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Press review: Iran seeks to edge out Russian bases in Syria and US targets Nord Stream 2

Top stories in the Russian press on Monday

Nezavisimaya Gazeta: Iran seeks to edge out Russian bases in Syria

Tehran may equip a military port near Russian bases in Syria, a diplomatic source told Nezavisimaya Gazeta, referring to a May 5 report that an Iranian oil tanker, that had been allegedly heading to Turkey but changed its course, stopped at Syria’s Banias port. According to the source, in the future this port city may become the Islamic Republic’s military facility, and it is not ruled out that the establishment of a base between Russia’s positions in Tartus and Hmeymim may have far-reaching consequences. Experts believe that Russia and Iran are showing unanimity only on a strategic level, but the two countries’ positions differ on many issues.

"Iran’s activity near Banias may have a destabilizing effect not only for the region, but also for the forces, which are trying to stabilize this region," a diplomatic source told the paper. "It’s important to have a closer look at what is going on around the port because in the future it may become Iran’s military base near the Mediterranean Sea."

Iran’s access to the Mediterranean Sea deprives Russia of its monopoly on economic presence in Syria’s coastal areas and creates certain security risks. The territorial proximity of Iranian facilities, regardless of their purpose, may not only technically complicate life for Russian servicemen, but also put them under surveillance, the paper writes. However, it is difficult to stop Damascus from maintaining close contacts with Tehran, which granted Syria loans estimated at between $6 bln and $8 bln during all the years of the civil war.

According to Frederic Hof, former special advisor for transition in Syria at the US State Department, Russia is concerned that Iran seeks to do the same thing in Syria as it did in Lebanon, namely to create a force similar to Hezbollah, despite Moscow’s effort to restore the Syrian state. Besides, Russian and Iranian businessmen have conflicts over reconstruction projects in Syria and other economic issues, he noted.


Izvestia: Russia switches talks with Japan from peace treaty to freedom of movement

Last week, Moscow hosted the first meetings of Russian-Japanese working groups devoted to joint activity on four Kuril Islands and developing a free movement regime between Sakhalin and Hokkaido for local citizens. Several Russian diplomatic sources told Izvestia that this clearly demonstrated that Moscow managed to switch deadlocked discussions on a peace treaty with Japan to a workable issue. One of the goals at this stage is to ensure visa-free trips before the G20 summit in Osaka this June.

However, Russia has been suggesting lifting visa requirements between the two countries for several years, but Tokyo is impeding the process, one of the sources told the paper.

"We convinced the Japanese and switched the focus from a peace treaty to joint economic activity [on which Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe agreed back in late 2016] and advancing the issue of a free movement between the neighboring regions. So, we managed to return to normal work without inflated expectations," the source noted.

Russia’s former Ambassador to Japan Alexander Panov told the paper that it’s quite realistic to achieve an agreement on visa-free trips between Hokkaido and Sakhalin by the June summit. However, Russian diplomatic sources are not that optimistic. The reason is that Tokyo does not want or cannot do this without Washington’s backing. "As for the peace treaty, there has been no progress, the talks will be challenging and all parties understand this," Panov said.

Tokyo thought that this problem could be simply resolved by the transfer of two islands - Shikotan and Khabomai - to Japan, while Moscow believes that a peace treaty should encompass all areas of relations, including Japan’s military and technical cooperation with the US, Panov noted.


RBC: US introduces new sanctions bill targeting Russian pipeline project’s partners

US senators introduced a bill on May 14 targeting the Gazprom-led construction of the Nord Stream 2 gas pipeline. The document suggests slapping sanctions on foreign companies, which provide their vessels for laying pipelines in the Baltic Sea, RBC writes. The sanctions will be implemented if a vessel lays pipelines at the depth of 100 ft (nearly 30.5 m) below sea level. They will target companies if their vessels continue this activity after the bill comes into force. Potential sanctions against owners of vessels for the Nord Stream 2 construction include freezing assets and operations in the US jurisdiction, while managers and key shareholders will be barred from entering the US.

The sanctions bill will be aimed at more than 90% of the pipeline’s route, RBC writes, explaining that most pipelines are built at the depth of more than 30 m. Apparently, the senators deliberately chose this depth threshold to target most construction works, the paper says.

Currently, three companies -Switzerland’s Allseas, Italy’s Saipem and Russia’s MRTS - provide their vessels for the Nord Stream 2 construction. Allseas, which accounts for 96% of the pipeline construction works, has unique experience in these projects and its loss will be significant, but not fatal, Maria Belova, research director at Vygon Consulting, said. "The search for alternatives is just a question of time and money, because even in the worst sanctions scenario Nord Stream 2 will be built," she told the paper.

Even if the bill is passed by early August, Nord Stream 2 will have laid 70% of its pipelines. "The timeframe of slapping these sanctions will be a key issue. The bill introduced on May 14 is not the first one over the past 18 months aimed against Russia’s pipeline projects. All the previous ones were stalled at the stage of coordination in the Senate, therefore it’s highly likely that it will face the same fate or will be sent to the US president for signing when Nord Stream 2 will have been built," Belova said.


Vedomosti: Russia unlikely to meet UN tribunal’s demand on freeing Ukrainian sailors

The International Tribunal for the Law of the Sea (ITLOS) demanded on Saturday that Russia release Ukrainian warships and sailors detained in November 2018 in the Kerch Strait, but not that Moscow is not obliged to stop criminal proceedings against them. Ukrainian President Vladimir Zelensky stressed that Russia’s compliance with the ruling could become the first signal about its readiness for ending the Ukrainian conflict. Experts interviewed by Vedomosti believe that the chance that Russia will free the sailors as the tribunal demands is very slim.

The release of Ukrainian sailors was viewed as a possible gesture of good will from Russia to the new Ukrainian president, who would adopt a milder rhetoric, political scientist Yevgeny Minchenko told the paper. "But actually today Zelensky’s rhetoric is even more radical than that of [former President Pyotr] Poroshenko. So, the question is why should he be given this incentive?"

Besides, Russia is also in contact with the US and Europe and if a decision is made on the release, this will be due to some other reasons rather than to please Zelensky, the expert said. "Now this story is highly likely to be protracted, moreover that the Foreign Ministry earlier said that Russia would not recognize the tribunal’s decision."

This is a political rather than a legal issue and therefore Russia’s decision should be considered as a signal for Kiev and the West, Director General of the Russian International Affairs Council (RIAC) Andrey Kortunov told the paper. "I would like to hope that this will be a positive signal and certain flexibility will be shown and Russia’s position will be changed," he said, noting that there are no guarantees that Moscow will develop a flexible approach.


Izvestia: Russia’s recession risk drops to 10%

The risk that Russia’s economy will fall into recession will be reduced from 20%-25% in the beginning of the year to 5%-10% in the third quarter, a macroforecast carried out by the Plekhanov Russian University of Economics shows, according to Izvestia. However, experts interviewed by the paper have a gloomy outlook, predicting that the risk that the GDP growth rate will slow down still remains at the level of 20%. Moreover, if the oil price falls, this figure will double.

Besides the oil prices, analysts say another threat for the economy is a possible extension of sanctions, namely the freezing of Russian state banks’ accounts abroad. The most probable scenario of Russian economic development is that it will continue growing, the study says. This will be ensured by the population's increased borrowing and growing oil prices. However, there is still a recession risk due to the increase of the VAT rate in January 2019 and the continuing ruble depreciation. The authors of the study believe that as soon as the first factor’s influence is exhausted, the likelihood of recession will be gradually reduced.

To avoid recession, Russia needs to change its economic model, Director of the Institute of Contemporary Economy Nikita Isaev told the paper. According to the expert, Russia needs to develop its processing industry and private businesses. The first and key steps in this direction should be reducing taxes and total privatization, except for strategic extracting and defense enterprises. Russia’s budget is still dependent on resources at 46.4%, he noted.

Professor at the Russian Presidential Academy of National Economy and Public Administration Yuri Yudenkov believes that there are no reasons for Russia’s economic slowdown now. According to him, Russia has been providing loans to industries and implementing national projects, which guarantee added GDP growth. However, the EU and US sanctions aimed at weakening Russia’s economy are a significant factor of risk, he noted.


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