The cost of war in Ukraine. Online March 7: part 1

The Bell continues to report online on the economic impact of the war in Ukraine, which began on February 24, 2022.

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22:16 Following the NYT, details of the Nord Stream investigation were published by Die Zeit. There is also a “Ukrainian trace” in it.

According to journalists, German investigators have identified a ship that was allegedly used for a “secret operation.” We are talking about a yacht rented by a company from Poland. Its owners are probably two citizens of Ukraine.

The investigation believes that the “secret operation” at sea was carried out by a group of six people. These are five men (a captain, two divers and their assistants) and one female doctor. They allegedly delivered and planted explosives near the pipelines. The nationality of the group members appears to be unknown. Fake passports were used to rent a yacht and other activities.

Presumably, the yacht set sail from Rostock (a city in Germany) on September 6, 2022. According to investigators, all the necessary equipment was delivered to the port in advance by truck. The vessel is said to have been returned in an “uncleaned” condition. The investigation found traces of explosives inside. Moreover, writes Die Zeit, one of the Western intelligence services in the fall, shortly after the explosions, handed over to their European colleagues a notification about the involvement of the Ukrainian side in the explosions. After this, additional intelligence information emerged indicating the possible participation of a “pro-Ukrainian group.”

The orderer of the sabotage is still unknown, the article emphasizes. Expert circles admit that this could have been a “false flag” operation, and that traces pointing to Ukraine’s guilt were left “deliberately.” However, investigators most likely did not find evidence confirming this opinion, the newspaper notes.

Kyiv stated that it had nothing to do with the Nord Stream bombing and knew nothing about possible sabotage groups supporting Ukraine.

21:31 Police dispersed a mass rally in Tbilisi against the local law on “foreign agents”. The opposition accuses the ruling party of being pro-Russian and intending to thwart Georgia's attempts to join the EU.

The Georgian parliament this evening adopted in the first reading a bill introducing the concept of “foreign agent” in the country. It is proposed to recognize media, NPOs and other legal entities as foreign agents if more than 20% of their annual income comes from abroad. They will be required to disclose sources of funding and label their products, as in Russia. The ruling Georgian Dream party, which proposed the bill, claims that its text is copied verbatim from the American “foreign agency” law FARA.

Protests against the bill have taken place outside the parliament in Tbilisi since it was introduced, but today’s was the most widespread - several thousand people gathered there. At about 20:30 Moscow time, when the bill was adopted in the first reading and deputies began to leave parliament, the police, citing violence against Interior Ministry employees, began to disperse the rally using water cannons and tear gas .

The initiator of the bill on foreign agents is the ruling Georgian Dream party, founded by the billionaire, the richest person in Georgia, Bidzina Ivanishvili. He made his fortune ($4.8 billion according to Forbes) in Russia in the nineties and two thousand. In 2012-2013, Ivanishvili served as Prime Minister of Georgia, but subsequently formally retired from politics and distanced himself from his party, which since 2012 has maintained a majority in parliament, and with it, real power in Georgia.

The opposition constantlyaccuses Georgian Dream of pursuing a pro-Russian line. After the start of the war, Georgia did not join sanctions against Russia, and the Ukrainian authorities, which supported Georgia during the war with Russia in 2008, now accuse Tbilisi of lack of assistance. In the summer of 2022, the EU agreed on the status of candidate members of the union for Ukraine and Moldova, but rejected Georgia, noting, among other things, insufficient efforts at de-oligarchization.

If the law on foreign agents is adopted, it could jeopardize Georgia's potential entry into the EU, which is supported by 81% of the country's population. The EU called the bill not in accordance with the norms of the union, and the US Embassy in Georgia called the day of its adoption “a dark day for Georgian democracy.”

21:08 Former head of the Ministry of Economy Alexey Ulyukaev gave his first interview after his release from prison. He spoke about the new and past stages of his life on the Youtube channel “Find the Mammoth.”

“I finally felt like a private person. That means I was somehow a little removed from life: either a big boss or a prisoner. And now here I am a man among people,” says Ulyukaev. In the colony, the former minister worked as a librarian, although he was listed as an auxiliary worker. Now he is the chief expert at the Yegor Gaidar Foundation for Economic Policy.

Ulyukaev, sentenced to eight years of strict regime in the case of accepting a $2 million bribe from Igor Sechin, was released from prison on parole last year. 5.5 years have passed since his arrest on November 14, 2016. Details of the Ulyukaev case can be recalled here .

The main evidence was secret surveillance and wiretapping recordings, which The Bell was the first to find and publish after Ulyukaev’s arrest in 2017.

19:31 New intelligence information reviewed by US officials indicates that the attack on Nord Stream last year was carried out by pro-Ukrainian activists, The New York Times writes .

18:25 S&P raised the ratings of Freedom Holding's subsidiaries after the sale of Russian assets

The international agency S&P Global Ratings has raised the long-term and short-term credit ratings of several subsidiaries of Timur Turlov's Freedom Holding - from "B-" to "B", according to the holding's press release (available to The Bell).

The ratings were increased in relation to Freedom Finance Europe Ltd, Freedom Finance Global PLC, Freedom Finance JSC and Freedom Finance Kazakhstan Bank. The ratings of the last two on the national scale also increased from “kzBB” to “kzBB+”. The forecast for all enterprises is “stable”. The agency maintained the rating of the holding itself at the level of “B-”.

The revision of the ratings is due to a reduction in sanctions risks after the “successful sale of Russian assets,” the report clarifies. At the beginning of this year, Freedom Holding closed a deal to sell its investment company Freedom Finance (now Digital Broker) with the bank of the same name to Deputy General Director Maxim Povalishin for $140 million.

S&P Global Ratings, whose justification is given in the press release, notes that as a result, Freedom Holding was able to retain key clients from Russia and transfer them to Freedom Finance Global PLC, the group’s broker based in the Astana International Financial Center in Kazakhstan. “Overall, the FRHC group maintained strong profitability with a return on equity of more than 30% for the nine months ended December 31, 2022,” the statement highlights.

15:38 Henkel expects to leave Russia by the end of March

Germany's Henkel AG, one of the international companies with the largest investments in Russia, promised in its 2022 report to cease operations in Russia by the end of the first quarter.

Globally, the company increased sales by 11.6% last year to 22.4 billion euros, but this was largely due to rising prices: organic growth was 8.8%. Net profit fell 23% to 1.26 billion euros. For this year, Henkel forecast organic growth of just 1-3% due to a slowing global economy and higher raw material prices.

In December, Kommersant wrote that Henkel wants to leave under the scheme of spinning off the business into Lab Industries. It is possible that this is a way to gain time to find non-sanctioned buyers of assets that the concern wants to sell without a large discount to the valuation of about 600 million euros.

13:46 Lukashenko announced the detention of 20 participants in the attack on the Russian plane

President of Belarus Alexander Lukashenko said that a “saboteur of the Ukrainian Armed Forces” who had carried out an attack on the A-50 aircraft of the Russian Air Force and 20 of his accomplices was detained in Belarus.

• According to Lukashenko, he was allowed into Belarus by Russian border guards after the Belarusians showed vigilance and did not allow him through Poland. “He is a Russian, with a Russian passport, and has a Ukrainian passport,” the president clarified. — Born in Krivoy Rog, lived in Crimea. Some relatives are in Austria, some remained in Kyiv. He was recruited by the Ukrainian intelligence service in, I think, 2014.”
• The President of Belarus said that he ordered “the most severe cleansing throughout the country” even before his capture. According to him, the saboteur was helped by “representatives of the Belarusian opposition.”
• Ukrainian channels disseminated information about the successful attack and even the destruction of the A-50 at the end of February. Later, two videos of small quadcopters flying over the airfield in Machulishchi appeared, the end of one of them corresponded to an explosion on the “plate” of the aircraft locator. Soon the A-50 was shown in flight, from which it followed that if not the locator, then the aircraft itself was not damaged.
• Lukashenko confirmed today that the damage was minor, but there was: “We asked the Russians to take this plane for maintenance and send us another. That’s what happened.”
• The A-50 is one of the most valuable aircraft of the Russian Aerospace Forces: it is an airborne early warning aircraft (AWACS) or an air command post based on the Il-76. There are no more than nine of them in flying condition, each valued at no less than $300 million. Thanks to a powerful radar (housed in a large fairing-dish), raised high above the ground, it is capable of detecting aerial targets such as drones and cruise missiles against the background of the ground, and directing fighters and air defense forces on duty at them. Pro-war channels clearly regarded the double penetration of even small drones onto such a board as completely unacceptable and even shameful.

13:33 China's foreign trade slows down with recovery

The decline in China's foreign trade in January–February 2023 slowed down, but did not stop : exports fell by 6.8% in annual terms, imports by 10.2%. Both figures were at odds with Reuters analysts' forecasts. Exports were expected to be weaker (minus 9.4% after a fall of 9.9% in December), imports were expected to be noticeably stronger (minus 5.5% after 7.5%).

Behind the statistics is weak global demand, rising inflation in developed countries and trade barriers. Thus, exports to the USA fell by 21.8% (imports by 5%), to the EU by 12.2% (5.5%). China's imports of semiconductor products decreased by 26.5%.

13:10 The author of the telegram channel “Protest MSU” was sentenced to 8.5 years in the case of “military fakes”

In addition, the court banned former mathematics student, 23-year-old Dmitry Ivanov, from using the Internet for four years after his release. The prosecution asked for 9 years in a general regime colony for him. Ivanov did not admit guilt. In his last word, he stated that he “signs his name to every word he wrote a year ago,” reports Mediazona (recognized as a foreign agent).

The author of the telegram channel was tried for 11 anti-war posts, including about the events in Bucha, the shelling of Mariupol and the Zaporozhye nuclear power plant.

The “Protest MSU” channel was launched by Dmitry Ivanov, a student at the Faculty of Computational Mathematics and Cybernetics, in 2018, when dozens of university students and teachers opposed the creation of a fan zone for the World Cup near the main building of the university, the BBC writes . Ivanov was arrested several times for participating in protests, which is why he was unable to defend his diploma and was expelled from the university. He was detained and arrested in the case of “military fakes” in June last year.

12:04 Russians’ spending showed a drop due to last year’s panic

Sberindex showed a drop in spending by Russians in the week from February 27 to March 5 by 9.2% year-on-year in nominal terms. But this is almost entirely the effect of the base, or more precisely, the panic buying a year ago after the outbreak of hostilities in Ukraine and the first tough sanctions - here, for example, is what The Bell wrote about it. Due to this factor, the dynamics of consumer spending is significantly distorted, and in the second half of March the opposite effect will be observed due to last year's decline in spending.

The MMI channel believes that real expenses of Russians in February were at the level of January, and for the entire first quarter they will decrease by 4-4.5% in annual terms.

The main thing for the night and morning:

• Household appliances ordered during the rush last spring have finally arrived in Russia, but demand for them has fallen during this time and will continue to fall. Because of this, products remain in warehouses, writes Kommersant. They won’t lure customers into stores with discounts, but they won’t raise prices either, for now.
• The newly confirmed Minister of Foreign Affairs of the People's Republic of China, Qin Gang, held the first major press conference, which should become a guideline for China's foreign policy for the next five years. There was no criticism of Russia in connection with the invasion of Ukraine; on the contrary, the diplomat mentioned a certain “invisible hand” guiding the conflict, apparently referring to the United States.
• The statement by President Vladimir Zelensky that the Ukrainian Armed Forces will “continue to defend and strengthen” in Bakhmut was perceived in the West as a bet on exhausting the Russian army before a decisive offensive in other directions. Washington ISW ​​believes that the Ukrainian Armed Forces want to knock out the most combat-ready units of the Wagner PMC, which are forced to be deployed in a city of limited value.
• The Turkish IC Holding, whose division built two sections of the M11 Moscow-St. Petersburg toll highway under concession, withdrew from the capital of the Highway of Two Capitals company, which receives tolls. The market assumes that IC Holding got rid of the asset due to sanctions risks: it has many infrastructure projects in third countries.
• Michelin has found a buyer for the tire plant in Davydovo near Moscow, and this is not management, but a distributor - Power International Tires LLC. The buyer has close ties with the Chinese Hifly, so the production of Chinese-style tires can be expected at the facilities.
• At the end of 2022, the revenue of AvtoVAZ, which reduced sales by 46.2%, decreased by 1.8 times (by 43.7%) to 170 billion rubles. Profit fell 7.2 times (86.2%), to 206.6 million rubles.
• Tesla, hoping to boost demand, has cut prices for its electric vehicles in the US for the second time since the start of the year. This time, luxury versions were cut - the Model S sedan became cheaper by 5%, the Model X crossover - by 9%. Even with this year's rally, Tesla's current capitalization is half its November 2021 peak.

Read the previous one online here .