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Press Review: NATO looks east to China and Russia eyes tightening of monetary policy

Top stories from the Russian press on Tuesday, June 15th

Izvestia: Russian-US summit can launch dialogue on strategic stability, Deputy Foreign Minister hopes

Russian Deputy Foreign Minister Sergey Ryabkov hopes that the meeting between Russian and US Presidents Vladimir Putin and Joe Biden will become a starting point for launching a new dialogue on strategic stability. Meanwhile, Russia passed on to the Americans its proposals for strategic stability, he said in an interview with Izvestia.

"I hope the summit will become a starting point," he said, adding, "We have conveyed our proposals to the Americans, and they are continuing an internal analysis."

Speaking about whether the return of ambassadors is possible, the diplomat noted, "One of the results could be the decision of the leaders to return the ambassadors and begin to implement agreements that will be reached at the summit. It would be an important signal, no doubt, that a certain extremely difficult page is turning and something new is beginning".

However, Moscow does not yet see that Washington is ready to normalize the work of diplomatic missions, so the United States remains on the list of unfriendly countries, Ryabkov said. He stressed that to be excluded from the list of unfriendly countries, the US would have to end its interference in Russia's internal affairs and integration efforts and stop working to infringe on Moscow's economic affairs.

Russia expects that the symbolism of the site in Geneva, where many significant negotiations have been held, will help the US side feel the responsibility of the upcoming summit, Ryabkov added.

 

Kommersant: NATO turns to the East to confront China

The NATO summit in Brussels had two key goals: to demonstrate the resurgence of Euro-Atlantic unity and to outline the bloc's new strategy. Both tasks have been completed. US President Joe Biden has gone to great lengths to emphasize how seriously his administration — unlike the previous one — takes its allied obligations, Kommersant writes. Meanwhile, its allies agreed for the first time to declare China a systemic challenge for the security of the alliance. From now on, NATO plans to contain not only Russia, which is still considered the number one threat in the alliance.

The document adopted at the end of the summit in Brussels speaks of the intention of NATO members to increase military spending. Accordingly, the total defense budget of all 30 NATO countries will grow by 4.1% in 2021 and will amount to $1.049 trillion, including $726 bln from the United States, and $323 bln from its allies.

NATO members intend to spend these funds primarily on stopping "threats from the East." This term, for the first time, means not only Russia but also China. The declaration adopted at the end of the alliance summit in London in 2019 spoke about China in a rather calm manner. At the time, the European NATO member countries were not yet ready to fully support the US’ tough anti-Chinese rhetoric, Kommersant writes.

The list of claims against Beijing includes pursuing a policy that runs counter to the basic principles of the Washington Treaty on the creation of NATO, the rapid and non-transparent build-up of its nuclear arsenal, the merger of the military and civilian sectors, and joint exercises with Russia.

At the same time, NATO has not forgotten about Russia against the background of the growing confrontation with China: it is mentioned 63 times in the document agreed on Monday. NATO expressed concern about the buildup of Russia's military potential, large-scale exercises near the borders of NATO countries, violations of the airspace of the bloc members, and military integration with Belarus. The leaders of the alliance also called on the Russian authorities to exclude the Czech Republic and the United States from the list of "unfriendly countries."

 

Izvestia: G7 changes priorities to healing the world from COVID by 2022

The G7 countries have adopted the US agenda to contain China — according to experts interviewed by Izvestia, most of the current G7 initiatives are aimed at its rivalry with Beijing. A consequence of this struggle is the decision to provide developing countries with more than two bln COVID vaccines in 2022. Russia, according to analysts, is not on the list of G7 priorities — a fact indicated by the final document of the summit, which had no new statements on the Russian issue.

The key topic of the summit was the COVID-19 pandemic and what role the G7 countries will play in the fight against it. In a final statement released on June 13, the leaders detailed their objectives of setting the common goal of ending the pandemic as early as 2022 and deciding to step up the production and distribution of vaccines. By the end of next year, the G7 expects to provide developing countries with about 2.3 bln doses of vaccines.

It is impossible to say for sure whether it will be possible to finally tackle the pandemic in such a short time — even under the most favorable circumstances, there is a risk that the foci of the disease will still remain, especially among less-developed nations, experts told Izvestia.

"If there are no dangerous new mutations, then it will be possible to cope with the pandemic in the global North as early as next year," Head of the Russian International Affairs Council Andrey Kortunov told Izvestia. "At the same time, vaccine shortages for the global South cannot be ruled out - we have no reason to believe that this shortage can be closed within the next 12 months. Even in the best-case scenario, developing countries may still have some coronavirus foci," he added.

 

Kommersant: Bank of Russia raises key rate preparing for tight monetary policy

The Bank of Russia increasing the key rate by 0.5 percentage points to 5.5% per annum was quite predictable, but the regulator’s comments following the decision change the situation, Kommersant writes. At least for now, the Bank of Russia is considering 0.5 pp instead of 0.25 pp as a possible, albeit temporary, step in the fight against inflation. The regulator is also ready for a temporary transition to a tight monetary policy.

In addition, for the first time, the Bank of Russia outlined a mechanism that had not been discussed at all for the Russian economy: growing inflationary expectations may bring household consumption forward, which would additionally inflate prices and inflationary expectations.

Economist Alexander Zotin told Kommersant he believes that the monetary actions of the Bank of Russia would not help solve most issues, and the rate hike "will cool down the emerging post-pandemic recovery growth."

Meanwhile, banking analysts reacted very calmly to the regulator’s decision. Accordingly, ING now expects a "ceiling" of the key rate at 6.5%. Raiffeisenbank notes that a rate of 6.75% "fits into the medium-term forecast of the Bank of Russia on the average key rate for the year." At the same time, a strengthening of the ruble is still questionable due to geopolitical risks, but any results of the meeting of the US and Russian Presidents on June 15 may cause a sharp instability of the ruble for several weeks.

 

Vedomosti: Moscow strengthens anti-COVID-19 measures before State Duma elections

Four Russian regions followed Moscow mayor Sergey Sobyanin, who signed a decree on June 12 setting new restrictive measures due to the coronavirus pandemic (a ban on catering from 23.00 to 6.00, transferring 30% of employees to remote work, bans on entertainment events, etc.). Moscow, however, has so far remained the only region with a "non-working days" regime from June 15 to June 19. Meanwhile, according to experts interviewed by Vedomosti, the restrictive measures may be dictated not only by coronavirus but by the multi-day elections to the State Duma this fall.

Head of the St. Petersburg Politics Foundation Mikhail Vinogradov told the newspaper he believes that currently, people are mostly irritated over the measures taken against the coronavirus pandemic: "It is unclear whether people can be scared enough [for imposing restrictions] and whether they have forgotten past reports about the victory over coronavirus," he said.

Experts associate additional measures to combat coronavirus with the upcoming elections to the State Duma — Russia’s lower house of parliament. A source close to the leadership of the State Duma told Vedomosti that preventive measures against the coronavirus pandemic could "save the elections" if the real increase in the COVID-19 incidence can be brought down. "You may not have to introduce a lockdown during the campaign period," the source said. Another source close to the presidential administration told the newspaper that increasing the number of non-working days is intended to reduce social tension before the start of the election campaign.

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