The price of military intervention
As the Kremlin pursues Crimea, we look at how the crisis in Ukraine is affecting Russia’s economy and what is at stake.
As a regional tug of war continues to affect Ukraine’s economy, on the other side of the coin, the current crisis is also exposing cracks in Russia – generally perceived as being a big, strong, petro-economy.
At the centre of it all is one man, Russian President Vladimir Putin. But did he underestimate the international response – both political and financial – to his effective military control of Ukraine’s Crimea region?
The sudden threat of war has shocked Russian markets; $60bn was wiped off the value of Russian companies as worried international investors tried to figure out how the political climate was changing. Russia was also forced to spend $12bn supporting its currency, the rouble, which hit a record low.
Financial instability locally was then compounded when the international community chimed in, collectively unimpressed at Russia’s unilateral action. But while the response was united and determined, it lacked bite, which is likely due to fact that Russia supplies a third of Europe’s gas supplies. By taking aim at that, it would hurt both sides.
The United States called for a halt to trade talks, which sounds big, but that trade with Russia only amounts to $38bn which is not much when the combined size of both economies is more than $18 trillion.
Sanctions – the diplomatic go-to in times of trouble – could be another option for the West. There could be banking restrictions, visas could be stopped, and assets could be frozen, but none of this matches anything handed to the likes of Iran, Iraq and North Korea.
For Counting the Cost, Peter Sharp reports on what sanctions could and could not do to the Russian economy. We also speak to Ivan Mazalov, the director at Prosperity Capital Management, one of the biggest investors in Russia, to understand the economic story in Russia and what effect Ukraine and Crimea are having.
South Africa’s slowdown
Just as the Ukraine story got us thinking about Russia’s economy, our look at Zimbabwe a few weeks ago did the same with regards to its neighbour, South Africa.
We touched on South Africa, its economic struggle during the apartheid years, and its recent stagnation, which is crucial given that there is an election coming up in May.
Among the problems facing the country’s economy are: unemployment, which is stubbornly high at 25 percent; job creation, with President Jacob Zuma having promised the creation of five million new jobs; and just a two percent growth rate in 2013, which will eventually see Africa’s biggest economy overtaken by Nigeria.
Counting the Cost discusses the economy with Sim Tshabalala, the co-CEO of South Africa’s biggest bank, Standard Bank.
Swiss immigration and identity
A few weeks ago, we looked at the cost of immigration and Switzerland was the big focus because it was voting on changing its immigration quotas.
This week we return to Switzerland with a sporting twist and take a look at the country’s noticeably diverse football team; two thirds are from immigrant backgrounds, so the changes in law could mean big changes to the team, and even the nation.
The national football team is proudly ranked as one of the top eight for the World Cup finals in Brazil, but the team would be less than half its current size without players whose families are immigrants.
The football squad illustrates the confusion over the vote to restrict immigration to Switzerland and the complex nature of Swiss national identity. Al Jazeera’s Lee Wellings reports.
Watch each week at the following times GMT: Friday: 2230; Saturday: 0930; Sunday: 0330; Monday: 1630. Click here for more Counting the Cost. Follow Kamahl Santamaria @KamahlAJE and business editor Abid Ali @abidoliverali |
