On Thursday, the Supreme Court of the Donetsk People’s Republic handed two British mercenaries, Shaun Pinner and Aiden Aslin, together with a Moroccan, Brahim Saadoun, the death penalty. The day before, the three convicts partially pleaded guilty to training the Ukrainian military for terrorist activity and were found guilty of actions aimed at a coup d’etat in the republic. All of them were captured at a plant in Mariupol in mid-April jointly with a large group of Ukrainian armed formations from the 36thNaval Infantry Brigade.
"The convicted foreign mercenaries have a month to appeal against the verdict, we’ll see whether they will use the opportunity," DPR leader Denis Pushilin commented on Thursday. Their death penalty convictions could be replaced with a life sentence or a 25-year prison term. The DPR Supreme Court said the republic had never carried out capital punishment.
Lawyer Maria Yarmush told Izvestia that the UK is unlikely to help the British nationals. "Great Britain could try to mitigate the mercenaries’ verdict using diplomatic channels, yet the DPR’s judicial authorities don’t consider the mercenaries to be Ukrainian soldiers," she said. "So, no Geneva conventions on the rights of POWs could be applied to them, while the [Donbass] republics are free to use capital punishment by their laws. At present, the mercenaries are under the DPR’s jurisdiction," she added. DPR officials consider these people "foreign mercenaries who have been fighting against the republic, became prisoners of war and will be tried - this is part of the DPR’s powers and sovereignty as recognized by Russia," Yarmush said.
Another lawyer and human rights advocate, Dmitry Agranovsky, doubts the verdict will ever be carried out. "They are unlikely to use capital punishment against foreigners. And yet, it could take very long to appeal the verdict," he told the paper.
During a working visit to Armenia, Russian Foreign Minister Sergey Lavrov held a private talk with his Armenian counterpart Ararat Mirzoyan.
Analyst David Petrosyan told Nezavisimaya Gazeta that Lavrov’s visit hardly related to any serious process. "Negotiations between Yerevan and Ankara have so far been tepid. The two sides are clearly waiting to see how global developments unfold, including the Russian special operation in Ukraine. Armenia is not a priority for Turkey right now, it is much more interested in the situation in Ukraine and its own operation in Syria. Meanwhile, Moscow’s priorities include staying on top of the situation and promoting its agenda," Petrosyan said.
Yerevan also suspects that far from all details of the Russian top diplomat’s visit and his meetings with the Armenian leaders have been made public. Ashot Gazayan, a political analyst, told the paper that the Russian minister may have brought some new ideas to Armenia, since he arrived to Yerevan from Ankara after talks with his Turkish counterpart, where the two discussed the situation between Armenia and Azerbaijan.
"Yerevan is likely to finally learn how work on the demarcation and delimitation on the Armenia-Azerbaijan border would be carried out, with Azeri army units located in the sovereign Armenia for more than a year already and getting even more of a stronghold there," he assumed. "Azerbaijan could have already delimited and demarked the border on its own, without using the Russian Joint Staff’s maps Moscow has been talking about for the past few months or involving Russian experts," Gazayan said. He believes the talks in Yerevan will certainly cover an increased CSTO readiness to solve the issues faced by its member-countries on their lands.
The Zangezur link between Azerbaijan and the Nakhchivan Autonomous Republic via Armenia is another important issue. Baku has been seeking to have this project implemented as soon as possible, while Russia, too, is interested, as it will then get mainland access to Turkey via friendly countries. And Armenia is facing a difficult situation. The opposition has been putting more pressure on the government over issues discussed between Turkey and Azerbaijan, accusing it of betraying the country’s national interests, and the idea of opening the corridor is highly unpopular with the Armenians.
Russian President Vladimir Putin has abolished a rule requiring that exporters sell 50% of their currency revenues. From now on, businesses will be obliged to sell foreign currency in the amount to be determined by a governmental commission on foreign investments, within the terms set forth by the Bank of Russia, reads the executive order published on Thursday.
The ruble started weakening rapidly in late February amid the special military operation in Ukraine and the barrage of Western sanctions against Russia. According to data from the Moscow exchange, the Russian currency hit rock bottom on March 10, when the dollar was trading at 126 rubles and the euro at 135 rubles. But the ruble has been strengthening ever since, growing to 61.5 and 62.5 respectively by late May.
The Central Bank needs a strong ruble to fight inflation, while importers benefit too, since goods brought from abroad get cheaper in ruble terms. However, a stronger ruble reduces the revenue of exporters and the federal budget, with a sharp decrease in imports being crucial to the ruble’s recovery. And the Economic Development Ministry forecasts that the Russian currency will start trending higher in June.
The new flexible mechanism would enable the government to single out exporters from the general pool, Gazprombank economist Pavel Biryukov told Vedomosti. The government’s goal is to reduce the pressure from export revenues on the Russian currency to prevent it from excessively strengthening. Yet, he does not think the ruble will get much lower before some fundamental factors return, primarily importers’ demand for foreign currencies.
The measure will help lower the greenback supply overhang in the currency market, while getting the ruble back to about 65 - a rate that is more comfortable for the budget, Promsvyazbank chief analyst Yegor Zhilnikov said. He predicted that foreign currencies would remain under pressure from payments for gas in rubles and the approaching tax period, prior to which exporters actively get their amounts of foreign currencies converted.
AEB (the Association of European Businesses) CEO Tadzio Schilling said 70% of European investors were planning to cut investment in developing their business in Russia this year. At a presentation of an annual report, he revealed that half the companies said they had already suspended new investments in the country. In all, 107 companies were surveyed, from Germany, Russia, France, Sweden, the UK, the Netherlands, Switzerland, Italy, the US and other AEB member-countries. Since AEB has more than 500 members, the respondents accounted for a fifth of the organization.
In the short term (1-2 years), 80% of the surveyed investors expect that economic activity in the country is going to plunge. Nonetheless, businesses gave quite an optimistic assessment of the economy’s prospects for the long-term (6-10 years): 60% expect the economy to expand, 26% await stagnation and 11% say the economy will contract. This shows that businesses still believe they will be able to overcome geopolitical pressure, Schilling stressed.
"Every company has had its own review of the situation to make decisions for which it becomes responsible," he said. "No one is getting up from the table to leave. Everybody’s trying to hold on to their employees and assets and to continue doing what’s still possible."
Given the high uncertainty, everybody sits waiting, so the rhetoric on leaving the country or slashing investments could change, said Vladimir Salnikov, a senior expert at the Center for Marcoeconomic Analysis and Short-term Forecasting. Companies could be forced to exit not over economic restrictions, but because of politics, Salnikov told Vedomosti. A range of recent political decisions, such as the Russian oil embargo, has been a game, that has been strategically ineffective, the expert said.
The current sanctions should have hit the entire Russian population regardless of whether they approve of the special operation in Ukraine or not. The blocking of payment and credit cards, the closing of companies, a ban on deliveries of mass-market goods to Russia and the severing of scientific and economic ties should have provoked discontent in Russia, those who initiated the sanctions thought. However, the restrictions have triggered the opposite. About 75% of the country’s population approve of the government’s policies despite the damage done by the sanctions. The other goal of cutting access to funding for the Russian "war machine" was not attained either, and Russia’s export revenues are forecasted to exceed last year’s figures.
And yet, the collective West is likely to further turn up the heat on Russia. Part of the existing sanctions, such as restrictions on Russian oil exports to Europe, will come into full effect by New Year’s, and Europe has been drafting a seventh package of sanctions with Poland suggesting a ban on all Russian energy resources and banks, Polish Foreign Minister Zbigniew Rau said.
The sanctions, the departure of foreign companies from the Russian market and export decrease may put an end to the economic results Moscow has achieved in the past 15 years, IIF chief economist Elina Rybakova said. According to an IIF estimate, the country’s GDP will fall by 15% in 2022, or twice as much as the Economics Ministry predicts (a decrease by about 8%). In 2023, the economy is expected to continue falling and will contract by 3%, the IIF said.
"The current sanctions were aimed at changing Russia’s policy towards Ukraine. According to the latest available data, the sanctions have not seriously affected either Russian citizens or the country’s economy, so one should not expect any changes to Russia’s stance on Ukraine over the sanctions," Executive Director of the Capital Market Department at Univer Capital Artem Tuzov told Nezavisimaya Gazeta.
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