Press review: Macron's weak spot and capital flight from Russia on the rise

Kommersant: European policy remains Macron’s weak spot, expert says

Russia is not among France’s foreign policy priorities, Director of the French Institute of International Relations (IFRI) Thomas Gomart told Kommersant business daily on Monday. "The priority, no doubt, is relations with Germany, and, most importantly, a desire to relaunch the European project and achieve greater integration between EU members, sticking to the approach "A Europe of different speeds" (although officially this formula has not been declared)," Gomart said in his interview with the paper.

France has three key traditional trajectories of foreign policy - special relations with the United States, the unification of Europe based on French-German reconciliation and France’s multilateral policy aimed at participating in key international alliances and initiatives, Gomart said. "Apparently, Macron expects to seriously deal with the second direction, which has been left unattended over the past decade," he said.

"At the same time, European policy is the president’s major Achilles' heel: he acts as a pro-European leader and at the same time a significant number of his opponents and voters hold a Eurosceptic approach. He will have to solve this contradiction," the expert said.

Concerning dialogue with Moscow, Gomart said it is most important now not only to declare new initiatives on the Ukrainian crisis, but to "revitalize bilateral relations, turn the page and try to overcome the negativity that built up during the election campaign when Russian diplomacy mistakenly placed a stake on Marine Le Pen."

Given Russia’s influence in the Middle East, Syria is more likely to become an important area of cooperation between Moscow and Paris, according to Gomart. Now the pace of relations with Moscow is set by people with a sound approach and who don’t have an anti-Russian stance, he noted. Although a new ambassador to Russia has not been appointed so far, "it may be expected that a diplomat will be sent to Moscow who also believes that the crisis may be overcome and the standoff with Russia may not last indefinitely," he noted.

Kommersant: Geopolitics, corporate conflicts chase capital away from Russia

For the fourth month in a row, foreign investors have been rolling back investments from Russia. Capital outflow has swelled more than $1.6 bln during this period, the highest figure over the past three and a half years, Kommersant notes. Among the culprits for the surge in capital flight are the failed rapprochement expectations between Russia and the US following Trump’s victory in last year’s US presidential election, the deteriorating corporate struggle between oil giant Rosneft and Sistema, and also plunging oil prices, the paper says.

According to the Emerging Portfolio Fund Research (EPFR), foreign investors have continued slashing investments in funds focused on the Russian stock market. Investment is increasingly shifting from Russian funds to other developing countries. Last week, the emerging markets’ funds attracted almost $1.9 bln and nearly $28 bln over the past four months, the EPFR said.

This exit of investors has left the Russian stock market among the outsiders, while India and Brazil have taken the lead in attracting capital among BRICS countries, with these respective countries’ funds ringing up $2.6 bln and $1 bln in investments over the past four months.

Market players are not ruling out that more ruble assets may be put up for sale in the future, though in smaller amounts. "Any illusions about the normalization of relations between Russia and the West have finally evaporated. Russian share prices bottomed to the levels when the rally of the second half of 2016 began," Director of the Analytical Department of the Region Investment Company, Valery Weisberg, told the paper. "In July, the US House of Representatives may start discussing the sanctions bill. That’s why foreign investors’ interest in Russian securities is unlikely to be revived," he said.

Nezavisimaya Gazeta: Saudi King looking for ‘shortcut to the Kremlin’

Qatar’s quagmire is going to be on the agenda of issues that Russian President Vladimir Putin and Saudi Arabia’s King Salman bin Abdulaziz Al Saud will be discussing during their personal meeting. Last week, the King’s protocol service traveled to Moscow and the visit to Russia may take place after the G20 summit in Hamburg on July 7-8, Nezavisimaya Gazeta writes.

Experts say Riyadh is set to strengthen economic ties with Moscow. Russia and Saudi Arabia still have a number of political differences. However, as for the Qatari crisis, initiated by Riyadh, Moscow is seeking an approach for both parties to the conflict, according to the paper.

Meanwhile, it is off the mark to say that the diplomatic boycott imposed on Qatar will be the centerpiece of the talks between Putin and the Saudi King given that lately both countries have stepped up economic contacts, the paper says.

Saudi Arabia’s intention to build economic ties with Russia seems to be an attempt to increase Moscow’s economic dependence "in order to make it easier to achieve an agreement on political issues in the region," said Senior Lecturer at the Department of Political Science of the Higher School of Economics Leonid Isaev.

The expert believes that the Qatari quagmire will allow Moscow to achieve more success at its talks with Riyadh. "The principal issue is what we can offer in return," Isaev said. "In fact, we used the Yemeni crisis to our advantage in OPEC in order to stabilize the oil market," he noted.

The analyst doubts that Russia may take a pro-Saudi stance in return for economic benefits. "Russia is interested in playing a balanced role and maintaining relations with all parties to the conflict."

The expert sees three possible outcomes to the negotiations. "The first is that we will keep up the current level of cooperation. The second and the most possible is that we may advance on some issues, including economic ones, which we outlined at previous talks between Putin and (Crown Prince Mohammad) bin Salman. The third and least likely one is that we may strike a deal with Riyadh on some principally new positons."

Media: Moscow, Beijing to hash over North Korea and commercial deals

Chinese President Xi Jinping is arriving in Russia on a visit on Monday. The two leaders will discuss international issues and work on fostering bilateral relations, but the situation on the Korean Peninsula will be the dominant topic on the agenda, Nezavisimaya Gazeta writes.

"The Chinese have announced their aspiration to coordinate both countries’ positions at the G20. They want to more actively promote their interests and the interests of countries with growing economies. This may be an issue of one-on-one talks between Putin and Xi," said Alexander Lomanov, Chief Research Fellow at the Russian Academy of Sciences’ Institute of Far Eastern Studies.

Moscow and Beijing are coordinating their official line on the Korean Peninsula crisis, according to the paper. China’s Foreign Ministry has approved the roadmap for Korea put forward by Moscow, which envisages a dialogue on the issue while stressing that the problem cannot be solved by just exerting pressure on Pyongyang as Washington wishes to do, the paper said.

These talks will be the third between Putin and Xi in 2017, and at least three more meetings are expected to be held until the end of the year, Kommersant writes. On Monday, the parties are expected to sign an agreement on extending an action plan to implement the Treaty on Good Neighborly Relations, Friendship and Cooperation in 2017-2020.

The Russian Direct Investment Fund and the Russian-Chinese Investment Fund, which it set up jointly with the China Investment Corporation, expect to clinch agreements on implementing investment projects worth $12 bln. This refers to initiatives in e-commerce, medicine, industry, creating innovation parks, tourism and regional cooperation, the RDIF told the paper.

Sources in Moscow told Kommersant that the top deal will be the Chinese international conglomerate, Fosun purchasing a share in Russia’s Polyus Gold. However, regarding negotiations on one of the more large-scale projects, the western route of gas supplies to China, the parties have so far failed to find an acceptable formula for its construction, according to the paper.

Vedomosti: EU seeks access for other Russian gas producers to Nord Stream 2

A draft mandate, prepared by the European Commission for EU energy ministers, includes the demands to partly extend the provisions of the Third Energy Package to the underwater section of the Nord Stream 2 project, a source familiar with the document and a representative from one of the European ministries told Vedomosti.

The partial application of the norms of the EU’s energy legislation to the underwater section of the pipeline envisages access to it for third parties, including other Russian companies, a source who read the document said. The EU energy ministers have approved the text.

"The reason for extending the Third Energy Package to the underwater section of Nord Stream 2 may be the last kilometers of the pipeline from the German side. According to the documents, this is an underwater section, although this is not so in fact. Some countries believe it cannot be exempted from the EU legislation’s norms," one of the sources told the paper.

Tatiana Mitrova, Director of the Skolkovo Business School Energy Center, said there are real opportunities to approve the mandate in its current form, noting that this does not create any obstacles for the gas pipeline. "Everyone understands very well; no mandate whatsoever will allow the European Commission to liberalize Russia’s export of pipeline gas against the Russian side’s will," she said.

Gazprom’s position remains unchanged that no special regime for the Nord Stream 2 project is needed, the company’s CEO Alexei Miller said earlier.

According to Fitch analyst Dmitry Marinchenko, rivalry for access to the pipeline and the final consumer may lead to lower prices. "That’s why extending the norms of the Third Energy Package to the pipeline’s section may become an advantage for Europe," he said.

Independent producers will remain optimistic about this decision, since this is a chance for them to increase profits. Meanwhile, any gas price drop may lead to a decrease in export earnings and export duties, and therefore a reduction in budget revenues. However, this may be compensated by growing exports, he said.

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