new policy changes will be put in place any time soon. Looser rules enacted last September led an important regional political party to withdraw from the governing coalition, briefly threatening the coalition’s viability. India’s main opposition party, the Bharatiya Janata Party, has opposed efforts to loosen foreign investment rules. Critics say that Wal-Mart would put thousands of small retailers out of business, increasing unemployment.
“I don’t see any big foreign retailers entering the market at least for the next nine months, until after the general elections, when we know what the direction will be of the policy,” said Saloni Nangia, president of Technopak, a management consulting firm based in Gurgaon. “It is a wait and watch for many international retailers who want to be in India eventually.”
Wal-Mart’s problems in India extend well beyond the government’s procurement rules. The Indian authorities are investigating whether Wal-Mart violated foreign investment rules by giving Bharti Retail an interest-free loan of $100 million that could later be converted into a controlling stake in the company. Both companies deny wrongdoing.
Last November, the joint venture between Wal-Mart and Bharti suspended several senior executives and delayed some store openings as part of an internal bribery investigation, one of a series of bribery inquiries that have shaken Wal-Mart’s international operations. In June, the joint venture replaced its chief executive.
Girish Kuber, a former political editor of the Indian newspaper The Economic Times, called the dissolution of the Wal-Mart and Bharti partnership “inevitable.”
“It is a sad story,” he said. “The reforms are going nowhere, and there is no investment coming in.”
Many foreign companies have found India’s endemic corruption difficult to keep out of their operations. Since American law requires top executives to ensure that their international operations remain free of corruption, executives in the United States have taken an increasingly dim view of doing business in India, with its low profits and constant legal worries.
Neha Thirani Bagri contributed reporting from Mumbai, and Malavika Vyawahare from New Delhi.
Hamid Karzai: ‘What we wanted was absolute security and a clear-cut war against terrorism’
- Path to talks
- Q&A: Doha office
- Who are the Taliban?
- Militant nexus
President Hamid Karzai has criticised Nato for failing to bring stability to Afghanistan in over a decade there.
“On the security front the entire Nato exercise was one that caused Afghanistan a lot of suffering, a lot of loss of life, and no gains because the country is not secure,” he said.
He said Nato had incorrectly focused the fight on Afghan villages rather than Taliban safe havens in Pakistan.
Mr Karzai has just six months remaining in office until a successor is elected.
The return of the Taliban will not undermine progress. This country needs to have peace”
- Warlords and technocrats line up to replace Karzai
“I am not happy to say that there is partial security. That’s not what we are seeking. What we wanted was absolute security and a clear-cut war against terrorism,” Mr Karzai said of the Nato campaign.
Speaking in one of his last major interviews before stepping down, he told BBC Newsnight that his priority now is to bring peace and security to Afghanistan, including a power-sharing deal with the Taliban.
He said that his government was actively engaged in talks with the hardline Islamic group with this aim in mind:
“They are Afghans. Where the Afghan president, the Afghan government can appoint the Taliban to a government job they are welcome,” he said. “But where it’s the Afghan people appointing people through elections to state organs then the Taliban should come and participate in elections.”
He dismissed concerns that bringing the Taliban back into government would sacrifice the tenuous gains on the status of women made in Afghanistan.
Afghanistan has come a long way from 2001, from the days of the Taliban’s oppressive Islamist rule. But it has cost hundreds of billions of dollars and tens of thousands of lives.
And as the Afghans argue with the United States about a bilateral security agreement that will formalise post-war relations, its president continues to be an ally one day, and an opponent the next.
Hamid Karzai has long had a troubled relationship with his Western backers. And whether it is fighting the Taliban or nation-building, he has often had very different objectives, especially from the US.
When I interviewed him 18 months ago he seemed frustrated, especially with the United States. But this time, Mr Karzai seemed more relaxed, clearly feeling that his concerns about the Nato operation had finally been heard in capitals around the world.
Now, with only six months until elections for his successor Mr Karzai is looking to establish his legacy. He says the most important thing for him is that he is seen as the man who did his utmost to defend and unite the new Afghanistan.
But it has come at a price. He lives under armed guard and has survived at least six assassination attempts.
“The return of the Taliban will not undermine progress. This country needs to have peace. I am willing to stand for anything that will bring peace to Afghanistan and through that to promote the cause of the Afghan women better,” he said.
“I have no doubt that there will be more Afghan young girls and women studying and getting higher education and better job opportunities. There is no doubt about that; even if the Taliban come that will not end, that will not slow down,” he added.
Before the elections for Mr Karzai’s successor the United States is keen to finalise a bilateral security agreement which will also formalise US-Afghan relations following the 2014 Nato troop withdrawal.
The US wants this signed by Mr Karzai, to avoid it becoming an election issue. However, the Afghan leader told Newsnight he was in no hurry to sign a pact:
“If the agreement doesn’t suit us then of course they can leave. The agreement has to suit Afghanistan’s interests and purposes. If it doesn’t suit us and if it doesn’t suit them then naturally we will go separate ways.”
The US is becoming more and more pessimistic about the issue and has said it will consider a zero troops option.
Mr Karzai has had troubled relations with his Western backers in recent years for openly criticising Nato, whom he has accused of having no respect for Afghan sovereignty.
Our government is weak and ineffective in comparison to other governments, we’ve just begun. But the big corruption, the hundreds of millions of dollars of corruption, it was not Afghan”
In 2009, US President Barack Obama described Mr Karzai as an unreliable and ineffective partner. However, speaking to Newsnight Mr Karzai dismissed the claim saying he was characterised in this manner “because where they want us to go along, we don’t go along. They want us to keep silent when civilians are killed. We will not, we cannot”.
He said that in the years immediately following the US-led invasion of Afghanistan he had had good relations with the-then President George W Bush as in “those beginning years there was not much difference of opinion between us”.
“The worsening of relations began in 2005 where we saw the first incidents of civilian casualties, where we saw that the war on terror was not conducted where it should have been.”
Mr Karzai said the war should have been conducted “in the sanctuaries, in the training grounds beyond Afghanistan, rather than that which the US and Nato forces were conducting operations in Afghan villages, causing harm to Afghan people.”
There has also been much criticism of the Afghan government’s failure to deal with corruption, which along with lack of progress on significantly improving women’s rights, saw Norway cutting some its aid to the country last week.
“Our government is weak and ineffective in comparison to other governments, we’ve just begun,” Mr Karzai said. “But the big corruption, the hundreds of millions of dollars of corruption, it was not Afghan. Now everybody knows that. It was foreign.
“The contracts, the subcontracts, the blind contracts given to people, money thrown around to buy loyalties, money thrown around to buy submissiveness of Afghan government officials, to policies and designs that the Afghans would not agree to. That was the major part of corruption,” he said.
- Bettencourt scandal: Key players
- Could Sarkozy return as president?
- Sarkozy battles Bettencourt scandal
A criminal investigation into former French President Nicolas Sarkozy, for allegedly soliciting secret campaign financing from France’s richest woman, has been dropped, judicial sources say.
Mr Sarkozy has been left off a list of those to appear for trial over the so-called Bettencourt affair, they say.
He had denied visiting L’Oreal heiress Liliane Bettencourt – alleged to be mentally frail – to solicit cash.
The decision could leave Mr Sarkozy, 58, clear to contest the 2017 election.
The judges are not saying they do not think Bettencourt money was illegally made over to his campaign. What they are saying is that there is no proof Nicolas Sarkozy personally pressured the L’Oreal heiress into giving it.
So the trial for “abuse of mental frailty” will go ahead – its star accused now being UMP ex-treasurer Eric Woerth. But politically, the news is that Sarko is off the hook.
True, there are other investigations into which he could be drawn. The so-called Karachi affair about kickbacks from Pakistan; or claims he used influence to get businessman Bernard Tapie a massive state pay-out.
But the Bettencourt affair was the one that mattered. Before Monday, he was actually “mis en examen” – placed under investigation – which normally means there will be a trial. Exonerated, he is free to plan. The vision of a comeback in 2017 for Mr Sarkozy – a pocket political dynamo – has now slipped perceptibly into focus.
Although unpopular when he lost his attempt to be re-elected in 2012, opinion polls now suggest he would beat President Francois Hollande in a re-run.
He has hinted at a comeback, saying earlier this year that he might have to return to “save” France from economic disaster under President Hollande.
The possibility of a criminal case against him has, therefore, gripped the media in France.
‘Cash in envelopes’
Mrs Bettencourt’s accountant, Claire Thibout, has said she withdrew 150,000 euros (£125,000) in cash that was to be passed to Mr Sarkozy’s conservative UMP party in the run-up to his presidential election victory in 2007.
Individual campaign contributions in France are limited to 4,600 euros annually.
Mrs Bettencourt’s butler testified that Mr Sarkozy was a regular visitor to her home during his 2007 campaign.
But Mr Sarkozy insisted that he only saw Mrs Bettencourt once in that year.
The argument came to a dramatic head in March, when a judge summoned both Mr Sarkozy and the butler for a face-to-face encounter, after which preliminary charges were filed against the former president.
He was charged with taking advantage of Mrs Bettencourt, by accepting cash from her when she was too frail to know what she was doing.
Mrs Bettencourt, now 90, has suffered from dementia since 2006, the AFP news agency reports.
Ten people are still facing trial over the case, Le Monde reports.
They include Mr Sarkozy’s former campaign aide and UMP treasurer – and later, the French budget minister – Eric Woerth, Le Monde says.
Bettencourt staff say Mr Woerth visited the house several times to pick up envelopes stuffed full of cash. He denies doing so.
It had never been alleged that Mr Sarkozy personally received money.
He still faces investigation in other cases – including another related to his 2007 presidential run, in which it is alleged that he received funding from Libya’s Muammar Gaddafi – which he strongly denies
Cate Blanchett has received rave reviews for her performance in the film
- Blanchett tipped for Oscar glory
- Cate on Woody Allen and elvesWatch
- Woody Allen gets honorary Globe
Woody Allen has stopped his latest film, Blue Jasmine, from being screened in India after learning mandatory anti-tobacco adverts would be inserted into its smoking scenes.
Indian law requires health warnings to be shown on screen when characters smoke in films, while cinemas must play anti-smoking ads before every movie.
According to Reuters, Allen refused to accommodate the ads during his film.
It had been due to open in around 30 cinemas at the weekend.
Blue Jasmine stars Cate Blanchett as a wealthy New York socialite who suffers a humiliating fall from grace after her husband is arrested for financial fraud.
The actress’s critically acclaimed performance has seen her odds of winning an Oscar next year slashed to 1/4 from an initial 7/1 in August.
The film features two smoking scenes that would have given cause for the on-screen disclaimers – typically scrolling text warning viewers of the dangers of tobacco use.
A publicist for Allen told Reuters: “Due to content in the film, it cannot be shown in India in its intended manner. Therefore, the film is not scheduled to play there.”
The film’s Indian distributor, PVR films, told DNA newspaper the director had overall creative control over the film.
“He wasn’t comfortable with the disclaimer that we are required to run when some smoking scene is shown in films,” Deepak Sharma said.
“He feels that when the scroll comes, attention goes to it rather than the scene. We had to abide by the law and we don’t have control over the film.”
India’s film censor board regularly requires changes to films and while some directors allow the alterations, others have refused.
Many, including Martin Scorsese and David Lynch, argue changes to their films – including changing the aspect ratio in which some movies are shot – are unacceptable because they corrupt the artist’s vision.