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So check out lenovo .com slash legion Lenovo, Lenovo Empowering creators everywhere Hello and welcome to World Business Report from the BBC World Service.
I'm Liana Byrne and on this edition we're going to ask whether the Kremlin is feeling the pinch enough to seek an end to the conflict in Ukraine.
We speak to a Russian economist about what's at stake in Argentina President Javier Mele faces a fraud investigation after sharing a link to an obscure digital currency.
And with the fall of the Assad regime in Syria, experts are returning to war -torn historical sites, hoping to restore them and revive tourism.
But first, we turn to Russia's war in Ukraine, and we're going to examine an often overlooked angle, whether economic pressures could push Moscow to end the conflict.
With Western sanctions tightening, inflation more than 9 .5 % and businesses under strain, Russia's economy faces serious struggles.
Our reporter Victoria Holland told me about how ordinary Russians are coping.
As I know right now, prices grow up in about 20 -30 % with comparison last autumn.
I know that many people can't afford with simple things like eggs or extra meat.
And we have to reduce the spending on entertainment things like cinema, concerts or theatre.
We stop catching up outside of the apartments because it's just not affordable.
And it's not just the cost of living, isn't it?
To navigate the economy in Russia isn't the same as it used to be.
Can you just tell me what you can't do there now?
A lot of people in Russia can't do any purchases abroad.
For example, in the past, many of them ordering some clothes or makeup or some cosmetic products or books.
They have some kind of buyers who can buy it for them and send it to Russia.
But we have to pay extra fee for this.
So it's again increased price on some simple thing.
Also, Russians can't even book themselves a flight with their local bank accounts because we are not supporting SWIFT anymore.
And Russians quite often, if they want to go abroad, they need to fly to Uzbekistan first, get themselves an Uzbekistan bank card, which is supporting SWIFT after they come back.
and only with that card they can apply for a Schengen visa or book themselves flights for holidays.
Victoria, what about the labour market there?
How has the conflict changed the prospects for skilled professionals in Russia and has any of those changes led to people leaving the country?
I know that since 2022 the labour market is struggling a lot, especially in the IT sector.
According to the latest report of Ministry of Labour in Russia, 45 % of deficits of skilled professionals in IT are noticed last autumn, for example.
And I know that obviously our risk showing that over two and a half thousands of scientists left Russia.
And right now Russian scientists are absolutely isolated from our part of the world.
No one wants to work with them.
No one wants to share research with them.
No one really contacts with them at all.
That was our reporter, Victoria Holland, speaking to me.
Now, here's a view from a man in Russia who spoke to our Russia editor, Stephen Rosenberg, about his hopes for 2025.
This pensioner says he trusts Putin, but that Russia needs to focus more now on its economy, because his pension isn't enough to live on.
At the age of 74, he's had to take a job as a courier.
He hopes that Putin will raise pensions.
So how much will these challenges shape the Kremlin's next move?
And is economic recovery enough of an incentive to seek peace?
Joining me to discuss this is Professor Ruben Iginlokalopov, research professor at the Barcelona School of Economics.
Thanks for joining us.
Hello. Thanks for inviting me.
No problem. So how much pressure do you think economic considerations, those ones that we were talking about earlier, are putting on the Kremlin to seek a settlement in Ukraine?
So the economic pressure is definitely building up.
So I think it's still not a decisive factor because Russia proved that basically the economy is more or less resilient.
I mean, it's not falling apart, the sanctions.
But the sanctions and discontent of the people, predominantly from the rise of inflation, is growing.
So I think the Kremlin already understands that they cannot sustain this war for a long period of time.
But there's still – their position in negotiations on the economic side is still kind of – they're not under such big pressure because there are no economic problems that they're realizing right now except for inflation.
But there's some suspicion that soon, maybe this year, maybe later, then the economic situation can actually go out of control with the banks, et cetera, et cetera.
So there is a pressure.
It's growing. But it's not yet at the brink of like, let's bring peace right now immediately because the economy is falling apart.
No, because when you look at the numbers, you see its GDP number, which is its growth figure, the country's growth figure.
It's growing, right?
But on the face of it, it's fine.
However, that is very much propped up by the war economy, right?
So, I mean, if agreement was reached tomorrow, do you think Russia's economy would be OK if sanctions weren't lifted?
It's without lifting of sanctions, a Russian economy will definitely have some issues because it's, as you've rightly noticed, the growth of GDP was to a large extent supported by huge stimulus from government spending on military sector, and that does not obviously necessarily translate into quality
of life by population.
And right now, the main issue is inflation.
Inflation is caused by labor shortages and by the restrictions on import that do not allow to increase production and sales of goods like imported goods that much.
Labor shortages obviously cannot be solved by lifting sanctions.
If the sanctions involve lifting sanctions on imports, that could ease up the pressure on inflation.
But it will not change the fundamental problem that Russia faces now that the structure of the economy was distorted severely.
Another thing that sanctions has changed is Russia's trade relationship with Europe and other global partners.
And it's facing more towards India and China, right?
But, I mean, do you see Russia reorientating permanently away from Western markets?
And is that really a good thing because you're really relying heavily on a small set of trading partners?
No, that's definitely not a good thing for Russian economy because we always could buy everything from India and China before.
There was a choice by consumers not to do that, so now they are forced to.
A lot of it is a substitution of for example, one of the most obvious is the market for cars, where basically all the import of European cars that was the major part of the Russian market was basically stopped and all reoriented to Chinese cars, which are basically clearly of lower quality.
So people would be happy, Russian population would be definitely happy if it was able to buy things from the Western world again.
Because in terms of exports, their orientation was like Russia still sells the same thing.
It's natural resources, oil and gas, same thing.
Going in different directions.
But obviously the sanctions do play a role there because the profitability of the export is clearly lower than the counterfactual scenario of not having sanctions.
But it's the main, it's just reorienting it to a different place, whereas imports is the main thing that is hurting the Russian economy and Russian population big time.
Okay. Professor Ruben Enoch -Kolov, thank you so much for joining us.
Now, let's head to Argentina, where President Javier Mille is in a bit of hot water over an obscure cryptocurrency Libra coin.
The president shared a link to it on social media last week and many investors who bought it say they lost money.
A judge is now investigating whether President Mille's post amounted to fraud, something he strongly denies.
I didn't. I didn't because I acted in good faith.
Somebody approaches me and proposes to create an instrument to fund projects in Argentina that is interesting to me.
Now, it's true in wanting to help those Argentines, I was slapped in the face.
But did the state lose anything?
Nothing. Now, a lawmaker for the opposition, German Pedro Martinez, says President Millé had serious questions to answer over his conduct.
We are facing an unprecedented scandal in which the main character is the President of the nation.
There has been a fraud of enormous scale which has Javier Millay as one of its necessary participants.
47 million Argentines must know whether they have a President who lets a scam happen right under his nose without noticing or if they have a President who is a scammer.
or if they have a president a favor.
Earlier, I spoke to the BBC's Veronica who's in Argentina and Buenos Aires and she gave me the timeline for the story.
President Millay is very, very active on his especially his ex -formerly Twitter account.
And on Friday at 7 .01pm, he pinned a post on his private account where he doesn't even say he's a president, just says economist.
He announced a new cryptocurrency that was called Libra.
And he said it would help fund small businesses and startups.
He also posted a link to the name of the project, which was Viva la Libertad, which is the slant, what he says, he screams really at the end of every speech.
He says, Viva la Libertad, carajo.
So a short time later, this cryptocurrency started gaining traction and the price raised really, really quickly.
However, just about an hour later, a group of, apparently, according to experts, what happened is a group of big investors pulled out, taking about $90 million and the price of Libra crumbled.
So a little bit after midnight, so around five hours after his first post, Millet deleted it, saying he had posted, as he does with many other startups and new businesses, but he really hadn't known the details.
And now that he did, he decided to delete it.
However, this didn't stop the enormous scandal that was created afterwards with people accusing him of being involved in a scam.
It is quite the scandal, but he says he did not promote the coin, but he merely shared a link.
But what do the critics interpreted his involvement as?
His words were he divulged it, not promoted it.
But of course, you know, especially the opposition has jumped on this and saying, you know, he was a necessary part in this, what they're calling a scam.
The creators, by the way, of this cryptocurrency insist it's not a scam.
They say that they're going to put money into Libra, making it grow again.
But the people who are accusing him of being, they say this is something classic called rug pulling, where a crypto is created, a lot of money is put into it, famous people promote it, and then investors take all the money out.
And, you know, it's a famous scam.
This is what they're accusing him of doing.
And the opposition have called for impeachment and they have already presented a legal action against the president accusing him of fraud.
So what's at stake in this fraud investigation?
And are there any legal structures in place in Argentina regarding public figures endorsing or appearing to endorse financial products?
But we still have to hear what the judge in charge.
this all happened on Monday because obviously it was Friday evening when the whole thing exploded so we had to wait till Monday to know who the judge was going to be, a federal judge is going to be involved in these accusations, in Congress at the same time a commission has to investigate whether there
is you know a call for an impeachment so this is very early days, however Millay himself has also created a special unit to investigate and he ordered the anti -corruption office to determine if there was any wrongdoing including by the president himself.
So we have yet to see what the ramifications are going to be.
A broad picture Argentina's economy it's been struggling hasn't it?
It's under enormous strain with inflation, debt issues.
So how does this crypto controversy fit into that economic picture?
Struggling is an understatement.
Argentina had the highest inflation in the world.
And actually, Milay has been credited so far in reining it in.
And I think the biggest thing is perhaps to his reputation, because the worst case scenario would be if he were actually accused of participating in a scam.
But the other scenario is showing that He perhaps is not the great economist that he always says he is in terms of, you know, admitting to being quite naive about even if it was divulging, as he said, and not promoting.
This is not the first time that he's been involved in something related to crypto.
He's not he's not new to this.
And so many people think that this will damage his credibility personally, but also Argentina's credibility perhaps to other organizations, especially, for example, the IMF, who Argentina is negotiating with.
And, you know, this perhaps will hurt Argentina in terms of reputation.
That was Veronica Smink speaking to me from Brandes Ares and here with World Business Report from the BBC World Service.
Now, one of Europe's largest pension funds has pulled its investments from some of the world's biggest tech companies.
ABP, the Netherlands' largest pension fund, has sold off its shares in Meta, Alphabet and Tesla, citing governance concerns.
Harman van Veenen is chair of the board at ABP and I asked him why.
This is a decision we made last year already as a part of the reassessment of our investment policy.
And then we had four different criteria.
We take a look to climate criteria, biodiversity, then human rights in the third place, and the fourth place, good governance.
And some of the companies we were invested did not match on all those four criteria.
You mentioned governance concerns.
What specific issues are you referring to?
Generally spoken, we take a look to the labour circumstances.
The people working there, can they unite themselves in labour unions?
Also, we take a look to the remuneration policy of the companies, is that according to the criteria we have.
You also have a history of divesting from fossil fuels, tobacco, arms manufacturers.
What's your thinking in this divestment?
Is it very similar to the times that you've divested before?
The main thing is that we are a pension fund and we take a look to the long term.
We want to have investments that have good investments now, but also that will have good investment returns in the future.
So we take a look to economy for the future, what is sustainable for the future, what kind of companies will provide good economy in the future.
We think that the example you mentioned about the fossil fuels, a lot of companies have to make a big transition to a sustainable economy and some companies will not make that transition so they are at risk.
What about the people who invest in your pension fund?
Are they happy with that decision or is it really just about making as much money as possible for their pot or are they actually concerned about ethical and governance considerations as you are?
We are a pension fund with 3 million participants and maybe you can say also 3 million different opinions.
So it's a big challenge for us to show them and to tell them that for now and for the long term, this is the best decision we made for them.
And that also when we have the criteria of good governance it also benefits the investments for them because we see that also from scientific research that good companies, sustainable companies for the longer term will have better investment results than when they are not facing this criteria.
That was Harman van Weinen, chair of the board at ABP.
Now, we've got Colleen McHugh, investment consultant to Wealthify on the line.
Hello, Colleen. Hello, Liana.
How are you? Yeah, brilliant.
Colleen, so let's start with Australia.
Its central bank cut its bank rate for the first time since the pandemic.
But then you have the governor saying it doesn't mean that future rates are coming, cuts rather are coming.
What does that say about the Australian economy right now?
Yeah, I mean, so this, I should say, was well signposted.
Markets had fully expected it.
But it is the first rate cut that the Australians have had in four years.
So that in itself is quite a big deal.
So you're right, they took the rates down 25 basis points, which means that the interest rates now in Australia are 4 .1%.
To your point there on the governor, her remarks basically was that it's all dependent on inflation.
So the markets are pricing, I believe, a further to rate cuts in Australia by the end of 2025, by the end of the year, but really it will be dependent on inflation.
It's a story, of course, we're familiar with in the UK as well.
Absolutely. And do you think any political considerations might be going into this?
I believe the Prime Minister, Anthony Albanese, might be looking to, you know, form an election or, you know, he's going to capitalise on these rate cuts.
Sure. I mean, there's a lot going on, certainly in Australia.
I mean, we also have issues around or concerns, I should say, around trade tensions and tariffs.
So no doubt that will be feeding into the situation as well.
And how does that play into the economy?
Now, Chinese tech stocks, there's another thing I want to talk to you about, Colleen.
I'm sure this has been on your radar because they've been on a real tear lately.
The Hang Seng tech index jumping up 30 % a month.
Explain to me what's behind this surge.
Yeah, this is crazy.
So I think we have to sort of remind ourselves, you know, the negative sentiment surrounding Chinese shares for the last few years.
And as you say, we've had this massive rally year -to -date.
the main reason for this renewed enthusiasm, Liana, is the fact that you had this DeepSeek release a few weeks ago.
And what it's doing is that it's driving this sense that, oh, we're going to have this breakthrough in AI, and this is going to drive the sector's earning outlook.
And then what you had yesterday, which was super interesting, you had President Yi's meeting with prominent local entrepreneurs.
And of course, that just sends a strong message that Chinese tech companies are coming in from this political cold of the last few years.
And with Beijing's new show of support and endorsement for the private sector, you've just seen stocks rally a little bit more today.
And it's interesting Wall Street banks, Goldman Sachs and Citi, they're suddenly bullish on Chinese stocks again.
So what do you think, quickly, short -term optimism or could it be a real turning point?
Oh, you're putting me on the spot.
I mean, a little word of caution, as always, we might remember the rally we saw last September.
It did fade quickly.
This does seem to have a little bit more lasting power.
I think what gives people comfort if you're an investor in this area is that the valuations are incredibly low, let's say, relative to their counterparts in the US.
So there's a little bit of cushioning to be had.
All right, cautious optimism.
Colleen McHugh, thank you so much.
We love it. Now let's go to Syria now, where after 14 years of conflict in the fall of the Assad regime in December, experts are trying to restore the country's war -torn heritage sites.
They're hoping to bring back places like the ancient city of Pamraya and the medieval castle of Crac de Chevelier back to life and jumpstart a tourism industry that could give Syria a much -needed economic boost.
I speak to Syrian archaeologists and chairperson of the Syrians for Heritage, Salam Al -Khantar.
Hello. Hello. So could you just paint a picture for us?
What do these war -torn heritage sites look like on the ground right now?
And are they actually restorable?
So Syria has six World Heritage Sites enlisted on the UNESCO World Heritage Site.
They've all been damaged to a certain degree Some more than the others Basically the ancient city of Aleppo and Palmyra are the most damaged They are destroyed to a great extent Of course they are restorable But it takes a lot of effort A lot of international help and training, patience But there are emergent
needs to actually intervene for preventing these sites from deteriorating further.
Just tell us about that deterioration, because there was looting as well and damage to those sites, wasn't there?
Yes. So, I mean, the damage from, of course, bombardment, the damage from looting, the damage also from the recent earthquake.
We saw that in Aleppo.
I've been there. I was there in early January.
I managed to see myself some of the damage.
So not only the World Heritage Sites are damaged, but also there are other very important sites that are actually nominated to become World Heritage Site, like the site of Pamea, for example.
This has been severely looted.
It's still being looted as we speak.
and, you know, other sites as well.
The deterioration comes, like, from these, like, for example, the citadel of Aleppo, lots of gaps in the outer wall of the citadel, the so -called glacis.
So that could also, you know, like it could crumble any minute.
And so how crucial could those restored heritage sites, if they were restored, how crucial could it be for Syria's economic recovery?
It is very crucial because these are very important assets.
And we see, like, with the new administration in Syria, they are talking about the importance of heritage size, the importance of tourism in the country.
And these sites are, you know, Syria is incredible.
These are unique sites.
They could really boost cultural tourism.
The ancient cities of Damascus and Aleppo are like living cities.
People live there. People have their shops.
There are like, you know, crafts being made there.
People love to see these places.
And we hope that in the new Syrian era that there will be real attention from the international community and the current government to restore these sites, particularly the ancient towns of Aleppo and Damascus.
And I believe as well these sites mean a lot to you and your family.
Yes, obviously, yes.
I am, you know, I'm Syrian and I have a lot of family connection and memories and I worked almost in most of these sites.
Now, local tourists, this is the good news, they're starting to visit again, But large scale restoration, you mentioned this, it often depends on international cooperation, right?
So how would you see a partnership evolving now that the political situation has changed?
Do you have any suggestions?
So, yes, of course, because of the sanctions before, it was very hard to work in Syria.
And we did work. So my, for example, organization Syrians for Heritage, which is based in Germany, But we have a team of 10 people who work on the ground.
We've been very it's been very difficult to, you know, to access fund to do someone.
We did very much like emergency interventions.
Now, the hope is, especially with the European sanctions being lifted first, and we hope that the US sanctions goes next, that there will be because, you know, the country needs millions of dollars in the heritage sector to go back to where, you know, where it was.
and, you know, we hope even get better.
We have a good example of the city of Musa, for example.
There are lots of international help that came in and also regional help from the Arab Gulf states and that really boosted the city to go back to life.
It provided a lot of job opportunities in Musa and we can see that, you know, initially people were saying, and I understand what they're doing.
Salam Al -Khantar. Unfortunately, we've run out of time, but thank you so much for joining us on World Business Report.
And don't forget, you can get a podcast on this programme wherever you get your podcasts.
