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Press review: German election impacts Nord Stream 2 fate and Russian fuel prices skyrocket

Top stories from the Russian press on Tuesday, September 28th

Rossiyskaya Gazeta: German Election results to influence Nord Stream 2

Nord Stream 2 could be affected by the results of the recent elections in Germany, as well as the new sanctions by the United States, writes Rossiyskaya Gazeta.

While it’s not possible to demolish the constructed pipeline, it is possible to bury it in court cases limiting its activities and stalling the certification process.

The US House of Representatives approved a defense budget that allows for sanctions against companies and individuals involved in the Nord Stream 2 construction and operation, which could lead to banning their business activities in the US and freezing their assets there. While it sounds threatening and dangerous for the European companies, it may be difficult to carry out in practice. Sergei Suverov, investment strategist at Arikapital says that since the project is already built, it is unlikely to be reversed, however, its launch may be delayed.

If in fact the implementation is stalled, it may cause severe problems for the European gas market, which isn’t in the best shape already, Alexei Grivach, Deputy Head of the National Energy Security Fund told Rossiyskaya Gazeta. According to the latest information, European underground gas storage facilities are half empty with the heating season just two weeks away. Gas prices have responded to these conditions by hitting historical highs.

 

Nezavisimaya Gazeta: Russia and Turkey to hash out differences over Syria

Syria will be a thorn in the side of Russian-Turkish dialogue when President Recep Tayyip Erdogan comes to Moscow on September 29, as the two countries have a growing number of grievances over various agreements in the Middle East, Nezavisimaya Gazeta writes.

While the differences won’t dampen the visit, the issue is something that certainly requires attention. The pro-Turkish opposition is unhappy with what it calls the growing number of attacks by Damascus on the territories under its control, while the Russian Center for the Reconciliation of Warring Parties disputes those claims.

Just on Monday, Russian Admiral and Deputy Head of the Reconciliation Center Vadim Kulit said that a serious incident occurred in Aleppo when members of the Syrian Arab Republic (SAR) attempted to cross the border into Turkish territory through a minefield. As a result, five were killed and 10 injured, along with 5 Syrian servicemen. On the other hand, just a few days ago, shelling by the Turkish regular army took place in the province of Haseke, nearly causing damage to the Russian Aerospace Forces helicopters.

Presidential Spokesperson Dmitry Peskov assured that Syria will be among the topics discussed during the meeting between the two presidents, Nezavisimaya Gazeta writes.

According to Kirill Semyonov, an expert from the Russian International Affairs Council , the mutual claims of attacks are something to watch out for. "If the attacks are confirmed, that means that changes in the air control zones over northeastern Syria have taken place," Semyonov said, adding that despite withdrawing from the area, the United States retained control of the airspace over them. Flights over the area should be confirmed with the Americans, since it is possible that the changes in control were the result of Russian-American consultations.

 

Kommersant: Russian fuel prices hit record highs

The rise in oil prices has led to an increase in Russian fuel prices, Kommersant writes on Tuesday morning. The spike could improve the position of petroleum producers. Analysts say that the profitability of fuel oil production improved by about 200 rubles ($2.8) per tonne of refined oil compared to September of the pre-pandemic 2019. However, since early 2021 fuel oil production profitability has only declined, as the price of oil for refineries grows. Currently, the price of fuel oil is 26,900 rubles ($371) per tonne, an increase of 42% since the beginning of 2021, according to the data of the SPIMEX exchange. The previous record was set in 2018 at 21,000 ($290) rubles per tonne.

Oil fuel production in Russia in Jan-Sept 2021 amounted to 28.7 mln tonnes, with a total volume of primary oil refining of 185.5 mln tonnes. Rosneft remains the largest producer and accounts for about 40% of the total Russian fuel oil production (11.8 mln tonnes), LUKOIL - 10%, Surgutneftegaz - 15%, Gazprom and Gazprom Neft - 11%.

The domestic market prices are formed at export parity, while European quotations for fuel oil with a sulfur content of 3.5% are at their highest levels since fall 2018, says Evgeny Tyrtov from Vygon Consulting. The price growth is driven by high oil prices and inter-fuel competition with gas, the latter setting historical price records in Europe. Tyrtov says that the current difference between the price of oil and the corresponding oil product for fuel oil is now higher than it was in September 2018 and 2019.

 

Izvestia: Kosovo escalation jeopardizes 10-years of Brussels-backed peace settlement

Kosovo may be back on the map as a conflict zone, after Deputy Foreign Minister of Serbia, Nemanja Starovic said that Serbia will not negotiate with the help of the EU.

Last week, an incident occurred at the border that fueled emotions on both sides. The EU has called for de-escalation at the border and is preparing an emergency meeting on the incident. The Serbian side took offense, as in its opinion, the country did not do anything to contribute to the exacerbation.

However, it looks as though it will not be possible to defuse the situation without outside assistance.

Serbia said that it will not negotiate until Pristina withdraws its military forces from the north of the partially recognized republic. Starovic told Izvestia that the Kosovar leadership had no right to send troops there in the first place. "We will not agree to any deals or imaginary compromises offered in recent days not only by Pristina, but also by Brussels," she said. According to the diplomat, Serbia will not use "an alternative reality" as a basis for conflict resolution.

Belgrade, the newspaper writes, is going to push the EU to publicly confirm within the month, whether the Brussels agreements that it supports will remain in place. If so, Belgrade plans to demand that they are carried out in full, Starovic said.

 

Vedomosti: Russia plans to set income tax equal for residents and non-residents

The Russian Ministry of Finance would like to make income tax rates equal for Russians and citizens who are not tax residents of Russia, according to its draft Guidelines for budgetary, tax and customs tariff policy for 2022-2024, Vedomosti writes.

The draft has proposed to establish the size of the income tax on earnings "from labor activity" for non-residents at a level similar to Russian tax residents. Passive income from securities or real estate is not discussed.

Two years ago, Finance Minister Anton Siluanov proposed similar initiatives, to make personal tax the same for both non-residents and residents. The chairman of the Russian Union of Taxpayers Artem Kiryanov says that equal terms will make the country more attractive to investors, especially for those who have been optimizing their tax through offshore schemes. Ernest Young partner Marina Belyakova adds that equal taxes is something that the business community has been waiting for. The initiative will make it easier to administer mobile employees, in particular, foreigners who regularly come to Russia, Vedomosti quotes Belyakova. In 2020, the Russian Trilateral Commission working group already considered a similar bill, according to the secretary of the Federation of Independent Trade Unions of Russia Oleg Sokolov. The trade union opposed it for several reasons, he said. According to him, the measure violated employment laws, taking away any advantages that Russian workers may have on the market. Sokolov went on to explain that the labor market is still recovering from the pandemic and there are fewer jobs out there now than before.

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