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Press review: Russia eyes partial Syria pullout and Rosneft freezes Black Sea oil project

October 30, 13:00 UTC+3 MOSCOW

Top stories in the Russian press on Monday

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© Valery Sharifulin/TASS

 

Kommersant: Russia mulling partial military withdrawal from Syria

As the Syrian crisis shifts towards a political settlement, Moscow may be considering a partial withdrawal of its military forces from the country, Kommersant writes with reference to military and diplomatic sources. The plan is to partially roll back the amount of hardware of the mixed aviation group based in Hmeimim (Latakia province) and pull out part of the military contingent from the republic, the sources said, adding that no final decisions have been made yet and Russian President Vladimir Putin will have the last word on the matter.

According to the data provided by Russia’s Defense Ministry, Bashar Assad’s government forces control around 95% of Syrian land and do not need Russia’s massive support for their final attack on the Islamists’ positions. If implemented, the plan implies that only the contingent required for protecting sites in Hmeimim and Tartus will be left in Syria, as well as military police units and military advisors, Kommersant writes. As for what equipment will be withdrawn from the country, that remains to be decided on. Expert at the Center for Analysis of Strategies and Technologies Konstantin Makiyenko feels that it reasonable to pull out the most valuable equipment, leaving old units there, whereas Su-24s may be left permanently in Syria.

Anton Lavrov, a military expert, says that taking into account the lower intensity of military activity and the long-awaited defeat of the Islamists, Russia’s Defense Ministry may cut back its military in Syria. "It is necessary to bear in mind that experience shows that it doesn’t take much time to boost the number (of equipment units) again," he said. Meanwhile, the plan does not envisage a withdrawal of equipment and forces that protect Russian military sites in Syria.

Only hours are left before the start of the seventh international meeting in Astana where the parties to the Syrian crisis will meet to discuss humanitarian demining and swapping prisoners. Bilateral and trilateral expert consultations are expected later on Monday, while a plenary meeting is scheduled for October 31. Presidential Envoy for the Syrian Settlement Alexander Lavrentyev will head the Russian delegation to the talks, while Deputy Foreign Minister Hossein Ansari will be representing Iran and Foreign Ministry Undersecretary Sedat Onal will lead the Turkish delegation. Delegations from the Syrian government and the country’s opposition will be attending the meeting alongside representatives from the United Nations, the United States and Jordan as observers.

 

Izvestia: Moscow, Washington to hash over Ukraine in November

Russian Presidential Aide Vladislav Surkov and US Special Representative for Ukraine Kurt Volker are planning another round of talks on neutral ground in the first half of November, Izvestia writes on Monday. Sources close to the negotiations told the newspaper that Moscow and Washington believe that it is necessary to ramp up the work of the Russian-American channel on the Ukrainian crisis, and the need to organize a meeting emerged after Volker’s unscheduled visit to Ukraine on October 27.

"It has been agreed to intensify contacts and meet regularly without long intervals, which will help establish a necessary understanding," one of the sources said.

The upcoming talks between Surkov and Volker will be the third meeting after they got down to business for the first time on August 21 in Minsk and met again on October 7 in Belgrade. Both sides said following the latest meeting that the negotiations were positive and noted a lack of insurmountable differences. The peacekeeping mission issue still tops the agenda at the moment, Izvestia says. "The issue of deploying peacekeepers in Donbass is still relevant. It is being hammered out, even the Russian draft resolution. The parties are involved in endorsing positions and searching for compromises. Another thing is that Kiev’s position hinders the resolution’s approval and plans to bring peacekeepers into the conflict zone as soon as possible since the United States backs it so far. But one cannot say that the Russian project has no prospects," a top-ranked Russian diplomatic source told the publication.

According to Ukrainian political scientist and director of the Kiev Center for Political Studies and Conflictology Mikhail Pogrebinsky, the public knows little about the essence of the talks between Surkov and Volker, though certain announcements offer hope that they will be productive. This is indirectly proven by the fact that Surkov expects positive results from the talks, while Volker has finally announced the need to hold local elections in the Donbass territories and acknowledge a special status for the unrecognized republics. "The Ukrainian ruling elite denied it as it is afraid of the response of nationalists and partially considers it to be a defeat," the analyst said, adding that he expects Ukrainian President Pyotr Poroshenko to be "more tractable at upcoming talks with Volker."

 

RBC: Rosneft suspends offshore geological exploration in Black Sea due to US sanctions

Russia’s Federal Agency for Mineral Resources has suspended Rosneft’s license on exploring and producing oil and gas on the Yuzho-Chernomorsky block in the eastern part of the Black Sea for five years, a source in the country’s top oil producer told RBC. Moreover, this sort of license suspension has been imposed on the company’s Russian projects for the first time ever. According to the source, the sanctions were the main reason hindering the involvement of drilling equipment for the field’s offshore exploration. It is technically impossible to postpone geological exploration works since the booking of applications by the Ministry of Natural Resources was closed back in end-2016, the source added.

A source in the company told TASS earlier that the federal agency satisfied Rosneft’s application to suspend the exploration and production license for the Yuzhno-Chernomorsky license area, as "the project is economically unfeasible at present given the adverse macroeconomic atmosphere and sanctions." "Furthermore, the oilfield services market does not have drilling vessels or drilling equipment conforming to the requirements brought by the company to carry out the well construction project on the Yuzhno-Chernomorsky license site," a representative of Rosneft said.

The company’s spokesman Mikhail Leontyev said that a number of reasons brought about the license suspension, including sanctions and the market climate, the newspaper writes. Rosneft plans to start drilling an appraisal well in the area in cooperation with Italian Eni in end-December 2017 or early January 2018 after the partners inked an expansion cooperation agreement in May as part of the Italian delegation’s visit to Moscow, RBC says.

 

RBC: Russia to create new agency focused on reforms and economic breakthroughs

Russia’s Prime Minister Dmitry Medvedev has laid out a goal to create a center for reforms, or a ‘Growth Administration’ to deal separately with issues of reform, RBC daily writes with reference to a document signed by the premier and submitted to First Deputy Head of the Governmental Administration Maxim Akimov. "I request to develop and present proposals," the document obtained by the newspaper says. Russia’s Business Ombudsman Boris Titov and experts from the Center for Strategic Research (CSR) headed by former finance minister Alexey Kudrin have already announced such proposals. The move anticipates separating the functions of development management and the management of current issues.

Medvedev proposes basing the new institution on the government’s analytical center. A source familiar with the matter told RBC, that all federal executive bodies have been tasked to prepare an assessment on the initiative.

"There has been such a proposal from Titov. It was submitted to the Russian government’s analytical center where it will be considered together with existing proposals to improve the state management system," the government’s press service told the newspaper. According to Titov, "a special law should regulate the operations of such a state body. Its head should be the government’s Deputy Prime Minister and simultaneously should be a direct subordinate to the president."

Titov’s letter to Medvedev specifies that the head of the new agency should be given the title of deputy prime minister on development, similar to how it is done in Japan, China, South Korea, Singapore, Malaysia and Spain, countries known for their ‘economic breakthroughs." A source in the Stolypin Club told RBC, that work on developing the proposals would start at the government’s analytical center in early November. According to Titov, the ministries will implement the development strategy, which the ‘Growth Administration’ will take a controlling function, and will coordinate certain projects at microeconomic level, such as industrial clusters.

 

Vedomosti: Central Bank explains Otkritie, B&N Bank bailouts, Yugra license revocation

Yugra was not a systemically important bank with assets worth 355 bln rubles ($6.1 bln), which accounts for only 0.4% of Russia’s banking sector, the regulator’s First Deputy Chairman Dmitry Tulin wrote in a letter to Chairman of the Russian State Duma’s (lower house of parliament) Financial Market Committee Anatoly Aksakov, Vedomosti writes. According to the letter, the bank dealt with almost no funds of companies not connected to any final beneficiary, had no interbank loans, and had no budgetary or pension funds. After temporary administration was imposed on the lender, its shareholders suggested that the Deposit Insurance Agency should grant a ten-year loan to save the bank, though the Bank of Russia decided that the idea was hardly realistic and complied with national legislation, which is why the decision to suspend its license was taken. 

Meanwhile, Otkritie is considered to be a banking industry heavyweight with assets worth 2.6 trillion rubles ($44.8 bln), or a 3.2% share of the banking sector, which include private deposits, corporate funds and budget funds, Tulin noted in a letter. He added that when making a decision on any financial recovery procedure, the regulator took into account the bank’s size and its influence on other participants in the financial markets and beyond. B&N Bank was de facto a top banking major as well, with assets worth 1.1 trillion rubles ($19 bln) (1.3% of the banking system’s assets), and 1.9 trillion rubles ($33 bln) (2.3%) including Rost Bank’s assets, the letter said. The bank also had private and budget funds. According to Tulin, had Otkritie and B&N Bank’s licenses been revoked, it would have had dire consequences for the Russian economy, Vedomosti says.

Founded in 1990 in Russia’s Tyumen Region, Bank Yugra lost its license on July 28.  Previously, it had ranked among the nation’s the top-30 largest banks by assets and the top-20 largest banks by retail deposits as of October 1, 2016. The bank’s collapse was the biggest in history in terms of volume of payments to depositors from the Deposit Insurance Agency. Otkritie Bank went into temporary administration (the 8th biggest bank in terms of assets) on August 30. Since then, the Bank of Russia has been acting as the institution’s majority investor through capital injections, bailing it out at the expense of the banking sector’s consolidation fund created this summer. B&N Bank (the 12th-biggest bank in terms of assets) applied for financial recovery through the Fund for the Consolidation of the Banking Sector in September. On September 21, the Central Bank announced measures to bail out B&N Bank.

 

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

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