Today, the West's squeeze and sanctions on Russia's war economy.
Is it working?
I think it's yielding a very big result.
It's causing great pain.
I know for sure that people aren't happy that the economy is not doing well.
But are Western sanctions actually deterring Russia's oil customers?
As far as India is concerned, if there is oil available, you buy it.
It is business for them.
It's not politics.
This is World Business Report from the BBC World Service.
I'm Ed Butler, and today, as Vladimir Putin begins a key visit to his ally and trading partner India, we're asking what's at stake for Russia, in particular, with its war in Ukraine.
Also, we hear the latest on the battles over Southeast Asia's scam centres.
And can the musical juggernaut Eurovision survive its new bitter feud over Israel?
Yeah, in the last few hours President Putin has arrived in India for talks expected to focus on trade and defence ties.
It's the first visit by the Russian leader to New Delhi since he launched the full-scale invasion of Ukraine in 2022.
The Indian Prime Minister, Narendra Modi, welcomed him at the airport with what looked like a very warm embrace.
India, like China, has been a big purchaser of Russian oil and has been accused by the West of financing the war.
Vladimir Putin spoke to India Today shortly before his visit.
We have a comprehensive plan for our cooperation in key sectors, the most important of which, of course, are those that are focused on technology in space and energy.
Moreover, in nuclear energy, shipbuilding, aviation, we will discuss all of this.
That's some of what they'll discuss, but what do people in Delhi think about this visit from the Russian president?
India wants to be a global leader, and this visit by the Russian president shows our growing importance on the world.
It will lead to better trade with Russia and benefit us.
I support Putin's visit to India because I believe that they've been a friend of ours for a very long time.
And even most recently, they've helped us with cheap oil.
OK, let's talk about the cheap oil.
In October, the US Treasury announced blanket sanctions on Russia's two biggest oil companies, Lukoil and Rosneft, a result, in its words, of Russia's serious lack of commitment to a peace process to end the war in Ukraine.
Well, since then India, one of Russia's biggest purchasers of oil, has apparently been reducing its oil purchases quite a lot.
Not, though, by as much as some would like, according to the Indian oil trader Sumit Ritalia.
November, India imported around 1.8 million barrels per day.
That is five months high.
Again, that has also to do with because November 21st was the deadline for all the imports from Rosneft and New Guelph.
So refiners front-loaded and they increased the import.
But going ahead, we are seeing a dip.
So looking into December and January, we are seeing around 30 to 35% of dip.
But again, as said, like Russian ecosystem or crude ecosystem knows how to move products.
You're saying that there's going to be a 30 to 35 dip once these sanctions are fully implemented, which they have been now right.
Yeah.
Yeah.
But again, these are the short term dip.
We don't see a long term decrease as such, because what we are seeing is new intermediaries are coming up.
New companies are coming up that are selling Russian oil.
So and these are non-sanctioned entities.
So.
Right.
So basically you're saying the Russians have just relabeled companies which produce the oil out of Russia?
They're no longer called Rosneft and Lukoil.
They're called something else.
Yeah, like they are called Russ Exports, Lugaf Marine.
Different entities are popping up in the last two, three months.
OK.
I was seeing a general figure suggesting that India is now importing, in cash terms, a good 30 40 percent less than it was one year ago from Russia.
You're saying that really that's just to do with cheaper oil prices.
It's not to do with the volume of oil.
Yeah, I don't have the exact quantum, but if I can recall, I think compared to last year, oil prices have fallen by 15 to 20.
As such,
So that is also.
Sumit Rutolia, so that's what we're hearing from India.
But what does Russia need economically right now?
This visit comes as the US State Department has actually been announcing a partial easing of sanctions against Lukoil, authorising Lukoil-branded petrol stations outside Russia to continue operating at least two for another few months.
I've been speaking to Sir Bill Browder.
He leads the global Magnitsky campaign.
I began by asking him if European and US sanctions on oil exports were being felt in Russia itself.
I think it's having a profound effect.
The one thing that everyone needs to understand is that oil is what powers the Russian economy.
It's an oil country.
And the crude oil that they sell is what allows Vladimir Putin to fund his war, to kill Ukrainians, to buy weapons.
What's also very clear is that there's only a few oil companies that sell the oil.
Luke Oil, Rosneft, and a few others, Surgut Neftogaz, Gazprom Neft.
And then there's only a few companies in the outside of Russia that buy the oil.
There's two refineries in China, four in India, and two in Turkey.
And so we're talking about a very small number of entities that are involved in this whole thing.
Well, we'll talk about India in a second.
But I mean, it's interesting.
I saw these figures from Goldman Sachs recently.
Russian oil companies are still shipping nearly the same amount of oil since the US Treasury cracked down on its biggest oil producers.
But prices have plunged.
I mean, in cash terms, Russian oil export revenues have halved.
I mean, is that a sense that you're getting, that there is a squeeze going on, at least in the cash value of a Russian crude barrel?
Yeah.
Yeah.
So if Rosneft and Lukoil, who are the two biggest oil producers, are put under sanctions, then anybody who buys oil from them is worried about getting into trouble with the US.
Treasury.
And, as a result, some people probably will still buy from them.
But they'll say you know what, if we're going to take that risk, you've got to make it worth our while and sell it to us cheaper, which is good.
That's the kind of thing we want to see happen.
Russia can't simply relabel its oil companies, because just give them a new name, give them a new company designation and just say Yeah, they could do that.
And then the US Treasury would then sanction the newly named oil company.
But the most important thing is that, if you look at what's happened in the last couple of weeks, there's been this 28-point peace plan.
There's been Steve Witkoff, the president's envoy, and Jared Kushner, his son-in-law. shuttling to various places, having conversations with Russians, having conversations with different people.
And the whole thing in my mind is engineered by Vladimir Putin.
This 28-point peace plan, which I don't believe is a peace plan at all with one specific objective, which is to stop further oil sanctions from happening.
And let me just put this into perspective.
A couple of weeks ago, because there was so little progress.
There was a piece of legislation going through the US.
Congress sponsored by Senator Lindsey Graham, which would have put 500 tariffs on countries that bought Russian oil China, India and Turkey.
That legislation has 85 out of 100 Senate co-sponsors, so it would certainly pass.
President Trump had told Lindsey Graham don't put this into play up until about two weeks ago three weeks ago at which point it went into play.
Trump said, I no longer forbid it from going through the Senate.
And that's something which is absolutely terrifying to Putin.
So what does Putin do?
He has one of his envoys leak a Russian-written peace plan.
It goes into Axios news media.
And for reasons that we'll never really understand, Trump takes ownership of it.
And all of a sudden, there's a peace negotiation going on.
And so everybody is saying, well, we can't do more sanctions during a peace negotiation.
And as a result, Putin has stopped the thing he's most afraid of, which are these sanctions.
The problem remains, doesn't it, that Vladimir Putin is getting less money than he used to from oil.
To what extent do you see any kind of fragility within the Russian domestic economy right now?
Because that is obviously the object of the European Union when they're slowly kind of cutting off gas purchases as well.
Is there a sign that this is actually yielding any kind of result within Russia's domestic economy?
I think it's yielding a very big result.
It's causing great pain inside their domestic economy.
I can't imagine and I know for sure that people aren't happy that the economy is not doing well.
And for those people who are quoting economic statistics coming out of Russia, those statistics are being produced by a regime that constantly lies about stuff.
I don't think anything is going well in their economy.
What will he be asking of Prime Minister Modi tomorrow?
Though the main thing he wants to do is make sure that the Indians continue to buy his oil.
That's the only thing that matters.
If the Indians buy his oil, he gets hundreds of billions of dollars a year, and that's the money he needs to fight his war.
The global transparency campaigner, Sybil Browder.
Well, I'm joined now by Kerry Leahy, an economist based at Columbia University in New York.
What do you think, Kerry?
I mean, a lot of this really hinges, I guess, on the appetite of Western powers, Washington especially, to really keep the pressure on Russia in terms of those oil exports.
There has been perhaps a disinclination, it would seem, in the Trump White House so far to really kind of push the envelope on those sanctions.
Unfortunately, that is correct.
I don't think they're pushing hard enough, particularly since you now have a so-called peace agreement being negotiated.
And during that period of time, as a previous commentator mentioned, you probably don't want to turn the screws on.
But right now, as we all know, Putin desperately needs somebody to buy his oil and prop up his oil revenues.
And India has been the source of much of that.
But India is under a lot of pressure from the US maybe not in the last two or three weeks with higher tariffs and threats of even higher tariffs after that.
So there's this non-alignment that India is trying to follow up on.
It's going to be very hard to walk through in the next couple of days and weeks.
Everyone is trying to tread a fine path, it seems.
I want to switch to Japan now, because there was a story in the Financial Times.
I think it's seen it elsewhere.
There's a lot of signalling going on that the Bank of Japan could soon be raising interest rates.
It's added fuel to a brutal sell-off in the country's bond market.
Tell us why this matters.
Well, it matters because Japan is a large, important country with a lot of world-class industries.
And their incoming PM wants to try to grow the economy again.
And to do that, probably wants some help from the central bank.
So if there's any talk of of higher rates off of ironically easier Japanese monetary policy, that's bad for yields, thinking that the bank will flood the Japanese and world economies with more liquidity.
And that gets you nervous about inflation.
And that makes bonds less valuable.
And that's why you had the sell-off today.
Kerry Leahy, thank you very much indeed.
Now that is the sound of a bomb blast from a recent attack on so-called a scam centre in Myanmar.
Since late October, the military leadership of Myanmar has been spearheading attacks on two of the largest scam centres in the border area with Thailand, demolishing buildings, forcing out thousands of scam workers.
Four weeks ago, we received this video of a daring escape involving some scam workers, Ethiopians and Filipinos who'd been forced into scamming people under pain of torture.
We are here now, ma'am.
We are going to transfer to the other side over there.
Very dramatic images there of people coming across, some people swimming across the river to get to Thailand.
The military, which seized power in a coup nearly five years ago, says it's dedicated to stamping out the global online fraud business which has proliferated in the border areas, although many observers doubt this claim.
And more recently, one of the main ethnic insurgent groups has also become involved, attacking scam centres itself.
Our Southeast Asia correspondent, Jonathan Head, is on the border where he says after years of impunity, it seems like the multi-billion dollar scam industry could now be facing significant disruption.
This is the Mui River that divides Myanmar from Thailand.
And you can hear the detonations going on from the other side.
There is an artillery exchange between the Myanmar military and the main Karen insurgent group, the KNU.
All this fighting has escalated.
Because both sides the army and the KNU, the Karen insurgents say they're trying to shut down the scam compounds that have proliferated all along this river.
We can just see in the distance KK Park, one of the most notorious of all of them.
In the last few weeks the army has been making very public its demolition of buildings in there and its claim that it's shutting it down.
There are good reasons for scepticism about the military's claims, because it is the warlords, who are allied to the military junta, who have been mainly profiting from this business and protecting it.
KNU has disowned the scam business and is looking for international sympathy, but it's now involved in this area in a full-on territorial fight with the military.
That has come right up to the Thai border and all of these people have been displaced by it.
Jonathan Head there.
Well, a few days ago I did manage to speak with the chief spokesman of the Karen National Union, the rebel group that Jonathan was just referring to there.
His name is Pado Sotorne.
He told me what happened last month, when KNU forces managed to take over a scam centre controlled by another local faction.
Our ground troops entered to that compound and then they saw that so many people from around the world up to now just only hundreds of people, they can verify.
According to our ground troops, the most bigger one is Chinese nationals.
It might be more than 1,000 Chinese nationals there.
And you are right now working with the Thai authorities to process these people?
Yes, as you know that KNU, we have very limited capacity.
That's why we're always asking for international participation with fighting against scams, for checking and verification or something like that.
Does this mean that the KNU, one of the major rebel groups inside Myanmar, is now working to clear more scam centres?
Because just south of this facility that you have entered, there are many more, aren't there?
Also controlled by the same DKBA leaders.
Yes, it might be not easy for us.
That's why we really need international community working together with us.
But on the other hand, we clearly see that If we don't do like that, there will be a kind of crisis that will be very sorry for us, not only our current people, but also international community facing with that crisis.
That's why now we're trying our best.
What kind of actual help do you want?
Especially we need for the technology.
We really need physical resources to drive out and to kick out all the illicit business in our territory like that.
And then at the same time for the humanitarian assistance also.
We need to help the people who become victims.
That will be challenging for us.
It's said that both sides in this war are depending more and more on the money that is coming from scams.
The military is depending on the income from the scams, and some people say that parts of the opposition rebel groups are also depending on them.
How much is there an incentive for all of you to end this scam industry.
We don't do that.
If you see in our area, we don't have any building, something like that.
Our policy is totally against the illicit business.
And we do not allow anything in our territory.
Firm denial there from Pado Sotone of the Myanmar rebel group, the KNU.
You're with World Business Report from the BBC World Service.
The agreement that binds cross-border trade between the United States, Mexico and Canada, the USMCA, is crucially under review this week.
Public hearings have just started in Washington on whether it could be renewed for another 16-year term.
Speaking at the White House, US President Donald Trump has indicated he would rather strike a new trade deal with both countries, Canada and Mexico, but he could walk away as well.
Today the Business Council of Canada testified before the office of the United States Trade Representative.
Their CEO and President, Goldie Hyder, spoke to me earlier about how the meeting went.
Quite well.
I was encouraged by what I heard.
What I've seen is a chorus of support for the President's agreement.
The USMCA, whether you're Canadian or Mexican or American.
Every speaker effectively said this is a good deal.
It's a deal that works for all three countries.
That we're actually better together and that there's an opportunity here to improve and do more in terms of harmonizing it and improving some of the regulatory issues that business continues to identify.
And I think we're all rowing in the same direction to try and deal with the opportunity of the review and renewal of the USMCA represents.
At the same time addressing the anxiety that businesses feel across North America and frankly, around the world, about the ongoing uncertainty without a way forward.
And I think this is one of the best ways to give hope that things can calm down on the trade front.
Right.
But President Trump said he's going to rip up the agreement if he doesn't get what he wants, which is something much more preferential to the US.
Yeah.
I mean, look, the president has a history of saying lots of things about these things.
I basically focus on not what he says, but also what he doesn't say.
Not what he does, but also what he doesn't do.
And the fact that today alone, I know, me and a variety of other stakeholders are part of a US government process for 270 days to gather input on the review and renewal of the USMCA.
The fact that the president has given Canada and Mexico an exclusion in terms of the tariffs for all goods that are covered off by the USMCA.
These are the things that we should be paying attention to, and not the noise and the speculation and the opinions of people.
We should be focused on the process and what is actually taking place.
And in that spirit, everything seems to be on track.
Now, is it going to happen as fast as I might like?
Maybe, maybe not.
But we're going to continue to push for the importance of reviewing and renewing it sooner rather than later.
Clearly, President Trump has been in the way of free trade between your countries in the last few months.
So you've got a 75% export requirement coming from the US.
I mean, that's the amount of your exports that goes to the US, right, or has been historically.
You kind of need this deal more than the US does.
And they're aware of that, aren't they?
Well, look, that's not a unique position Canada finds itself in.
When you're dealing with the G1, it has better cards than you do.
But it's not like these countries don't have their own cards.
We do.
We have a lot of what America needs, starting with natural resources or, particularly in cases of oil gas mining.
You know, the aluminum.
They desperately need our aluminum, the potash, the uranium.
There's just an agreement signed, you know with, with a, with a Canadian owned American company called Westinghouse, where you know the American government came and said Hey listen, we want you to give you 80 billion worth to help you build our nuclear plants and get us a as much uranium as you can to make sure we've got the energy that we need.
So it's not like we don't have the cards, but in any negotiation with America they're going to want to negotiate.
They're going to want to win the negotiation.
I think our job is to give them the wind that we can live with and ensure that we have an agreement that allows our economies to continue to grow and we live to fight another day.
And that's how negotiations work.
It's a give and take.
When will we see one?
That's the really important question in my mind, because I firmly believe, and I've never not believed, that there will be an agreement.
There will be an extension.
The fear I have is uncertainty is America's friend because it allows capital to come to America.
But in the longer run, it's not healthy for anybody.
If they want to drag it out, they're dragging it out for short term gains, but long term pain.
So our message to them, as I'm here in Washington, is Let's get this thing done sooner rather than later.
Let's not risk this getting hijacked by.
You know political processes and midterms and you know events, my dear boy events, if you will.
Let's get this thing done in the timeframe that is supposed to be done, which is next year.
That's our goal.
And we're doing everything we can to make it happen.
That's Goldie Hyder, CEO and President of the Business Council of Canada.
Finally today Ireland Spain, the Netherlands and Slovenia have all said that they're going to boycott the Eurovision Song Contest.
This is the mighty competition, the Jamboree, that reaches around 160 million viewers.
It's the longest running international music competition on television.
It is, frankly, an institution.
But who's going to be competing next year?
The argument, of course, is about Israel's participation.
Delegates from the European Broadcasting Union had met in Switzerland to discuss whether Israel should be excluded over its military action in Gaza.
But the organising body decided not to hold a vote on that issue.
The head of the Spanish public broadcaster said in a statement it was difficult to maintain Eurovision as a neutral event now.
Well, I'm joined to discuss this by the freelance journalist and Eurovision watcher Adrian Bradley.
So, Adrian, this isn't just a shock for Eurovision lovers, is it?
There's real money at stake here.
Yeah, I mean, this is... a really big moment for Eurovision.
Spain is one of the big five members of EBU, the big five contributors to Eurovision that pay the most for it.
And like the United Kingdom, get directly into the final.
Netherlands are probably around the sixth biggest.
So those two countries alone are huge.
I mean, if we talk in terms of viewing figures.
In Spain last year nearly six million people watched it on TV with about a 50% audience share.
In the Netherlands about 3.3 million viewers watched it on TV with a 75% audience share.
These are two countries that are really big parts of the Eurovision audience and And Ireland, of course, one of the most successful countries in Eurovision history as well.
So the four countries that have stood down are big countries.
And it was pretty unprecedented today.
Yeah.
But the argument is obviously that Eurovision excluded Russia over its invasion of Ukraine in 2022.
So shouldn't it be doing the same with Israel this time?
At least that's what Slovenia is saying.
And then there are other countries, like Germany right, who would have walked out had Israel been excluded.
I mean yeah, there were a lot of unknowns as to what would have happened had the vote gone a different way today.
When talking about Russia and Belarus, who were kicked out, the arguments were given and it was quite unanimous was whether the
EBU is a body of broadcasters, not of countries, and the broadcasters need to be independent from their governments.
And the argument given with Russia and Belarus were that the public broadcasters were no longer anything but voices of their governments.
This is what the discussions and the arguments have been about.
Israel's broadcaster can and cannot.
The EBU and a lot of members will say that it is independent of its government, but it is critical of its government and its reporting as well.
So it's a complicated decision.
It came to a head today, and I don't think next year will be the end of it either.
We will keep a keen eye.
Eurovision watches everywhere, Will, I'm sure.
Adrian Bradley, thank you very much indeed.
That is all we have time for for today's World Business Report.
I hope you enjoyed it.
Take care.
Thank you.
