The recent crisis between Moscow and London reached a new peak, British Prime Minister Theresa May unleashed a set of measures in response to the poisoning of a former officer of Russia's military intelligence service, Sergei Skripal. According to the Russian media, generally ‘mild’ initial measures against Russia might be followed later on by action at the international level, in particular, within the EU and NATO. Moscow, however, has vowed to respond to this ‘provocation’ by London with its own retaliatory measures in the near future.
First, according to the British leader, 23 accredited Russian diplomats will be compelled to leave the UK, which will be the largest expulsion of diplomats from Britain in three decades, and would "fundamentally degrade Russia’s intelligence capability in the UK for years to come." By the same token, a source told Kommersant that the Russian embassy in London has been already working with a reduced staff for several years. In addition, all government contacts at the highest level will be suspended. The British authorities rescinded an invitation for Russian Foreign Minister Sergey Lavrov to visit London. The country’s national security will be beefed up with measures such as increased monitoring of private jets and freight, alongside new powers to stop people on borders. Meanwhile, their boycott of the 2018 World Cup in Russia is limited to ministers and members of the royal family.
A source told Kommersant that the British have long pursued an unofficial policy of "squeezing" Russian diplomats out of the country by "not extending their visas and not giving visas to those who should come to replace those departing." Over time, the Russian side began to respond with reciprocal measures. The problem became so noticeable that Russian Foreign Minister Sergey Lavrov personally decided to bring it up with his British counterpart Boris Johnson when he arrived in Moscow at the end of last year. In addition, the UK might freeze diplomatic property and funds in the accounts of the diplomatic mission, EMPP law firm partner Mergen Doraev told RBC. However, according to him, this would violate the Vienna Convention of 1961, which prohibits the requisition or seizure of diplomatic property.
According to Izvestia, Moscow is going to respond to the recent sanctions by expelling at least the same number of British diplomats from Russia. However, "given the groundlessness of London's accusations of Russia's involvement in the poisoning, the reaction may turn out to be more complicated," the newspaper wrote, referring to two sources in Russian diplomatic circles.
Based on what the sources say, "proposals for countermeasures against London will soon be on the Russian president’s table." "A number of British diplomats will be expelled from Russia. In addition, a more comprehensive answer is being hammered out," a source specified. According to the source, an "American scenario" might be used, meaning that the number of diplomats from the UK to leave Russia could be much greater than 23. The Russian State Duma and the Federation Council also told Izvestia that the British diplomatic mission in the Russian Federation would soon noticeably thin out.
May's measures turned out to be the weakest among all possible answers. They are rather restrained and limited, Professor of Russian and European politics at the University of Kent Richard Sakwa told RBC. The expert noted that the response lacked economic and financial sanctions. "You cannot call the measures radical, they are dull. In our relations with Britain, there is almost nothing left that could be destroyed," Director of development of the Russian International Affairs Council Alexander Kramarenko told RBC.
According to Vedomosti, the measures indeed may not seem as stringent as experts expected. However, such a response plays into the uncertainty surrounding relations with Moscow, while the expansion of sanctions for state investment in the UK is also in the cards. This also carries new risks for Russians living in or owning property in the UK.
Moscow is insisting on a moratorium on military exercises near the Korean peninsula during the inter-Korean summit and the meeting between US and North Korean leaders as well as for the period preceding these events, Russian Deputy Foreign Minister Igor Morgulov told Izvestia. Three sources in Russian diplomatic circles told the newspaper that this position was voiced at a meeting between Foreign Minister Sergey Lavrov with Special Envoy of the President of South Korea Chung Eui-yong in Moscow. According to the newspaper, Seoul is ‘working on it,’ but a lot depends on the position of the Americans.
"The main thing for us was to hear from the people who talked with Kim Jong-un, Donald Trump, and Xi Jinping, and understand what really happened in Pyongyang and how the US and China respond to this," a source in Russian diplomatic circles told Izvestia.
"It is hard to imagine that such an unprecedented event, the meeting between Kim Jong-un and Donald Trump, and even the preparation for it were accompanied by ‘saber rattling’ on and around the Korean peninsula. After all, increased military activity in itself carries a potential threat of an armed clash. We hope that common sense will prevail in Washington and a decision will be made to suspend the maneuvers, at least for the period of negotiations," Igor Morgulov, Russian Deputy Foreign Minister, told Izvestia.
Another source told the newspaper that Seoul has taken note of Moscow's arguments about a double freeze - a simultaneous moratorium on Pyongyang's missile and nuclear tests and on the maneuvers between Seoul and Washington, and are "working on this" with the American side.
"Of course, we must seek to call off the maneuvers. This should be a step forward, not arguments who has a bigger nuclear button," Deputy Head of Russia's State Duma Committee on Foreign Affairs Aleksey Chepa told Izvestia.
The Trump administration will soon introduce import duties on hundreds of Chinese goods in order to cut the US trade deficit. The brewing trade war with China could also upset the Russian economy, as demand for traditional Russian export goods in China might decline, Nezavisimaya Gazeta wrote.
According to the newspaper, customs duties on Chinese goods might spark a catastrophic retaliation against US exporters, including American farmers, who rely on China as the main market for the sale of soybeans, pork and a number of other products. The surge of US trade barriers on Chinese goods would also redirect these products to third countries.
Supplies of raw materials and metals from Russia would come under additional pressure, Nezavisimaya Gazeta wrote. "The metal export sector would feel some jitters, in particular, ferrous and non-ferrous ores exports from Russia to China. But at the same time, this is just the kind of product that sells well in the world market during an upswing, which is occurring right now," Professor Sergey Orlov from the Plekhanov Russian Economic University told the newspaper. "In the event of another trade war, steel prices may be put under pressure, which affects the interests of Russian steel producers," Managing Director at BCS Ultima Oleg Safonov told Nezavisimaya Gazeta.
According to Roman Tkachuk, a senior analyst at the Alpari investment company, global trade wars are an absolute negative for the export-oriented Russian economy. According to the expert, duties for Russian exporting companies could be increased, and it will be more difficult to compete in foreign markets. "In addition, global prices for commodities may be under pressure, which will also hurt the financial results of companies," he said. What’s even worse is if these worldwide trade wars drag on. "In that case, the largest players in the world market will protect domestic producers and displace outsiders. The Russian economy is growing at a slow pace, and replacing the loss of imports by an increase in domestic demand will not work" the expert pointed out.
By the end of 2018, sales of package tours to domestic resorts will remain at last year’s level and might even decline, according to Vedomosti. Industry experts told the newspaper that there are no prerequisites for a rise in sales of package tours to Russian resorts this year.
In 2015 and 2016, sales of Russian resorts grew by 30-35%, Executive Director of the Association of Tour Operators of Russia (ATOR) Maya Lomidze told the newspaper. This was a phenomenal time for the domestic market, because of the ruble’s devaluation, foreign resorts doubled in price, and along with the closure of key tourist destinations - Egypt and Turkey - the Russian market received an additional 5 million travelers. Now the market is evening out, the newspaper wrote. All key Russian destinations saw a decline in visitors, except for Sochi, which saw a 5% increase in sales as a travel destination.
By contrast, the number of people travelling abroad will likely grow by 10-15%, co-founder of Onlinetours.ru service Konstantin Pobedkin told Vedomosti. According to him, people finally feel financial stability. Turkey is the most popular destination, and this year up to 5 million Russians are expected to visit the country, compared to 4.7 million people a year earlier, Pobedkin added. Greece and Cyprus are also among the top destinations for Russian tourists.
According to Ilya Umansky, General Director of the Alean tour company, a price hike on tours to Turkey might be the sole reason for an increase of domestic tours sales in 2018. However, according to experts, from the "price-quality" perspective, tourist services in Russia are inferior to Turkey’s and Russia lacks quality infrastructure. Russians might be willing to explore Russia, but they want to good service, Vedomosti wrote.
The number of Russians who believe that the accession of Crimea has brought Russia more benefits returned to the maximum of 70% first seen in March 2015, Vedomosti wrote referring to a survey conducted by the sociological research organization, the Levada Center.
According to the pollster, only 15% of the respondents believe that the events caused more harm. Yet, the number of those who approve of the accession is much higher - 86% - and has remained stable throughout the four years following Crimea’s reunification with Russia. Nonetheless, the number of people who believe that Russia violated its international obligations increased from 10% in November 2014 to 14%, and the number of people believing the opposite decreased from 78 to 74%.
According to Levada Center sociologist Natalia Zorkaya, Putin’s recent State of the Nation Address to the Federal Assembly might have played a role in the changes.
"People understand that the roots of this conflict originated in Crimea and the situation in Ukraine," she said. According to her, in 2014-2015, people panicked due to the economic crisis, the collapsing ruble, in addition to salaries and real incomes declining. "After that a gradual process of adaptation to the decline of the standard of living began, the anxiety began to taper off," Zorkaya added.
Political scientist Alexei Makarkin told Vedomosti he does not see the connection between the survey results and the coming presidential election. According to him, this is most likely a reaction to the recent surge in anti-Western rhetoric, political scientist Abbas Gallyamov added. "The aggravation of the situation in Syria, the president’s address, the conflicts with the UK - all this led to a "rallying around the flag" effect. Internal difficulties have receded into the background for a while, and the foreign policy agenda is in the foreground," he told the newspaper.
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