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Press Review: Black Sea incident prompts weapon review and Pentagon wary of China’s nukes

Top stories from the Russian press on Friday, June 25th
British destroyer HMS Defender Kevin Shipp/Shutterstock/FOTODOM
British destroyer HMS Defender
© Kevin Shipp/Shutterstock/FOTODOM

Izvestia: Russia’s Defense Ministry considering new regulations after Black Sea incident

The Russian Ministry of Defense is creating a unified procedure for Russian aviation against ships violating the state border in response to the incident involving a British warship in the Black Sea on June 23, Izvestia writes. The new regulations will cover the use of lighter weapons to reduce the risk of serious military incidents since the use of conventional aerial bombs can be too dangerous. Experts believe that provocations in Russia’s territorial waters will become more frequent and the country must be ready to react, but unguided rockets would be enough to demonstrate intentions.

The regulations are now under the consideration of the main command of the Navy and the Aerospace Forces. It will revise the set of weapons that aviation can use to fire warning shots against intruders. A proposal has been put forward to abandon the use of aerial bombs in favor of unguided aircraft missiles, sources in the military department told Izvestia.

In the coming years, incidents like this one with foreign ships may become more frequent, ex-Deputy Foreign Minister Sergey Ordzhonikidze told Izvestia. According to the diplomat, the Americans and their allies are testing to see if Russia is ready to resist such provocations. "They not only violate the border off the coast of Crimea but also question the territorial integrity of the country. It is their problem, whether they recognize the peninsula as Russia’s or not. We must defend our territorial integrity," the expert said.

"Even if you launch one or two missiles, then visually it will be perfectly noticeable due to the smoky trail from the jet engine. And the burst itself will not be too large, and the radius of damage is small," military expert Viktor Murakhovsky told Izvestia.


Izvestia: How EU sanctions will affect Belarusian economy

New EU sanctions against Minsk will have a painful effect on the Belarusian economy, according to experts interviewed by Izvestia, and the country will become poorer from sectoral restrictions, especially those related to the production of fertilizers and petroleum products. The sanctions were announced on the first day of the EU summit, which started on June 24. While Belarus was not even on the event’s agenda initially, one of the key foreign policy topics was the relations between Brussels and Moscow.

According to experts, individual restrictions were rather symbolic, but economic sanctions are fraught with real losses for the country.

"If this affects oil refining and there is a decision that will completely stop the supply of Belarusian refineries to the EU market, of course, it will be very painful. Oil refining accounts for about a third of Belarus' exports to EU countries. The share of exports may fall by 10-15%," Belarusian political scientist Evgeny Preigerman explained to Izvestia. "Other sanctions - for example, a ban on access to financing — will be perceived differently: the possibility of carrying out many investment projects and some kind of financial transactions will be generally closed. Economists' estimates vary — the damage could be from 2 to 7% of GDP in the case of the most powerful sanctions," he added.

According to Associate Professor at Plekhanov Russian University of Economics Denis Domashchenko, the sanctions will leave businesses and the public poorer. Closing the doors to the European financial markets, Belarus will have to almost completely rely on Russia, the expert believes. In the current situation, a lot depends on the position and actions of the Russian leadership, he added.


Nezavisimaya Gazeta: Pentagon concerned about China's growing nuclear potential

According to the Pentagon, the view that Beijing possesses the minimal required nuclear stockpile to deter a potential adversary is outdated. Now, according to the department, China could use nuclear weapons in a regional conflict. According to Nezavisimaya Gazeta, the modernization of China’s nuclear forces is so rapid that by the end of the decade they will more than double. Meanwhile, focusing on China is a good way to inflate the Pentagon's budget, which is greater than it was at the heights of the Korean and Vietnam wars or under Reagan in the 80s.

The Pentagon report states that China now has over 200 warheads. In an interview with Nezavisimaya Gazeta leading researcher at the Institute of Far Eastern Studies of the Russian Academy of Sciences Vasily Kashin noted, "This is most likely an outdated figure. It arises from compilations in published sources. SIPRI estimates that China has 350 warheads". "Indeed, China's approach to nuclear weapons has changed. This change happened a long time ago, but the United States preferred to ignore it," the expert added.

China made the political decision to make significant investments in modernizing its nuclear forces in the 1980s and 1990s. But only now has it begun to bring real results, the newspaper writes. From the early 2000s to the present, a large number of new strategic weapons systems have been developed.

"A new great nuclear power is emerging. I think that in the future, China may join the arms control negotiations between Russia and the United States. But the Chinese made it clear that they would never sign a treaty that would give them a lower quota on the number of nuclear weapons than Russia and the United States," Kashin concluded.


Kommersant: Russian metal exporters suffer from export duty hike

Rusal and Novolipetsk Steel (NLMK) may suffer the most from the introduction of temporary export duties on metal. Meanwhile, Nornickel has in the most advantageous position, since the duties do not affect palladium and platinum. According to Kommersant, although the government decided to introduce duties under the mantra of protecting the domestic market, metal companies consider this decision exclusively fiscal, doubting its effectiveness and fearing negative consequences for their investment programs, as well as the position of Russian metals on the world market.

An unexpected decision by the Russian government to impose export duties on steel and basic non-ferrous metals will hit Rusal the hardest, analysts interviewed by Kommersant believe. The company's hypothetical revenue losses could amount to 12%. Nornickel's position looks stronger, as duties will affect copper and nickel (42% of the company's revenue), but not platinum group metals.

At the same time, according to Aton, if the prices for raw materials remain at the current level in 2022, and the duties are extended, then in annual terms their effect will be even more significant — Rusal may lose 27% of EBITDA, NLMK — 18 %, Evraz — 16%.

NLMK told Kommersant that the duties will affect all types of metal products, including those that do not have significant consumption within Russia, such as steel products and cast iron.

"Restrictions on exports may lead to falling revenues, and all plans for upgrading capacities, environmental modernization, new production facilities, developing social infrastructure, implemented by companies in the metallurgical industry, including aluminum, will require adjustments," the source in the metals industry told Kommersant, as well as mentioning the likely reduction in tax revenues to regional budgets.


Vedomosti: Russia cracks down on pandemic restrictions in resort region

The authorities of Russia’s main domestic resort destination — the Krasnodar region — are tightening requirements for tourists right in the middle of the summer season. Tourists will only be able to check into hotels with either a negative PCR test for the coronavirus or a vaccination certificate from July 1, and from August 1 only vaccinated tourists will be able to visit local resorts. Such measures are associated with the worsening epidemiological situation in the region. According to Vedomosti, local hotels may lose half of their tourists due to the new restrictions, which could lead to an increase in demand for private accommodation.

About 15 mln people annually visit the resorts of the Krasnodar region, and August is one of the peak months, Director of the hotel business and tourism department at Cushman & Wakefield Marina Smirnova told the newspaper. In July-August alone in 2020, 6.2 mln people vacationed in this region, according to the Association of Tour Operators of Russia (ATOR). This is the main destination for domestic tourism, accounting for an average of 18-20% of the total tourist flow annually.

The restrictions, which will take effect from August, are considered "rather tough" by Executive Director of ATOR Maya Lomidze. According to her, Russians are already canceling their tours and hotel reservations en mass. "In essence, the new rules mean the end of the season," she said.

The new rules will undoubtedly reduce the interest of Russians in traveling to these resorts, Managing Partner at Alliance Hotel Management Vadim Prasov agreed. According to him, about 30% of tourists who planned to visit resorts of the Krasnodar region this year will have to give up their trips. But on the other hand, stricter restrictions (mandatory vaccination certificate) are being introduced only from August 1, so many people will still have time to get vaccinated, Prasov added.

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