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Carlsberg's Russian hangover

Thursday, January 29, 2015 - 01:59

Foreign ministers are discussing the possibility of more sanctions on Russia over the escalating Ukraine crisis. As David Pollard reports, there's growing evidence the current ones are really hurting the West as well as Russia.

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The fizz went out of the Russian economy some time ago. Carlsberg's decision may mean even less beer itself on these supemarket shelves. Two breweries in Siberia are closing, amid a decline in Russian beer sales of nearly a third in six years. Several hundred jobs are to go too. (SOUNDBITE) (Russian) SACKED BREWERY WORKER KONSTANTIN MURUYEV, SAYING: "It's over, the factory has been shut down.'' And there's deep pain for Gazprom. The energy giant says nine-month profits are down over a third. A dispute with Ukraine over energy prices has hit hard. The slide in the rouble inflicting a massive foreign exchange loss. Weak oil prices, it says, could make things worse still. IG's Chris Beauchamp agrees. (SOUNDBITE) (English) CHRIS BEAUCHAMP, MARKET ANALSYT, IG, SAYING: ''It's a sign that the Russian economy is almost, I wouldn't say fatally holed below the waterline, but very much in serious trouble. And that's a major problem for the euro zone, especially, that one of its biggest trading partners is now in this devastating downward spiral, but the sign that Gazprom is seeing its profits drop away means that it will require increased state support, and the Russian state is fast running out of the funds to do that.'' Foreign companies like Carlsberg, meanwhile, will continue to vote with their feet. (SOUNDBITE) (English) CHRIS BEAUCHAMP, MARKET ANALSYT, IG, SAYING: ''You adjust your plans to reflect changing realities, and the drop in consumer spending in Russia, the drop in economic performance in Russia, means that we will see further companies exiting, chiefly for political reasons.'' Those losing their jobs are being promised help to find new ones. They'll take little cheer at talk of more sanctions over Ukraine. With EU foreign ministers meeting in Brussels, the expectation was punitive measures would be extended - at least for another half year. More Russians could be added to a target list, and new measures added. But with the ceasefire in Ukraine now in tatters - these are the latest pictures to show the aftermath of fighting in rebel-held Donetsk - the question is being asked: will new sanctions be any more effective than the old ones?

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Carlsberg's Russian hangover

Thursday, January 29, 2015 - 01:59