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Press review: Takeaways from Istanbul talks and US pressures Arab world on Russia

Top stories from the Russian press on Wednesday, March 30th

In Istanbul, Russia heard Ukraine’s "clearly formulated" stance, according to Russian Presidential Aide Vladimir Medinsky who led the Russian delegation. Ukraine’s proposals include the country’s neutral and non-nuclear status, ensured by international guarantees and the non-use of force against Crimea and "certain areas of the Donetsk and Lugansk Regions." He noted that the sides have diverging positions on Donbass’ borders. That said, Russia does not oppose Ukraine’s aspiration to join the EU.

Judging by the latest talks, the rhetoric of both sides has toned down, Russian International Affairs Council (RIAC) Director General Andrey Kortunov said. According to him, Russia is ready to work with Ukraine’s leadership and does not seek regime change. That said, it is obvious that so far there is no clear rapprochement on the territorial issue, he added.

The special military operation will continue at least in Donbass, and Russia will aspire for the Donbass republics to receive control within the spring 2014 borders of the Donetsk and Lugansk Regions, Deputy Director of the Center for Comprehensive European and International Studies at the Higher School of Economics Dmitry Suslov said. Therefore, Ukraine’s armed forces there will be either pushed back or encircled. He noted that the proposals do not provide answers to Russia’s two key goals of the special operation - demilitarization and denazification.

The expert thinks that it is possible to divide the agenda into several components while postponing the final settlement, particularly with regards to the status of Crimea and the Donbass republics. In his opinion, Ukraine’s temporary rejection of a military resolution to the territorial issues for 15 years does not suit Russia at all. He envisions two possible scenarios: Russia will either try to resolve all the issues comprehensively in one agreement which means that the special operation will continue, including in the south of Ukraine since there Russia hasn’t assumed any obligations, or will agree to Ukraine’s proposals on its neutral and non-nuclear status and postpone the resolution of the territorial issues. In this case, it is likely that Russia will keep its military presence in the areas where its units are already located or will be located in the near future. The complete pullout will happen after a comprehensive agreement with Kiev is reached.

The result of the talks is definitely a step forward, according to Ivan Timofeev, Director of Programs at the Russian International Affairs Council (RIAC). In his words, a general pattern is seen and the Russian leadership has the last word. The results of the Istanbul talks are definitely not the agreements between decision-makers, Director of the Institute for the Development of Parliamentarism Alexey Chadaev told Vedomosti. "What is being discussed now is [the subject of] a meeting at the highest level of presidents. The subject of today’s talks creates the background for an agenda of such a meeting," the expert concluded.


Nezavisimaya Gazeta: US tries to convince the Arab world to join the pressure on Russia

US Secretary of State Antony Blinken is wrapping up his Middle Eastern tour. It started in Palestine and Israel with the Negev Summit attended by the top diplomats of Israel, Egypt, Morocco, the UAE and Bahrain. Blinken also intends to visit Morocco and Algeria. The tour should launch the implementation of an ambitious project by the US proposed back during the Trump administration to build an Arab-Israeli coalition on an anti-Iranian and partially on an anti-Russian basis.

"The neutral position adopted by the majority of Arab countries is viewed by the US as virtually pro-Russian. This concerns even Egypt that voted for the UN Security Council’s anti-Russian resolution but then clarified that the country was not ready for a conflict with Russia," said Russian International Affairs Council expert Kirill Semenov.

Washington’s pressure on Arab countries in order to convince them at least not to facilitate the circumvention of sanctions will remain, the expert asserted. "Yet, so far there are no grounds to think that the Americans will succeed. The positions, if not anti-American, then directed at diversifying connections, are too strong in Arab countries. For the majority of them, it is important to preserve multivectorness in foreign policy. In this case, the Americans may adjust the stance of a number of Arab countries yet insignificantly," he explained.


Rossiyskaya Gazeta: Russia and Europe have to find a compromise in switching to rubles in gas payments

Germany and other countries of the Group of Seven are not ready to pay for Russian gas with rubles, German Vice-Chancellor and Economy Minister Robert Habeck said. Russia has made its stance clear earlier saying that gas deliveries to countries recognized as unfriendly must be paid for in rubles.

Russia does not intend to supply gas to Europe for free, if payments are not made in rubles, then the supplies will be halted, Associate Professor at the Russian Government’s Financial University Valery Andrianov said. Private business in Europe may be less politicized and more rational than officials and may agree to ruble payments. This does not infringe on gas importers and consumers but only provides guarantees that the money received for Russian gas won’t be frozen in European accounts, he explained.

The majority of contracts with European partners now provide for euro payments, Deputy Director General of the National Energy Institute Alexander Frolov noted. In this situation, the opponents of ruble payments may demand to observe the contractual obligations. However, the expert explained that Gazprom here may cite the force majeure clause which provides for circumstances beyond its control, because according to Russian law, if a European company cannot pay in rubles, Gazprom won’t be able to supply it with gas. Information security expert Evgenia Meshkova, a member of the Association of Lawyers of Russia concurs, saying that the introduction of sanctions can also be viewed as a force majeure situation and Gazprom can insist on switching to a currency different from the one indicated in a contract.

The mechanism of switching gas payments to rubles itself is not complicated at all, according to Alfa Capital’s portfolio manager Dmitry Skryabin. In his opinion, it is quite possible to switch all European deliveries to one legal entity which would pay rubles to the Russian side and resell gas to Western companies for foreign currency.


RBC: Experts suggest Russia look into new payment structure

Russia should think about creating a new payments unit for trade with friendly countries, according to several economists and experts from the Center for Macroeconomic Analysis and the Institute of Economic Forecasting of the Russian Academy of Sciences. The issue has been brought to the fore by Western sanctions that cut off Russia from global capital markets and hindered the conversion of the ruble for foreign trade as well as by Russia’s reciprocal intention to receive payments in rubles for gas export to Europe. The Russian Ministry of Economic Development does not rule out creating such a payments unit in the future, yet for now is counting on reaping the most benefits from payments in national currencies.

If progress towards the creation of a currency union and the deepening of economic integration between countries persists (in the context of shared external shocks, common labor and capital markets, and developed trade), then the development of a regional monetary unit will make sense, Dmitry Kulikov, director of the Group of Sovereign Ratings and Macroeconomic Analysis at ACRA thinks. "In other cases, the new currency will suffer from a lack of confidence. The time of currencies supported by physical assets has passed. In modern times, the internal value of currencies is supported by confidence that in the future the monetary unit can be used to pay taxes, for trans-border or internal payments, and settlement of accounts," he explained.

Theoretically, the monetary integration has chances to survive but a long-term risk forecast is important here: it is necessary to understand whether potent centrifugal forces may emerge that in 10-20 years would render all integration efforts useless, the expert concluded.


Rossiyskaya Gazeta: How sanctions impact the Russian beer market

Two largest beer producers, Carlsberg Group and Heineken, almost simultaneously announced that they were leaving Russia and selling their enterprises. The largest player on the Russian market, Turkey’s AB InBev Efes as well as domestic brewers are rubbing their hands in anticipation since they will be able to fill in the niche quite easily even without buying the breweries of the exiting players. However, experts don’t think that the intentions of European brewers are sincere since nobody would voluntarily leave such a lucrative market, while Russian consumers won’t be left without a quality product in any scenario.

There are no buyers for the Russian assets of Carlsberg and Heineken, Vadim Drobiz, head of the Center for the Study of Federal and Regional Alcohol Markets asserts since nobody can afford it and nobody will agree to provide a loan of this size. The expert sees the exit of transnational companies as a plus for Russian business. Based on his calculations, Russian brewers can fill 65% of the market with their own products in a year while in his opinion, Russian beer is just as good and consumers will have no trouble switching to new products. That said, he thinks that the Western companies have invested too much money in the development of their enterprises in Russia and are likely to return within two years.

Other experts also do not believe that European brewers will actually leave since they are forced to do so under pressure from European authorities. "The same players will have some simple names or Russian ones," said Pavel Shapkin, who heads the Center for Development of National Alcohol Policy. He concurs that there are no buyers for the assets of Carlsberg and Heineken and they know it. In his opinion, the companies will "simply change their names" and continue to work in Russia since no license is needed to produce beer.

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