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Press review: China beefs up its nukes and EU pressing for bigger role in Arctic

Top stories from the Russian press on Friday, October 15th

Izvestia: Strong ruble to slow price hikes

Russia’s Economic Development Minister Maxim Reshetnikov said that the inflation forecast for the 2021 has been increased from 5.8% to 7.4% Experts told Izvestia that inflation is a global problem, not a local one, and that strengthening the ruble could lead to slower price hikes, Izvestia writes.

Food item inflation is perhaps the biggest one of all. The Economic Ministry indicates that over one year vegetable rose in price the most - cabbage by 81.5%, potatoes by 59.1% carrots by 35% and tomatoes by 31.3%.

Head of Macroeconomic Analysis at Finam, Olga Belenkaya, told Izvestia that "in 2020-2021, governments and central banks of the largest countries took unprecedented measures to stimulate economic demand, and the demand, as lockdowns were lifted, recovered faster than opportunities to adequately increase supply. On the other hand, the pandemic and the lockdowns to contain it have disrupted the normal functioning of production and supply chains, resulting in business production costs growing at record rates, and companies transferring them to selling prices," she said.

Belenkaya expects "a slight decrease in annual inflation to about 6.9%" by the end of 2021. Managing partner of the analytical agency WMT Consult Ekaterina Kosareva also told the newspaper that she believes the issue is the decline in economic demand around the world. "The pandemic has made its own adjustments to economic growth forecasts and other macro indicators. Therefore, it is not surprising that forecasts are now being revised, and quite often, said Kosareva.


Nezavisimaya Gazeta: China continues to build up its nuke stockpile

China is continuing to build up its nuclear weapon storage and isn’t making any promises on how it will use is. The increased supply is getting harder to conceal from the rest of the world, according to US Special Presidential Representative for Nuclear Nonproliferation Jeffrey Eberhardt, Nezavisimaya Gazeta writes.

Eberhardt has called on Beijing to work together with Washington in order to avoid nuclear war. In other words, the US wants China to acknowledge that it is a powerful nuclear nation and should join the strategic stability talks, which are being led by Russia and the US.

Beijing has said time and time again that it will join the conversation if the United States reduces its reserves to China’s level. And this is at a time when images from American satellites indicate that China is building hundreds of silos to launch nuclear missiles.

Nezavisimaya Gazeta wrote in August 2021, that General Thomas Bussiere, Deputy Commander of the US Strategic Command, said that China's claims that it wants to maintain minimum forces as a means of nuclear deterrence are not true.

Senior Research Fellow at the Higher School of Economics Vasily Kashin told the newspaper that China has not issued any official statements on its nukes, and that the speech was made by Beijing’s former representative to the UN on disarmament." Nevertheless, this is a sign, yet this not an official revision. But in fact, China's nuclear activities do not match its previous position, which was that it keeps the arsenal at a minimum and avoids entering the arms race. In fact, China is developing systems such as missiles capable of carrying 10 warheads each. They are working intensively on this. We can expect that by the end of the decade, the number of deployed nuclear weapons will increase significantly," Kashin said.


Kommersant: EU wants to impose new rules in Arctic

The European Union is taking a stance on the Arctic and demanding that it be recognized as a full-fledged player, Kommersant writes.

The EU’s first demand is a complete prohibition on the extraction of coal, oil and gas in the Arctic and neighboring regions. Russia has rejected the EU's claims to the Arctic. According to Deputy Prime Minister Alexander Novak, the new demand from the European Union "is not motivated by anything, except political reasons." And one of Kommersant's sources in the Russian Federation’s state structures said that the EU is attempting to take on the role of a "bull in a china shop."

But in fact, the EU is fundamentally changing its approach to the Arctic. Since 2008, Brussels has been trying to obtain at least observer status in the Arctic Council - an organization uniting eight circumpolar states (Denmark, Iceland, Canada, Norway, Russia, the US, Finland and Sweden). This structure is sometimes called the "shadow government of the Arctic", since its members have been trying for 25 years to resolve key issues in the region among themselves, not allowing non-regional players there.

An official who spoke anonymously with Kommersant said that the military-political situation in the region "is clearly assessed from a pro-NATO angle."

Dmitry Akishin from Vygon Consulting told the newspaper that the implementation of drastic measures can lead to unpredictable consequences, such as, for example, last month’s energy crisis, so it makes more sense to make all-around well-informed decisions. "In this case, this is a common effort to decarbonize production in the Arctic. To achieve this, Arctic countries need to jointly hammer out a set of measures to cut greenhouse gas emissions through the introduction of the best available technologies and industry practices, as well as the creation of incentive tools for such projects," he told Kommersant.


Nezavisimaya Gazeta: Russia, Turkey at odds over Syria

Tension over Syria is rising between Russia and Turkey with both sides trading a slew of mutual accusations.

Turkish President Recep Tayyip Erdogan has hinted at being ready to independently push the Kurdish paramilitary forces from their border to the required depth, while Russian diplomacy responded with a statement that Damascus has the right to restore its sovereignty over the entire territory despite the fact that it is still controlled by Ankara-backed non-governmental forces. The experts talk to Nezavisimaya Gazeta and say the stakes are rising.

Visiting researcher at the Washington-based Middle East Institute (MEI) and Russian International Affairs Council expert Anton Mardasov says what’s surprising is that tensions are running high just after the talks in Sochi between Putin and Erdogan. "It is unlikely that an agreement was reached there on a new Russian-Turkish deal in Syria." Most likely this question was raised "tangentially", he said.

"It's another matter that the parties, even after the six-hour-long negotiations, never voiced specific agreements, preferring to leave room for interpretations of their actions," he said.

He said that it is necessary under the current conditions, when Moscow demands that Ankara carry out the agreements concluded by Putin and Erdogan in the Kremlin in March 2020 on unblocking the M4 highway (Aleppo-Latakia) in Idlib, and vice-a-versa, and also to fulfill the points of the Sochi Memorandum of 2019 associated with the withdrawal of Kurdish self-defense units from Manbij and Tel Rifaat.


Izvestia: How much longer will the world need coal

The Russian Energy Ministry published statistics that say that Russian coal export to Europe and the Asia-Pacific region have grown by 12% since the beginning of the year. The demand for coal has increased due to a global gas market shortage, Izvestia asked exports whether or not this is a long-term trend.

The consumption of Russian coal in the external market in 2021 will rise 8% higher than the previous year and will exceed 220 mln tonnes. In addition, foreign exchange earnings will grow by almost 19% and surpass $15 bln, which is $2.15 bln more than in 2020.

Head of the Department for Research of the Energy Complex of the World and Russia at the Institute for Energy Research (ERI RAS), Vyacheslav Kulagin told the newspaper that an increase in external prices and volumes of coal exports causes an increase in the income of coal companies and the amount of taxes paid. "Our exports have grown not only in comparison with 2020, when there was a recession, but also in comparison with more favorable years of 2018-2019," Kulagin said. "But in general, the effect for the country is more complicated. The growth in exports with a smaller increase in production led to a reduction in coal supplies to the domestic market," he added.

Deputy Head of the Economy of the Fuel and Energy Complex Sectors of the Center for Strategic Research (CSR), Sergei Kolobanov, explained to Izvestia that federal budget revenues from the coal industry are actually quite modest. In seven months of 2021, coal mining generated 37 bln rubles in tax revenues. "In addition, it should be noted that there is no export duty on coal," Kolobanov said. "Almost half of the taxes on coal mining (18 bln rubles) are formed by the profit tax, and only in this part, can the Russian budget be replenished with additional revenues via an increase in coal prices and, accordingly, the profits of coal mining companies. Other taxes do not depend on coal prices, but export growth will increase the volume of production and the total amount of the mineral extraction tax.

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