Vedomosti: Putin sets new date for Russia’s constitutional amendments vote

On June 1, Russian President Vladimir Putin signed a decree setting July 1 as the new date for the vote for the amendments to the Russian Constitution, which was set for April 22 but had to be postponed due to the coronavirus pandemic. Head of the Russian Central Election Commission Ella Pamfilova offered to hold the ballot over a seven-day period (from June 25 to July 1) due to epidemiological concerns.

Vedomosti’s sources close to the Kremlin and to the Moscow mayor’s office claim that they had predicted this outcome earlier. "They are hoping for a mobilization effect, enthusiasm and a positive outlook after the Victory Day parade," one of the newspaper’s sources stated, linking the chosen date for the ballot to the Victory Day parade set to take place in Moscow on June 24. Another source noted that Russian officials seek to celebrate "a victory over the virus" to lift people’s spirits, holding the constitutional amendments vote shortly thereafter.

When asked by Vedomosti whether the vote could be postponed if the epidemiological situation in Russia deteriorates, Kremlin Spokesman Dmitry Peskov stated: "Public health remains the indisputable priority."

According to the data in possession of Vedomosti provided by Levada Center, a Russian independent polling and sociological research organization, 44% of Russians are in favor of the constitutional amendments (or 55% of those expressing their desire to attend the vote), while 32% claim they are against the amendments (notably, 58% of those who are against the amendments are not planning to attend the vote at all). For its part, another polling organization, the Russian Public Opinion Research Center, revealed that 61% of Russians plan to vote for the amendments. Meanwhile, both organizations put the potential voter turnout at about 66%.

When asked to comment on the likely turnout, Denis Volkov, deputy head of Levada Center, told Vedomosti that the exact figure would be difficult to predict. "It seems that the vote held over seven days may affect the turnout. However, once again, it is difficult to say how, but this is an unprecedented vote, just like the situation with the coronavirus is unprecedented," Volkov noted, adding that Russian officials wish to hold the ballot as soon as possible hoping to avoid repercussions from the coronavirus recession. "Economic crises do not affect the approval ratings of the government immediately. The president’s rating follows a negative trend, but this trend did not emerge this year, and it is not related to this crisis. The government’s ratings are behaving more or less in the same way as they do during other crises, for example in 2008. During a crisis, public opinion does not change at once, it happens over time. So they want to hold the vote faster and mobilize people with the help of the parade," the expert told Vedomosti.

 

Izvestia: Russian MPs set out to double Russia’s gold production

Members of the Russian State Duma (lower house of parliament) are in the process of putting together an initiative to double Russia’s gold production rate, Izvestia revealed. Russian lawmakers Dmitry Ionin and Igor Ananskikh told the newspaper that they plan to put forward a bill to the State Duma in mid-June proposing to cancel the 20% import VAT on precious metals.

Currently, 11 gold refineries in Russia are producing about 300 tonnes of gold annually, compared to just four Swiss refineries producing 3,300 tonnes annually, Ionin told Izvestia.

Aleksander Sakharov, commercial director of the Yekaterinburg Non-Ferrous Metals Processing Plant, confirmed to the newspaper that Russian precious metals refineries are working at only 30% capacity. He noted that the 20% import VAT is one of the defining factors suffocating this particular domestic market. Russian producers have to compensate for these expenses by working with foreign commodity exporters, which makes processing precious metals in Russia unprofitable, the expert explained.

Russia’s share on the global gold market comes to about 7%, while the overall cost of the processed metal is estimated at approximately 1.2 trln rubles (about $17.4 bln), Ilya Tarasov, head of Legion, a company dealing with primary processing of precious metals, disclosed to the newspaper. These figures have the potential to at least double, with another 300 tonnes of gold being produced in Russia, lawmaker Igor Ananskikh affirmed. AMarkets Analytics Department Chief Artem Deyev expressed the same stance to Izvestia. "The demand for gold is very high right now, and Russia can take its rightful place among global producers of this metal. This will be profitable for the country’s economy both in the short term and for many years to come," he stressed.

 

Nezavisimaya Gazeta: Washington declares Beijing enemy number one

The Trump administration is putting up barriers to Chinese foreign trade and investment in a bid to undermine the Chinese people’s trust in their leadership by coming up with bombastic statements such as the recent claims made by US Secretary of State Mike Pompeo, who said that the Communist Party of China aims to destroy Western democracies and put an end to democratic values, Nezavisimaya Gazeta notes in its analysis of recent US foreign policy moves. Washington has succeeded in undermining public opinion in Hong Kong and some parts of mainland China, where mass protests are taking place, the newspaper states, adding however that the Chinese Communist Party’s powerful repression system enables Beijing to suppress dissent and dig in its heels to bring the political situation under control.

Nezavisimaya Gazeta asked Andrey Karneev, who heads the Higher School of Economics Asian Studies Department, whether China’s Communist Party leadership truly aims to encroach on the West’s democratic values. The expert noted that while there are some radical nationalists in China who support this course of action, they represent a minority within the party. "The government’s position is reflected in its official statements, which note that China does not wish to undermine the existing world order. On the contrary, it strives to ensure that the rules of international communication be cultivated not only by developed states, the G7 or some other group of states, but also that the voice of China as one of the developing countries should be taken into account in this process. China’s course can be determined from the speech of Chinese President Xi Jinping at the Davos Economic Forum in 2017. He spoke in support of globalization and free trade. Back then, many experts noted the contrast between the approach of the US that chose the path of protectionism, and China’s approach, which supports the current world order. China’s stance is easy to explain, since it was the main beneficiary of globalization."

Karneev concluded that in light of these facts, it is unlikely that Beijing would actively attempt to destroy Western values. Nezavisimaya Gazeta suggests that in truth, the US does not aim to protect its democratic ideals. Instead, it hopes to prevent China from turning into a world leader in the sphere of hi-tech, becoming a global military and economic power comparable to the United States.

 

Rossiyskaya Gazeta: Fate of OPEC+ deal once again hinges on Russia

Saudi Arabia’s initiative, which wants OPEC+ states to stick to the cap on the decrease in oil production at 9.7 mln barrels a day until the end of the year, can be approved only if Russia chooses to support it, Rossiyskaya Gazeta says.

It was presumed earlier that starting in July, OPEC+ states would begin to gradually restore output, easing the production decrease quota to 7.7 mln barrels a day. This would allow Russia to begin expanding production in the most critical areas, where a halt in output could have led to the deterioration of oil reserves and would also maintain the volume of investment in the industry at least partially due to gradual preparations for launching new projects in the second half of 2020.

On the other hand, the decision to prolong the maximum decrease in oil production may encourage getting rid of the oil surplus on the global market and raise the barrel’s value. Another argument in favor of the existing conditions of the deal is the growing tensions between the US and China.

Jorg Doerler, a partner at Deloitte’s consulting department in the Commonwealth of Independent States, told Rossiyskaya Gazeta that OPEC+ members already know the price of intransigence after the March talks, and that they would be ready for a compromise. He noted that if the new agreement is compromised, oil prices may drop below $20 per barrel, so it is likely that OPEC+ will prolong the existing deal until the end of the year.

Not all experts agree with this stance, however. "It would be wiser to extend the deal for one-three months and then act in accordance with the actual demand situation," Vladimir Bragin, head of financial markets analysis and macroeconomics at Alfa Capital, told the newspaper, noting that the lack of increased supply would lead to a deficit and a sharp increase in oil prices, which would contribute to the recovery of oil industries in the US and other countries not part of OPEC+ and not tied to the strict terms of the deal.

 

Izvestia: Russian citizens' disposable income will drop in 2020

Russians’ real disposable incomes shaken by 2020 coronavirus recession will fall by 5.2%, the quarterly report of the Institute of Economic Forecasting with the Russian Academy of Sciences reports. This is the biggest decrease in income since Russia’s 1998 meltdown, when the plunge reached 16%, Izvestia notes. The institute’s predictions for the year are less optimistic than those of the Russian Ministry of Economic Development, which provided a figure of 3.8%. However, both predictions agree that in the medium term, the population’s income will begin to increase again due to the low base effect and state support measures.

According to the Institute of Economic Forecasting’s experts, once the quarantine measures are lifted, it is important to relaunch economic activity, first and foremost by jumpstarting the real sector. At the same time, it will be necessary to ensure the basic demand of Russians through the system of government purchases and credit subsidies to buy Russian goods and housing, notes a report that Izvestia has. The acceleration of the economy will trigger an increase in income and consumption, Alexander Shirov, deputy director of the institute, and one of the authors of the report, points out. The measures of state support implemented currently will have an effect, however, it is unlikely that they will spark any large-scale recovery, the expert added.

The real disposable income of the population will decrease by 6.5-10%, taking into account the changes in the nominal monetary income of citizens and the level of inflation based on the outcome of the current year, Anton Pokatovich, an economist with BCS Premier told the newspaper. "In 2020, the nominal income of Russians will decrease by 2-5%. The main drop will be observed in the second and third quarters by 15% and 6% compared to the corresponding periods of 2019. In this period, wages and income from entrepreneurial activities will go down significantly. The decrease in those key components will be caused by the lockdown, the exit from the market of many small and medium-sized enterprises and a jump in the level of unemployment in the country," the expert explained. He noted that a return to a 3% growth in real income next year would be quite a difficult task.

Meanwhile, Mikhail Kogan, head of the analytical research department of the Higher School of Finance Management, told Izvestia that the real disposable income of the Russian population may turn into a positive trend in 2021 due to this year’s low base effect. However, the expert noted that it is too early to talk about the full recovery of the citizens’ income.

 

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