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Press review: EU plots own bloc-wide Magnitsky Act and Moscow, Minsk bolster defense ties

Top stories in the Russian press on Thursday, September 17
European Commission President Ursula von der Leyen  Olivier Hoslet, Pool via AP
European Commission President Ursula von der Leyen
© Olivier Hoslet, Pool via AP

Kommersant: EU to loosen legal mechanism for new sanctions against Russia

The European Commission is working on broadening its legal instruments that would enable the introduction of personal sanctions against human rights violators in different countries, counting Russia among them. President of the European Commission Ursula von der Leyen announced plans to adopt Europe’s version of the Magnitsky Act and suggested adjusting the mechanism for approving sanctions in such a way that does not require the support of all EU member states. According to Kommersant, this amendment, if adopted, will no longer allow Moscow to count on friendly European countries that have called on EU allies not to impose tough sanctions on Russia.

According to von der Leyen, the proposals for a European 'Magnitsky Act' will be ready soon. She explained that the European Union should be able to respond clearly and quickly to what is happening anywhere, whether it is in Hong Kong, Moscow, or Minsk.

Stefan Meister, an EU-Russia relations guru at the German Council on Foreign Relations (DGAP), does not believe that the European Union will be able to agree on an extensive package of sanctions against Russia soon. Rather, an agreement on a blacklist similar to the 'Magnitsky list' can be expected. According to the expert, regarding the Nord Stream 2 pipeline, Germany and the EU would rather allow the project to be implemented in full, and then introduce some measures to restrict or prohibit transportation of gas through the pipeline.

"With the crises around Navalny and Lukashenko unfolding, the freezing of Nord Stream 2 seems to be in the cards. Nevertheless, we are not talking about a complete breakdown of relations. Even during the Cold War, economic ties between the USSR and the West were not completely severed," Head of the European Political Studies Department at the Institute for World Economy and International Relations (IMEMO) Nadezhda Arbatova told Kommersant. "Today's confrontation between Russia and the West is a struggle of ideology and real politics. Minimal interaction will be maintained, but this will not change the quality of relations between Russia and the EU," she added.


Izvestia: Minsk, Moscow agreed on military exercises amid protests in Belarus

The next joint Russian-Belarusian military exercises are not related to the political situation in the neighboring CIS member nation, Moscow and Minsk traditionally cooperate on defense, the Belarusian parliament told Izvestia. On September 16, Russian Defense Minister Sergei Shoigu met with President Alexander Lukashenko of Belarus to hash over the joint maneuvers. Meanwhile, a nationwide strike that had been looming did not occur on Wednesday. That said, the idea may no longer find support among workers, experts told the newspaper.

Cooperation between Moscow and Minsk through their defense departments and the upcoming exercises are not related to the events unfolding in Belarus, Chairman of the International Affairs Committee of the House of Representatives of the National Assembly of Belarus Andrei Savinykh explained to Izvestia. "You should not link the current events in Minsk with military cooperation, which is carried out within the framework of the CSTO and bilateral ties. These are two parallel processes, and they do not have a direct causal relationship," the politician specified.

Chairman of the State Duma’s Committee on CIS affairs, Eurasian integration and Relations with Compatriots Leonid Kalashnikov told the newspaper that the joint exercises of both countries are being held, among other things, to show NATO the effectiveness of cooperation between Russia and Belarus.

Meanwhile, Telegram channel NEXTA declared September 16 to be a Day of Solidarity and called on all residents of Belarus not to go to work in protest. However, the planned nationwide strike failed to materialize. This idea will no longer find support among workers in the country. As early as mid-August it looked promising, but then it quickly became clear that this would not lead to anything, Belarusian political scientist Evgeny Preigerman explained to Izvestia.


Izvestia: Experts forecast inevitable decline in demand for oil within 30 years

Global energy giant BP published its annual forecast on the state of the world’s energy industry up to 2050. The company's experts agree that the oil industry will either return to the pre-crisis state in a few years, or it is bound to never happen. Especially due to the new laws on emissions and the trend for environmentally friendly consumption. Experts told Izvestia, that both "green" scenarios would be economically disadvantageous for Russia, where traditional energy sources account for the lion's share of exports.

BP’s experts presented three scenarios. The "business-as-usual" scenario assumes the development of the world energy sector according to the existing trends. Energy consumption will increase by 25%, the share of coal will decrease by 20%, and the growth of renewable energy will be the same at 20%. The "rapid" scenario includes policy adjustments that will increase the cost of greenhouse emissions, and coal emissions will be reduced to 70%. The "net zero" scenario assumes that mass environmental consciousness will be added to the political measures, which stimulates alternative energy and conscious consumption.

Traditional energy sources account for the biggest share of Russia’s exports, and both "green" scenarios would be economically disadvantageous. At the same time, the green trend is common in developed countries, and Russia sees itself as a developed country, Izvestia writes. "The future of Russia’s fuel and energy complex lies in deep oil refining. It is time to understand that energy exports are expensive. First of all, it is necessary to develop our own economy, using cheap energy resources, and catch up with the lag in chemistry and mechanical engineering, " Maxim Khudalov from ACRA told the newspaper.

Maria Belova from VYGON Consulting considers BP's forecast to be a warning for Russia. The "business-as-usual" scenario assumes Russia’s daily production at 12 mln barrels per day by 2030. According to the "rapid" scenario, by 2030 production will fall to 7 mln barrels per day. This means increased competition in the market and, most likely, low oil prices.


Vedomosti: Rostec to shell out $1.7 bln on creating new Sukhoi Superjet aircraft

By 2023, the United Aircraft Corporation (UAC) plans to create the Sukhoi SuperJet New, an import-substituted version of the short-haul Sukhoi SuperJet 100, the only civilian jet built by the Russian aviation industry. The development of the new Sukhoi Superjet New aircraft, which UAC plans to create by 2023, will cost 120 bln-130 bln rubles ($1.6-1.7 bln), Vedomosti writes, citing sources close to the corporate leadership of Rostec and UAC.

According to the newspaper, the United Engine Corporation (UEC) is developing a domestic PD-8 engine, which the aircraft will use. That said, UAC and UEC are owned by Rostec. The budgets of the SSJ New program are laid out and distributed over years, one of the sources told the newspaper. About half of the sum will be spent on creating an engine. Most of these investments UEC and UAC will receive from the budget, although both companies also spend their own funds, sources told Vedomosti. UAC will allocate at least 50 bln rubles ($664 mln) for the development of SSJ New.

A source in the UAC told Vedomosti that SSJ New will be a new aircraft, which will not only replace dozens of systems and components with Russian-made ones, but also change the body design and adjust the center of gravity.

"Within the framework of the SSJ New project, Russian systems and a new generation engine are being developed. In the future, modern systems and technologies will be used in other new projects belonging to Russia’s civilian aircraft industry," a representative of the Russian Ministry of Industry and Trade told Vedomosti.


Vedomosti: Russia’s industry slows, as commodity industries resume growth

The volume of Russia’s industrial production in August was 2.9% higher than in July, but was 7.2% lower than last year. With the exclusion of seasonal and calendar factors, growth in July was 0.5%, according to the Russian State Statistics Service. Based on the figures of the statistics department, in August 2020, the raw materials sector demonstrated the highest growth of 5.2% in July 2020. Experts told Vedomosti that in general, the industries that were hardest hit during the pandemic have exhausted their recovery potential, and there are no powerful new growth drivers yet.

"Official statistics show that positive dynamics have already been observed in a huge number of industrial activities, however, industrial indices are still declining on an annualized basis," said Evgeny Rudakov, deputy head of the fuel and energy complex research department at the Institute of Natural Monopolies Research (IPEM). "The growth of industrial indices will be possible only when oil and gas production starts to grow again," the expert added.

"In general, the industries that sank heavily in the midst of the pandemic and made up for lost time in early summer have exhausted their recovery potential. The deferred demand has ended, but there are no new, powerful growth drivers yet," Deputy General Director of the Center for Macroeconomic Analysis and Short-Term Forecasting Vladimir Salnikov told Vedomosti. A notable phenomenon of the summer months is the continued excess daily demand of last year's production volumes of consumer goods (both food and non-food). "However, it is based on a much smaller scale of outbound tourism, so there is no reason to expect such a situation to continue amid lower incomes of the population," the economist said.



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