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Press review: How Kurds vote will change Middle East and lawmakers get tough on bankers

September 25, 13:00 UTC+3 MOSCOW

Top stories in the Russian press on Monday, September 25

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© AP Photo/Balint Szlanko

 

Media: State Duma to get tough on bank owners

The two recent cases of Russian banks (Otkritie and B&N Bank) applying to the Central Bank for rehabilitation procedures have prompted the country’s lawmakers to change the recovery mechanism and those responsible for rescuing big financial institutions. In a move to tighten the responsibility of bank owners, the State Duma (lower house of parliament) plans to draft a law, which obliges owners to be answerable for obligations with their property not only in case of bankruptcies, but in cases of recovery procedures as well. Anatoly Aksakov, Chairman of the State Duma’s Financial Market Committee told Izvestia that the respective bill would be considered by this fall. "We fully support the idea (of recovery procedures using the funds of shareholders), as it will make the mechanism more efficient," he said. Sergey Dubinin, a member of the supervisory board of Russia’s second-biggest lender VTB, expects such proposals to make the banking business unattractive. "This mechanism devaluates the principle of limited responsibility of the business owner. The issue is about the virtual elimination of public stock companies, the essence of which is making its participants responsible via their capital, not personal property," he told the newspaper.

Meanwhile, RBC business daily said that top managers, heads of regional offices, accountants and regional managers of Otkritie Bank have already been charged within the bank’s financial recovery procedure. Two sources close to the financial organization told the publication that around 100 top managers could not use their bankcards late last week. "The amount of funds was considerable, and it was efficient from the viewpoint of return of the funds," one of the source said. On August 29, the Bank of Russia announced a financial recovery procedure for Otkritie Bank (8th biggest bank in terms of assets), which implies that the regulator will become its main shareholder with a stake amounting to at least 75% and will recapitalize it.

According to RBC, similar actions will be applied to the employees of B&N bank, Russia’s 12th-biggest bank in terms of assets. Last week, the Bank of Russia reported that the owner of B&N Bank had applied with a request to consider financial recovery procedures through the Fund for the Consolidation of the Banking Sector. Mikail Shishkhanov, one of the lender’s main shareholders and board chairman, said in an interview with Vedomosti that the Central Bank may acquire his assets, Inteco and part of A101, within the recovery procedure. "I am handing over all my stakes, in which I have invested my own funds, including via B&N Bank," he said. A source in the regulator confirmed to Vedomosti that such talks are underway.

 

Kommersant: Kurdistan’s referendum evokes destabilization concerns in Iraq

As Iraqi Kurds go to the polls to vote on their referendum for independence, experts are raising serious concerns that this may destabilize a strategically important region by breaking up Iraq, trigger separatism in Turkey, Syria and Iran and weakening the struggle against the Islamic State, in which the Kurds remain one of the primary fighting forces, Kommersant writes. Experts interviewed by the newspaper mulled over the possibility that "a constant pocket of tension on a trans-border scale" may emerge in the Middle East.

Grigory Kosach, Professor of the Modern East Department of History, Political Science and Law at the Russian State University for the Humanities, expects "independent Kurdistan to become an example for the Kurds in Turkey, Iran and Syria, pushing the Kurdish minorities in neighboring countries to follow their Iraqi peers’ example." He also expects an independent Iraqi Kurdistan to become the second instance of the collapse of Middle Eastern political relations since the Sykes-Picot agreement was struck over a century ago.

Some experts stress that if the future Kurdish state, where the bulk of hydrocarbon reserves are located, turns out to be inviable, projects by Russia’s top oil producer Rosneft, which plans to construct a gas pipeline to supply 30 bln cubic meters of gas from Iraqi Kurdistan to Europe via Turkey annually, will be jeopardized. "Moscow’s cautious reaction is due to the lack of a clear understanding of how the situation around the Iraqi Kurdistan will unfold and how far its opponents threating military actions and sanctions will go," Director of the Center for Strategic Studies and analysis Russia-East-West Vladimir Sotnikov told the newspaper.

The Kurdistan Region of Iraq, also known as Iraqi Kurdistan, is an autonomous region, with its status enshrined in the country’s constitution. On September 15, the regional parliament, which held its first session since 2015, approved plans to hold an independence referendum on September 25. Baghdad is strongly against the referendum, saying this decision is illegal. Earlier, Prime Minister Haidar al-Abadi said he did not rule out a military operation if referendum sparks an escalation of violence.

 

Izvestia: Roscosmos to ink deal on sending first UAE astronaut into space

Russia’s State Space Corporation, Roscosmos, plans to sign a framework agreement on the flight of the first astronaut from the United Arab Emirates to the International Space Station on the Russian Soyuz rocket, Izvestia writes. Sources in the state-run space agency told the newspaper that the talks are expected on the sidelines of the International Astronautical Congress in Australia’s Adelaide later this week with the participation of Roscosmos CEO Igor Komarov. Top managers from Russia’s aerospace industry plans to conduct talks with potential ‘space tourists’ there, among them representatives of the UAE’s national space agency.

"A meeting is expected at the conference in Adelaide where a letter of intent will be signed. The issue is about representatives of a rich Arab country that are ready to start preparing their cosmonauts for flights on our rockets," a source in the Roscosmos delegation told Izvestia. Another source close to the agency’s top management added that the talks would be held with colleagues from the United Arab Emirates. The country sent a delegation to Moscow in early September, he said. "Representatives of the United Arab Emirates saw with their own eyes the civilian-manned launch to the International Space Station at the Baikonur Cosmodrome on September 13," the source said.

The flight may take place in end-2019 or early 2020, the publication said. According to a source in Roscosmos’ department of manned programs, the astronaut from the UAE may not be referred to as ‘space tourist’ in the true sense of the word as the flight is planned within the UAE’s space program. "The term ‘member of space travel within the space flight participant program’ is used for such astronauts. Flights by Malaysian and Kazakh astronauts, Sheikh Muszaphar Shukor and Aidyn Aimbetov, were part of this program. Unlike space tourists, the national space agencies paid for their voyages," a source in the bureau told Izvestia, adding that the flight contract will be made directly between Roscosmos and the UAE’s national space agency, omitting mediators from SpaceAdventures, which usually helps find those willing to buy a seat on Russia spacecraft.

 

Izvestia: Russian envoy points to declining ceasefire violations in Donbass

The number of breaches in the current ceasefire in Donbass has been on the decline, given the far fewer incidents involving the use of weapons in the summer of 2017 compared to the same periods in 2015 and 2016, Russia’s Representative to the Contact Group Boris Gryzlov said in an interview with Izvestia. "This has been stated by the OSCE Special monitoring mission, and each day thousands of people cross the contact line through control points," he said. "Obviously, the situation is changing, though not as fast as we all would like it to. The very fact of the signing of the Minsk accords, both the first and the second packages, is an optimistic story, a story of moving towards peace instead of war, a story of compromise instead of confrontation.

When asked what factors hinder the implementation of the Minsk agreements, he said that the main reason is Kiev’s refusal to sort out political issues as stipulated by the accords that initially triggered the conflict. "This means constitutional reform in Ukraine, which implies decentralization, according to item 11 of the Minsk accords. This means a special status for Donbass (item 4), amnesty and pardons (item 5) for participants of the actions in Donbass and elections (item 4), following which the special status of Donbass will become permanent (item 11)," Gryzlov said, adding that "the political conflict should be tackled by political means, and not by suppressing one of the sides."

According to the Russian envoy, "the people of Donbass need guarantees against repression and arrests, guarantees of security, linguistic and cultural rights, rights to self-rule, as well as the possibilities of sustaining economic and human ties with Russia." "However, there is a whole number of obstacles for Russian nationals to enter the country. The head of the Verkhovna Rada has recently signed education legislation, depriving the country’s young people of getting an education in their native language. It is widely known that this law has already sparked official protests from Poland, Bulgaria, Romania, Moldova and particularly, Hungary. I doubt that the citizens of Donbass and many other regions of the country where Russian-speaking people have never considered themselves a national or linguistic minority, will be happy with the law," Gryzlov said.

 

Kommersant: China seeks dividend tax cuts for its Yamal LNG investors

The protocol of the Russian-Chinese intergovernmental energy commission held last week, contains a request by China to the Russian government to cut the dividend tax for Beijing’s participants in the Russian Yamal LNG project, Kommersant says citing sources. Currently, the dividend tax rate is different for the project’s foreign participants– France’s Total pays 5%, while Chinese investors pay 10%. The Russian-French contract stipulates a 5% rate if more than 500,000 francs have been invested, while the tax accord with China implies that for obtaining a 5% rate an investor should contribute at least 80,000 euros and have at least a 25% stake in the project. The latter term does not apply to the project’s Chinese shareholders.

The Yamal LNG project is being carried out on the Yamal Peninsula in the Arctic on the basis of the Yuzhno-Tambeiskoye deposit with proven and probable resources under PRMS (Petroleum Reserves & Resources Definitions) total 926 bln cubic meters of natural gas. The project's operator is OAO Yamal LNG - a joint venture of Russia’s Novatek (50.1%), France’s Total (20%), CNPC, or China National Petroleum Corporation (20%) and the Silk Road Fund (9.9%). If Moscow agrees to Beijing’s requests, tax adjustments would affect not just the Yamal LNG project, the newspaper writes. According to head of tax disputes practice at MEF-Audit, Alexander Ovesnov, dividend tax adjustments are only possible by altering the Russian Chinese double taxation agreement since international deals take priority over local legislation. Setting tax rates for particular companies is unlikely, he says, as it contradicts customary taxation principles, though he does not rule out setting special tax rates within certain types of economic activities. Andrey Polishchuk from Raiffeisenbank expects the dividend tax rate spread to cause serious losses for Chinese companies. By 2022-2023, dividend yields may become the only revenue distribution channel for Yamal LNG participants. With oil price amounting to $65 per barrel, the project may distribute around $5 bln worth of dividends in 2022, the expert says, of which Chinese investors will obtain $1.5 bln. In this case, their losses due to high dividend tax may reach around $75 mln per year, he added.

 

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

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