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Press review: Ruble set for gold peg and EU braces as Russia freezes gas to Eastern Europe

Top stories from the Russian press on Thursday, April 28th

Europe is prepared for a shutoff of Russian gas supplies, President of the European Commission (EC) Ursula von der Leyen announced on April 27 after Gazprom halted pumping to Poland and Bulgaria. This happened because these countries did not make the required ruble payment to the gas giant on April 26 for the following round of gas supplies. Von der Leyen dubbed Gazprom's move to halt gas supplies to Bulgaria and Poland "blackmail," emphasizing that the EU is ready to respond. However, it is unclear what steps the EU could take, according to Vedomosti.

On the morning of April 27, spot prices in Europe increased by more than 20% when gas supplies to Poland and Bulgaria were cut off. According to ICE exchange data and Vedomosti calculations, the May futures price on the Dutch TTF hub reached $1,390 per 1,000 cubic meters.

"Against the backdrop of the array of sanctions that the EU has already placed on Russia, the prospect of some additional actions in reaction to the termination of gas flows to Poland and Bulgaria appears modest," expert at the Russian International Affairs Council Ivan Timofeev told Vedomosti. According to him, more sanctions against Russia cannot be ruled out, but "it is difficult to think what else it may consist of."

ACRA rating agency said Poland annually consumes about 19 bln cubic meters of gas. According to Gas Infrastructure Europe and Vedomosti's calculations, on April 25 (latest updated data), there were about 2.68 bln cubic meters of gas in underground storage facilities (UGS) in Poland, they were filled by more than 75%. Thus, the currently available reserves in the country's UGS facilities will last a little more than two months, the newspaper writes.

By suspending deliveries to Poland and Bulgaria, Gazprom has clearly proved its willingness to firmly stick to the directive on converting payments into rubles, Vygon Consulting’s Maria Belova told the newspaper. According to Belova's estimates, the EU can survive without gas from Russia for 1-2 months. But, she warns, "either a serious lack of energy resources or a decline in industrial production will follow."


Nezavisimaya Gazeta: US proposes to arm Ukraine at the expense of Russian billionaires

The Biden administration is pursuing legislation that makes it easier to seize the property of Russians who have been blacklisted by the US. The proceeds from the sale of confiscated property are supposed to be transferred to Ukraine. According to Nezavisimaya Gazeta, the frequently discussed idea of supporting Ukraine using what has been confiscated from Russians is no longer just theoretical.

Speaking before a Senate Appropriations Subcommittee, US Attorney General Merrick Garland stated that he was anticipating a request for a legislative amendment that would make it easier to seize and sell the assets of Russian billionaires, with the revenues going to Ukraine. He claims that the White House will back the corresponding bill.

Even now, it is not guaranteed that the revised law will be passed by Congress without difficulties. "After all, there will be a terrible precedent, not only for those who are blacklisted, but for everyone. The question will be raised as to how dependable investments in the United States are in general. So serious conversations will happen," Director of the Franklin Roosevelt Foundation for United States Studies at Moscow State University Yuri Rogulev told the newspaper.

Nonetheless, the tendency in the United States to clamp down on Russia and raise the volume of the most diverse support to Ukraine is clear, according to the newspaper. Sociological polls attest to society's support for it as well. According to an Ipsos poll commissioned by Reuters in mid-April, about 73% of Americans support the supply of arms to the Ukrainian army.


Nezavisimaya Gazeta: China shifts focus to Central Asia

Chinese Defense Minister Wei Fenghe visited Kazakhstan and Turkmenistan as part of a tour of Central Asia and the Middle East, which will last until May 3. He spoke out against foreign meddling in the internal affairs of the region's countries and pledged that the People's Liberation Army of China would assist Kazakh and Turkmen troops if necessary. According to Nezavisimaya Gazeta, the defense chief’s journey to Kazakhstan and Turkmenistan should be viewed in light of the events in Ukraine, or more specifically, the sanctions policies imposed on Russia.

China's situation differs greatly from Russia's, but the main premise - the imposition of global sanctions in reaction to military acts - pushes China to anticipate all conceivable outcomes of a potential conflict with Taiwan, according to the newspaper. Kazakhstan and Turkmenistan are Beijing’s key partners, particularly in the energy industry. As a result, experts believe the Chinese general came to assess their resilience to potential pressure, particularly from the US administration.

"The Chinese Defense Minister's visit is noteworthy in two ways. First, given what is going on in the globe and the general threat of a major war, China needs to grasp the situation in Central Asia in terms of its own security, the stability of the regimes, and the stances of Turkmenistan and Kazakhstan, and maybe other nations. Second, bolstering Turkmenistan's security will assure the stability of Chinese initiatives with Ashgabat, ranging from oil and gas transit to infrastructure and economic development," expert on Central Asia and the Middle East, professor at St. Petersburg State University Alexander Knyazev told the newspaper.

The academic also does not rule out that China is interested in developing military-technical cooperation. Central Asia, in particular Turkmenistan, can become a promising market. "Russia dominates in this area in Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan, but military-technical cooperation in Turkmenistan has differed for a while," Knyazev noted. China can potentially take advantage of Russia's military sanctions to fill a niche in the supply of weapons and military equipment, as well as to train personnel.


Izvestia: Austrian politician sees no reasonable grounds to fast-track Ukraine into EU

Ukraine’s possible entry into the EU would take 20 years, member of the Federal Council of Austria and speaker on foreign policy issues in the parliamentary club of the Austrian Freedom Party (FPO) Johannes Hubner told Izvestia. He stated that there are no acceptable grounds for accelerating the admission procedure at this time. According to him, the standard of living in Ukraine is considerably below that of the EU.

He told the newspaper that the process of joining the EU will take years, if not decades, for countries that are far from the standard of living and political culture of other EU member states. According to Amnesty International and other studies conducted up to 2022, Ukraine is being consumed by corruption, Hubner added. According to his estimates, Ukraine's potential EU entry would take 20 years.

Agriculture is another important issue, he said, warning that if Ukraine had free market access, it would throw the entire European agrarian system on its head. Although Kiev has signed a free trade agreement with the EU, it does not yet have access to the EU's support system or subsidies. According to the expert, if Ukraine has this access, the agricultural system will become unsustainable. There are no realistic reasons to accept Ukraine quickly, he said. What’s more, pointing out the dangers of fast-tracking Ukraine into the EU, he mentioned the Russian-Ukrainian conflict could become intra-European. The conflict would fall on Europe's shoulders, which is the purpose of the US in its efforts to restrain Russia, he added.


Izvestia: Russia eyes pegging ruble to gold

Russia will develop and test a new financial system, which involves pegging its currency to gold, according to Secretary of the Russian Security Council Nikolay Patrushev. He noted that the move could ensure Russia’s economic security. A council of experts is already working on such a project. According to experts interviewed by Izvestia, if the initiative is successful, the ruble might become one of the world's strongest currencies.

This is not the first time that tying the ruble to the value of gold has been suggested, but it has become more crucial in the face of the current barrage of sanctions, Artem Deev of AMarkets believes. "Pegging [the national currency] to gold implies a significant strengthening of the ruble. The global dollar system will suffer a significant hit as a result of this. And other countries would follow Russia's lead," he said. The expert recalls that the rejection of the gold standard resulted in a dramatic strengthening of the US currency over the world.

After the West blocked half of Russia's gold and foreign exchange reserves, it became clear that the ruble exchange rate could not be supported by traditional methods based on international trade and the credit finance system, Executive Director of the Capital Market Department of UNIVER Capital Artem Tuzov noted. Any economic innovation is stressful, but the persistent depreciation of the ruble against international currencies is also difficult for people, he said.

If the reform is successful, the ruble will become one of the world's strongest currencies, drastically increasing people's purchasing power. However, the expert warned of dangers, saying, "this will substantially limit the profitability of Russian exporters, because their key advantage was a low ruble combined with large foreign exchange earnings."

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