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Press review: Moscow slams EU’s meddling in Belarus and global corporations exit China

Top stories from the Russian press on Thursday, August 20th

Izvestia: Moscow brands EU’s actions against Minsk as meddling in Belarusian crisis


The European Union is on the verge of intervening in the internal affairs of Belarus, stating that it does not recognize the election and demanding the transfer of power in the republic, Russian Senator Konstantin Kosachev told Izvestia. According to Russian Foreign Minister Sergey Lavrov, the European Union and the United States are taking advantage of the challenging situation in the country and are imposing their own terms on Belarus. Brussels has refused to recognize the outcome of the August 9 presidential election in the country and is gearing up to impose sanctions against the nation’s officials.

Meanwhile, Moscow is supporting the Belarusian leadership with reserve while not scolding the opposition, but criticizing the European approach. "The thesis on the readiness to facilitate a peaceful transition of power does raise concerns. Here the focus is not on the word "peaceful," but on the word "transition." It turns out that the EU believes it can define whether Belarus needs this transition or not. It plans to allocate money for these goals. The question is: where will these funds go? We should keep an eye on this," Chairman of the Federation Council’s Foreign Affairs Committee Konstantin Kosachev told the paper. "So, the current EU position is beyond its purview and is at least on the brink of meddling in the domestic affairs of Belarus, which is not its member," he pointed out.

However, there is no a direct clash of positions on Belarus between Russia and the European Union, the paper says. This was confirmed by the fact that a day before the EU summit, Russian President Vladimir Putin had four international conversations on the Belarusian issue - with German Chancellor Angela Merkel at Berlin’s initiative, French President Emmanuel Macron, European Council President Charles Michel and Belarusian leader Alexander Lukashenko.

Andrej Hunko, a member of the Left party in the German Bundestag’s committee on European affairs, said the EU and Russia must not make a mistake by turning the events in Belarus into a geopolitical conflict. On the contrary, if they coordinate their steps, they will manage to become mediators in this standoff. Only Belarusians themselves can iron out this issue, the politician stressed.


Kommersant: First Ukrainian president ‘unblocks’ Contact Group’s work

At the talks of the Trilateral Contact Group on the Donbass crisis, Ukraine’s second president, Leonid Kuchma, was replaced by the country’s first head of state, 86-year-old Leonid Kravchuk. His deputy in the delegation is now ex-Prime Minister Vitold Fokin, 87, who was delegated with holding dialogue with the representatives of the self-proclaimed Donetsk and Lugansk regions. A source in the Ukrainian Foreign Ministry said Kravchuk met Kiev’s expectations, Kommersant writes.

Donbass representatives also noted that with Kravchuk’s participation, the talks became more fruitful and the situation in the conflict zone began to improve. Foreign Minister of the self-proclaimed Donetsk People’s Republic Natalya Nikonorova, who heads the Donetsk delegation at the Contact Group’s talks, said the additional measures on enhancing and controlling the current ceasefire had yielded certain results and not many truce violations had been recorded. She voiced hope that "the Ukrainian side will show more resolve so that the violations will fully stop and a long-awaited peace will finally be established in Donbass." Speaking on the outcome of the meeting, she also noted another positive signal: the security subgroup moved closer to coordinating 20 mine-clearing areas.

More news came from the Ukrainian side: reporter Sergei Garmash, who joined the Ukrainian delegation to the Contact Group, said that at the meeting, Kravchuk promised to ask the parliament to review the decision on holding local elections on October 25, which outlaws them on the territories not under Kiev’s control.

Now the key goal is to convene the so-called Normandy Four talks between the leaders of Ukraine, Germany, France and Russia, the paper says. However, the talks at the level of advisers to the leaders seem to be more real. Journalist Garmash told the Obozrevatel Internet newspaper that the negotiations could be held on August 28. Kremlin Spokesman Dmitry Peskov confirmed that the new meeting of the Normandy Four was being prepared at the level of advisers.


Izvestia: Global corporations abandoning China amid US pressure

Economic ties between the United States and China keep breaking down as the trade war heats up. Dozens of companies have declared plans on moving their production from China to other countries, mostly in Southeast Asia. In some cases, this relocation is really successful, but it is too early to speak about the end of the era of China as "the world’s factory," Izvestia writes.

Numerous tariffs imposed by the Trump administration over the past years have significantly increased the cost of production in China. Sanctions are being levied on more and more Chinese companies. Global corporations have earned billions of dollars for decades from China’s cheap labor force, but now they have to look for alternatives. What’s more, rising living standards there have pushed up salaries in China, so a transfer of production has been brewing. Moreover, upon leaving China, where is production capital going to move to? The most promising destinations are other countries in East Asia.

Production based on foreign investments has been rapidly rising in Vietnam (+9% compared with production in 2019), Cambodia, Myanmar and Thailand. The world’s second most populated country India has also declared its ambitions, it has been seeking to repeat the Chinese production leap.

Meanwhile, the relocation of manufacturing is painful even for modern corporations. China still has a number of advantages and it is early to say that its future as the world’s key production base is doomed, the paper says. First, over the past decades, China has acquired new technologies and improved the culture of production due to gaining more experience. China’s second key trump card is technological chains, which had been built in the country for decades with the active participation of American, European and Asian corporations. Third, China is the world’s second largest economy with a giant domestic market, which still has a good potential for further growth. After relocation, these companies will face the risk of losing their competitive advantage on this important platform. It is absolutely clear that neither Vietnam nor Cambodia, nor even large countries as Brazil and Mexico could replace China in this field. Although due to political pressure some foreign companies will cut operations in China, it is impossible to imagine their full exit from the country in the near future, the paper says.


Media: OPEC+ oil cut deal participants fear second wave of COVID-19

OPEC+ confirmed that the oil output cut deal has yielded benefits: compliance with the agreement reached 95%, while commercial oil reserves began shrinking in July. However, the leaders of the pact - Russia and Saudi Arabia - are still cautious, fearing a second wave of the pandemic and turned up pressure on those countries violating quotas. According to experts, the balance achieved on the market remains fragile, Kommersant writes.

"Most likely, the agreement will be extended in the future, and the balancing factor will be not only the demand, which dropped over the restrictions during the pandemic, but also production in the US, which could grow amid the restoration of prices," Raiffeisenbank analyst Andrei Polischuk told the paper. There are no grounds for changing the terms of OPEC+ deal approved earlier, expert at Vygon Consulting Darya Kozlova noted. The risks of a second wave of the coronavirus remain and demand is reviving slower than expected and that’s why the key issue for stability on the market now is discipline in fulfilling the deal, she said.

The OPEC + Monitoring Committee said the countries that ineffectively fulfill the terms of the agreement will be obliged to compensate for 2.3 million barrels per day for the reduction in oil production. The countries must meet this condition in August and September. The OPEC + deal expires in 2022, but can be extended. Saudi Arabia has put forward this idea, Izvestia writes.

According to the Rystad Energy consulting agency, if the second wave of the coronavirus begins in September, the blow to demand could be 18 mln barrels per day against losses of 26 mln barrels per day in April, senior analyst at BCS Vitaly Gromadin told Izvestia. So, there is again the risk of overflowing storage facilities. But even without the extreme scenario, the demand for oil could be restored to the pre-quarantine level much longer than expected, the expert noted.

Alpari’s Alexander Razuvayev notes that today the major risk for the sector is the coronavirus pandemic, but tomorrow new threats could emerge. So, the OPEC+ deal should be indefinite. Exporters are interested in comfortable prices.


Nezavisimaya Gazeta: Belarus and Turkey likely to harm Russian ruble

The Russian ruble has been under pressure due to several negative factors. First, the Belarusian economic collapse and also the looming sanctions threats against Minsk and Moscow are spoiling prospects for both the Russian and Belarusian currencies, Nezavisimaya Gazeta writes. Another blow could be the financial crisis in Turkey.

"The situation in Belarus could greatly influence the Russian national currency," chief analyst at Alor Broker Alexei Antonov said. "The integration of the two countries is huge and therefore in the event of any transfer of power in the republic or growing protests with a guaranteed destabilization of economic ties there are big risks that the Belarusian currency will further drop. As a result, the ruble will react to this."

The Russian economy could face the risk of not only a potential default in Belarus but there is also the danger of sanctions, the paper writes. New sanctions threats are being waved at both Minsk and Moscow in the context of the Belarusian events. All this is not contributing to any calm on financial markets. Earlier, there were sanctions threats against Russia from Washington. Any new sanctions would harm the Russian national currency.

Second, economists fear that the debt crisis could soon blow up on emerging markets, which may be triggered by Turkey’s financial problems. According to the authors of the Macro Markets Inside analytical channel, the situation in Turkey now resembles 2018, when the Turkish crisis ricocheted on most emerging markets, including Russia. In early August, the Turkish lira renewed its historic low, plunging lower against the dollar than at the peak of the pandemic crisis.

"The integration of the economic processes between Russia and Turkey is rather large and some trade is carried out via the ruble and Turkey is Russia’s major trade partner," Antonov noted. "So, obviously, the processes around the lira could affect the ruble." After the Turkish crisis in 2018, the Russian ruble dropped 10% within five weeks and this year the effect could be quicker due to the coronavirus, he said.

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