TIME energy

Low Oil Prices Raise the Risk of Recession in Russia

Russia oil
Russia will look to tap Arctic resources of oil and gas Photo by Dmitry Korotayev/Kommersant Photo via Getty Images

Oil prices dipped to around $92 per barrel in early October

This post originally appeared on OilPrice.com.

Falling oil prices are inflicting deeper economic pain on Russia’s economy, which is already reeling from EU and U.S. sanctions.

Russia is currently considering its budget for 2015-2017, and based on the numbers, the Kremlin is planning for leaner times. With oil revenue accounting for around half of the country’s budget, any dip in prices has a ripple effect.

And in recent years, Russia’s economy has become more dependent on oil to meet its budget commitments. Excluding oil revenue, Russia has run a budget deficit that hit 10.3 percent in 2013, the highest level in three years.

In other words, the government needs oil revenues to plug budget holes, and that need is growing.

Related: Will Ukraine Commit Economic Suicide?

Russia occupies a strong economic position when oil prices are high, but for every $1 decline in the price per barrel of oil, Russia loses $2.1 billion in revenue on an annualized basis. Slumping oil prices in recent months could see revenues to the state decline by $30 to $40 billion.

The Russian economy may only expand 0.4 percent this year, and just 1 percent in 2015. But even that meager growth rate is not a certainty. Russia is increasingly facing the possibility of recession, according to a Bloomberg survey of economists.

Oil prices dipped to around $92 per barrel in early October. While that won’t plunge Russia into an immediate economic crisis, the government needs oil prices to stay around $105 in order to balance the budget. Thus, if oil prices don’t rebound soon, problems will only grow worse for the Kremlin.

The upcoming budget plans for the possibility of persistent inflation, a weakening ruble, and the potential need for the state to dip into cash reserves in order to finance its budget. What is worse, even this negative outlook is based on highly optimistic assumptions – it assumes oil prices of around $100 per barrel.

“It is quite optimistic given where oil prices are at now and given how much the Russian budget depends on oil revenues,” Liza Ermolenko, an analyst at Capital Economics, told The Moscow Times. “For the next year, it’s more likely that the oil prices will be lower than what they are penciling in.”

Running a deficit will be tricky because western sanctions have restricted access to financial markets. Major Russian companies targeted by the U.S. and Europe are unable to take out long-term loans. As a result, they are turning to the Russian state for funds. That has worked so far, but a Bloomberg report outlines an emerging fight within the Russian elite over a dwindling pile of money.

The mid-September arrest of Vladimir Evtushenkov, the head of oil company OAO Bashneft, was a sign that the situation is starting to deteriorate. He is the richest Russian arrested since Mikhail Khodorkovsky was thrown in jail in 2005 and whose oil company, Yukos, was taken over by the state. Evtushenkov, an ally of Prime Minister Dmitry Medvedev, is thought to have been arrested because of a growing rift in Russia’s elite that is at least partially due to the troubled economy.

Related: Europe Seeks To Undermine Russian Energy Influence

“This is creating a dire financial situation, particularly for state companies friendly to Putin, which are now vying for shrinking state resources,” Yevgeny Yasin, a former Russian economy minister, told Bloomberg. Russian President Vladimir Putin and his allies are hunting for more assets as the economy worsens, according to the same article.

Oil prices could remain low for a while. Reuters reports that the Russian central bank is beginning to plan for a disaster scenario in which oil prices drop to $60 per barrel. Such a scenario would precipitate a dramatic weakening of the ruble, forcing the central bank into action.

But there is no easy way out. The Russian economy is far too dependent on the global price of oil, a volatile benchmark largely out of the Kremlin’s control.

More Top reads From Oilprice.com:

TIME Crime

U.S. Marine Charged in Murder of Transgender Woman in Philippines

Philippine government now wants to take custody of the Marine, who has been identified as Private First Class Joseph Scott Pemberton

A U.S. Marine has been charged with murder in the killing of a Filipino transgender woman found strangled in a local hotel room last weekend.

A senior Philippine official said Wednesday that the Philippine government wants to take custody of the Marine, who has been identified as Private First Class Joseph Scott Pemberton, and warned that the case could damage the military relationship between the two allies, according to MSN news.

Under a defense agreement between the U.S. and the Philippines, the Philippines can demand custody of a service member who has been involved in a crime. The joint defense pact has stoked tension between the two countries in the past, and the question of the U.S. Marine’s custody in this case may renew those tensions.

Pemberton is currently being held on the USS Peleliu warship in Subic Bay. The marines had been in the Philippines for an annual joint military exercise. All military personnel “still actively involved with the investigation” remain on board the ship, according to a press statement from the U.S. Marine Corps.

Three other marines who are considered possible witnesses are also being held, according to previous news reports. The other four ships previously held at port in Subic Bay during the investigation have been cleared to depart, the Marine Corps announced on Wednesday.

The killing has also ignited emotions in the transgender community in the Philippines, who are calling the death of Jennifer Laude, who was found dead with her head in a toilet bowl, a hate crime. An autopsy report in the case has shown the cause of death as “asphyxia by drowning.”

“We will not accept anything less than justice,” the victim’s sister Marilou Laude said to CNN.

[MSN]

TIME faith

Vatican Changes Draft Report Translation About Welcoming Gays

Pope Francis arrives at a morning session of a two-week synod on family issues, at the Vatican, Oct. 16, 2014.
Pope Francis arrives at a morning session of a two-week synod on family issues, at the Vatican, Oct. 16, 2014. Alessandra Tarantino—AP

"Welcoming homosexual persons” is now “Providing for homosexual persons"

The Vatican adjusted the English translation of a controversial phrase in its mid-Synod-of-the-Bishops report on Thursday, adapting “Welcoming homosexual persons” to “Providing for homosexual persons.”

The original Italian verb in question, accogliere, remains unchanged. Italian is the official language of the bishops’ meeting, and because the official language of the document is Italian, a Vatican spokesman explained at a press briefing, the report has technically stayed the same.

Parts of the paragraph that followed that phrase have also been updated in English. According to the Associated Press:

The first version asked if the church was capable of “welcoming these people, guaranteeing to them a fraternal space in our communities.” The new version asks if the church is “capable of providing for these people, guaranteeing … them … a place of fellowship in our communities.” The first version said homosexual unions can often constitute a “precious support in the life of the partners.” The new one says gay unions often constitute “valuable support in the life of these persons.”

Initial reaction suggests that the original English translations more closely follow the Italian. The change comes after press reports of a Vatican shift on teachings of marriage as between one man and one woman flooded the Western media earlier this week. In Thursday’s press briefing, a Vatican spokesperson urged media to not give too much importance to the new translation change.

Translation issues have prompted confusion at several points during the Synod so far. Summaries of Synod conversations have been relayed to the press at daily briefings in Italian, English and Spanish, and different points have been emphasized depending on the language of the person giving the briefing. Questions at the daily press briefings are also asked in a variety of languages, and usually replied to in Italian, English, Spanish or French. That means a question asked in English has been responded to in Italian, or a question in Italian could get a response in French.

A final Synod “message,” not report, is expected to be approved Saturday, according to the Vatican’s press office. The message will be composed by a group of church leaders. Pope Francis also added South African Cardinal Wilfrid Napier to that group on Thursday. Napier has been critical of the initial mid-Synod report this week. “The message has gone out and it’s not a true message,” he told the press after the report was released on Monday. “Whatever we say hereafter is going to be as if we’re doing some damage control.”

TIME legal

Why U.S. Sanctions Mean Some Countries Don’t Get Any iPhones

Apple iPhone Technology Embargo Sanctions
An attendee displays the new Apple Inc. iPhone 6, left, and iPhone 6 Plus for a photograph after a product announcement at Flint Center in Cupertino, California, U.S., on Tuesday, Sept. 9, 2014. Bloomberg via Getty Images

A sanction a day keeps Apple away

Some 36 additional countries will receive shipments of Apple’s iPhone 6 this month, with over 115 countries on track to get the big-screen smartphones by the end of the year. But a handful of countries won’t be receiving any Apple products at all.

Among the Apple-less countries are Syria, North Korea, Sudan and Cuba, which face trade sanctions from the United States. That means the “exportation, reexportation, sale or supply” of any Apple goods from the U.S. or an American anywhere is prohibited in those countries, according to Apple’s global trade compliance. Add to those Apple-less countries several African and Middle Eastern nations, among other countries, which Apple’s sales locator indicates have neither Apple Stores nor authorized Apple product resellers.

Apple did not respond for comment on whether authorized distribution channels exist in countries that aren’t sanctioned by the U.S. but still present a difficult business climate, like Ethiopia, Afghanistan and Yemen. Technology and trade experts were reluctant to speculate why Apple may not penetrate these markets, but some pointed to a lack of demand or infrastructure.

In the map below, Apple-less countries appear unshaded:

The world recently bore witness to what happened when China, not subject to U.S. sanctions, was deprived of the iPhone 6’s initial release: a gray market exploded while rumors swirled that the “Chinese mafia” was storming Apple Stores around the world to collect iPhones for resell to high-income buyers.

That same grey market boom is happening in countries that do face U.S. sanctions, though for different reasons. While Chinese buyers were simply unwilling to wait for the iPhone 6’s official release in their home country, high-income buyers in sanctioned states are creating demand for a product that will likely never be sold in their country. That demand is being met by unofficial providers like the “Apple Syria Store” and “Tehran Apple Store,” two unofficial Apple distribution channels in the Middle East, for example.

A lack of iPhones in some countries, however, is only a problem for those countries’ wealthiest residents. Indeed, the iPhone craze overshadows a higher-stake battle: Access to less-hyped but important American technology in countries where such technology continues to be restricted.

The U.S. has put in place sanctions against Syria, North Korea, Sudan, Cuba and Iran to discourage those countries from abusing human rights, sponsoring terrorism or launching nuclear programs. While the sanctions were largely intended as economic embargoes, they also disrupted the free flow of information by severely limiting residents’ access to communication technology, advocates say. That technology includes not only electronics like Apple’s iPhone, but also American software and websites like Apple’s App Store, Adobe Flash, Yahoo e-mail and educational platforms like Khan Academy and Coursera. In many sanctioned countries, attempts to access those sites result in a “blocked” page. In certain countries it’s also prohibited to update whatever American software is available, leaving in place security vulnerabilities in countries where surveillance and censorship are commonplace.

“It’s still a fairly new issue, because it wasn’t really until the Arab Spring that people started to realize communication technology as a tools of free expression,” said Danielle Kehl, a tech policy analyst at the New America Foundation’s Open Technology Institute.

Observers first began to note the impact of U.S. sanctions on communication technology during Iran’s Green Movement in 2009, when protesters demanding the president’s removal used the Internet as an activist tool, according to independent tech policy researcher Collin Anderson. Within years, activists won over U.S. officials, who exempted certain technologies from American sanctions on Iran to empower protestors. That hasn’t yet been replicated in other sanctioned countries.

Anderson also said that pressure from the Iranian diaspora contributed to a decision by U.S. officials to issue a sanction exemption that allowed the export or re-export of “certain services, software, and hardware incident to personal communications” to Iranians. Apple then “quietly updated its compliance policy” to match the change, Anderson said.

“Apple is in an under-appreciated way one of the most responsive adopters of U.S. policies [that lift sanctions on technology],” said Anderson.

Apple had some market incentive to comply quickly with the change. Most of these sanctioned countries have significant amounts of mobile phone subscribers buying devices purchased from non-U.S. countries or companies, according to Anderson and data from the International Telecommunications Union.

Despite all those potential customers for Apple and other tech firms, tech policy analysts agreed the onus is on U.S. officials to invoke change. But that Apple and several other companies chose to engage with complex, high-risk sanctions in Iran shows that when the policies change, companies tend follow suit.

Still, Kehl said the other, risk-averse option for companies is to “over-comply” with Iranian sanctions, or to treat the laws as if they were complete embargoes in order to reduce their liability. That’s what happened in 2009 when LinkedIn blocked Syrian accounts and when Google blocked its code.google.com developer’s tool in Sudan.

Even Apple appeared to over-comply in 2012 when a Apple Store employee in Alpharetta, Georgia refused to sell an iPad to Iranian-American woman after he heard the woman speaking Persian, according to Jamal Abdi, policy director at the National Iranian American Council. “If [Apple] had reason to believe you were going to take an Apple product to Iran, or if you were going to resell it, [Apple] had to take action to stop people,” explained Abdi, who slammed the practice as discriminatory in a New York Times op-ed. The woman later received an apology from an Apple customer service employee, as NPR noted at the time.

The greatest pressure for change, however, is coming from within the sanctioned countries. Iranian bloggers have discussed banned technologies at risking of criminal charges, Sudanese computer science students have demanded more educational tools, and Syrians have called for U.S. imports of basic technological needs. Several non-profits have reported that sanctioning U.S. technology is highly detrimental to affected countries’ growth, while Abdi added that sanctions have prevented the electronic delivery of humanitarian aid or day-to-day monetary transactions because many banks are affected.

Still, tech companies have in recent years shown more willingness to engage government officials on matter of policy, particularly after former NSA contractor Edward Snowden’s surveillance leaks. Twitter sued the U.S. Justice Department earlier this month to disclose government requests for user data, while popular websites like Netflix, Mozilla and Reddit joined an online protest against the Federal Communications Commission’s proposed rules they said could divide the Internet into “fast lanes” and “slow lanes.” In the most visible tech-backed activism to date, Wikipedia and Reddit “blacked out” their webpages and Google censored its logo to protest the Stop Online Piracy Act, which was later shelved by its author.

Analysts are not expecting Apple to be at the forefront of the battle to lift U.S. sanctions. But as several organizations and advocates pressed for changes to American trade policy towards Iran, it would be hard to believe they would turn away Apple’s support.

“[Apple] is very quiet about these things—like either Apple is the best, or maybe the worst. But it seems like it’s the best,” Anderson said. “[Apple's] recognition of [the policy changes regarding Iran] was the first moral victory for everyone who had worked so hard on this.”

TIME South Africa

Oscar Pistorius Must ‘Pay for What He Has Done,’ Steenkamp Family Says

Athlete expected to be sentenced as early as Friday for culpable homicide of girlfriend Reeva Steenkamp

Oscar Pistorius “needs to pay for what he has done,” Reeva Steenkamp’s cousin said Thursday at a court hearing to decide the athlete’s sentence for killing the model. “My family are not people who are seeking revenge, we just feel … taking somebody’s life, to shoot somebody behind the door that is unarmed, that is harmless needs sufficient punishment,” Kim Martin told the court. “I’m very fearful of the accused, I have tried very hard to put him out of my mind…because I didn’t want to spend any energy thinking about him,” she said.

After giving her testimony, Martin thanked…

Read the rest of the story from our partners at NBC News

TIME ebola

U.N. Rights Chief: Ebola, Extremists ‘Twin Plagues’

(GENEVA) — U.N. High Commissioner for Human Rights Zeid Raad al-Hussein drew comparisons between the Ebola outbreak and the Islamic State group Thursday, labeling them “twin plagues” upon the world that were allowed to gain strength because of widespread neglect and misunderstanding.

At his first news conference since becoming the U.N.’s top human rights official last month, Zeid focused on the “two monumental crises” that he said would inevitably cost nations many billions to overcome.

“The twin plagues of Ebola and ISIL,” he told reporters, using an acronym for the group, “both fomented quietly, neglected by a world that knew they existed but misread their terrible potential before exploding into the global consciousness during the latter months of 2014.”

Zeid said the U.N. human rights office has begun drawing up guidelines for Ebola-hit nations to follow if they impose health quarantines on people, because such efforts can easily violate a wide range of human rights if imposed and enforced unjustly.

Along the border of Iraq and Syria, the Islamic fighters who are seizing ground represent “a diabolical, potentially genocidal movement” that is the product of “a perverse and lethal marriage of a new form of nihilism with the digital age,” he said.

The veteran diplomat and prince from Jordan also urged Iraq to join The Hague-based International Criminal Court and to take the “immediate step” of accepting its jurisdiction to allow for the prosecution of alleged war crimes and crimes against humanity that a U.N. Human Rights Council-appointed mission is investigating.

Syria has signed the treaty establishing the ICC, but has not ratified it.

TIME

Barack and Michelle Obama Congratulate Malala Yousafzai

President Barack Obama and first lady Michelle Obama attend the National Prayer Breakfast at the Washington Hilton on Feb. 6, 2014 in Washington.
President Barack Obama and first lady Michelle Obama attend the National Prayer Breakfast at the Washington Hilton on Feb. 6, 2014 in Washington. Olivier Douliery—Getty Images

Let’s not simply be in awe of her age or her accomplishments. Let’s join her

A year ago, we were honored to welcome Malala Yousafzai to the Oval Office. From the moment she walked in, it was clear that this young woman–not much older than our own daughters–possessed character far beyond her years. The courage to stand up to Taliban gunmen determined to silence her. The conviction to fight back, not just for her own education but also for the future of young people everywhere. So we were thrilled when Malala was awarded the Nobel Peace Prize on Oct. 10, alongside Kailash Satyarthi, who has inspired us with his work to combat child labor and slavery.

It wasn’t long ago that Malala was just a girl going to school every morning, laughing with her friends as class began. She was like millions of girls in America and around the world who aren’t famous but whose promise is boundless; girls who, if just given the opportunity and the support, could change the world. So as we celebrate 17-year-old Malala, let’s not simply be in awe of her age or her accomplishments. Let’s join her. Let’s all do our part to help unlock the extraordinary talents and potential of all our children.

Barack and Michelle Obama are the President and First Lady of the United States

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