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Medvedev: Diversification of Russian Economy to Take Over 10 Years

© Sputnik / Dmitry Astakhov / Go to the mediabankDecember 10, 2014. Prime Minister Dmitry Medvedev gives a live interview on the annual results of the government work to major Russian television channels at the Ostankino television center.
December 10, 2014. Prime Minister Dmitry Medvedev gives a live interview on the annual results of the government work to major Russian television channels at the Ostankino television center. - Sputnik International
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Russian Prime Minister Medvedev has commented on Russian budget, Western sanctions imposed against Russia, the cancellation of the South Stream project and the ruble rate during a live televised interview Wednesday.

Russian Central Bank Headquarters - Sputnik International
Russia
Central Bank to Give New Forecast on Russian Economy December 11
MOSCOW, December 10 (Sputnik) – Russia has not missed the chance to diversify its economy yet, but it will take more than a decade to complete the process, Russian Prime Minister Dmitry Medvedev said Wednesday during a live televised interview.

“Of course, the chance has not been missed,” he said. “It should be understood that… diversifying the modern economy of Russia will not take a year, or two, or three, or even ten years, it will take much more time, because our economy was fully dependent on oil [prices] for 40 years,” he added.

Crude oil exports make up a significant part of the Russian budget's revenues. Global oil prices fell sharply after the Organization of the Petroleum Exporting Countries (OPEC) decided to maintain oil production at 30 million barrels per day. Following the statement, prices of Brent futures fell to below $66, its lowest level since October 2009.

The Russian Finance Ministry said it expected the global oil prices to stabilize at $90 per barrel in the medium-term. In late November, Russian Finance Minister Anton Siluanov said the country needed to adjust its federal budget for the next few years to reflect oil prices of $80 to $90 per barrel.

Russia May Have to Correct Development of Economy, Budget

The Russian government will possibly have to correct its scenario on developing the economy and budget, Medvedev said Wednesday.

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“If economic conditions change considerably, we will have to investigate the scenario, and in the end make decisions on the budget, but we haven’t done that yet,” Medvedev said.

In recent months, Russia’s ruble has fallen to its historic low against the dollar and the euro amid declining oil prices and geopolitical tensions over the situation in Ukraine.

According to Russian President Vladimir Putin, the ruble’s value has been affected not only by external factors, but also by speculation.

On December 2, Russia’s Economic Development Ministry said it had revised its economic forecast for 2014 and 2015. According to the new estimates, the average annual ruble exchange rate for 2015 has been revised upward to 49 rubles from 37.7 rubles per dollar.

Ruble Weakness Triggered by Western Sanctions, Oil Price Slump

Russia’s ruble has plunged this year due to the combination of domestic and international factors, severely battering the nation’s economy. - Sputnik International
What Happened to Russia’s Ruble and Where Do We Go From Here
The current weakness of the ruble is a result of western sanctions on Russia and the oil prices fall, Dmitry Medvedev said Wednesday.

The prime minister said the currency’s fall in value was caused, among other things, by the slump in global oil prices and "external influence that is being exerted on our country."

Medvedev also noted during a live television interview that “the cost of this type of decision [sanctions] runs into the tens of billions of dollars, which means our economy has probably lost several tens of billions of dollars”.

At the same time, the prime minister said that the European economy had also been affected by the West’s politically motivated measures.

"According to estimates by our economists, the European economy has lost 40 billion euros this year and will lose 50 billion euros next year because of cancelled contracts with the Russian Federation," Medvedev said.

Brent crude oil price has fallen below $68 per barrel, a 5-year low, following last week's OPEC decision against a reduction in oil output. - Sputnik International
Brent Price Falls Below Five-Year Minimum After OPEC Decision
As a result of high geopolitical risks and a significant fall in oil prices caused by the decision by the Organization of Petroleum Exporting Countries (OPEC) to maintain oil production at 30 million barrels a day, the ruble has fallen more than 20 percent against the dollar in the past three months, hitting historic lows of over 54 rubles to the dollar and more than 67 rubles to the euro.

However, Russia's Central Bank has insisted on transitioning to free-floating currency exchange rates. In early November, the bank cancelled nonlimited exchange rate interventions, effectively free floating the currency.

The decline in the ruble's value also forced the Russian Economic Development Ministry to update its inflation rate forecast for 2014, raising the figure to 7.2 percent from 6 percent initially predicted.

Russia Able to Reject Unnecessary Imports

Russia will temporarily restrict imports of fruits and vegetables from Albania starting from December 8 as some of it is being re-exported from the European Union, a spokesperson for Russia's agricultural watchdog told RIA Novosti Wednesday. - Sputnik International
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Russia is able to reject unnecessary imported goods, Russian Prime Minister said Wednesday.

“In the mid-term, we are able to completely reject unnecessary imports,” Medvedev said.

Medvedev added that “no one has ever said that we would redirect our agriculture completely for the Russian producer in half a year.”

The prime minister noted that “the shelves of our stores are already currently filled with Russian goods” across the country.

Russian President Vladimir Putin delivers the annual Presidential Address to the Federal Assembly - Sputnik International
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Putin Says Anti-Russia Sanctions US Reaction to Russia's Growing Influence
The United States, the European Union and a number of their allies have imposed sanctions against Russia, accusing it of interfering in the Ukrainian crisis. The restrictions targeted a number of Russian energy companies, banks, and also the defense sector, prohibiting imports of military and dual-use products and technology to Russia.

Moscow has condemned the sanctions as groundless and counterproductive, introducing a one-year ban on certain food imports from the countries that have imposed sanctions.

In addition, the Russian authorities have launched an import substitution program to replace Western imports in the country's defense, space and energy sectors. Russia has also signed a number of contracts on food imports with alternative suppliers.

Moscow Hopes Kiev Will Fulfill Obligations on Paying Gas Debt by Year End

Russian energy giant Gazprom started prepaid gas deliveries to Ukraine Tuesday, a spokesman for the company said. - Sputnik International
Gazprom Confirms Start of Prepaid Gas Deliveries to Ukraine
Moscow hopes Ukraine will fulfill its obligations and pay its massive gas debt, Russian Prime Minister Dmitry Medvedev said Wednesday during a live televised interview.

"[Ukraine] needs to pay its debt to us. At the present moment the figure is at $3.1 billion, some of this has been repaid, part of it needs to be repaid by the end of the year," Medvedev said.

The prime minister added that he hoped Ukraine would proceed with the payment, stressing that Russia will deal with Kiev on an absolutely pragmatic basis.

"Pay the money and gas will be delivered. If no money is paid, then no gas is delivered," Medvedev said.

In June, Moscow switched Kiev to a prepayment system of gas deliveries in light of Kiev's gas debt of more than $5 billion. Since then, Ukraine has been receiving gas through reverse flows from several European countries and using its own reserves. - Sputnik International
Gazprom Recieves $378Mln From Naftogaz for 1Bln Cubic Meters of Gas
He added that there would always be an opportunity to sit at the negotiations table and find a compromise. "But if we can't agree, then we'll meet at the Stockholm Arbitration Court where all of the documents are already located," the Russian prime minister stated.

Russian energy giant Gazprom switched Ukraine to a prepayment system for gas supplies in June over its major gas debt, which at the time exceeded $5 billion.

Following the move, Ukraine's Naftogaz turned to the Stockholm Arbitration Court requesting it to review the contract with Gazprom with hopes to recover $6 billion in alleged overpayments. In response, Gazprom filed a lawsuit against Naftogaz with the same court in order to recover the debt.

In late October, the two sides agreed on a "winter package" deal, securing the deliveries of Russian gas to Ukraine until March 2015.

According to the agreement, Kiev has to pay $3.1 billion of its gas debt to Russia by the end of 2014. The first tranche of $1.45 billion was transferred to Russia in November.

On December 9, Gazprom started prepaid gas deliveries to Ukraine.

Turkey will not go down the same road as the West in subverting Russia's gas pipeline project, and hopes to get the upper hand over Brussels instead, the deputy chairman of Turkey's ruling party told the Sputnik news agency Tuesday. - Sputnik International
Turkey Committed to Gas Transit Cooperation With Russia: Turkish Lawmaker
Russia Invites EU Partners to Join Turkey-Bound Gas Pipeline Project

Moscow is ready to negotiate European participation in Blue Stream gas pipeline project, Prime Minister Dmitry Medvedev said Wednesday.

“We plan to increase capacity of the Blue Stream or create additional capacities in the Black Sea region, create a [gas transportation] hub in Turkey to sell gas to other states. This idea is just as attractive, and European partners – members of the European Union – can join it, as well as partners from other states,” he said.

Turkish security special forces patrol at the pumping station in the village of Durusu, near the northern Turkish city of Samsun - Sputnik International
Russia, Turkey Confirm Interest to Increase Blue Stream Gas Supplies

The Blue Stream is a major gas pipeline developed to deliver Russian natural gas to Turkey through the Black Sea.

In November, Russia and Turkey confirmed their interest in increasing gas deliveries via the Blue Stream pipeline from 16 billion cubic meters to 19 billion cubic meters per year.

Bulgaria Had to Hold Up South Stream Under Pressure From EU, US

Bulgaria refused to allow the construction of the South Stream gas pipeline via its territory under pressure from the European Union and the United States, the Russian prime minister said Wednesday.

Bulgaria still considers the Russia-backed South Stream pipeline an important project - Sputnik International
Bulgaria Keeps Hope Alive for South Stream Revival: Energy Ministry
Dmitry Medvedev said in a televised interview that the government in Sofia “behaved like any ordinary European Union member that came under pressure from the European authorities in Brussels and, to put it bluntly, from the Americans.”

On December 1, Russian President Vladimir Putin announced that Russia would abandon the South Stream pipeline project. The South Stream was originally designed to bring Russian natural gas to a number of EU countries via a new route under the Black Sea bypassing Ukraine.

Putin cited the European Commission's "non-constructive" stance on the matter as one of the main reasons behind this decision.

Shareholders and partners of Gazprom's project sign on the first pipe abut during the launching ceremony of South Stream gas pipeline construction. - Sputnik International
EU Must Find Alternatives to South Stream: European Commission Official
The project was stalled after the European Commission had expressed concern that Russia’s bilateral agreements with European transit countries, including Bulgaria violated the EU Third Energy Package. According to the legislation, pipelines in the European Union cannot belong to the natural gas extractors.

In August, the Bulgarian energy minister said he had frozen the construction of the gas pipeline indefinitely on Bulgarian soil as it did not meet EU guidelines.

However, following Russia’s decision to drop the South Stream project, Bulgarian Prime Minister Boyko Borisov expressed hope it would be resumed soon, adding that otherwise Bulgaria would lose a lot.

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