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Press review: Iran-US conflict may morph into proxy war and EU eyes revising Russia ties

Top stories in the Russian press on Friday, January 10

Media: Iran-US conflict may turn into proxy war

The confrontation between Tehran and the United States is entering into a ‘Cold War’ phase. Experts interviewed by Izvestia are confident that Iran won’t leave General Qasem Soleimani’s assassination unpunished and the conflict will eventually turn into a proxy war in third countries, like Iraq and Lebanon in particular.

Head of the Iraqi Advisory Council and a former presidential adviser Farhad Alaaldin told the newspaper that both Iran and the US have mechanisms to influence Baghdad. Tehran has weapons deployed to Iraq and is capable of opposing any political force or leader supported by the other side. Besides, pro-Iranian forces have high-ranking positions in the Iraqi government.

Lebanon may become another battlefield in the conflict between Iran and the US, Senior Researcher at the Russian Academy of Sciences’ Institute of Oriental Studies Boris Dolgov said. The pro-Iranian Hezbollah movement has been active in Lebanon since the mid-1980s, the expert pointed out, adding that Saudi Arabia’s positions in the country were strong, and a thing to note is that Riyadh is Washington’s main regional ally.

The assassination of Soleimani and further developments marked the culmination of the conflict between the US and Iran, Senior Researcher at the Russian Academy of Sciences’ Institute of Oriental Studies Vladimir Sazhin told Nezavisimaya Gazeta. "However, both Washington and Tehran came to the conclusion that an escalation of tensions may have very serious consequences, so they have stepped back. A lull has set in, but it is temporary," the expert added.

It is impossible to find a long-term solution to the flare-up between Iran and the US without negotiations, particularly as far as the future of the nuclear deal goes, Sazhin emphasized. "The activities of the countries that are interested in reducing tensions between Tehran and Washington are important in this situation. They need to persuade [US President Donald] Trump and [Iran’s] Supreme Leader Ayatollah Ali Khamenei to try to reach compromises on the entire range of issues between the two countries," the expert said.


Kommersant: EU may revise strategy for relations with Russia

Russia’s Permanent Envoy to the European Union Vladimir Chizhov in an interview with Kommersant did not rule out that following the recent top-level reshuffle, the EU might revise its course with Moscow, adopted in 2016.

"As far as relations with Russia are concerned, the European Union’s current course is based on a document adopted in March 2016, known as ‘Mogherini’s five guiding principles.’ But the five principles are now becoming an obstacle preventing progress in our relations, which is why I don’t rule out that the EU will soon start working to revise the strategy," Chizhov pointed out.

According to him, it is up to the EU "to find a way out of the dead end in relations with Russia, where it has cornered itself." "It would be naive to expect that the ship named the European Union will make a U-turn under the stewardship of the newly selected officials. In fact, its member states are the ones that determine the EU’s development strategy and its foreign relations. There are different countries with different priorities and different governments, so relations between them are not always serene and smooth, which affects their common positions," the Russian envoy explained.

Chizhov went on to say that France, whose President Emmanuel Macron had called for reviewing relations with Russia, was not the only country that supported the idea of an improved relationship. "There is more than one such voice. And the number of those who share this sentiment is more than the number of those who raise their voices because not everyone is ready to express their views in public like the French president does," the envoy stressed.

He noted that the EU’s policy of extending sanctions against Russia would change sooner or later, when "at least one country with a firm stance comes forward." As of now, in Chizhov’s words, "there is still not enough political willpower to steer the European Union in the right direction."


Rossiyskaya Gazeta: Iran flare-up puts OPEC+ under mounting political pressure

Surging tensions in the Middle East may negatively affect the OPEC+ oil cut agreement, Rossiyskaya Gazeta notes.

The conflict between Washington and Iran is unlikely to break up the OPEC+ group, but it definitely can sway the operation of the oil output cut deal and intensify discord within the organization of oil-producing countries. Iran’s attacks on US military targets in Iraq have exacerbated the situation in the region, making Brent Crude prices exceed the $70 per barrel mark. However, after President Trump stated that Washington’s response would be limited to tightening economic restrictions, oil prices went back to $65-66 per barrel. The markets figured that it meant the risk of further military engagements was subsiding, Stock Market Expert at BCS Broker Igor Galaktionov noted. Accordingly, the threat of disruptions in oil supplies from the Persian Gulf diminished, which impacted oil prices.

"The US Energy Information Administration’s recent report was another reason for the drop in oil prices, as it showed that oil reserves had risen by 1.2 mln barrels in the week ending on January 3," said AMarkets Analytics Department Chief Artem Deyev.

As far as OPEC+ members are concerned, the ups and downs in oil prices undermine efforts to reduce oil production, making it clear that despite increasing oil cuts, prices are still more dependent on political factors rather than market ones.

In addition, instability in the Middle East raises tensions within OPEC. Relations between Iran and Saudi Arabia have never been good, but as OPEC members, the two countries were capable of finding common ground. However, now they may lose all ability to reach any compromises. As a result, Saudi Arabia — the main driver behind the oil production cut — may find itself isolated, as most countries will find the deal to be unprofitable and ineffective for political and economic reasons.


Kommersant: Russia gearing up to counter climate threats

Russia’s government has adopted a national plan to adjust to climate change. The document outlines measures expected to be taken in the coming three years, Rossiyskaya Gazeta writes.

According to the policy, Russia’s "climate safety passport" will be developed by the end of 2020, based on the analysis of current and future climate trends. The country’s Economic Development Ministry will start putting together specific projects by the end of 2022.

Head of the Climate and Energy Program at WWF Russia Alexey Kokorin believes that one of the reasons for drawing up such a plan "was the increasing number of dangerous weather phenomena in the country, which doubled in the past 15 to 20 years, as well as recent research indicating that the climate change issue is here to stay."

"It seems, the country’s authorities have finally addressed this complicated and pressing issue because last year, unprecedented forest fires swept through Siberia, a flood that hit the Irkutsk region led to tragic consequences and Moscow saw some record high temperatures in December," Georgy Safonov of Higher School of Economics pointed out.

Among the anticipated negative effects of climate change, the proposal lists rising health risks for the population, a spike in the intensity and duration of droughts and floods, as well as increasing wildfire risks. On the other hand, positive effects particularly include saving energy during heating seasons and the expansion of zones suitable for crop production.

"The negative impacts are already here, though it will require effort to take advantage of the positive ones. For instance, climate-driven forest expansion should not be lost to wildfires and environmentally erroneous deforestation activities," Kokorin emphasized.


Rossiyskaya Gazeta: Russian currency continues to strengthen

Russia’s ruble continues to gain strength against the dollar and the euro despite the fact that the holiday season usually tends to generate negative trends. Moreover, the Russian currency could benefit the most from key global developments, which include the situation around Iran and a new stage in the trade war between the United States and China, Rossiyskaya Gazeta wrote.

Since the beginning of the year, the ruble has experienced the biggest increase among the currencies of developing countries, strengthening 1.2% against the dollar and 2.2% against the euro. This is a direct result of an easing in tensions, because Washington has opted not to provide a military response to Iran’s missile strike on US targets in Iraq. This caused a spike in demand for risky assets and strengthened the currencies of developing markets, Sberbank CIB analysts said.

Apparently, there won’t be another round of the conflict, so the outcome of trade talks between the US and China will now prove to be crucial for the ruble, Nordea Bank analysts Tatyana Yevdokimova and Grigory Zhirnov pointed out. The two countries seem to have come close to signing the first part of a trade deal. The markets’ reaction will depend on the deal’s details, of which little is known at the moment, the experts said. The ruble has good chances to maintain its current strong position at least until the deal is signed, Yevdokimova and Zhirnov added.

The current strengthening of the ruble is partly an inertia-driven process that has been following the 2019 trend, Senior Analyst at BCS Premier Sergei Suverov noted. A rise in oil prices and the continued capital inflow into Russian assets have been strengthening the ruble, he specified. The expert did not exclude that the Russian currency could reach 60.5 rubles per dollar level by the end of January.


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