Kommersant: US senators unveil ‘crushing’ penalties against Moscow

A group of senators from the US Republican Party and the Democratic Party has introduced a bill on new sanctions against Russia accusing it of continuing to meddle in the US election, creating chaos in Syria and aggression in Crimea, Kommersant writes. While acknowledging that the previous sanctions have had no effect, initiators of The Defending American Security from Kremlin Aggression Act of 2018 offered a new package of penalties - ranging from banning any transactions pertaining to the Russian sovereign debt to personal sanctions targeting "political figures, oligarchs, and family members." The authors believe these will be "crushing measures" forcing Moscow to change its behavior ahead of the November US midterm elections.

The legislation was submitted by Republican Senator Lindsey Graham to the Senate just two weeks after the landmark Helsinki summit between the Russian and US presidents, Vladimir Putin and Donald Trump. The reason behind the new surge in activity was not only dissatisfaction over Trump’s steps in Helsinki, but also the upcoming elections to Congress due on November 6, the paper says.

It is noteworthy that unlike other proposals on strengthening sanctions, the new initiative suggests punishing for investments not in Russian export pipelines, but in general for investment in energy projects "supported by Russia state-owned or parastatal entities." Since the term "support" is rather vague, it is unclear whether it targets projects receiving secured loans at state banks, or receiving tax benefits.

The direct sanctions effect for Russian state energy companies will be banning them from entering new projects abroad and also further restrictions when attracting Western investment and debt capital in Russian projects. In a more long-term prospect, the potential influence of expanding US sanctions on the macroeconomic situation in Russia is still significantly limited, according to the paper.

 

Izvestia: Russia talks Japan into discussing US missile shield

The first consultations between Russian and Japanese experts on the US missile defense system’s deployment to Japan will be held before the September meeting between the two countries’ leadership in the Far Eastern city of Vladivostok, sources in the Russian Foreign Ministry told Izvestia. The agreement on this was reached after the 2+2 format negotiations in Moscow between the Russian and Japanese foreign and defense ministers. The meeting was attended by Japanese Defense Minister Itsunori Onodera, who visited Russia for the first time in the past 12 years.

The agreement on holding these consultations may be considered as Russia’s diplomatic victory, the paper writes. Moscow had been seeking Tokyo’s response to the initiative on organizing these talks for several months.

Japan insists that the US missile shield on its territory will be purely for defensive purposes and won’t threaten Russia. However, Moscow is not satisfied by the general explanations from high-level Japanese officials. "There are certain technical parameters of the missile defense system and only experts can explain if it may have offensive capabilities or not," a diplomatic source told Izvestia.

According to Ruslan Pukhov, Director of the Center for Analysis of Strategies and Technologies, Japan is a staunch ally of the United States in the Asia-Pacific region and all decisions regarding the foreign and defense policy on Russia are made through the lens of Tokyo’s relations with Washington. "The fact that Japan agreed to create this group is a great step forward and a big victory of Russia’s diplomacy," the expert said.

 

Kommersant: Tajikistan terror attack may ruin Iran’s plans on joining SCO

Relations between Tajikistan and Iran are at the lowest point: Dushanbe has blamed Tehran for a terrorist attack, which killed four foreign tourists, Kommersant writes. Although the Islamic State (terror group, outlawed in Russia) claimed responsibility for the attack, Tajikistan insists that this was the work of the Islamic Renaissance Party of Tajikistan (IRP). This conclusion was made based on the evidence of the only surviving attacker Husein Abdusamadov, who allegedly confessed that in 2014-2015 he underwent ideological and subversive training in Iran. Meanwhile, experts are not convinced on both the role of the IRP and Iran in this attack.

The Tajik-Iranian conflict, which is gaining steam, may affect Russia’s interests, the paper says. Moscow backs Iran’s aspiration to become a full-fledged member of the Shanghai Cooperation Organization. However, Dushanbe stonewalls all Tehran’s attempts of joining the alliance.

"Due to Tajikistan’s principled stance the issue on Iran’s accession was not even raised at the SCO June summit in Qingdao," said Radzhab Safarov, Director General of the Center for Modern Iranian Studies. Iran took offense with Moscow’s not using its "huge authority in Central Asia to ask Tajikistan not to impede the SCO expansion," he noted.

According to Valdai Club expert and senior lecturer at the Tehran Shahid Behsti University Hamidrez Azizi, Dushanbe’s steps are encouraged by Saudi Arabia, which has been increasing its influence in Tajikistan. "Iran’s full-fledged membership (in the SCO) will strengthen the country’s international role, while Riyadh is not ready to accept this," Azizi said.

Moscow may attempt to defuse tensions between the conflicting parties, but no one expects it to side with Iran. "When Tajikistan is concerned, the situation becomes more complicated, as this is Russia’s de facto ally," the expert explained.

 

Nezavisimaya Gazeta: US-Chinese trade standoff may draw Russia into new crisis

The trade war between Beijing and Washington is heating up. China retaliates against any US measures by countermeasures, and now Washington plans to hike tariffs on $200 bln in Chinese goods, Nezavisimaya Gazeta writes. China calls on the US to show common sense, but is not ruling out the introduction of tit-for-tat restrictions on US imports. Experts note that Washington is shooting itself in the foot: one third of Chinese imports returns to the US under American brands. Besides, this trade standoff may trigger a huge slowdown in the global economy, and result in a recession in Russia.

"If the US makes a decision to increase tariffs doubling what was earlier expected, this will result in a greater slowdown in global economy. According to our assessments, due to this decision global GDP growth rates may drop by 1 or 1.5 percentage points," analyst at the Analytical Credit Rating Agency Vasilisa Baranova said.

For Russia, the increasing protectionism in global trade will mean reduced demand in its export. On the other hand, the tariffs will in theory create new opportunities for boosting Russian-Chinese trade, the expert said. "In the mid-term prospect this may partly compensate the negative effect for our economy related to the general downturn in global trade. This process may be also encouraged by the general tendency of the past years linked to growing cooperation between Russia and China, trade and financial flows and also the Silk Road project implementation," the analyst noted.

According to Roman Tkachuk, a senior analyst at the Alpari investment company, "if the scenario of a full-scale trade standoff between the US and China becomes a reality, the price of Brent crude will roll back to $50-$60 per barrel. In this case we will see an outflow of funds from all developing markets. Russia will be affected as an export-oriented country."

"Russia should not hope to win the economic race. Trade wars can slow down global economic growth by 1 or 2 percentage points and disturb logistic chains around the world," analyst at Alor Broker Alexei Antonov said.

 

Izvestia: EBRD shuts down six offices in Russia amid lack of new projects

The European Bank for Reconstruction and Development (EBRD) has closed six out of its seven branches in Russia, leaving just one central office in Moscow, the international financial institution’s press service told Izvestia. This decision is in connection with the gradual suspension of the organization’s work in Russia and the lack of new projects where the bank could invest funds.

The Eurasian Development Bank, which brings together Russia, Kazakhstan, Armenia, Belarus, Kyrgyzstan and Tajikistan, is already replacing the EBRD. It has bought the EBRD’s stake in some Russian projects and plans to further pour in funds in small and medium-sized businesses.

The EBRD board of directors announced the decision to suspend all new operations in Russia in July 2014. The Russian Foreign Ministry slammed this decision as politicized viewing this as another attempt of sanctions pressure. A source close to the financial institution told Izvestia that the decision on investing in new projects is made by its shareholders, namely Western states. This means that halting the financing of new Russian projects was indeed a political move, the source noted.

In early July, some media reports said that Italy suggested lifting the ban on issuing loans of the EBRD for small and medium-sized businesses in Russia. The bank confirmed this report to Izvestia, but stressed that shareholders should adopt a consolidated stance.

Deputy Chairman of the EBRD Board of Directors Andrey Krayniy said there are great doubts about the bank’s return into serious strategic projects. The signal from Italian colleagues came amid news from Brussels on extending sanctions against Russia. Even if this initiative is successful, the EBRD will face serious rivalry on the Russian market, he noted.

 

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