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Press review: Moscow, US debate New START in Vienna and Russian economy slowly reopens

Top stories in the Russian press on Tuesday, June 23
US Special Presidential Envoy for Arms Control Marshall Billingslea arriving for a meeting with Russian Deputy Foreign Minister Sergei Ryabkov in Vienna EPA-EFE/CHRISTIAN BRUNA
US Special Presidential Envoy for Arms Control Marshall Billingslea arriving for a meeting with Russian Deputy Foreign Minister Sergei Ryabkov in Vienna

Izvestia: US, Russia deliberate over New START in Vienna

On June 22, another round of US-Russian strategic stability talks took place in Vienna, Izvestia reports. The talks went on for about 10 hours. The Russian delegation was represented by Russian Deputy Foreign Minister Sergei Ryabkov, while the American side was represented by US Special Presidential Envoy for Arms Control Marshall Billingslea, who plans to issue a statement on the nature of the negotiations on June 23.

A diplomatic source told Izvestia that the Russian delegation had left Vienna on the day of the talks, and any commentary regarding the negotiations would be provided on the return to Moscow. So far, the Russian Foreign Ministry has outlined the main issues discussed: the prolongation of New START (Strategic Arms Reduction Treaty), stability issues after the termination of the INF (Intermediate-Range Nuclear Forces) Treaty, and a comprehensive dialogue on international security.

The negotiations got off to a peculiar start. In the run-up to the meeting, US representative Marshall Billingslea posted a picture of an empty table with Chinese flags from the negotiation room on Twitter, accusing China of skipping out on the talks. There were no Chinese flags on the photos provided by Russia. It seems that Russia and China arrived at the talks with completely different expectations, Izvestia notes: while Moscow was prepared for a bilateral format, the US "booked" a table for Chinese representatives. This was done in a purely symbolical manner, since China had announced a week ago that it would not attend the talks.

Moscow did not approve of Washington’s move, as follows from the comment given to Izvestia by Chairman of the Russian Federation Council’s (the upper house of parliament) Foreign Affairs Committee Konstantin Kosachev. "This is not the way serious negotiators behave," he said. "They needed to put on some kind of show to demonstrate that the Chinese presence at the talks is desired, to say that they had been invited, but declined to attend the talks," the senator told Izvestia. "However, this looks more like an ultimatum, and no self-respecting country can react positively to such an invitation." Kosachev noted that the US had taken this step on purpose to gain propaganda points.


Vedomosti: Russian economy faces slow recovery after COVID-19

The Russian economy is moving towards a recovery as the coronavirus-related restrictions are gradually being lifted, but, so far, the economy is teetering between weak growth and a new recession, experts interviewed by Vedomosti note.

By mid-June, a positive trend had been noted among Russian businesses and consumers. Inbound financial flows (analyzed by Russia’s Central Bank) have stabilized, though at quite a low level. In early June, they were 12.3% lower than the norm, while in the second week of June, the decline was reported at 10.7%. The situation with people’s savings has also improved slightly, with deposits growing by 1.4%. The mood among Russian businesses is looking up. The majority of companies polled by the Central Bank plan to restore production to pre-crisis levels or even to exceed it. The share of businesses facing a disruption of supplies has gone down. The situation is stabilizing, however, so far, there is not enough data to see how reliable this recovery is, cautioned Vladimir Tikhomirov, chief economist at BCS Global Markets, in an interview with Vedomosti.

The economic guru noted that the Central Bank’s mild financial and credit policy, which includes lowering the key rate, is unlikely to boost growth. Throwing money at the problem cannot fix sagging demand and the population’s low solvency. Lowering the key rate can support borrowers and alleviate their debt, but, this measure is unlikely to boost demand.

The only thing that can pull the Russian economy out of the crisis is a global economic rebound, Tikhomirov told the newspaper. Economists of Uralsib Bank share his opinion, noting that the recovery of the world economy will be a key factor in the growth of the Russian economy. However, the unstable situation throughout the world caused by the COVID-19 pandemic will hinder global business activity, potentially leading to a full recession, analysts of the Russian Higher School of Economic Development Center told Izvestia, adding that the recovery of the global economy might take a long time.


Kommersant: Belarus shapes shortlist of likely presidential contenders

Belarus has formed a shortlist of seven presidential candidates wishing to run in the August 9 election. Their participation will be confirmed within roughly ten days if all signatures are in order, said Lidia Yermoshina, who heads the Belarusian Central Election Commission. The preliminary list includes seven potential candidates, including Valery Tsepkalo, a former member of Lukashenko’s team; Svetlana Tikhanovskaya, the wife of prominent opposition figure and blogger Sergei Tikhanovsky who is currently under arrest; and Belarusian President Alexander Lukashenko’s main rival Viktor Babariko, who is currently in custody on charges of committing financial crimes.

Babariko, a former banker, is considered the main rival of the current president in the 2020 election. He collected over three times the amount of necessary signatures to run for president (over 350,000, while the required number of signatures is 100,000) earlier than the other candidates. However, on June 18, he was detained along with his son Eduard, who heads his election campaign, on suspicion of being involved in illegal financial activity. Meanwhile, Yermoshina noted that if his signatures are in order, Babariko’s arrest will not affect the decision of the election commission regarding his participation in the election.

Belarusian political analyst Artyom Shraibman told Kommersant that out of all the presidential hopefuls, the three least prominent candidates (Andrei Dmitriyev, Sergei Cherechen and Anna Kanopatskaya) are the most likely to be approved. As for the three opposition figures, Valery Tsepkalo has the best chance of getting through, the expert noted. "He hasn’t made any resounding statements in a while, which may have created an image of a safe candidate. Meanwhile, Svetlana Tikhanovskaya and her husband are the cookie-cutter image of street protesters that Lukashenko abhors," Shraibman said. When asked about Viktor Babariko, the analyst estimated his chances at 50%. "Of course, the arrest of Babariko and his son will hinder their campaign. However, they can still be a threat. We know that Babariko has recorded video messages that are ready to be published. Besides, people do not expect a detailed program from this politician. He benefits much more from the image of a martyr," the expert concluded.


Nezavisimaya Gazeta: Every third Russian company on the brink of bankruptcy

The crisis caused by the novel coronavirus pandemic has led to an unprecedented global economic slowdown. Businesses have suffered a serious blow due to a reduction in household consumption and disruptions in value-added chains, Nezavisimaya Gazeta writes. As a result of this, up to 50% of companies in various countries and segments of the economy have found themselves on the brink of bankruptcy. In Russia, one in three companies are in danger, despite the support measures announced by the Russian government, experts quizzed by the newspaper warn.

The survey in possession of Nezavisimaya Gazeta conducted by the Center for Strategic Research notes that currently, one in three Russian companies is under threat of bankruptcy. In some industries, the situation is only worsening. In early April, 37% of companies in the sphere of trade and services were facing bankruptcy, now, this figure has gone up to 40%. In the sphere of logistics, 31% of companies were in trouble in early April, compared to 33% in June. The construction sector is also reporting worrying figures: 32% of companies are facing bankruptcy compared to 29% earlier. In addition, energy companies are not the only ones in trouble during the pandemic, even healthcare and pharmaceutical industries are not safe. Up to 29% of companies in those spheres might declare bankruptcy, while two months ago, only 18% of those companies were in trouble. In the energy industry, one in every four enterprises is struggling with difficulties, compared to about 13% in April, the poll informs.

The amount of bankruptcies caused by the crisis will only grow, experts interviewed by Nezavisimaya Gazeta warn. "In the near future, we can expect an explosive increase in the number of court battles over rental payments and development, followed by a wave of bankruptcies, sadly," a bankruptcy expert with the Rustam Kurmayev and partners firm Oleg Permyakov told the newspaper. He noted that some companies would rather declare bankruptcy than deal with debt. "Right now, there is a moratorium on bankruptcies, however, it won’t be active forever, it doesn’t apply to everyone and it does not suppose full exemption from debt payments. I think that by the fall, the courts will be full of developers filing claims in corporate disputes," Permyakov said.


Vedomosti: Moscow restaurants reopen, but revenue remains low

Restaurants and cafes have opened in Moscow after coronavirus-related restrictions had been lifted. On June 16, summer cafes began to accept visitors, and on June 23, all restaurants have been allowed to reopen in accordance with the decree signed by Moscow Mayor Sergei Sobyanin. Vedomosti has interviewed several Moscow restaurant owners, asking them about the current situation in the restaurant business.

Founder of the RESTart Vasilchuk Brothers Alexey Vasilchuk told Vedomosti that it is difficult for a restaurant to return to normal working capacity after three months of downtime. The holding’s revenue is 50% lower on average than before the pandemic. Director General of the Shokoladnitsa cafe chain Oleg Podgorny said that the chain’s proceeds came to just 25% of the pre-crisis figures, however, during the pandemic, it reached just 8-10%. Mikhail Goncharov, who heads the Teremok fast food chain, estimated post-pandemic revenue at 25% compared to the same period of last year. Founder of Anderson (a chain of family restaurants) Anastasia Tatulova said that in the first days of work after the quarantine was lifted, its revenue has not surpassed 50% compared to last year.

Meanwhile, Rosinter Restaurants reported that the revenue from summer cafes was 30-40% lower than the same time last year. This is explained by the reduced amount of tables due to the demands introduced by the Russian consumer rights watchdog, which stress that there must be a 1.5-meter distance between all tables, president of the holding Margarita Kosteyeva explained, adding that restaurants cannot serve every client that wishes to dine out.

According to a poll held in May by the NPD market research group, half of Russian consumers will head to cafes and restaurants within a week of their opening. The rest said that they would wait 3-4 weeks. A return to the pre-pandemic client rate can be expected only by late 2021, experts predict. Fast food restaurants are expected to recover their client base the fastest, along with small cafes, while full-service restaurants are unlikely to return to the pre-pandemic figures anytime soon, Vedomosti notes.


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