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PRESS TOP 5: Thursday, September 29

September 29, 2016, 13:00 UTC+3 MOSCOW

Report on MH17 crash, International Investment Forum in Sochi, Rosneft and its oil production plans and Japan's new policy towards Russia

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© AP Photo/Evgeniy Maloletka

Vedomosti: Report on downed MH17 poses no consequences for Russia yet

The Dutch-led joint investigation team (JIT) presented the initial results of the criminal investigation into the MH17 crash in Ukraine in July 2014. According to conclusions made by the experts, the plane was downed by a Buk air defense system brought from Russian territory. Experts interviewed by Vedomosti believe that even if there is enough data for reconstructing and analyzing the incident, the study will not imply any repercussions for Russia yet.

The JIT noted that it does not claim that Russia was involved in the incident on a state level, the information about suspects (around 100 individuals) will not be disclosed in the interests of the investigation.

There will be no international legal consequences for Russia, according to Associate Professor of Public Law at the Russian Presidential Academy of National Economy and Public Administration, Kira Sazonova, an international lawyer. "The results are preliminary and cannot be considered as a basis for international responsibility," she told Vedomosti, adding that the state may face international responsibility only after a decision by international judiciary bodies that do not include such investigation commissions, and an international court or tribunal that is empowered to define the right and wrong.

Compensations in such situations are set by a competent international court, Sergei Borodin from the Borodin and Partners law firm said. "The findings of the commission can be used as evidence, but will not be decisive," he told the newspaper.

According to Ukrainian political expert Vladimir Fesenko, the findings will make publication of full information about the tragedy unlikely, as it will lead to a new crisis in relations between Europe and Russia.

A major investment banker told Vedomosti there is no need to wait for the report to see the effect on the market - "it has long been included into the current price of Russian assets." "This is no news for the markets, the investigation will continue until 2018 which means that Russia will have more counterarguments. There will be no additional sanctions from the West, and therefore there is no reaction from investors," Alexander Losev, the Director General at Sputnik Asset Management, told Vedomosti.


Vedomosti: Sochi’s International Investment Forum kicks off Friday

Friday will mark the opening of the 2016 Sochi International Investment Forum - the first investment forum after the recent parliamentary elections. According to Vedomosti, unlike the St. Petersburg International Economic Forum (SPIEF), which concentrates mainly on foreign investors and expanding international relations, the forum in Sochi traditionally focuses on regional development with "simpler investors and a lower cost of participation."

According to the newspaper, expenses for the Sochi forum total 250 mln rubles ($3.9 mln), are nearly a tenth of what the SPIEF costs. The forum’s program is divided into three areas: sustainable development, instruments of regional growth and competency development. Governors, officials and experts will discuss traditional problems, but on the regional level, this year, according to the newspaper, among the topics covered will be "export potential, reforming regulatory bodies, management practices, project approach, the integrated development of territories, which is trendy among the officials, and the implementation and impact of technologies."

According to Vedomosti, the Sochi forum will be a great platform for the Russian regions to sign contracts with investors. Last year, 417 agreements were signed for 415 bln rubles ($6.57 bln). "When budget revenues and federal transfers decline (in 2017 - by 15.5%, according to the Finance Ministry), the regions, consequently have to actively attract investment," the newspaper said.


Kommersant: State puts forward options for basic parameters of 2017-2019 federal budget

The Russian Government is preparing alternatives to the basic parameters of the federal budget in 2017-2019, in addition to the options put forward by the Finance Ministry this summer. Kommersant learned about the details of the talks on the 2017-2019 budget’s structure in the government and the Presidential Administration.

There will be three alternatives: The first involves increasing only VAT, the second - only the income tax, the third - increasing only the government debt emission. It was proposed to introduce different terms for increasing taxes starting from 2017 or 2018. All versions will include the dividend payout rate for state-owned companies to the budget in the amount of 50%, cuts in subsidizes to state-owned companies and corporations, threshold increase or its abolition for allocations to the Pension Fund and Social Insurance Fund. A choice on the options will be made on October 3-4.

According to the newspaper, regardless of the choice, de facto a part of the new budgetary decisions has already been made. This includes increasing state companies’ dividends to 50% of the profit and reducing federal allocations to state corporations and companies "by the amount of unused or temporarily free funds." In addition, the Finance Ministry, the Ministry of Economy and the Labor Ministry are expected to agree on the size and when to increase social payments to the Pension Fund above the current threshold and to introduce payments "over the threshold" to the Social Insurance Fund. "Most likely, this means a hike in the total burden on employers in 2017-2018, should the tariff rate itself remain unchanged," Kommersant concluded.


Kommersant: Clock still ticking on Japanese agreement

Japanese Prime Minister Shinzo Abe addressed the Parliament on September 28, stating the goal of his new policy towards Russia - developing cooperation with Moscow, creating conditions for the return of the four South Kuril islands to Tokyo and signing a peace treaty. The Japanese leader has high hopes for the upcoming meeting with Russian President Vladimir Putin, to be held in December in the Yamaguchi Prefecture. According to Kommersant experts in Tokyo, Prime Minister Abe is risking his political future by rapprochement with Moscow

According to former Russian Ambassador to Japan Alexander Panov, Abe is interested in weakening Washington's control over the country’s foreign policy. "He is a nationalist in a good sense of the word, he is in favor of reforming the constitution to reduce dependence on the United States, and solving the Kuril dilemma would help him to strengthen his positions," he told Vedomosti.

At the same time, the majority of Japanese media experts agree that personal motives have also played an important factor. "His father, Shintaro Abe, served as Foreign Minister from 1982 to 1986 and took an active part in the restoration of relations with the USSR after the arrival of Mikhail Gorbachev," Hosei University Professor Nobuo Shimotomai told Kommersant.

Japanese experts interviewed by the newspaper believe that Abe chose the right moment for his move. Since mid-2014, Moscow has been under pressure from international sanctions, so the position of Japan, which is considered a leader in the Western world, has special significance for Russia.

Experts believe that once the December meeting between Putin and Abe rolls around, both leaders might agree to the Japanese state company JOGMEC buying a 10% stake in Rosneft for $10 bln.

However, according to Kommersant, "Japan’s policy over the recent decades has been very fast-changing, and if Russia takes too long to reciprocate, Shinzo Abe might lose the trust of his associates and voters."


Izvestia: Rosneft to boost hard-to-recover oil production by 2020

Rosneft plans to increase the share of hard-to-recover oil in the total volume of production at the fields in Western Siberia in the coming years, Izvestia said citing a representative from the oil producer.

According to the newspaper’s source, the company plans to increase oil production from hard-to-recover reserves in the overall production structure from 7% to 11% "with the growing trend of the company's overall production."

According to the newspaper, all Russian oil companies currently seek to develop hard-to-recover oil due to the depletion of conventional sources. "One of the main problems in the implementation of these plans - Western sanctions that restrict access to technology for the development of this category of reserves," the newspaper said. In this regard, Russian companies are actively working on transitioning to domestic equipment.

Regional Director for Russia and CIS at eToro Pavel Salas told the newspaper, that problems with production of hard-to-recover oil are connected to high costs - $10-35 per barrel. "By comparison, traditional oil costs Rosneft around $4. In today's macroeconomic situation production of hard-to-recover oil is neither very profitable, nor competitive in the long term. However, companies simply have no choice," the expert told Izvestia.


TASS is not responsible for the material quoted in the press reviews

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