Kommersant: Russia may benefit from tensions between Japan, South Korea

Tokyo and Seoul are about to end security cooperation under the Japan-South Korea General Security of Military Information Agreement (GSOMIA), which expires on Friday. High-ranking officials in Seoul told Kommersant that amid a trade war with Japan, Russia could become an alternative source of materials for the South Korean electronics industry.

The crisis emerged following the South Korean Supreme Court’s ruling ordering Japanese companies to provide compensation for the use of Korean forced labor during World War II. The Japanese government did not agree with the decision, saying that all claims had been settled after the restoration of diplomatic relations in 1965. In early July, Tokyo tightened control over the export of materials for South Korea’s electronics industry, including those used in the development of flexible displays.

The newspaper’s sources in Seoul believe that Russia may become an alternative supplier of these components. Besides, since South Korea has not joined the sanctions against Moscow, they suggested that the two countries bring Russian fundamental technologies and South Korean achievements together to promote these technologies on the markets.

However, Russian experts point out that this kind of stuff is highly specialized, so it is usually produced in small amounts and, as a rule, for a specific customer. On the whole, experts say that Russia does have an opportunity to meet Seoul’s demand but it will take time and effort to upgrade technologies. Some also believe that South Korea’s statement is a tool to put pressure on Japan.

Technology Risk Consulting Practice Director at KPMG Russia and the CIS Sergei Vikharev, in turn, says that it won’t be easy for Russia to compete with China on the South Korean market because China produces electronics in large amounts and has all the necessary raw materials.

 

Nezavisimaya Gazeta: Democrats line up to bash Trump’s foreign policy

The US Democratic Party’s presidential hopefuls have taken part in another round of TV debates, frustrating experts with their lack of new ideas. Incumbent US President Donald Trump once again became "the hero" of the debates as the Democrats focused on his foreign policy, Nezavisimaya Gazeta notes.

Former Vice President Joe Biden claimed that the incumbent president did not have a clear vision of action that needed to be taken on the foreign policy track. He accused Trump of making concessions to North Korea, Russia and China. However, it remained unclear how different Biden’s foreign policy course would be if he is elected president. The former vice president said that China should be used as a tool to put pressure on North Korea to ensure the denuclearization of the Korean Peninsula, but it is an idea that Trump administration members have brought up on numerous occasions. Biden also called for increasing pressure on Washington’s rivals, China and Russia. He also noted that he is a candidate that Russia does not want to see win.

Curiously, the strongest candidates refrained from criticizing many of Trump’s specific landmark foreign policy steps. Minnesota Senator Amy Klobuchar was the only one who opposed the US withdrawal from international security agreements.

Director of the Franklin Roosevelt Foundation for United States Studies at Moscow State University Yuri Rogulev pointed out that no clear frontrunner had emerged following the recent round of the Democratic presidential debates. However, in his view, the fact should not be exaggerated. "This round of debates wasn’t the last one. There is about the same number of debates to come. It means, we are in the middle of the process," Rogulev told the newspaper. According to him, the true Democratic opinion leaders will become evident next year, when the caucuses kick off across the country and it becomes clear who has local support.

 

Nezavisimaya Gazeta: Russia plans to invest in Iran amid unrest

Moscow and Tehran are discussing conditions for providing Iran with a $5 bln loan, Nezavisimaya Gazeta wrote, citing Iranian sources. Russia pledges to use the money to build infrastructure facilities in Iran, including a railway and power plants. However, there are risks that Tehran will be unable to repay the loan because of mounting domestic problems. A surge in fuel prices and the overall unfavorable climate triggered mass protests across the country. According to the International Monetary Fund (IMF), Iran’s GDP will drop by 9.5% in 2019. Inflation is spiraling towards 40%. Tehran seeks to boost oil and gas production to reduce the negative effect of US sanctions.

"Just like in Venezuela’s case, a risk does exist that Iran won’t repay the loan amid the civil unrest. Iran will most likely repay it by supplying raw materials (oil) and other goods to Russia. And if the country goes bankrupt, the facilities for which the money was allocated may be handed over to the creditor," Analytics Department Chief at AMarkets Artem Deyev said.

"Like the Soviet Union, Russia often times provides loans to other counties not so much for economic reasons as for political ones. This is where a large amount of foreign loans that Moscow has to write off comes from," Associate Professor with the Russian Presidential Academy of National Economy and Public Administration Sergei Khestanov emphasized. At the same time, Russia gets additional economic and political advantages, Associate Professor at the Plekhanov Russian University of Economics Oleg Cherednichenko emphasized.

The risk of losing money in the event of a change in government is always there but it is not that big," Finam analyst Alexey Kalachev noted. "After all, Iran is not a poorly developed African country or Cuba. Despite the sanctions, it remains a rather substantial exporter of oil and gas," the expert stressed.

 

Izvestia: Three recipes for boosting Russia’s economy

Russian Presidential Adviser Andrei Belousov has come up with three formulas for boosting the country’s economic growth. They include steps to make borrowing cheaper, particularly by reducing the Central Bank’s key rate to about five percent, efforts to improve the investment environment and shield businesses from law enforcement pressure, and measures to increase businesses’ access to technologies. The implementation of these initiatives really could allow Russia to increase the GDP growth rate, said experts interviewed by Izvestia.

Out of all the measures proposed by Belousov, the most important ones are aimed at improving the investment climate, said Director of the Russian Finance Ministry’s Research Institute of Finance Vladimir Nazarov. If the government succeeds in carrying out a series of profound reforms to that end, Russia’s economy may start growing by at least three percent a year. In addition, the Central Bank has taken a more active stance on changing the key rate in 2019, Nazarov added.

Alexander Deryugin, a professor at the Russian Presidential Academy of National Economy and Public Administration, agreed that the implementation of measures proposed by the presidential adviser would indeed make it possible to bolster the economy. However, in his opinion, it would be too optimistic to expect reforms on all three tracks to be launched at the same time. The government cannot influence the Central Bank’s decisions on the key rate, while increasing the GDP growth rate is beyond the regulator’s responsibility, the expert explained. According to him, Russia’s Central Bank is unlikely to be prompted to reduce the rate to five percent anytime soon.

It will also be very difficult to quickly reduce law enforcement’s pressure on businesses, Deryugin added. Legal amendments won’t solve the problem because it is more about law enforcement agencies’ overall intolerance of businessmen than about legislative flaws, the professor pointed out.

 

Nezavisimaya Gazeta: China gearing up for digital attack on dollar

China has tempered justice with mercy as far as cryptocurrencies are concerned, based on a report from Nezavisimaya Gazeta that cites analysts from the Carnegie Moscow Center. Beijing may view plans to create its own cryptocurrency as a tool to weaken the US greenback, experts specified. It raises the question whether Russia is ready to trade with China in cryptocurrencies.

According to Department Head at the Russian Presidential Academy of National Economy and Public Administration Konstantin Korishchenko, chances are high that China will launch its own cryptocurrency, a CryptoYuan. "As for the timeframe, it is hard to make predictions, but the initial projects may emerge within the next two to three years," the expert pointed out.

Mindsmith Executive Partner Ruslan Yusufov highlighted the difference in regulators’ stances on traditional cryptocurrencies and national digital currency projects. Regarding the latter, regulators are usually ready to actively consider innovations. "According to the World Economic Forum, the central banks of 44 countries are considering the possibility of introducing the blockchain technology nationally, but China may prove to be the first to actually do it," the expert noted. However, according to Alor analyst Alexei Antonov, the current CryptoYuan concept "only stipulates cashless yuan transactions with better protection, while the history of transactions will be saved." "This is not a cryptocurrency in the proper sense of the word because it does not meet growing global demand for anonymous transactions," the analyst added.

In Korishchenko’s view, as far as Russia is concerned, the question is not whether to trade in cryptocurrencies, but how to get down to creating a CryptoRuble. "It should be seen as a strong signal that even conservative countries have realized that there probably is no alternative to central banks’ digital money," the expert emphasized.

 

TASS is not responsible for the material quoted in these press reviews.