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Press review: Belarus looks for gas options and Central Asia impacted by Russia’s lockdown

Top stories in the Russian press on Wednesday, June 17

Kommersant: Belarus looking for alternatives to Russian gas

Belarus is gearing up to search for alternatives to Russian gas as relations between both countries are going through another rocky period, Kommersant reports. Previously, Minsk acted in the same way when it came to oil imports. Although it is possible to find alternative suppliers of oil to Belarus, other gas supply options are rather scarce, the newspaper notes. Minsk can purchase significant amounts of gas only through Ukraine or Poland, if Gazprom, which owns the Belarusian gas transport system, greenlights such deliveries.

Belarus imports about 20 bln cubic meters of gas from Russia annually. This year, the price for Russian gas to Belarus hit a fixed $127 for 1,000 cubic meters. Minsk is requesting that Russia lower the price, citing a drop in spot prices in Europe. Meanwhile, Gazprom refuses to budge. What is more, the Russian company divulged in late May that the Belarusian side had accumulated a debt totaling $165.57 mln, and that the supply of Russian gas to Belarus might be suspended starting July 1, if this sum is not paid in full. Minsk refuses to recognize this debt, citing insufficient caloric content of gas as the reason. Gazprom refused to provide a comment.

Belarus has established transport links with Poland, Lithuania and Ukraine, the newspaper suggests. Deputy Director of the National Energy Security Fund Alexei Grivach told Kommersant that gas deliveries from Poland to Belarus are unlikely, as Beltransgas (a Belarusian gas transport enterprise) has strict contractual ties to Russia’s Gazprom.

For her part, VYGON Consulting’s Maria Beglova told Kommersant that the supply of gas to Belarus is possible through Latvia or Lithuania via the Vilnius-Ivatsevichi pipeline, with up to 600 mln cubic meters of gas transported annually.

Another possibility is clinching a deal with Ukraine and transporting the gas through the Ivatsevichi-Dolina and the Torzhok-Dolina pipelines. These routes can supply about 6-8 bln cubic meters of gas a year. However, the real volume of supply depends on the physical conditions of those pipelines. Nonetheless, Lithuania pays more for Russian gas than Belarus, and LNG tends to be even more costly, which means that the price for gas transported to Belarus from Lithuania will be more expensive than $127 per 1,000 cubic meters.

The expert told Kommersant that Ukraine is likely to offer its services to Belarus, organizing the supply of gas through European spot markets, where the average price of gas reaches about $60 per 1,000 cubic meters due to its surplus. However, by the end of the year, spot prices for gas are likely to rise, the expert pointed out.


Nezavisimaya Gazeta: China utilizing economically secure ways of combating COVID-19

China is employing new methods of protecting its economy under the current pandemic conditions, Nezavisimaya Gazeta notes in its analysis of China’s new measures to contain the virus. Faced with a surge in new COVID-19 cases, the government has introduced a state of military alert in separate regions, avoiding a shutdown of all surrounding enterprises. China is also ready to track the chains of infection cause by imported food deliveries, the newspaper notes.

Earlier, Nezavisimaya Gazeta wrote that a handful developed states are moving towards special methods of containing the epidemic that require controlling local outbreaks of COVID-19, adding that Russia has not mastered this technique so far. Meanwhile, in China, Germany and South Korea, doctors have successfully detected and isolated hundreds of citizens who came into contact with every person diagnosed with COVID-19.

Nezavisimaya Gazeta asked several Russian experts to compare the situation with China and the measures taken in Russia to combat the spread of COVID-19. Director of the Institute of the Far East at the Russian Academy of Sciences Alexey Maslov said that he is not surprised by the targeted restricted measures currently introduced by China. "The country has a good understanding of the situation, it has learned to manage crises. There are many differences to the situation in Russia. China shut down the economy abruptly and swiftly at the start of the epidemic, which allowed the country to alleviate its consequences. The country has placed the economy in an induced coma in a controlled manner and then brought it out of it just as swiftly. Essentially, the economic decline was under control," the expert said.

For his part, President of the Russian-Asian Union of Industrialists and Entrepreneurs Vitaly Mankevich told Nezavisimaya Gazeta that Russia is attempting "to reach China’s results without Chinese restrictions using a European approach." "However, the problem is that when faced with a real threat to public health and the spread of the virus, enterprises cannot shut down following orders from the top. The government’s actions are inconsistent. Some are fighting the spread of infection, while some are reporting pleasant statistical figures, and this does not lead to a victory against the coronavirus. On the contrary, the disease spreads, and the entire region, not just a couple enterprises, is placed in quarantine," the expert lamented.


Vedomosti: Russian industrial sector shrinks by nearly 10% in May

In May, the Russian industrial sector contracted by 9.6% compared to last year and by 2.4% in the first five months of the year, Vedomosti disclosed, citing the Russian Federal State Statistics Service, adding that the coronavirus lockdown served as the defining reason for the plunge. The industrial sector began to shrink back in April (by 6.6% compared to last year), while back in March, a 0.3% increase was documented. In May, the statistics service documented a sharp drop in all industrial sectors, with the mineral extraction sector suffering the most (decreasing by 13.5% compared to last year compared to just a 3.2% drop in April). This major dive happened due to the restrictions on oil production introduced by the OPEC+ deal, the newspaper notes.

The industrial crisis has surpassed the expectations of experts, because it is difficult to make certain predictions given the current conditions, said Oleg Shibanov, who heads the Skolkovo Financial Center of the New Economic School in an interview with Vedomosti. For his part, Dmitry Dolgin, chief economist of ING for Russia and the CIS, stated that Russia had significantly decreased its oil and gas production in accordance with the OPEC+ deal (by 14.3% compared to last year), adding that the dynamic of food production has also slowed, as the wave of excessive demand has ended.

However, Shibanov stresses that the final figures are not as "terrible" compared to other states. Russia can expect a slow and gradual recovery in the future, the expert thinks, noting that even China has not returned to the pre-pandemic economic levels so far. Dolgin pointed out that all manufacturing and processing industries had reported some improvements in the past month due to the lifting of some of the coronavirus restrictions in mid-May. The expert noted that the secondary effect of reduced income and consumer demand might hinder the recovery of the Russian industrial sector in the future.


Izvestia: Central Asia braces for crisis as migration flow to Russia halted due to coronavirus

The COVID-19 pandemic is on the wane globally, however, economic difficulties are on the rise, with Central Asian states bracing for a tough crisis due to the interrupted flow of labor migration to Russia and the subsequent rise in unemployment, Izvestia notes in its analysis of the current economic situation in several Central Asian countries, including Kyrgyzstan and Tajikistan.

Money transfers from labor migrants play a crucial role in the economy of Central Asian states. For example, in 2019, Tajik nationals working in Russia sent home $2.5 bln, which constitutes 35% of the country’s annual GDP. Meanwhile, Kyrgyz residents sent $2 bln home to their families (30% of the GDP), and Uzbek labor migrants sent home a record sum of $4.7 bln (15% of the GDP). It is important to note that this data only includes bank transfers.

The coronavirus pandemic has undermined the existing economic model, with Russia introducing strict quarantine measures, suspending migrant flow and pausing activity in key industries for migrants: trade, construction, transport, and the service industry. For example, Kyrgyz workers sent only $76.3 mln back home in April 2020, compared to $200.1 mln in April 2019. According to unofficial data, about a million (one in six) Kyrgyz residents are working in Russia. Some have been forced to return home, some have lost their jobs within the country. As a result, the number of unemployed people in Kyrgyzstan has reached 700,000.

Yuri Solozobov, Director of International Projects at Russia’s National Strategy Institute, has told Izvestia that in late 2020, a parliamentary election is set to take place in Kyrgyzstan. Meanwhile, Tajikistan plans to hold a presidential election. "There may be protests, riots, civil unrest. Islamists might be the ideological string-pullers behind them, as their ideas have spread widely among the low and middle class of Kyrgyzstan and Tajikistan. This is the only force that offers an alternative ideology, an alternative concept of building a society," the expert notes.

Meanwhile, head of the Central Asia Department of the Institute of CIS countries Andrey Grozin told the newspaper that a border conflict is also possible in conditions of a crisis. "It is becoming harder to buy the loyalty of citizens and elite groups. What can be done? One of the options is to divert the people’s attention, provoking a conflict with their neighbors. I think that the threat of confrontation in the region will rise in the coming months. We are already witnessing that. In the first quarter of the current year, there have been more clashes in the disputed areas of the Tajik-Kyrgyz border than in the entire last year," the analyst pointed out.


Izvestia: Half of Russians polled still working from home

About 47% of working-age Russians are still working from home, Izvestia informs, citing the recruiting website. More people are teleworking in Moscow and St. Petersburg, while residents of Samara and Rostov-on-Don tend to return to their places of employment more often.

A survey was carried out by on May 21-May 31, 2020 among 3,500 respondents, who visited the website to find some information and not necessarily for job hunting.

Only 15% of those polled had returned to the office at the time the poll was being conducted, mostly accountants, financiers and HR specialists. Twenty percent of workers surveyed said that they had not worked from home at all during the pandemic. The majority of them were medical or industrial workers, or professionals employed in the agricultural sector.

One of the main post-pandemic trends will be a gradual move from the office to working from home, Alexey Krichevsky, an expert with the Academy of Finance and Investment Management, told the newspaper, which is fueled by the development of online trade and the introduction of Customer Relationship Management (CRM) systems that help automatize businesses and implement the majority of goals from home.

The expert pointed out that due to the move away from the office, a trend for de-urbanization is arising. "The poll among tenants of holiday homes held by Incom Corporation shows that 80% of them are willing to continue living outside the city after all restrictions are lifted," the expert notes.


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