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Press review: EU to commit ‘sanctions suicide’ and ‘invasion’ hype causes economic pain

Top stories from the Russian press on Tuesday, February 1st

Talk of tough sanctions against Russian oil and gas exports is nothing but political rhetoric. A ban on energy imports from Russia would be suicide for the European economy. The uncontrolled rise in energy prices that would follow these sanctions will lead to a global crisis, Rossiyskaya Gazeta writes, citing market experts.

Director of the National Energy Security Fund Konstantin Simonov points out that there aren’t any large amounts of oil and gas freely available on the global market. Without Russian hydrocarbons, prices will soar. Saudi Arabia won’t rush to save the United States and Europe by increasing production and in fact, it’s not capable of making up for such shortages. The only remaining option is Iran, but the country has long been under US sanctions and doesn’t have infrastructure facilities to supply energy to Europe. Sanctions against Russia will push the global economy to the brink of disaster, the expert emphasized.

A ban on hydrocarbon imports from Russia will lead to a situation where gas prices at about $1,000 per 1,000 cubic meters would seem low. At the same time, the price of oil and oil products will double, Deputy Director General of the National Energy Institute Alexander Frolov noted. According to him, while only China turns a blind eye to the ban on oil imports from Iran, all of Eurasia will ignore the ban on energy imports from Russia.

That being said, experts believe that tough measures are unlikely to be taken against Russia’s oil and gas industry. All the painless options for sanctions have already been used and the only thing left to do now is to discuss restrictions that will cause more harm to the countries who impose them, Executive Director of the Capital Market Department at Univer Capital Artem Tuzov noted.

 

Nezavisimaya Gazeta: Month-long ‘invasion’ hysteria proves costly for Russia, Ukraine

Mounting military and sanctions-related hysteria around Russia and Ukraine has proved costly for both countries. Both the Ukrainian and Russian economies are suffering from rising inflation rates, currency depreciation, stock market crashes, and foreign investors fleeing from government stocks, Nezavisimaya Gazeta writes.

The current discussions about the threat of a military conflict between Russia and Ukraine are negatively impacting the economies and financial markets of both countries, experts say. Macroeconomic Analysis Chief at Finam Olga Belenkaya pointed out that Ukraine’s hryvnia had lost 8.4% of its value between early November and last Friday, while the Russian ruble lost 8.1%. The weakening currencies are creating conditions for a further rise in inflation and compel central banks to pursue a tougher monetary policy, thereby hindering economic growth, the expert added.

However, the damage from the rising political tensions to the Russian and Ukrainian economies is not equal, TeleTrade Chief Analyst Pyotr Pushkarev noted. "As for Ukraine, investors are massively abandoning plans related to the real sector of the economy, yet in Russia, it’s the stock market that funds have been withdrawn from. That means that only the share of foreign capital in Russia’s financial instruments has declined," he explained.

Ukraine’s financial system is experiencing more damage, Pushkarev went on to say, adding that if the conflict continued to mount and there were no additional monetary infusions, then the Ukrainian economy would hardly be able to survive the standoff for more than a few months.

 

Vedomosti: Olympic athletes bringing coronavirus to Beijing

With four days to go before the start of the Winter Olympic Games, mainland China has recorded 40 new daily coronavirus cases, according to its January 31 statistics. In the meantime, 37 cases were reported among the 1,252 people who arrived in the Chinese capital for the Olympics on January 30. That said, while the country’s infection rates are declining, imported cases may pose the main threat, Vedomosti writes.

For more than two years, China has been pursuing a zero-COVID policy, which particularly includes an actual border closure, along with near-universal vaccination rates. However, one of the key elements of this system has been isolated from the outside world. This may well tear China’s defenses apart for a while, noted Pavel Volchkov, who heads the genome engineering laboratory at Moscow Institute of Physics and Technology.

"It is already clear that it’s hard to resist an outbreak amid this kind of a public event, albeit a downsized one. Judging by Japan’s experience in hosting the Olympic Games in 2021, it led to a significant rise in cases, even though it was quickly contained. China is sure to see an outbreak, but it highly likely that it will be a local one, limited to Olympic locations," Volchkov pointed out.

According to Deputy Director of the Center for Comprehensive European and International Studies at the Higher School of Economics Vasily Kashin, if infections spread beyond "the Olympic bubble," where no one can enter without undergoing a lot of testing and quarantine, the Chinese authorities will probably have to review their usual measures to contain the virus. "It is about an event that involves hundreds of thousands of people and the Omicron variant is more contagious than the previous strains," Kashin said, adding that the Olympic Games were an unprecedented challenge to China’s healthcare system.

 

Nezavisimaya Gazeta: Russia seeks success in military drone market

Russia is bracing to become an important exporter of unmanned combat aerial vehicles. However, the country has to catch up with other suppliers. According to expert estimates, had Russia started to promote its goods in this niche much earlier, their annual exports would have reached hundreds of millions of dollars by now, Nezavisimaya Gazeta notes.

Russia’s state arms seller Rosoboronexport points out that foreign partners have been showing a growing interest in Russian-made unmanned aircraft and now the country is bringing an entire range of drones to the market, from ultralight to heavy ones.

Meanwhile, Russia has to quickly catch up with other countries. It wasn’t that long ago that Moscow launched efforts to develop up-to-date drones, Dmitry Stefanovich, a researcher at the International Security Center with the Russian Academy of Sciences’ Institute of World Economy and International Relations, said during an online discussion hosted by the Valdai Club. According to him, another issue is that despite import substitution efforts, Russia still depends on foreign supplies. However, as the event’s participants specified, it’s possible to quickly make up for a lost time as far as the drone aviation industry is concerned because combat drones may well be viewed as "cruise missiles for the poor" and their production requires much fewer resources than that of fighter jets.

Stafanovich explained to the newspaper that the annual turnover of the global drone market was estimated at tens of billions of dollars, "with the possibility of it doubling in the next three to five years." Russia could occupy a niche worth hundreds of millions of dollars. However, in the expert’s words, the current pressing issue is to meet the Russian Armed Forces’ demand for drones. At the same time, export contracts may increase the attractiveness of this and related industries in the eyes of investors.

 

Izvestia: Tourists don’t care about new coronavirus wave

Russians are unwilling to abandon their vacation plans despite a rise in coronavirus cases. On the contrary, a surge in tourist trip sales was recorded in January, market experts told Izvestia. The total amount of booked tours is now only eight percent lower than in the same period of 2020 and 13-fold higher than last year.

Russians continue to travel both around the country and overseas despite the spread of the Omicron coronavirus variant, Vice President of the Russian Travel Industry Union Yuri Barzykin said. This year, positive sentiment among tourists is higher, even with the complicated Omicron situation, ATOR Vice President Dmitry Gorinnoted. The pandemic now has less influence on people deciding to travel for the sake of tourism because travelers have adapted to it.

Strange as it may seem, a massive shift to telecommuting is one of the reasons for a steady interest in traveling, Barzykin noted. According to him, remote workers from Moscow, St. Petersburg, and regions close to the two cities account for the majority of those who seek to change their environment. A high level of infections in big cities is the reason.

However, doctors warn that tourist trips amid the fifth wave of the coronavirus pandemic are a bad idea. Any public transport accumulates viruses, be it a plane or a train. As the Omicron variant is spreading, the crucial thing is to restrict contacts, particularly refraining from trips.

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