04/03/2014 World Business Report

Those are the latest headlines from BBC World News. Now for the latest

financial news in World Business Report.

The threat of economic sanctions - the US and Europe weigh the options

in a bid to isolate Russia and de-escalate the crisis in Ukraine.

The final frontier as investors and governments eye the potential of the

Arctic region environmentalists prepare for a battle.

Welcome to World Business Report. I'm Sally Bundock. Also in the

programme: Singapore's topped the list as the most expensive city in

the world. We'll talk to our team there to find out why. But first: As

you've been hearing, tensions continue to rise across the globe

over Russia's military actions in Ukraine. As the world rushes to find

a diplomatic solution, powers in the West are weighing up what economic

action they can take that could force Russia out of Crimea. So what

options do the Europeans and Americans have?

The UK Prime Minister, David Cameron says economic and financial

sanctions will ensure Russia pays significant costs for these

aggressive actions. Details are currently scarce but the measures

would include financial sanctions and blocking visas for Russian

businesspeople wanting to visit the EU. The US Secretary of State, John

Kerry, has said they could also freeze assets and ban visas. And all

trade talks and planning meetings for investment conferences have been

suspended. So how could these measures impact Russia's economy?

And with the rouble already at a record low, and Russian shares in

free fall, how much longer will the Russian people support their

leader's military actions? With me now is Joshua Raymond, Chief Market

Strategist at city Index. Good morning. There is a split in the

Russian press this morning. Some say that it is good for the economy. The

weaker currency will help manufacturers. Oil prices are going

up. Others say that Black Monday it has impacted the Russian economy

badly. The Russian stock market fell between ten and 14%. If you are

investing in Russian stocks, that is a problem. -- 10% and 14%. Russia

has a natural hedge against these potential volatility is and concerns

because gas prices have risen. Gas will be delivered in the next month

have had prices raised by 10%. Russia controls most pipelines to

Europe, most of which go through Ukraine. The low currency means that

currencies will be in demand -- exports will be in demand. That is a

hedge to this uncertainty. You could argue that on one side of it, it

goes towards Russian strengths as opposed to witnesses. President

Putin got the backing for military action in Ukraine. To what extent is

he concerned about the rhetoric coming from the West about economic

sanctions. But it put pressure on him? My opinion is that he isn't

getting much pressure. We have been through this before although on a

smaller scale in Georgia we had a similar situation where Russia moved

to protect their pipelines. The one thing I would say that Russia tend

to be aggressive early on and Europe and the West and the G-7 tend to

talk up significant hostilities in terms of moves they could make and

we have already started to see that layout. Whether Vladimir Putin is

aptly shaking his boots right now, I doubt that. Russia holds the cards.

They have their troops in Premier already protecting the Black Sea and

the fleet and are protecting their assets and pipelines. The Russian

Parliament is booked -- backing him as well. Troops are not only in

Crimea but ready to go into Ukraine if needed. What impact will this

have if this were to escalate and worsen and therefore sanctions were

to be applied on London and the City? Russia is a big part of

London, isn't it? To commit sanctions could hurt London. London

being the hub of the UK economy, the UK more than other countries if you

look at where Russian assets are, they buy properties here and their

cash is in Western banks including some in London. If you look at what

economic sanctions would be doing in terms of freezing Russian assets, it

could hurt London more than people expect.

We appreciate your perspective. We are keeping you up-to-date on this

story day by day as it progresses. Let's look at Singapore. Singapore

has topped the list of 131 cities globally to become the world's most

expensive city to live in according to the Economist Intelligence Unit.

The city's strong currency combined with the high cost of running a car

and soaring utility bills are seen as some of the reasons why. It's

also the most expensive place in the world to buy clothes. So Singapore

tops the list. Then in second place there is Paris.

Followed by Oslo, then Zurich and in fifth place is Sydney, Australia.

Let's get more on this story from a person living in the most expensive

city. Leisha Chi joins me now from Singapore.

I am concerned that we have a whole team of people in Singapore. Tell us

how you are coping. Why is it so expensive? I've lived here for over

a decade and four years and years, it has become a lot more expensive.

It might be time to look at that salary negotiation once again. As

you mentioned, it has to do with the rising transport utility and costs

in retail. Understanding the central district district. If I went to a

bar or restaurant down and get a small bottle of wine, it would be

$25. A pint of beer is $14 and that is higher than you would get in

another capital such as London or New York. A lot of this has to do

with the currency fluctuations. The Singaporean dollar has gained 14%

invaluable past decade as well as a steady rise in inflation in this

country. That has made everything more expensive. Singapore is the

third most expensive country in which to pay for water and

electricity because this island has no natural resources and have to

import it all, Sally. The worrying the most expensive city but which

were the cheapest? According to the survey, some of the cheaper cities

are in Asia. You have New Delhi and Mumbai topping the list of cheapest

cities and this has a lot to do with the income equality that we get on

the subcontinent. With millions of people living under the poverty

line, you need a range of goods and services to cater to families. Other

cheap cities include Nepal as well as Damascus in Syria which is all

the value of the Syrian pound fall dramatically due to instability

that. Thank you for that.

There's no doubting the final frontier when it comes to the global

search for new natural resources or new sea routes. It's the Arctic. The

very idea of exploiting it horrifies environmentalists. But oil, mining,

and shipping companies are already dipping their toes into the frozen

waters. This morning in London, the business and geopolitical future of

the region will be debated at an Arctic summit lasting two days. With

hundreds of billions of dollars at stake, business, governments,

environmentalists, and Arctic residents have to navigate some

choppy waters. Nigel Cassidy sets the scene as the summit begins.

It is the not quite frozen Arctic, the world 's high zero. Nowhere on

the planet is warming any faster. This is the retreating sea ice, in

this case over Greenland. It is a silent call to shipping. Led by

Russian icebreakers, this German vessel is part of the first Western

Fleet to navigate the new north-east passage from Asia to Europe. It cuts

the previous journey time by at least ten days although little more

than 70 ships per year are so far using the route. It is what lies

beneath that is contracting investors. -- attracting. Few doubt

that the resources are vast. The Arctic apparently accounts for 13%

of the world's undiscovered oil, 30% of the undiscovered natural gas and

20% of the liquid is of natural gas. Hydrocarbon relied Russia has been

the biggest initial investor in these fragile and inhospitable

fields. Recent events have tempered the initial Arctic Russia. Shell has

pulled back from the Alaskan operations after sinking $5 billion

there. BP's raised new questions. Deepwater horizon tragedy in Mexico

-- the Gulf of Mexico had a big influence on the way countries like

the US and Canada and Greenland thought about regulating the Arctic.

That has really led to the imposition of March heavier

requirements, conditions on oil companies operating there. They need

to demonstrate that they can clean up an oil spill which is not an easy

task. It is not just oil companies acting in the Arctic which faced the

right of environmentalists. Economic development of the entire region is

fraught with risks as this latest summit in London brings together

many of those with very different ideas as to what constitutes

sustainable development in the high North.

A quick look at the markets before I say goodbye. In Australia, the bank

of Australia kept interest rates at 2.5%. You can see the market in Asia

are bouncing back after significant falls yesterday out of fear of what

is going on in Ukraine. The close in the US as you can see, shares

falling there because of worries about the situation. I'll see you

soon. Part-time child-care now costs more

than the average mortgage according to a new report. The research by the

Family and Childcare Trust shows that childcare costs across Britain

continue to rise faster than inflation, though prices in England

have fallen slightly over the