Russia

(Compared with China)

Group Members

Aaron Sakulich

Ryan Schultz

Craig Schroeder

General Facts

Russia China

Location Eastern Europe, Northern Asia

Central Asia

Capital Moscow Beijing

Population 143 Million 1.3 Billion

Currency Russian Ruble Chinese Yuan

Russia: Geography

China: Geography

Economic Comparison

Russia China

Growth Rate 7.3% 9.1%

Unemployment 8.5% 10.1%

Inflation Rate 13.7% 1.2%

Per Capita Income $8,900 $5,000

Trade Balance $59 Billion $39 Billion

Trade Bal. Ratio 2.17 16.14

GDP Production $1.282 Trillion $6.14 Trillion

Deficit $10 Billion $319 Billion

Debt 153.5 Billion 197.8 Billion

Debt Ratio 138.2 20.17

Deficit Ratio 32.10 30.1

12%

23%

65%

Labor Composition

50%

22%

28%

AgricultureIndustryServices

Russia China

Events in Russia

Yukos is Russia’s largest oil exporter

Putin (Russian Government) targeted Yukos

Believed to be a move to destroy its CEO, Mikhail Khodorkovsky.

What Happened

Targeted by Russian GovernmentCharged $27.5 billion in “back taxes” Important assets auctioned off at low

prices indirectly to the government– Sold Yuganskneftegaz– Produced 60 percent of Yukos' oil

Current Status

Filed Bankruptcy in Russia– Tried to prevent sale of assets– Not protected by the Russian Courts

Filed Bankruptcy in Houston, Texas– Judge dismissed the case

Yukos sues for over $20 billion in violations of bankruptcy stay

Economic Warnings

U.N. economists warned Russia to watch their pursuit of this issue.– They say it will drive away foreign investment and

hurt the country’s economy.

When a country’s property rights can easily be challenged by the government, international investors react very badly.

Economic Warnings

Russia’s economy is very vulnerable because it relies heavily on gas and oil.

The Yukos affair is not going to encourage an internationally competitive industry.

Until the legal outcome of the Yukos affair is announced, investors may be apprehensive.

Symptoms of Problems

Yukos made up 1/5 of the countries main RTS stock index by capitalization

In recent months the RTS has lost about 1/3 of its value.

Because of the affair many are scared to trust banks, 10 percent of depositors of each credit organization declined banking services.

Economic Outlook

GDP– 7.3% higher in the first 5 months of 2004

compared to 2003– Expected growth to hit 10% in 2006

Domestic consumption is rising steadily

References

1. CIA World Factbook – China http://www.cia.gov/cia/publications/factbook/2. CIA World Factbook – Russia http://www.cia.gov/cia/publications/factbook/3. Countrywatch – China http://www.countrywatch.com/4. Countrywatch – Russia http://www.countrywatch.com/5. Herald Tribune. http://www.iht.com/bin/pring.php?file=528051.html6. Putin.ru. http://putinru.com/new/item/26633.html7. Access News. “UN Warns Yukos Affair Could Hurt Russian Economy.”

http://www.axcessnews.com/business_072204.shtml8. Mosnews.com. “BP Chief Calls Oil Company’s Experience in Russia ‘Positive’”

http://www.mosnews.com/money/2005/02/24/bppositive.shtml9. The Mercury News, “Judge mulls Yukos bankruptcy dismissal.”

http://www.mercurynews.com/mld/mercurynews/business/10981740.htm?1c10. Yukos homepage. http://www.yukos.com/11. New Times. “Will back taxes ruin Yukos?” http://www.newtimes.ru/eng/detail.asp?

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