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Press review: Putin to shield business from sanctions and Kurdish issue weighs on Astana

December 22, 2017, 13:00 UTC+3 MOSCOW

Top stories in the Russian press on Friday, December 22

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© Mikhail Klimentyev/Russian Presidential Press and Information Office/TASS

 

RBC: ‘Sanctions-fighting’ bonds to save big businesses

President Vladimir Putin announced a new financial instrument focused on returning capital to Russia at a meeting with businessmen. The goal is to make it easier for big companies to get currency liquidity back to the country, RBC business daily writes on Friday. The government and the Central Bank worked on this matter, the president said Thursday. He added that he had set out the task to identify required terms and parameters to issue such securities for Russian investors and support their floating as early as 2018, after members of the business community asked to create accommodating mechanisms and suggested using domestic ‘eurobonds’ as an instrument. A source in the government’s financial and economic block told RBC that the Eurobonds issued within the capital return mechanism are not likely to exceed $3 bln.

"The ‘fakeonomy’ is already spreading to capital markets as Bad boys bonds are about to appear," the newspaper quotes a top manager of one large investment bank. "Business keeps funds in foreign currency abroad, unwilling to bear exchange rate risks in case of the ruble’s devaluation due to new sanctions, which is why the proposal looks feasible, since state securities will simply replace businessmen’s deposits in foreign banks," Alexander Losev, Director General at Sputnik Asset Management, told RBC. A source in the banking sector added that "no one doubts that 90% of the Swiss allocation originates from Russia."

Most market participants interviewed by the publication assume that the new instrument will be demanded among big Russian businesses. "Anyone who will be under the new US sanctions will buy those OFZs," a banker who asked not to be named told RBC. "Otherwise where should he bring his money to? To Sberbank? Does Sberbank need a client under sanctions? Meanwhile, foreign exchange deposits provide low rates," he said, adding that "OFZs guaranteed by the state may be considered a purchase of loyalty."

That said some experts think that the move to return big capital to Russia would have not only an ‘anti-sanctions’, but also a macroeconomic effect. Alexander Losev says that this is the easiest risk coverage solution amid expectations of a new sanctions package. "Since Russia’s national earnings have long focused mainly on export sectors and have been accumulated in foreign currencies, the proposal to issue the bonds is aimed at transferring as much funds as possible to the safest zone. In addition it seeks to avoid a sharp decline in GDP and investment, and an economic slowdown if the imposed restrictions are as tough as frozen accounts or putting financial assets of Russian legal and physical entities in an Iranian scenario," the expert explained.

 

Kommersant: Moscow accuses Kiev of violating nuclear fuel purchase contract

Although Ukraine has unveiled plans to buy more nuclear fuel for power stations from the United States, Russia has accused the Ukrainians of violating a long-term contract, Kommersant says. Ukraine’s Energy Minister Igor Nasalik said earlier this week that the current structure of the country’s nuclear fuel purchases would change in 2018. As of now, TVEL Fuel Company (part of Rosatom state corporation) provides 60% of the fuel to Ukraine, while the remaining 40% is supplied by Westinghouse, whereas next year the proportion will change to 45-55%, which will deprive TVEL of its status as Ukraine’s key supplier for the first time ever, the newspaper writes.

Russia’s TVEL and Ukraine’s Energoatom, the operator of five nuclear power plants (NPPs), have been cooperating in accordance with a long-term contract, pursuant to which Ukraine buys fuel for at least 12 out of its 15 reactors. However, TVEL has been facing a decrease in Kiev’s purchases for a couple of years already, Kommersant says. A source in TVEL confirmed to the paper that the virtual volume of exports to Ukraine would be further reduced, in violation of the existing contract.

Another source close to Energoatom said that the company "plans to shift away from TVEL’s fuel to Westinghouse’s production reaching a 50-50 ratio." He added that the company considers the prospects of a legal battle quite realistic, but noted that the dispute should be brought to the political scope of Ukraine’s general claims to Russia. "It will eventually become an element of the global Ukrainian claim against Russia, which will particularly unite Kiev’s demands resulting from the loss of property and infrastructure in Crimea and Donbass," he said.

 

Nezavisimaya Gazeta: Kurdish question keeps Astana talks dragging on

As Kazakhstan’s capital gears up to kick off the plenary session of the Syrian talks, concerns run high that discord between the participants may hinder the Syrian National Dialogue Congress initiated by Russian President Vladimir Putin to be held in Sochi. According to Nezavisimaya Gazeta, the bilateral and multilateral consultations in Astana on December 21 once again revealed that Turkey and Iran are against the Kurds from the so-called Democratic Union Party (PYD) coming to the Congress in Sochi.

Earlier reports from Turkish media said that there is friction between PYD and Damascus, which fail to equally divide the oil fields and relevant infrastructure captured by PYD troops with the support of the US-led collation in southeastern Syria. However, there is still hope the participants of the eighth round of the Astana talks will reach a compromise, the paper says. Military and diplomatic sources stated that the issue of Damascus-PYD relations would be brought beyond the pale of the talks in Kazakhstan and would likely be discussed only with Moscow’s mediation.

Russia earlier put forward an initiative to convene the Syrian National Dialogue Congress in the Black Sea resort of Sochi. The date for the congress and the final list of its participants have not been set yet. Moscow has stressed many times that the Congress is not an alternative to the intra-Syrian talks in Geneva, but is aimed at facilitating the Geneva process.

Meanwhile, the planned participation of UN’s Special Envoy for Syria Staffan de Mistura at the Syrian peace talks later in the day indicates that the meeting in Astana is considered to be crucial, Nezavisimaya says. The agenda includes the issue of organizing the National Dialogue Congress in Sochi, the operation of Syria’s four de-escalation zones, the supervision of the ceasefire, and a joint statement on humanitarian demining in Syria, including UNESCO World Heritage sites.

 

Kommersant: Deputy PM anticipated to step down as Russia’s football chief

Russian Deputy Prime Minister Vitaly Mutko who supervises the realm of Russia’s football, will resign from one of his most notable posts as the president of the Russian Football Union (RFU), Kommersant writes. The announcement is expected within the next few days, most probably at the RFU Executive Committee on December 26, a source familiar with the decision told the paper. Several sources in various sports and state structures confirmed the information, particularly sources in Russia’s State Duma (lower house of parliament) told Kommersant that the decision on Mutko’s resignation was taken last week.

The most probable successor is Russia-2018 Organizing Committee chief Alexey Sorokin, the newspaper writes. Sources said that Sorokin himself was reluctant to accept the offer, though Mutko considers his candidacy to be ‘ideal’. The main reason for that is that Sorokin is perceived as a neutral figure that’s clean when it comes to any doping scandals, Kommersant says.

The move comes in the wake of the International Olympic Committee’s (IOC) decisions to bar the national Russian team from the 2018 Winter Olympics in South Korea’s PyeongChang, in addition to banning Mutko for life from attending Olympic events in his official capacity and slapping some other restrictions on other Russian Olympic and sports officials.

 

Kommersant: Investors in Russia’s ‘green’ energy ask state for support until 2035

Amid disputes about which energy segments should get more investments, key investors in renewable energy have asked the government to extend its support program until 2035 and raise the launch plan to 20 GW, Kommersant writes. Heads of Rusnano, Renova, Fortum, Enel Russia, and Solar Systems signed a respective letter addressed to Prime Minister Dmitry Medvedev on the matter, sources in the companies and those close to market players said.

Experts agree that it is necessary to expand production in order to tax foreign markets. However, Russia’s Energy Minister Alexander Novak thinks that it is not the right time to extend support for the existing program, which only expires in 2024, Kommersant says. The energy market regulator has stated that it is not fair to support certain sectors of the market, and proposed to cut costs, and support innovation rather than expand aging technologies, and generally to "encourage development amid competitive environment."

 

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

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