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Even though Monday’s telephone talks between the Normandy Four leaders (Russia, Germany, France and Ukraine) failed to produce any tangible result other than "marking the importance of a complete ceasefire in Donbass monitored round the clock by the OSCE Special Monitoring Mission’s (SMM) observers," as reported by Ukraine’s presidential press service, the conversation signaled a heightened interest in settling the Ukrainian conflict. According to Kommersant, this is particularly due to recent reports about a new state Malorossiya being established as declared by head of the self-proclaimed Donetsk People’s Republic (DPR) Alexander Zakharchenko last week. The statement virtually puts the viability of the Minsk accords, the core of the Donbass settlement, in doubt.
A source in the Ukrainian Presidential administration told Kommersant that Angela Merkel and Emmanuel Macron called the initiative impermissible. “The response by Paris and Berlin to the announcement about Malorossiya shows that interest in ironing out the Ukrainian situation has been revived, Vladislav Deinego, LPR envoy to the Contact Group, told the newspaper, adding that much was talked about regarding Ukraine on the sidelines of the G20 summit, though no results followed those discussions.
The issue of introducing a peacekeeping force in the conflict zone was one among many topics discussed by the Normandy Four leaders on Monday. According to the source in the Ukrainian Presidential administration, Kiev is aware of "how difficult it is to take a decision like that, but hopes that the UN Security Council will vote for it." He added that if Moscow "vetoes it, it will demonstrate that it is involved in the conflict and is reluctant to put an end to it."
The factors that throw up obstacles to negotiations have not changed as the sides are struggling to agree on what items of the Minsk accords should be implemented in the first place - those regarding security or a political settlement. Kommersant’s source that that "Putin wanted to add political requirements on elections in certain areas of the Donetsk and Lugansk regions to the ‘road map’, but Poroshenko argued that no elections will take place in those territories until comprehensive security is guaranteed there." Director of the Center of Political Situation Alexey Chesnakov told the publication that he hardly expects any dialogue between Kiev and other negotiators until Ukraine "provides legislation norms concerning amnesty, elections and the special status (of Donbass)" that Russia is requesting it to do in accordance with the Minsk agreements.
Tensions are on the rise between Tiraspol and Chisinau, as the Moldovan parliament passed a declaration calling for the removal of Russia’s peacekeeping operation from Transnistria. The breakaway republic’s Supreme Council Chairman Vadim Krasnoselsky believes that the situation is heating up, he said in an interview with Nezavisimaya Gazeta, adding that he plans to hash over the situation with Moldova’s President Igor Dodon. "The constitutional court acknowledged earlier that the presence of Russian peacekeepers in Transnistria is illegal. The court also noted that the Russian peacekeepers may be withdrawn using a foreign force, which is a direct threat," the leader of the breakaway republic stated. "The parliament of the Republic of Moldova has adopted a declaration containing a requirement to withdraw Russian forces from Transnistria, with a proposal to replace the peacekeeping mission with an international civilian one. This is what I am going to discuss with Igor Dodon,” Krasnoselsky said, adding that the meeting is planned to be held on the 25th anniversary of the deployment of Russia’s peacekeepers to Bendery, when the Russians entered in 1992 as agreed on by the presidents of Russia and Moldova.
The Transnistrian conflict erupted back in March 1992 when initial clashes occurred between Moldovan police and Transnistrian militia near the city of Dubossary, followed by an outbreak of armed hostilities. By the summer, it had turned into a large-scale conflict in Bendery, where about 1,000 people were killed and tens of thousands were wounded and ended up as refugees. Since then, Russian peacekeepers have been maintaining calm in the region, together with their Moldovan and Transnistrian colleagues, thus allowing Chisinau and Tiraspol to conduct negotiations on settling the conflict regarding the breakaway republic.
The Transnistrian Supreme Council criticized this recent declaration, saying "Chisinau’s strategy is to destabilize the situation, fuel the conflict and turn it into a hotspot." Supreme Council’s deputy head Galina Antyufeyeva told Nezavisimaya that the decision follows the destructive logic pursued earlier by Chisinau, including expelling Russian diplomats involved in the work of the United Control Commission that administers the security area on the Dniester. She added that the region’s deputies considers the declaration to be an attempt to deflect attention away from Moldova’s inability to reach positive solutions on economic and humanitarian issues in the conflict. Krasnoselsky said that he believes it is necessary to keep Russia’s peacekeeping mission in the region. "Moldova does not accept any compromises, and thereby fails to offer us any optimism. That is why the peacekeeping mission should remain on the banks of the Dniester until the conflict is settled to ensure peace," he explained.
Russia’s government has requested that the Defense Ministry consider additional purchases of 10-12 Su-30SM multirole fighter jets from the Irkut aircraft manufacturer, Kommersant says with reference to two sources - in the government’s central office and in the ministry. The latter said that there is no decision yet, as "the issue is under consideration and discussion." The company plans to earmark funds to bankroll the production of the first medium-haul passenger jet, the MC-21.
The new state weapons program "is being considered and plans are in store for it to be adopted in 2018," a source familiar with the subject told the paper, adding that "various options for earmarking funds are possible." Sberbank has been the main financial partner in the development and production of the MC-21 since 2012. The amount of credit provided for the project tops $1 bln. The VEB Group has also poured $90 mln into the project, with part of the funds serving as prepayment for future jets.
Irkut is involved in the development of the family of MC-21 short-and medium-haul passenger planes. The aircraft’s prototype is the MC-21-300, which seats 180-200 passengers. Starting from 2020, Irkut plans to manufacture 20 such airliners a year, and up to 70 such planes - from 2023. Russia’s new MC-21-300 passenger plane performed its maiden flight in late May when a 30-minute voyage was conducted in a routine mode.
The number of operations using Russia’s national payment system, established as an analogue to international ones, has surged almost six-fold since the beginning of this year to 14.3 mln transactions in June, a source in the Russian National Payment Cards System (NSPC) told Izvestia. Expectations are even higher as analysts project skyrocketing growth due to a rise in NSPC share among payments systems by 2020.
The need to develop a national payment system in Russia was prompted by Washington’s. sanctions imposed in the spring of 2014 when the world’s two largest payment systems Visa and MasterCard blocked transactions of cards issued by Russia’s Rossiya Bank, its subsidiary Sobinbank, and SMP Bank without any notice. According to TKB Bank Vice President Igor Antonov, it took consumers years to get used to international payments cards, while it is going to be far quicker with Mir cards.
Anton Suvorkin, Retail Business Development Department Director at RosEuroBank thinks it is essential to widen the geography of Mir card services in order to engage in full-fledged competition with international giants. Currently, Mir is accepted in Armenia, while Moscow is in talks with Thailand, the United Arab Emirates, Belarus and Kazakhstan, Izvestia writes. Russian Central Bank Chief Elvira Nabiullina said earlier that the regulator’s strategic task for the near future is to provide direct international acceptance of Mir cards within the Eurasian Economic Union (EAEU). Another way to enhance its popularity is to expand Mir’s non-financial services and social projects.
Two-thirds of Russian enterprises who participated in Deloitte’s annual research in April-May 2017 (66% of the respondents) expected a strengthening in the national currency to positive affect their operations, RBC writes, while 18% of companies did not expect any influence of currency fluctuations and the same number of respondents warned of negative implications. The most recent ruble plunge in 2016 hit foreign firms (70%) and those manufacturing metal products (46%) the hardest, the study said. Automakers, aircraft producers and shipbuilders are among those that stated no major effect on their businesses due to the ruble’s devaluation, the newspaper says.
Russian officials have repeatedly stated the need for a weak ruble. The Minister of Industry and Trade Denis Manturov said that the sectors involved in the import substitution program need the dollar at 62 rubles. According to Agriculture Minister Alexander Tkachev, a ruble-dollar rate of 60-65 rubles is "mostly appropriate" for the sector. However, the Central Bank said in one of its recent notes that most sectors of the Russian economy, particularly transport, construction, and the metal and mining industries will remain financially stable should the ruble strengthen, RBC writes. "Sharp swings in the ruble’s exchange rate are much more worrisome for businesses than its current level. The greatest concerns fall more on the period of unstable exchange rates,” Vice President for Economic Policy and Competitiveness of the Russian Union of Industrialists and Entrepreneurs Maria Glukhova told the publication.
According to Sergey Kolesnikov, General Council presidium member of Delovaya Rossiya, economic uncertainty, the lack of demand and high interest rates are the top challenges faced by local businesses. "Even those who have no problems with demand are cautious in foreign expansion due to the fact that borrowing capital is very expensive, and they are practically devoid of their own funds," he said, adding that another risk factor is unstable fiscal legislation and, as a result, growing non-tax payments. Glukhova considers declining demand, the lack of qualified staff, rising tariffs and excessive pressure by regulative and supervisory bodies to be the primary problems Russian producers face.
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