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Press review: Moscow wins $3 bln debt battle vs. Kiev and S.Ossetia seeks to join Russia

March 30, 13:00 UTC+3 MOSCOW

Top stories in the Russian press on Thursday, March 30

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Kommersant: Questions on Ukraine’s debt repayment still remain 

Following the announcement of the High Court of London’s ruling on Russia’s lawsuit to recover a $3 bln debt from Ukraine, some experts note the court order contains no direct indication that Kiev is obliged to repay the debt, Kommersant writes. Immediately after the court’s decision, Russia’s Finance Ministry said that it believed the court had obliged Kiev to repay the debt along with interest to Moscow. According to the Ministry, the court handed down the final judgment obliging Ukraine to repay its Eurobond debt in full, and no additional hearings on this issue are foreseen. However, Kiev said it would file an appeal against the judgment.

“I would not say that the court unambiguously opted in for Russia,” Associate Professor Ilya Rachkov, from the international law faculty of Moscow State Institute of International Relations (MGIMO), said in an interview with Kommersant business daily. “On the one hand, the trustee said that this is an ordinary borrowing, while the court hinted at the deal’s peculiarity,” he said. According to Rachkov, the ruling pointed to Russia’s strong economic pressure on Ukraine, meaning that Kiev would take the money in exchange for pledging not to move towards EU integration. “The court noted that the trustee was attempting to downplay the danger coming from Russia in 2013, and that Ukraine is right when it says that Russia used threats of force unless Kiev abandoned the EU agreement. The fact that Russia did use force in 2014 proves that Ukraine’s worries were justified,” the attorney said. 

Russia purchased Ukraine’s $3 bln Eurobond in December 2013, shelling out the money for it from its National Welfare Fund. After paying the first three Eurobond coupons, Ukraine refused to repay $3.075 bln of the Eurobond’s principal and last coupon in December 2015. After numerous attempts to settle out of court, in February 2016 Russia requested The Law Debenture Trust Corporation acting as the Trustee on the Eurobond to initiate judicial proceedings against Ukraine in the High Court of London. Rachkov told Kommersant that he thinks the London court’s judgement contains no direct indication that Ukraine has to repay its debt to Russia right now. The judgment on the merits is expected much later and it will bring out the findings. The lawyer says it is likely the court’s decision will be in Russia’s favor, though it may set up restrictive terms in order to take into consideration the interests of Ukraine’s other creditors.

 

Izvestia: Turkish tomatoes slip into Russia via Georgian exports

Tomatoes supplies from Georgia to Russia surged seven-fold last year, Izvestia writes Thursday. In January 2017, Georgia’s supplies of tomatoes to Russia have quadrupled when compared to 2014 figures. Russia is the country’s only importer of tomatoes, whereas the official total amount of this product exported from the republic was $2.2 mln.  Last year Georgia’s tomato exports to Russia were the decade’s biggest, the newspaper says since over the past few years it had never gone beyond $850,000.

This comes as Georgia’s tomato imports surged last year to $23.3 mln, up from $6.4 mln in 2015. Over the past ten years, Georgia’s imports of Turkish tomatoes have never been more than $8 mln per year. According to official data provided by the Federal Customs Service, in 2016, Georgia’s supplies of tomatoes to Russia totaled $2 mln, whereas supplies in the previous two years did not surpass $350,000, Izvestia writes, adding that experts think the bulk of supplies are illegal and are not recorded officially. 

According to president of the Russian National Vegetable Producers Association Sergei Korolev, “Georgia is engaged in smuggling Turkish tomatoes.” “Though supervisory bodies restrict re-export supplies from Belarus, Turkish tomatoes are supplies via Georgia, Azerbaijan and Armenia,” he added. Meanwhile, Yuliya Melano, official spokesperson for Russia’s veterinary and phytosanitary watchdog, says there have been no confirmed cases of Georgian re-exports of tomatoes from Turkey.

“It is difficult to unmask such supplies if all documents are in place and the batch is repacked. It is even impossible to identify the country of origin by analyzing pollen in order to differentiate between Turkey and Georgia,” the newspaper quotes the spokesperson.

Meanwhile, the watchdog has proposed expanding the list of products on the sanctions list that may be destroyed, Izvestia said. The proposal implies that bogus products, those with counterfeit accompanying papers and those lacking any proper documentation should be eliminated. Currently, the suppliers have the right to return them, which means those products may still be supplied to the consumer, the watchdog says.

 

 

Kommersant: South Ossetia joining Russia still on the agenda

The idea of South Ossetia becoming part of Russia is still alive and kicking, South Ossetian President Leonid Tibilov said in an interview with Kommersant. "Ossetians are a divided nation, our brothers live in Russia, that is why personally I support this idea as well," he said, adding though the he realizes that "this is not a simple and ordinary issue." "Both sides should create proper conditions. If we see that we are wanted in Russia, if there are respective signals we will development a general mechanism that is globally accepted," Tibilov noted.

In 2016, South Ossetia decided to hold a referendum on potentially uniting with Russia. Later the decision was postponed due to calls from representatives of the public, legislators, top government and security officials and other law enforcement structures.

On April 9, presidential elections and a referendum on renaming the republic to the Republic of South Ossetia - State of Alania will be held. The latter is important for the nation’s self-awareness, Tibilov told the newspaper. "We are bringing back a historical name. This issue has with us for a long time, though we’ve had no possibility, or time to get to it," he said, adding that "a great amount of work has been completed over the past two years in exploring the issue in order to make it well-grounded and legally valid, and what is only left is to find out what people think about it."

 

Vedomosti: The battle for state company dividends marches on

Among the perpetual state meetings on the future of state-owned companies' dividend policy, First Deputy Prime Minister Igor Shuvalov requested to size up the proposed approaches. According to Vedomosti, which refers to a federal official, the final decision on dividends of the majority of state companies is expected to be made by the end of April or the beginning of May.

The Finance Ministry based its 2017-2019 budget planning on the assumption that state companies would allocate 50% of its consolidated profit to dividend payouts. However, in a December 2016 meeting headed by Shuvalov, it was decided that dividend payments should contain no less than 25% of consolidated profit, though following the audit of a particular company, which covers its investment program, the amount of debt, the ability to service it, the final payment may be higher. The Economic Development Ministry supported the proposal, while the Finance Ministry insisted there should be no exclusions.

Two federal officials told Vedomosti that the meeting held earlier this week saw representatives of both ministries voicing the collective view that all state-hold companies can potentially pay 50% of profit. Any efficient investment project may be financed using borrowed funds, given that none among the biggest state companies have a high indebtedness level. One of the sources said that the new Economic Development Ministry Maksim Oreshkin, who previously had served as Deputy Finance Minister, has always said state companies are able to pay 50% of profit. Meanwhile, Shuvalov requests particular estimates to confirm that all state-owned companies can meet this dividend target, Vedomosti writes.

 

RBC: Arctic coal to flow to China

Russia’s VostokCoal company owned by Alltech Group President Dmitry Bosov and his partner Alexander Isayev, plans to produce up to 30 mln tonnes of coal in Taimyr, Bosov said at the International Arctic Forum "The Arctic - Territory of Dialogue" in Arkhangelsk. "We plan to step up production by around 5 mln tonnes each year, and to reach 30 mln tonnes of production by 2022-2023," RBC quoted the businessman. He estimates the 50 fields in the Taimyr Coal Basin owned by the company as having over 10 bln tonnes in overall reserves.

The company’s CEO Vadim Bugayev told the newspaper that production at one of those fields may be launched as early as this year, whereas now it is engaged in testing supplies of coal to China in order to find out whether it is in demand. Bugayev expects the demand to rise following a reduction in supplies from Vietnam, Ukraine and North Korea. "Western Europe will consume 10-12 mln tonnes of our coal without any problem," he told RBC, adding that "the remaining part will be supplied to India and China."

 

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

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