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Press review: Moscow mulls tit-for-tat action and Italian party vows to lift sanctions

May 11, 13:00 UTC+3 MOSCOW

Top stories in the Russian press on Thursday, May 11

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Russian Foreign Minister Sergey Lavrov and US Secretary of State Rex Tillerson

Russian Foreign Minister Sergey Lavrov and US Secretary of State Rex Tillerson

© Alexandr Sherbak/TASS

Kommersant: Moscow mulls tit-for-tat action for confiscation of Russian property in US

On Wednesday, US President Donald Trump met with Russian Foreign Minister Sergey Lavrov in the White House. Also, the Russian top diplomat held talks for the second in a month with US Secretary of State Rex Tillerson to discuss a range of issues including Ukraine, Syria, and bilateral concerns. 
Meanwhile, Moscow has so far failed to achieve the removal of sanctions imposed by the 44th US President Barack Obama on its diplomatic residences - Russian-owned building complexes in New York and Washington, Kommersant wrote. According to the newspaper, the White House has already made certain demands, still Russian authorities considered it inappropriate.
"We do not discuss sanctions. This is not our problem, these are unilateral actions that have been taken against us," Lavrov told Kommersant. The foreign minister added, however, that the issue of the Russian-owned building complexes in New York and Washington is “a question that stands apart in our negotiations.” “This is our property, which was confirmed as such by official legal documents issued in the United States. Our American partners do not deny the fact that this property belongs to us. They understand that this arrest is illegal," the minister added.

According to Kommersant, diplomatic sources in Moscow, the White House only recently made it clear that it was ready to lift restrictions imposed by Barack Obama on one condition - if the Russian government agreed to allocate a site in St. Petersburg for the construction of a new, larger-scale cluster of buildings for the US consulate. The permit has been already issued in 2014, but during the crisis in relations with the West it was recalled.
Moscow considered Washington's claim illogical. "They wanted this site in exchange for what already belongs to us. It would be an unequal exchange," one of the sources told Kommersant. The Russian authorities insist that the issue of unlocking embassy complexes is solved "without artificial linkages."
At the same time, Moscow does not rule out the possibility of imposing tit-for-tat measures on the US state property in the Russian Federation - for example, confiscating US state property in Moscow, according to Kommersant diplomatic sources.
The US Embassy in Moscow was unable to provide Kommersant with comments on this issue. According to the message of the US State Department on the outcome of the talks, Rex Tillerson and Sergey Lavrov “agreed to continue discussions to resolve other issues of bilateral concern, including strategic stability,” and that “the sanctions on Russia will remain in place until Moscow reverses the actions that triggered them.”

 

Izvestia: Italian senator vows sanctions against Russia ‘to be abolished soon’

A delegation from Italian ex-Prime Minister Silvio Berlusconi’s political party "Forward, Italy" participated in the Yalta International Economic Forum. A member of the party, the Italian Parliament Senator Bartolomeo Amidei, who has recently visited Crimea, talked to Izvestia about the fatuity of the current anti-Russian sanctions, the future of the EU and the prospects for trade relations between Italy and Russia.
“I have no doubt that in the near future the sanctions against Russia will be abolished. I am an optimist and I expect that relations between Russia, the EU and the US will be looking up. Our political movement is actively lobbying for the removal of all restrictions on cooperating with Moscow,” Amidei told the newspaper, adding that the parties “must look for alternative solutions to problems.”

“Even as we speak, it is obvious that the sanctions policy failed. More and more people understand that they have brought only damage, primarily economic. They also complicated cooperation in the political sphere and adversely affected the development of socio-cultural ties between Russia and EU countries,” the senator explained.
Speaking about the prospects of cooperation between Italy and Russia in business, Amidei told Izvestia that investment projects are very important for both countries. “In particular, tourism projects, the exchange of experience, the exchange of know-how, especially in agriculture and the food industry are vital. The forum was actively focusing on joint ventures between Italian and Crimean winemaking companies. There is even an Italian businessman who is already an investor in the winemaking industry. So joint projects are only welcomed,” the senator told the newspaper.
"Forward, Italy" holds a significant number of seats in the country’s legislature. In the upcoming general elections set for May 2018, the party expects to gain a majority in the parliament.

 

Vedomosti: Moscow may shift to VEB for project financing due to EBRD investment freeze 

The European Bank for Reconstruction and Development (EBRD) had decided against plans to invest into Russian projects back in July 2014 due to the sanctions. On Wednesday, May 10, Russia tried to challenge this decision at a regular meeting of the EBRD Board of Governors. Moscow believes that the investment freeze contradicts the EBRD’s establishing agreement, and deprives the bank of profits. However, the overwhelming majority of the Board of Governors members disagreed with the claims. According to Vedomosti, in this situation Vnesheconombank (VEB) might step up to the plate and replace the EBRD.

An official from the financial and economic bloc told Vedomosti, that the EBRD offered Russia tough conditions, high stakes, and strict covenants though it received profit from it. The EBRD was not Russia’s benefactor, it rigidly selected the most profitable projects for the organization itself, Alor analyst Kirill Yakovenko told the newspaper. However, despite tight credit conditions, “borrowers often turned to the EBRD because of its reputation, other investors were comfortable with it.” As a result, the EBRD's reputation helped attract money during other rounds of investment.

VEB, a Russian state-owned bank is now gearing up for this role as a base for project financing, a federal official told Vedomosti. In particular, VEB would buy minority stakes and through shareholder agreements would be able to influence management, the source said. However, the EBRD investment areas included agriculture and the financial sector, yet these branches are not included in VEB's strategy. “Indeed, the EBRD has actively financed agriculture, but now Russia is flooding its agricultural holdings with cheap financing just to implement the import substitution program,” Yakovenko commented on the issue. “The EBRD's investments in 2013 accounted for about 2.5% of all direct investment that went to Russia - Russia would not be particularly affected by the current situation,” he added.

According to the newspaper’s sources, the EBRD might suffer as well, since the international financial institution would run the risk of a decline in its credit rating. The Russian Economic Development Ministry will not intentionally ask the rating agencies to reduce the EBRD’s rating, it would only perform its analysis of the bank, a federal official told Vedomosti.

Currently, the EBRD has 169 active projects in Russia. In addition, its current loan portfolio in the country is estimated at 3.8 bln euros, while its operating assets come to 3.4 bln euros, according to the EBRD website. In total, from 1991 to 2013, the bank had invested more than 25 bln euros in Russia.

 

Izvestia: Russia looking to approach EU with election standardization offer

The Russian Central Election Commission (CEC) might suggest that its European partners adopt a unified international model for holding elections. On May 11, CEC members will discuss this issue in a closed session, two sources in the commission told Izvestia. This topic might also be discussed at the 14th European Conference of Electoral Management Bodies on May 15-16 in St. Petersburg with participation of the CEC, Vasily Likhachev, member of the Commission told Izvestia.
“Regulating elections globally should not be based simply on political agreements, as it is happening right now. It should be based on a legislative framework, on clear agreements. Moreover, the states that accept these legal obligations will have to reflect this in their national legislation. This is a democratic approach," Likhachev told Izvestia.
“Shared approaches to organizing elections, citizens’ electoral and political rights should be indicated. Currently these principles are blurred, and their interpretation is open to various manipulative schemes. For example, every country has its own principles of publicity and openness. Photo and video filming at polling stations on election day is allowed in Russia, yet in France and in the UK, even the presence of observers and, even more so, the use of technical means is not allowed,” Chairman of the Council of the Russian Public Institute of Electoral Law Igor Borisov told Izvestia.

Head of the Political Expert Group think tank Konstantin Kalachev noted that the election commission is taking this initiative prior to the 2018 Russian presidential elections, which, from the point of view of legitimacy, will be reviewed ‘under heavy scrutiny.’ According to the expert, the commission wants to pre-determine its aspiration to agree on common standards for elections.

Head of the expert-consultative group under the CEC Chairman Andrey Buzin believes that the adoption of unified European standards is unlikely, since the approaches to elections in Russia and Europe are too different. “A compromise is possible, but it would be so general that it will negate all efforts to achieve it,” he told Izvestia.

The CEC will put forward its proposals in a report that will be presented at the 14th European Conference of Electoral Management Bodies in St. Petersburg. Its main topics will be discussed by the commission’s members at the May 11th session and concrete proposals will be presented to European colleagues later, the election commission’s press service told Izvestia.

 

Kommersant: China’s LeEco to launch smartphones under new brand in Russia

The Chinese multinational, LeEco, is going to launch a line of LeRee smartphones in Russia based on the products of Yota Devices co-owner Coolpad company. LeEco hopes to attract a younger audience and take up to 10-12% of the budget smartphone market. According to Kommersant, the company has not yet become prominent in the Russian market, which could be due to its global financial problems, and now simply wants to try to whip up interest among retail chains in its new brand.

LeRee (LeEco Russia and Eastern Europe), a LeEco subsidiary, plans to launch a product line under its own brand in June 2017, LeRee President Viktor Xu told Kommersant. According to him, the product line will be aimed at a young audience and LeRee plans to occupy up to 10-12% of the budget smartphone market before the end of 2017. The number of models and prices will be announced closer to the launch, as LeRee is currently negotiating with Russian retailers.

At the same time, supplies of smartphones and other products under the LeEco brand to the Russian market will continue. Now the LeEco brand is represented in the mid and high-price segments. MTS, Eldorado, Svyaznoy, Vympelcom and DNS are among the company's retail partners in Russia.

"We must first see what LeEco is going to release, if it is going to be an interesting offer for the buyer, then we will make a decision," Alexey Shirokov, Director of Euroset retailer purchasing department told Kommersant. Russian mobile operator MTS confirmed the information on the talks, noting that a decision has not yet been made.

Analysts interviewed by the newspaper confirm that LeEco products in Russia are not in high demand. "In 2017, the company planned to take third place in the Russian market, but it is obvious that it is not possible to increase market share," Eldar Murtazin, leading analyst of the Mobile Research Group told Kommersant.

According to his estimates, no more than 500 LeEco devices are sold per week, and retail chains are already losing interest in it. "The company's model of distribution through Internet orders in Russia does not work. The brand in Russia has already exhausted itself, and now the company is trying to breathe new life into it, changing its name," he said. Finam group analyst Timur Nigmatullin associates low sales with financial problems of the parent company.

 

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

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