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Press review: US ploy to hand Russia’s money to Ukraine in trouble and cotton prices soar

Top stories from the Russian press on Tuesday, June 7th

Izvestia: Moscow and Kiev unlikely to resume negotiations anytime soon

Talks between Moscow and Kiev are impossible at the moment due to Ukraine’s position, a high-ranking Russian source told Izvestia. Experts believe that the negotiation process will depend on what the current round of tensions in Donbass leads to.

"Moscow was ready to halt its special operation in March, when the two countries’ delegations held talks in Antalya. Back then, it was Ukraine that made a proposal concerning its neutral status and security guarantees that would not apply to Donbass and Crimea. Vladimir Putin was willing to take such a step but the West put pressure on Ukraine and Kiev recalled its proposal," the high-ranking source noted.

International Affairs Council Director General Andrey Kortunov points out that talks may resume only after an active round of escalation is over. "The current escalation cycle, which is taking place primarily along the line of contact in Donbass, should end in the coming weeks. Probably, in a week or two. In any case, the parties will need a lull at some point to move up reserves and restock weapons. That said, we are in for some kind of a lull," the expert explained. "If it happens, a window for talks will open. The positions that the parties will promote will largely depend on what precisely the current escalation cycle brings," Kortunov stressed.

Military expert from the SCO Institute of CIS Countries Vladimir Yevseyev emphasized that even once the second phase of Russia’s special operation was completed, there would be no certainty about a resumption of talks. According to him, given Kiev’s decision not to withdraw troops, it’s pointless talking about Ukrainian President Vladimir Zelensky’s plans to engage in negotiations. "Besides, I don’t see any reason why his American and British sponsors would give orders to resume dialogue as they are actively providing weapons to Ukraine. They aren’t searching for a compromise," Yevseyev added.


Nezavisimaya Gazeta: Biden considering easing sanctions on Iran

Following permission for Venezuela to sell oil to Europe, the United States may also allow Iran to increase its oil exports. The move is possible even without a new deal on the Joint Comprehensive Plan of Action (JCPOA). The White House’s reasons are that high gas prices may hurt the Democrats’ chances in the November congressional election, Nezavisimaya Gazeta writes.

Until recently, there was no talk about unilateral concessions. Washington and Tehran both insisted that the other party should take the first step before any new full-fledged agreement could be considered. The reason why the White House may change its position is because the conflict between Russia and Ukraine has sent oil prices soaring, along with gas prices, too. However, with more than three months into the conflict, no new deal has been made on the JCPOA. Iran’s suffering economy needs money and the West needs an alternative source of oil.

"Although much has changed since February 24 and the number of sanctions introduced against Russia has passed that of the restrictions imposed on Iran, no new deal has been made yet, while its text is 95% ready. In March, Iran demanded that the Islamic Revolutionary Guard Corps be removed from the list of terrorist organizations. It is more of a propaganda step because the Corps’ leaders have been and will remain blacklisted. The talks have been put on hold but a deal is highly likely to be reached in the end," Senior Fellow at the Russian Academy of Sciences’ Institute of Oriental Studies Vladimir Sazhin noted.

"Still, even without a deal on the JCPOA, the United States may reduce its sanctions pressure. In particular, Iran’s assets in South Korea and Iraq have already been unfrozen with Washington’s consent," the expert added.


Rossiyskaya Gazeta: Germany may forfeit leading economic role in EU due to anti-Russia sanctions

Germany should refrain from hastily abandoning Russian energy supplies and ensure the country’s energy security, Prime Minister of Germany’s Saxony region Michael Kretschmer said. Germany became Europe’s leading economy largely thanks to Russian oil, gas and coal imports and now that Berlin is forced to reduce purchases, Germany is losing its advantage, that is, access to cheap and easily available energy, which will inevitably tell on the country's economic growth and position in the European Union, Rossiyskaya Gazeta writes.

Germany is one of the countries that depend on Russian energy supplies the most. Another EU leader, France, relies on them much less. As for the European Union’s third biggest economy, the Netherlands, it did import a large amount of oil, gas and oil from Russia but much of it was either resold or processed and exported to other countries.

According to Kirill Rodionov from the Institute for the Development of Technologies in the Fuel and Energy Complex, rising prices have already become a problem for German industries. IHS Markit predicted in May that Germany’s industrial production growth would slow down to zero in 2022 from four percent in 2021.

AriCapital Investment Strategist Sergey Suverov believes that the move to abandon Russian energy may cost Germany dearly. Rising energy prices will reduce the competitiveness of its products, energy logistics will become more expensive and complicated, and gasoline prices will surge, lowering the German population’s purchasing power. On the other hand, all countries will see a hike in energy costs, while Germany’s economic leadership in the EU stemmed not only from low energy costs but also from wage control, top-quality products, highly qualified engineers and workers, and the high level of technological efficiency of goods, the expert noted.


Izvestia: US unable to hand Russia’s money over to Ukraine

Three months have passed since the US and other Western countries moved to freeze the Russian Central Bank’s assets but Washington officials remain divided on whether the country has the power to confiscate Russia-related assets and use them for Ukraine’s restoration, Izvestia writes.

The 1977 International Emergency Economic Powers Act (IEEPA) is the main tool that allows the US president to freeze foreign assets. Such a step can be taken "to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States" but only "when the United States is engaged in armed hostilities or has been attacked by a foreign country or foreign nationals" who own the assets.

"I don’t see how these assets can be confiscated. The only possible scenario would involve a declaration of war between Russia and the US. Another scenario would include the establishment of an alternative Russian government, like in Venezuela. I don’t think that this scenario is possible," Professor of Finance at Michigan State University Andrey Simonov said.

There is a certain civil procedure to confiscate assets in favor of the state but it requires going to court and providing evidence of criminal activities, Professor of Law at University of Virginia Paul Stephan explained. The criminal origin of the money that Russian individuals used in order to purchase properties can be proved, but as for the assets of state companies and the Central Bank, it’s almost impossible.

The US government is first and foremost concerned that a refusal to return the assets to Russia will make other countries abandon the dollar as a global reserve currency because foreign governments and companies will no longer be sure that their assets won’t be frozen, sanctioned and seized. The same problem will affect the euro and the British pound, too. The Chinese yuan may benefit from the situation though this is not what Beijing really wants, Senior Research Editor of the Washington-based Issue Insight analytical portal John Kavulich told the paper.


Rossiyskaya Gazeta: Global cotton prices see significant spike

It seems that the global cotton market has been hit by every possible problem. Logistics issues started to emerge due to the coronavirus pandemic back in 2020. Last year, heavy rainfall damaged crops in India, one of the main cotton exporters. Cotton prices have skyrocketed by 70% over the past year, and this is not the limit. This year, a drought has affected cotton fields in the United States, the world’s most significant cotton exporter.

In May 2022, cotton prices hit 11-year highs. According to President of the Russian Union of Textile and Light Industry Entrepreneurs Andrey Razbrodin, Western sanctions on cotton from Central Asia and China also played a role.

"At the same time, the overall global economic downturn, as well as a recent move by the United States and a number of other developed countries to lift their embargo on the import of cotton and cotton products from Uzbekistan and Turkmenistan (which was imposed in the second half of the 2010s over the use of manual labor in cotton fields), will make prices drop by the fall or mid-fall. And if the US and other nations lift restrictions on ‘Uyghur’ cotton from China, introduced in 2017-2019, then there will be a major decline in prices," the expert pointed out.

Russians don’t have to worry about cotton products disappearing from the shelves, Primtex company Director General Dmitry Bakarinov noted. Russia is a regular buyer of cotton from Central Asian countries and there are no issues with supplies. Strong trade ties with the countries of the region made it possible for Russian businesses not to be concerned about logistics. While logistics chains across the world are thinning out and breaking down, cotton "caravans" keep arriving in Russia.

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