Day: March 19, 2023

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Russia exit costs EU automaker almost $700 million

Czech carmaker Skoda Auto, a unit of Germany’s Volkswagen, is closing in on a deal to sell its assets and exit Russia, the company’s CEO Klaus Zellmer announced this week.

Skoda has taken a hit of almost €700 million ($742 million) from exiting its second largest market due to disruptions in logistics chains caused by Western sanctions. Exports of cars and spare parts to Russia have also been stopped.

“The Volkswagen Group has analyzed various scenarios for the future of our business options in Russia,” Zellmer told reporters, adding that “the preferred option is to sell the assets of Volkswagen Group Russia… to a third party.”

He declined to give details on the deal until they are agreed by all parties, but noted that talks on the sale were “in the final stages.”

The automaker, which produced about 780,000 cars globally in 2022, suspended production at its two Russian factories in Kaluga and Nizhny Novgorod shortly after Ukraine-related sanctions were imposed by the EU. The facility in Kaluga has a production capacity of 225,000 vehicles per year, and assembled the Volkswagen Tiguan, Volkswagen Polo, and Skoda Rapid.

Last year, Skoda’s production in Russia plummeted to 18,300 cars from the 90,400 delivered in 2021, according to official data.

The carmaker’s net profit slumped 11.7% to €489 million in 2022, affected by a sharp rise in raw material prices and global supply chain disruptions.

SOURCE: RUSSIA TODAY

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Top Asian economy urges citizens to abandon Western payment systems

The leader of Indonesia says the country must reduce its dependence on foreign payment systems, to negate potentially disastrous economic consequences should the country ever find itself in the crosshairs of Western sanctions.

Addressing a business forum in Jakarta this week, President Joko Widodo argued that Indonesia must shield itself from geopolitical disruptions, citing the sanctions attack on Russia’s financial sector by the US, EU, and their allies over the conflict in Ukraine.

“Be very careful. We must remember the sanctions imposed by the US on Russia. Visa and Mastercard could be a problem,” Widodo said on Wednesday at a gathering that promoted the use of Indonesian-made products and services.

Last year, Indonesia rolled out a Domestic Government Credit Card (KKP) program to facilitate transactions between the central and regional governments. The president urged the public sector to adopt domestic systems, stressing that eventually “everyone should be able to use” locally-issued bank cards so that “we can be independent.”

“If we use our own platforms, and everybody is using them, from ministries and local administrations to municipal governments, then we can be more secure,” Widodo said, according to the Jakarta Post.

However, in order to compete with Visa and Mastercard, any domestic alternative must be accepted internationally, experts cited by the Post said, expressing doubt that local providers are ready for costly investments in infrastructure upgrades.

Indonesia’s domestic interbank system, GPN, currently supports only local debit cards and requires some adjustments to properly serve credit cards and international transactions, Indonesian Credit Card Association (AKKI) executive director Steve Marta told CNBC Indonesia on Saturday.

Indonesia is a major economy, ranked seventh in the world with $4.37 trillion GDP based on purchasing power parity.

Moscow rolled out its own national card system, Mir, soon after the US first targeted the country with sanctions in 2014, and prepared the internal National Payment Card System (NSPK) to smoothly take over all Visa and Mastercard transactions should the companies pull the plug.

Last year, as Moscow was hit by further sanctions in response to its military operation in Ukraine, international payment systems indeed halted their services, but locally issued Western cards continued to work within the country via the NSPK. While these cards can no longer be used internationally, their expiration dates were extended indefinitely to give users enough time to comfortably migrate to the Mir system.

Russia also has its own financial messaging system, SPFS, which ensures transactions between banks both inside and outside the country, and acts as a substitute for SWIFT, which blocked many sanctioned Russian banks.

SOURCE: RUSSIA TODAY

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President Christodoulides to unveil proposal in Brussels for more active EU involvement in settlement process, more contacts in Egypt and Israel follow

Cyprus President, Nikos Christodoulides, begins his contacts in Brussels this week, aiming among others to promote his proposal for a more active involvement of the European Union, in a bid to avert the impasse in the Cyprus settlement process. As Government Spokesman Konstantinos Letymbiotis told CNA, meetings with the President of the European Council Charles Michel, the President of the European Parliament Roberta Metsola and the President of the European Commission Ursula von der Leyen, have already been scheduled. At the same time, as the Spokesperson noted, the President of the Republic will hold meetings on the sidelines of the European Council with the President of France Emmanuel Macron, the Prime Minister of Sweden Ulf Kristersson who holds the rotating presidency of the Council of the EU this semester, while a meeting is also expected to be arranged with the German Chancellor Olaf Scholz. On the morning of March 23, and ahead of the European Council Summit, President Christodoulides will have the opportunity to present his proposal for a more active EU involvement, in an effort to immediately lift the impasse in the Cyprus issue in line with UN parameters, before the leaders of the European People’s Party (EPP). There has already been a telephone conversation with EPP President Manfred Weber and it was agreed that President Christodoulides will take the floor to detail his proposal before the Summit of EPP, the largest political group of the European Parliament, Letymbiotis noted. The Spokesman also said that at the beginning of April, President Christodoulides is expected to visit Egypt, while he will also go to Israel after Easter. Cyprus has been divided since 1974, when Turkey invaded and occupied its northern third. Repeated rounds of UN-led peace talks have so far failed to yield results. The latest round of negotiations, in July 2017 at the Swiss resort of Crans-Montana ended inconclusively.

Source: Cyprus News Agency

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Nicosia sees no element of surprise in efforts to normalize Turkey-Egypt relations, competent sources tell CNA

The Cyprus Government and the Egyptian side maintain a close, uninterrupted communication, at all levels and as a result there is no element of surprise in recent efforts to normalize relations between Turkey and Egypt, CNA learns from sources with knowledge of the matter. Turkey’s Foreign Minister Mevlut Cavusoglu said on Saturday that Ankara would upgrade its diplomatic relations with Egypt “as soon as possible”, following talks in Cairo with his Egyptian counterpart, Sameh Shoukry. That was the first visit of a top Turkish official in Egypt since a decade when relations between the two countries broke down. At the same time, Cavusoglu spoke of clear steps towards the normalization of relations with Egypt. According to CNA sources, Nicosia deems as an indisputable fact that relations between the Republic of Cyprus and Egypt are strategic, and were built having as a common denominator the two countries’ unwavering respect for International Law and for principled positions. “The close relations between Cyprus and Egypt and our strategic cooperation have been demonstrated in the last years by Egypt’s commitment to excellent relations, upgraded with cooperation at all levels despite any reactions from Turkey,” the same sources noted. It was finally pointed out that Nicosia does not regard the strategic development of its relations with countries in the region as a zero-sum game.

Source: Cyprus News Agency

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A Cyprus settlement looms large in the agenda of President Christodoulides, said Minister of Interior

The solution of the Cyprus issue is a major issue on the agenda of the President of the Republic, said Minister of Interior Constantinos Ioannou on Sunday, who noted that the current effort is focused on the development of a European initiative, within the framework of the United Nations and based on a bizonal bicommunal federation. Speaking at the annual general assembly of the Union of Displaced Communities of Famagusta held in Larnaca, Ioannou stated that “the primary goal and highest priority of the new government is the resumption of substantive negotiations aimed at resolving the Cyprus issue, freeing our country from occupation troops, foreign guarantees, and intervention rights, and restoring the unity of our homeland.” Ioannou added that “the Cyprus problem has always been and remains a problem of invasion and occupation’, noting that the inactivity observed and the lack of political will on the part of Turkey to reach a solution, ‘make it even more imperative that there is not a moment of complacency on our part.” Regarding the refugees, he said that the resolution of the long-standing problem of the state of refugee units is a priority, while high on the list is also the reevaluation of the criteria of housing plans for displaced persons, as well as the subsidy of rents, with the aim of implementing revised policies within 2023. Minister Ioannou noted that the refugee community has shouldered the greatest pain and has taken on a huge burden from the effects of the Turkish invasion. He welcomed the decisions taken by the Ministry, prior to his assumption of duties, regarding the associations of occupied communities of Famagusta, Keryneia, and Nicosia, which concern the establishment of an annual grant of pound 25,000 for each Association separately, in addition to the annual grant to each of the 137 communities to cover their operating expenses. Cyprus has been divided since 1974, when Turkish troops invaded and occupied its northern third. Repeated rounds of UN-led peace talks have so far failed to yield results. The last round of negotiations, in the summer of 2017, at the Swiss resort of Crans-Montana ended inconclusively.

Source: Cyprus News Agency

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We ought to do everything possible to resume Cyprus talks, Defense Minister says

Defence Minister, Michalis Giorgallas, underlined on Sunday the need to do everything possible in order to lift the impasse regarding the Cyprus settlement process and resume talks to reach a solution. In his address at a memorial service, in Nicosia, on the occasion of the 29th anniversary of the assassination of Kurdish rights advocate Theofilos Georgiadis, read by the Ministry of Defense Permanent Secretary Andreas Loukas, the Minister said that there can be no compromise with the current status quo of the Turkish occupation and division of Cyprus. The Minister added that “we need to stay devoted and focused on our goal, in doing everything possible to lift the impasse, resume negotiations” and through a sincere dialogue reach ‘a viable and functioning solution, without occupation troops and foreign guarantees’ or intervention rights. The solution needs to restore the unity of the country and the people, the Minister underlined. Also, on Saturday evening, during an event for reserve soldiers of the National Guard, Giorgallas noted that ‘amidst a period of important and complicated international events, we ought to remain firmly focused on the advocacy of the fundamental principles of freedom and democracy.’

Source: Cyprus News Agency