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Press review: Normandy Quartet summit postponed and US helps cement Russian-Chinese ties

Top stories in the Russian press on Thursday, September 19

Kommersant: Anticipated Normandy Quartet summit postponed

The Normandy Four summit, where the Russian and Ukrainian heads of state Vladimir Putin and Vladimir Zelensky were expected to meet for the first time to discuss plans to resolve the conflict in eastern Ukraine, will not take place in the near future. Negotiations between the leaders of Germany, Russia, Ukraine, and France were postponed indefinitely, because on September 18, the Trilateral Contact Group on Donbass did not approve a single word of the Steinmeier formula and did not agree on the separation of the warring parties, Kommersant wrote.

On September 11, advisers to the leaders of Germany, Russia, Ukraine, and France agreed on the general draft of the Steinmeier formula, a Russian official close to the talks told Kommersant. The formula calls for enacting the special status law on Donbass after the elections, which should be recognized by the OSCE as honest and free. The go-ahead was given to approve the document on September 18 in Minsk, but the plan did not pan out, the newspaper wrote. Even before the meeting in Minsk ended, the official Ukrainian delegate to the political working group Valery Grebenyuk told Kommersant that the paper would not be signed.

The newspaper possesses the approved version of the text, which was not signed. It takes up half a page and prescribes the implementation of the Steinmeier formula into Ukrainian law. According to the paper, Kiev believes that first, defense measures should be taken in the disputed area and only after that political ones, including elections. "Apparently, this position of Ukraine was the reason for the failure of the signing of the agreed on formula," Kommersant wrote.

The newspaper’s source in the Russian presidential administration commented on the situation, saying the "Steinmeier formula is fixed on paper, it is an addendum to the letter, signed by political advisers to the Normandy format … But the Ukrainian side once again evaded the agreements, despite the approval of the text by the assistant to the Ukrainian president."


Izvestia: US pressure on China and Russia helps cement their mutual ties

Partnering with China remains Russia's unconditional foreign policy priority, Russian President Vladimir Putin announced at a meeting with Premier of the State Council of the People's Republic of China Li Keqiang. In response, the top Chinese official emphasized that stable cooperation between Moscow and Beijing is an indisputable global stabilizing factor. Meanwhile, according to Izvestia, the talks were mostly important from a symbolic point of view.

Over the past nine years, China has remained Russia’s largest trading partner, with its commodity circulation steadily growing. Last year, it reached $108 bln. Around 70% of bilateral trade is related to the energy sector, and this trend will continue to gain momentum, the newspaper wrote. In addition, Beijing has long shown interest in mutually developing hydrocarbon deposits in the Arctic zone and in a number of projects within the framework of the Northern Sea Route. In addition, both sides have done much to foster cooperation in high tech.

At the same time, if the Chinese market readjusts towards closer cooperation with Russia, this process will become irreversible, Head of the Department of International Relations at the Higher School of Economics Alexander Lukin told Izvestia. "The Russian economy is small in comparison to the US and Chinese markets and it cannot completely replace the US, though maybe partially. In turn, China is able to compensate for the sanctions against our banks. Economic cooperation will increase, it is just beginning," he said. However, Russia would not even be able to completely replace the supplies of US soybeans to China, Director of the Center for Russian and Central Asian Studies at Fudan University Feng Yujun told the newspaper.

Both experts noted that relations between Russia and China are valuable in and of itself. Washington’s pressure on both countries contributes to the further geopolitical and economic rapprochement between Beijing and Moscow.


Nezavisimaya Gazeta: Minsk warming up to Washington may be trump card in talks with Moscow

The United States and Belarus seem to be moving closer as Washington pledged to lift sanctions following the election campaign. So far, Washington and Minsk have agreed only on restoring an ambassadorial-level diplomatic presence. Experts interviewed by Nezavisimaya Gazeta believe that regional geopolitics and the economic interests of President Alexander Lukashenko are the basis for the Belarusian diplomatic breakthrough.

Contacts between Minsk and Washington have been gaining momentum recently. The content of all the negotiations has not been made public, but experts told the newspaper that this is a matter of regional security. In their almost unanimous opinion, the warming of relations could be dictated by an escalating confrontation between the United States and Russia, and Washington’s intention to take on Moscow in Eastern Europe. The decision to return ambassadors could have been made in response to the intensifying dialogue between Moscow and Minsk on furthering integration, Nezavisimaya Gazeta wrote. According to the newspaper, such a quick decision may indicate that in return Minsk offered the United States something very significant.

As for the formal side of the things, Moscow can have no claims against Minsk so far. "It is difficult for Russia to make any claims, because the relations between Russia and the US are functionally more advanced. While Belarusian-US ties are only about normalizing relations," political analyst Valery Karbalevich told the newspaper. At the same time, it is obvious that Belarus, with the support of the United States, will feel more confident in difficult negotiations with Russia. That especially concerns the price of gas, compensating for the tax maneuver, and on deepening integration. "It’s not that the US could become an alternative to Russia in the foreseeable future, but it can become a counterbalance to some of its overly ambitious projects regarding Belarus," political analyst Yuri Drakohrust told Nezavisimaya Gazeta.


Kommersant: State-owned companies might get extension on sanctions-related tax breaks

The government is ready to prolong some corporate privileges, in effect until 2021, according to which state-owned companies under sanctions may not pay income tax when selling shares of their subsidiaries. The tax break applies to many state-owned companies, including Rostec and VEB, Kommersant wrote citing sources. Analysts interviewed by Kommersant consider the measure adequate, given the lack of any prospects on the West’s ongoing restrictions being removed.

"Sanctions have not been lifted from companies, so the Ministry of Finance supports extending this norm. Such amendments will most likely be prepared during the State Duma’s spring session," a ministry representative told the newspaper.

Kommersant’s sources name Rosneft as the chief lobbyist for extending the provision, specifying that other sanctioned companies, in particular VEB, Rostec, VTB, and Transneft, can also use this privilege. That being said, VEB has significant non-core assets that it plans to sell, and Rostec is looking for investors for the UAC civil division.

According to one of Kommersant’s sources, lengthening state support is currently not associated with a specific deal. Meanwhile, Victoria Turgeneva from KPMG told Kommersant that saving on income tax would allow state-owned companies under Western restrictions to free up funds, so this sanctions-related tax break is an adequate measure of state support for businesses.


Izvestia: Mobile operators fear data leaks from subscriber verification system

Russia’s biggest mobile operators — MTS, Megafon, and Beeline — believe that the proposed mechanism for the operation of the unified information system for verifying data of SIM card owners carries a number of risks, including personal data leaks, Izvestia wrote referring to a letter sent by the operators to Head of the State Duma Committee on Financial Market Anatoly Aksakov. However, the Central Bank argues that the operator of the information system will not store any data. Experts interviewed by the newspaper noted that there are no safe systems and additional security measures should be used.

"The project does not provide information security requirements for data transmitted through the system or a reference to the necessary by-laws, which may lead to data leaks of several million subscribers," the letter to Aksakov said. According to the newspaper, the operators suggested establishing such requirements and launching a pilot project to verify them.

At the same time, the Russian Central Bank and the Ministry of Communications said they did not see such dangers, since the system operator would not store the data. Aksakov told Izvestia that the proposals by the mobile operators regarding the finalization of the bill will be carefully studied, their representatives will be invited to discuss the initiative after amendments to the document are received from the government.

The State Duma adopted a bill on setting up the unified information system in the first reading in March. It is assumed that users of the system will include the Central Bank, banks and operators of payment systems, payment infrastructure services, and other organizations.


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