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Press review: Putin extends quarantine and Haftar declares himself ruler of Libya

Top stories in the Russian press on Wednesday, April 29

Izvestia: Putin extends quarantine, sets priorities for coping with coronavirus pandemic

Losses to the Russian budget from the new extension of the non-working holiday until May 11 due to the COVID-19 pandemic are estimated at an additional 1.8-2.3 trillion rubles ($24 bln-$31 bln), according to economists surveyed by Izvestia. However, it is much more important to safeguard the lives and health of the people, so the economy can be restored only later, through joint efforts, Russian President Vladimir Putin said in his address on April 28. For a thousand years, Russia has been living with the values of mutual assistance and solidarity, and these qualities are the main pillar of our country today, he said.

"We are now facing a new, and perhaps, the most intense stage in the fight against the pandemic," the Russian leader explained. Putin warned that relying on the fact that the threat was supposedly reduced and now would definitely bypass us, would be careless. Thus, the president announced the extension of the non-working holiday until May 11. Meanwhile, he ordered the regional authorities to draw up recommendations on gradual exiting the lockdown by May 5, based on the current epidemiological situation.

Extending the non-working holiday is an absolutely balanced measure, since the country has not yet passed the peak of the incidence rate, First Deputy Chairman of the Federation Council Committee for Social Policy Valery Ryazansky told the newspaper. "Judging by the statistics, we are close to the fact that in mid-May it will be possible to come to a decision on some easing of the quarantine with a gradual exit to economic decisions and employment concessions," the senator told Izvestia.

During his meeting with regional leaders, Putin announced a new package of measures to support the economy and citizens in the fight against COVID-19 and instructed the government to develop a nationwide economic recovery plan.

From April to mid-May, GDP losses may amount to at least 5%, Izvestia wrote. According to Sergey Khestanov, an associate professor at RANEPA, the longer the lockdown lasts, the higher the risk of closing many enterprises in the service and trade sectors will be. If the quarantine drags on beyond the beginning of May, about 7-10 mln people will be unemployed, taking into account the shadow labor market, he said.

"It is quite obvious that countries will not immediately open their borders, therefore, most likely, flights within the country should be gradually resumed. That is, tourism within Russia will be launched — namely hotels and sanatoriums, especially in the Krasnodar Region, and in Sochi and Crimea," Director of the BCS Broker sales office Vyacheslav Abramov told Izvestia. "Next, it is necessary to revive production, provided that workers continue to monitor social distance and additional precautionary measures are taken. Perhaps working in shifts," the expert added.


Vedomosti: Haftar unilaterally declares himself ruler of Libya, but Moscow disapproves

The Libyan National Army (LNA) took control of the country, its Commander-in-Chief Field Marshal Khalifa Haftar announced on April 27. The Government of National Accord (GNA) led by Prime Minister Fayez Sarraj blasted Haftar’s actions as a farce. The field marshal’s move to assume full power over the country came as a surprise to the international community, Vedomosti wrote. The United States expressed regret, while Russia and the European Union called this step unacceptable. However, the de facto situation in Libya has not yet changed: in order to lead the country, Haftar first needs to take control of the capital.

Since April 2019, under the leadership of Haftar, the LNA has continued its offensive in Tripoli, the seat of GNA authorities recognized by the United Nations. To date, the LNA controls most of the east and the south of the country, but it has failed to take the capital. The situation sharply worsened at the end of last year, when the GNA turned to Turkey for military support. Along with Turkey, the Government is supported by Italy and Qatar, and by Doha’s rivals — the UAE, Egypt, Saudi Arabia in addition to France. Turkish President Recep Tayyip Erdogan accused Russia of supporting Haftar, but the Russian authorities have repeatedly stressed that they support resolving the conflict through negotiations.

At his April 28 press conference, Russian Foreign Minister Sergey Lavrov said that Russia did not approve of Haftar’s statements. Konstantin Kosachev, who heads the Federation Council’s Foreign Affairs Committee, also called the news of Haftar’s unilateral actions "very disturbing."

Haftar is stuck in a deadlock, Leonid Isaev, an associate professor at the Higher School of Economics, told Vedomosti. "He has not been able to take Tripoli for a year now, and because of this there is no way to speak at international negotiations from a position of strength, as he would like," the expert said. The alignment of forces does not change in any way from his statement, since it is just an attempt to justify oneself for these failures, Isaev explained. According to him, last month, when the support of external players almost dried up due to the coronavirus pandemic, Haftar and Sarraj were left alone, and Haftar still couldn’t significantly advance on the battlefield, the expert said. "Neither one of them has sufficient resources to defeat the other, and ‘the great powers’ and regional allies are clearly occupied now," he concluded.


Kommersant: Russian diplomat slams Washington’s scheme to extend sanctions on Iran

The Trump administration reportedly plans to extend the arms embargo on Iran expiring in October. Washington allegedly expects to use the special dispute settlement mechanism provided for by UN Security Council resolution 2231, which accompanied the Joint Comprehensive Action Plan (JCPOA, i.e. the Iranian nuclear deal) in 2015. The mechanism could restore all international sanctions previously applied to Iran. Russia’s Permanent Representative to International Organizations in Vienna Mikhail Ulyanov told Kommersant that he believes that Washington’s arguments are ridiculous and will not find any support.

"In reality, justifying such an approach is, to put it mildly, not easy," he said. The US expects to find a clue in the wording of paragraph 10 of the resolution, which lists all the countries that participated in the JCPOA negotiations, including the United States, and where they are collectively referred to as parties to the nuclear deal, Ulyanov added.

"The argument is, of course, ridiculous. Everyone knows that on May 8, 2018, Washington officially announced its withdrawal from the nuclear deal. And what's more, for two years now, the United States has been doing everything to destroy this deal," he told the newspaper. "An attempt to appeal to resolution 2231 looks cynical, since it is this resolution that the US is undermining, and it is absolutely unconvincing from a legal, political, and moral point of view," the diplomat added.

According to the Russian envoy, it looks like the United States is trying to regain its status as a participant in the nuclear deal solely in order to completely dismantle it. Meanwhile, the deal was expected to end two years ago when the United States withdrew from it, but it survived.

"For its part, Russia is doing and will continue to do everything necessary to preserve this deal. Regarding the need to save it, there is an absolute consensus among all its remaining participants. We can disagree on some private issues, but everyone recognizes the value and the exceptional importance of the JCPOA, and everyone has confirmed their willingness to work to preserve it," the diplomat believes.


Izvestia: Russian banks facing $28-bln black hole in capital

In 2020, Russian banks may lose 2.1 trillion rubles ($28.45 bln) of capital due to the coronavirus pandemic, according to analysts of the Center for Macroeconomic Analysis and Short-Term Forecasting. However, such losses will arise if a stress scenario is realized, which implies a decline of the national currency to 98 rubles per dollar, an outflow of 10% of depositors within three months and an increase in the share of "bad" debts, Izvestia wrote. To compensate for the losses, banks will need additional money from the state in the amount of 1.8 trillion rubles ($24.38 bln). In addition, shareholders will have to add another 300 bln rubles ($4 bln) in the form of assistance.

This scenario is quite realistic, Finam analyst Alexey Korenev told the newspaper. However, the scale of the problems may be even more serious — about a third of borrowers are already classified as risky. In this case, state assistance will be required, and 1.7 trillion rubles ($23 bln) may not be enough, the expert said. The likelihood of a stressful scenario will become clear by July, when it will be possible to assess the damage from the pandemic, he added.

The situation described by the center is likely at oil prices below $20 per barrel for six months, Chairman of the board of Freedom Finance Gennady Salych told Izvestia. The problem of "bad" debts will intensify if restrictive measures drag on for three months or more.

First Deputy Prime Minister Andrei Belousov earlier at a meeting of the Russian president with leaders of major banks warned that the Russian banking system could face problems amid a deterioration in the quality of the loan portfolio in the fall.


Kommersant: Russia’s IT market may crash harder than in 2015 crisis

The downturn of the Russian IT market following the results of 2020 may exceed 30% in dollar terms, after which it will face a difficult recovery throughout 2021, according to a report by the IDC research company. The situation may be worse than the crisis of 2015, as the collapse has already affected the mobile phone, computer and server segments. The IT market depends on other sectors of the economy, market players told Kommersant, hoping for a quick recovery.

Vice President of IDC in Russia and the CIS Robert Farish told Kommersant that in mid-April, it was still possible to compare the current drop in the IT market with a decline of 37.3% in 2015, but then the latest data from Rosstat about a 7% decrease in freight traffic showed that the situation is even more serious now. A complicated and targeted recovery looms on the horizon for the IT market in 2021, Farish believes.

The majority of market participants agree with IDC’s estimates, Kommersant wrote. Most likely, the IT market will shrink by 15-40% in dollar terms, Deputy General Director of Angara group of companies Dmitry Pudov told the newspaper. After the crisis of 2015, the market practically retained its volume in rubles, although it halved in dollars, but now the situation is radically different, he argues. "The market has yet to find out the working conditions in the future," he said. At the same time, according to Pudov, the situation may not be so dramatic in the information security segment.

Temporary suspension of factories in Southeast Asia, as well as disruptions in logistics due to transportation restrictions put constraints on the market, Global CEO of Softline Sergey Chernovolenko told Kommersant, but now the situation is gradually stabilizing.



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