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Kiev continues to add fuel to the fire as Ukraine’s intelligence agency, the SBU, banned Russia’s wheelchair-bound Eurovision-2017 contestant, Yulia Samoilova, from entering the country for three years. According to Nezavisimaya Gazeta sources in the Eurovision organizing committee, Russia had not initially intended to participate in the contest, as the country’s delegation was the only one of all the participating countries that did not even come to Kiev.
According to the newspaper, the motives by Kiev are understandable - the country considered that the ban’s backlash was more advantageous than constant media attacks. "However, it could be assumed that the Russian side also prepared for the same scenario from the very beginning. It is unlikely that Channel One might not have known that she went to the Crimea, when choosing Samoilova to participate in the contest and therefore had the chance to be banned from entering the country," Nezavisimaya Gazeta wrote.
The newspaper’s sources, close to the organizers of the Eurovision Song Contest in Kiev, focus on another fact. "A few months before the contest, delegations from all countries that intended to participate in the contest visited Kiev to get acquainted with the organizers, look for housing, and so on. Ukraine was visited by everybody but Russia’s representatives," the sources noted.
Yesterday, President Vladimir Putin reported a record-breaking $15 bln in foreign exports set by Russia’s arms producers in 2016. According to the head of state, Russia now holds second place among global arms and military equipment exporters. However, last year was mainly devoted to fulfilling existing contracts with Algeria, Vietnam, China and India, Kommersant wrote. In 2017, Russia expects to seal more new billion-dollar deals.
The president specified that the total order portfolio remained at the level of $50 bln, which was achieved by signing new contracts worth around $9.5 bln in 2016. Although according to the newspaper, in 2016 there were no serious contracts for the supply of combat aircraft, naval equipment or air defense systems.
This is partly confirmed by Kommersant sources in the military-technical cooperation industry. According to them, the main emphasis in 2016 was placed on fulfilling previously undertaken obligations with China, India and Vietnam. "In general, the implementation of contracts - both in terms of timeframes, and defects claims - showed that our partners were satisfied," a source told the newspaper. Deliveries to CIS countries were also carried out, since based on the newspaper’s sources "the commercialization of relations with these countries will be continued."
Kommersant sources acknowledge that 2016 was largely devoted to marketing, which was also built on the results of using combat aircraft and air defense systems in Russia’s anti-terror operation in Syria. Thanks to this, according to the newspaper sources, substantive negotiations are underway with Algeria on the purchases of Sukhoi Su-32 bombers, while Indonesia is eyeing the Sukhoi Su-35 fighter aircraft and India and Turkey have set their sights on the S-400 Triumf aircraft missile system. High hopes are also pinned on naval equipment - Jakarta is seeking to buy two Varshavyanka Project 636 diesel-electric submarines and Delhi wants to acquire a second nuclear submarine on lease. According to the newspaper, if Russia concludes all the anticipated contracts with India, it will provide half of the annual volume of supplies and there will be a chance to get $16-17 bln in contracts and $14-15 billion in supplies.
Ukraine is ready to ramp up its banking war with Russia. Extremists demanded that the Kiev regime nationalize the property of all Russian banks operating in the country. According to Nezavisimaya Gazeta, in the near future Kiev might agree to confiscate Russian banking structures and the next step in the economic war could ban on passenger transportation and even introduction of visas. The country’s radicals want to go even further and nationalize Russian credit institutions.
The situation with Russian banks operating in Ukraine began to flare up recently, after Ukrainian President Pyotr Poroshenko imposed sanctions against five subsidiaries of Russian banks operating in Ukraine for one year, prohibiting the parent structures to withdraw funds. However, Russian authorities won’t let the other side get the upper hand in escalation of the conflict, the State Duma has recently adopted a law regulating cross-border money transfers from Russia with the help of foreign payment systems.
Experts interviewed by Nezavisimaya Gazeta do not rule out tensions between the two countries heating up even further. "In the future, proposals may be put forward to nationalize other enterprises, where Russian legal entities or individuals are the main shareholders," analyst at Finam, Bogdan Zvarich, told the newspaper.
It should also be taken into account that, in many respects, the mutual integration of Ukraine and Russia is still significant, according to Andrey Bystrov, Head of the Department of Industrial Economics of Plekhanov Russian University of Economics. "This is particularly noticeable in the field of engineering. The Ukrainian agrarian sector needs the Russian sales market. Any sharp political break to Russian-Ukrainian industrial cooperation might set off economic instability for Russia and threaten the existence of many Ukrainian enterprises," the expert said, noting that any artificial political restrictions to Russian-Ukrainian cooperation in the banking, industrial and agricultural sectors would spark systemic stagnation.
The next foreseeable step by Ukraine might be its withdrawal from the Commonwealth of Independent States (CIS), and the introduction of visas for Russians, according to Vladimir Zharikhin, Deputy Director of the Institute of CIS countries. The expert connects the deepening crisis between the countries with Kiev's reluctance to comply with the Minsk agreements, noting "The Ukrainian side delays implementation in every possible way and is trying to force Russia to aggravate the situation and formally violate the terms."
According to Nezavisimaya Gazeta, if relations deteriorate even further, the West may be eventually forced to support Ukraine. This, in particular, can be indicated by the recent appeal of the Verkhovna Rada MPs begging the US Congress to grant Ukraine the status of main US ally outside NATO. The appeal noted that Ukraine's foreign policy under current conditions has to be constructed taking into account the fact that the current Russian government regards democratic Ukraine as its existential enemy.
The next round of Syrian peace talks begin on Thursday in Geneva, with the negotiations taking place under a deteriorating situation on the battlefield in one of the districts of Damascus and Hama province. Despite this, the United Nations Special Envoy for Syria Staffan de Mistura is handling the negotiations with optimism, but the mood of the Syrian delegation is much more restrained, Nezavisimaya Gazeta wrote.
Experts, interviewed by the newspaper, noted that the participants’ basic positions for resolving the crisis have not changed, so breakthroughs should not be expected during the current round of talks.
As usual, Assad’s government will be represented by Syria’s Permanent Representative to the UN Bashar Ja’afari, who approaches the talks with caution.
"It is obvious that there are forces that are not interested in resolving the Syrian crisis," a member of the official government delegation and Syrian MP Muhammad Kheir Al-Akkam told Izvestia. "Prior to the talks we had witnessed flare-ups on the battlefield, aimed at changing the balance of forces and preparing the corresponding ground for dialogue. In this regard, I am not overly optimistic about the potential for progress. In addition, during the previous talks, Syria insisted on reaching an agreement on the war on terror that recognizes its main threat to the country. However, the government delegation had the impression that the attitude of other participants was basically that they were buying time," he added.
A source in the military leadership of Syria told Izvestia, the reason for this were the statements of the UN Special Envoy on the impossibility of a political settlement in the country, while Assad is in power.
According to Middle Eastern specialist and former diplomat Vyacheslav Matuzov, it is impossible to hope for any results in the current round. "Potentially, someone will have to make serious concessions. I see no reason for this to be done by the Syrian government. But the opposition should be flexible. De Mistura should recognize it and start developing approaches that account for the actual situation on the battlefield. The main element of the current situation is the desire by Syria and Russia to achieve a ceasefire. Starting off on this point, it is necessary to negotiate a political settlement. The alternative to this scenario is more war. However, the opposition will not succeed on the battlefield, those fighting the Syrian authorities do not grasp this yet," he told the newspaper.
According to Nezavisimaya Gazeta, participants and international mediators in the last round of talks could not go beyond the idea of "negotiations for the sake of negotiations" and nothing suggests that they will this time. Nevertheless, the opposition continue to push for agreements, which can be considered an achievement so far.
The Russian Federal Property Management Agency has officially informed state-owned companies on payment of dividends for 2016. According to Vedomosti, the agency requests the companies to make sure to use the entire net profit for dividends, except for the part allocated for investment programs, debt payment, and other purposes included in companies’ long-term development programs. At the same time, the share of entire net profit for dividends should total at least 50%.
According to the letter, if the company wants to pay less, it should explain why, a federal official told the newspaper, and the agency’s decisions are likely to be individual. State companies do not agree with the terms - Gazprom, Transneft paid less in 2016, this year they expect new concessions, the newspaper wrote.
A Vedomosti source close to Gazprom, said that 50% of net profits is a lot. As of March 1, Gazprom Board of Directors proposed maintain the level of dividend payment for 2016 at the level of the previous year - at about 24% of the profits. The proposal takes into account the investment needs of the company, including international projects, as well as the debt level.
Fitch calculates Gazprom’s profit for 2016 at 800 bln rubles ($13.84 bln), which means that the state can get up to 172.3 bln rubles ($2.98 bln) directly from the company. Given Gazprom’s vast investment program (Nord Stream - 2, Turkish Stream and Power of Siberia) totaling 1.55-1.6 trillion rubles ($26.84 bln - $27.7 bln), the company's cash flow will be zero or negative. According to the newspaper, the company will have to borrow 550-600 bln rubles ($9.5 bln - $10.39 bln), excluding short-term debt refinancing.
The outcome of the situation is not yet clear, BCS Chief Economist Vladimir Tikhomirov told the newspaper. "On the one hand, plans to increase dividends in the past were just initiatives of the Finance Ministry of Finance, but now companies’ failure to comply with the initiative will lead to direct budget losses. In addition, unlike in the past years, both the Economic Development Ministry and the Finance Ministry agree that companies can finance investment programs at the expense of debt," Tikhomirov noted.
The issue will soon be discussed at a meeting with First Deputy Prime Minister Igor Shuvalov, where the Economic Development Ministry will present an analysis of the situation with state companies.
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