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Press review: Zelensky's party wins Ukraine elections and Russia drawn into tanker war

Top stories in the Russian press on Monday, July 22


Izvestia: Ukrainian President’s party wins control over parliament

A new coalition based on the "Servant of the People" party that won the parliamentary elections will allow President of Ukraine Vladimir Zelensky to move towards the promised changes both within the country and in the foreign policy, according to experts interviewed by Izvestia. After the elections, the transit of power from the old political elite to the team of the new head of state will be completed. Regardless of the Ukrainian leader’s desire to transform the country, many more obstacles will stand in his way, the newspaper wrote. Meanwhile, according to preliminary data from the Central Electoral Commission of Ukraine, voter turnout was around 50%. According to exit polls, five parties have made it to the new Verkhovna Rada: "Servant of the people" (43%), "Opposition platform - For life" (12%), "European solidarity" (8.5%), "Batkivshchyna" (7.5%), and "Voice" (6%).

"The results are quite expected, close to the pre-election sociological surveys. Joining together with ‘Voice’ and adding independent majoritarian parties, they will form a coalition," member of the previous convocation of the Verkhovna Rada Evgeny Balitsky told Izvestia. "They can, of course, take Tymoshenko, but she will ask a lot, starting with the Prime Minister’s post. In any case, within the new Verkhovna Rada small parties - ‘Batkivshchyna’ and ‘Voice’ - will pull Western Ukraine’s views into the parliament," he added.

In any case, the majority will be created based on the "Servant of the People", Director of the Kiev Center for Political Studies and Conflictology Mikhail Pogrebinsky told the newspaper. In his opinion, the pro-presidential party may not need the help to form the ruling coalition. However, according to the newspaper, on the downside, after gaining control over the parliament and the government, the president would not be able to justify any failure to fulfill election promises.

According to the Director of the Institute for Peacemaking Initiatives and Conflict Resolution Denis Denisov, although the new government clearly needs to focus on the population’s welfare, at the moment it has no real chance at quality reforms. "They cannot do it quickly, as it requires huge resources and investments. The most important thing that can be done is appointing an effective Prime Minister," he told Izvestia.

The second important issue, largely connected with the economic well-being of Ukraine, is the war in the south-east of the country. At the moment there is no consensus in Kiev on the ways to solve the problem of Donbass. After the announcement of exit polls, Zelensky once again said that the main priorities for him and his team include ending the war in Donbass and defeating corruption.


Kommersant: Gazprom resumes South Stream construction

Gazprom unexpectedly unfroze a project to expand its infrastructure in southern Russia under the South Stream export gas pipeline that was canceled for the needs of the domestic market. However, sources on the market told Kommersant they doubt this reason: the capacity of the new pipeline is clearly overabundant for gasification. According to the newspaper’s sources, export justification of the project is more likely, for example, to further increase productivity of the TurkStream pipeline, which virtually replaced South Stream.

Gazprom told Kommersant that construction of the linear part of the pipeline in full "would increase the productivity of the gas transportation system in the direction of the Krasnodar Region to meet the growing gas demand in the region and ensure reliable gas injections into the underground gas storages of the North Caucasus."

Gas demand is stagnating, there is no need for such infrastructure expansion in the domestic market, a source told Kommersant. "It’s strange that at first Gazprom wanted to eliminate the already completed section, and then suddenly saw such growth in demand in the Russian south that could justify constructing over 1,000 km of pipe," another source told the newspaper.

Sources told Kommersant that the only rational reason for resuming the project would be preparing to increase capacity of the TurkStream pipeline, since this is why the section was originally created.

At the moment, TurkStream is in its final stages and should be launched at the end of the year. The capacity of the Nord Stream 2 and TurkStream bypass gas pipelines does not allow Gazprom to completely abandon gas transit through Ukraine with current demand from European consumers.


Nezavisimaya Gazeta: West is drawing Russia into tanker war

The situation in the Persian Gulf enters a new phase - last Friday, the US Central Command announced Operation Sentinel to enhance security on major shipping routes near the borders with Iran after Iranian forces in the Strait of Hormuz seized the Stena Impero oil tanker flying the British flag. Later on Saturday, Sunday Mirror, citing its sources, said that Russia might be involved in the detention, as allegedly the tanker could have ended up in Iranian waters due to false GPS coordinates sent by Iranian intelligence using Russian espionage technology. Experts interviewed by Nezavisimaya Gazeta interpret this version as "clearly biased".

"Many countries have technical tools that can distort signals of satellite navigation systems. Iran probably also has them. The question is whether these systems were used in the conflict when Stena Impero tanker was detained," a communications and electronic warfare officer told the newspaper.

Meanwhile, US President Donald Trump has already promised military support to the UK and countries in the region. "These forces, of course, will not be enough for a large-scale military operation against Iran, but apparently it will be enough to restrain its activity in the Strait of Hormuz and other adjacent maritime waters," military expert Lieutenant-General Yuri Netkachev told Nezavisimaya Gazeta. According to him, the UK provoked Iranian military activity in the Persian Gulf, seizing the Grace 1 tanker under the Iranian flag on July 4.

Moscow would not profit from the fall of the Iranian economy or provocations in the Persian Gulf. This would not affect the situation in Syria in the best way, where Shia formations and the Lebanese Hezbollah still play an important role in supporting the regime of Bashar al-Assad, also supported by Russia. "The West’s linking Russia with the tanker incidents within the information war is aimed primarily at misleading the international community once again, implying there’s a ‘Russian trail’ here, too," military expert Shamil Gareev told the newspaper.


Vedomosti: Russia wants to facilitate access to state procurement for foreigners

Russia’s Deputy Prime Minister Dmitry Kozak instructed several Ministries, including the Ministry of Industry and Trade and the Ministry of Economic Development, as well as the Federal Antimonopoly Service to replace a direct ban on participation of foreigners in the state procurement by other ways of supporting domestic producers. The system of import substitution in procurement will be revised, a federal official told Vedomosti. It is necessary to simplify procedures, introduce a unified approach to different market segments and streamline the procedure for confirming the country of origin of products, a representative of the Ministry of Industry and Trade told the newspaper.

The state spent 8.4 trillion rubles ($133.22 bln) on public procurement in 2018. Restrictions in terms of import substitution were imposed in 2014-2015. For government agencies, for example, it is prohibited to purchase foreign light industry products, special equipment (bulldozers, excavators, etc) and cars, furniture, software. At the same time, the ban does not apply on purchases from a single supplier (13.5% within the state procurement in 2018).

It is difficult to isolate government procurement from all the factors that influenced the economic sectors with preferences, Deputy Director of the Center for Development of the Higher School of Economics Valery Mironov told Vedomosti. However, according to him, comparing the Q1 2019 with the Q2 2014, then production increased by 15%, and the manufacturing industry - only by 4%, the IT sphere fell by 15%. State procurement could keep the industry from falling, but it is clearly not enough for competitiveness, where foreign markets are necessary, Mironov said.

Import substitution reduces competition, prices rise, and product quality declines, the newspaper writes. It is believed that due to the fall of the ruble, Russian exporters received a price advantage, but the devaluation head-start was quickly devoured by rising prices for resources fuel, power: they increased faster for producers, Deputy Director of the Center for Macroeconomic Analysis and Short-term Forecasting Vladimir Salnikov told Vedomosti.


Izvestia: LTE will dominate market over 5G for another decade

Global 5G would not become a mass technology of cellular communication in Europe and, in particular, in Russia, for at least another 10 years, Izvestia writes referring to a Deloitte report. According to the forecast, 5G will spread much slower than its predecessor LTE, experts say. There are economic reasons for this - 5G networks are expensive, operators and software developers have not yet come up with services and applications worth buying a 5G smartphone. Thus, LTE will remain the dominant mobile technology at least until the middle of the next decade.

In Russia, 5G will also develop slower than LTE networks, partner at Deloitte Anton Shulga told Izvestia. Building 5G infrastructure will be very expensive on the same scale as 4G, he noted. At the same time, the number of phones supporting 5G will grow gradually - that is why the infrastructure will most likely appear only in places with the demand for 5G and sufficient number of people for a return on investment. The technology will interest primarily business and the public sector.

In general terms, Russia does not lag behind Europe in implementing 5G, but may be at the forefront - 5G networks may appear in large cities next year, Content Review project leader Sergey Polovnikov told Izvestia. Cellular operators quickly and efficiently covered the country with 4G, prices for mobile Internet in Russia are among the lowest in the world the same can happen with 5G, the expert noted. "Unlike the West, we are friends with China, and most of the patents and know-how related to 5G right now belong to Chinese companies," Polovnikov said.

"Lagging behind Europe for our country will be largely determined by how quickly the state can help operators solve the frequency issue for the fifth generation of cellular communications," Shulga told Izvestia.



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