Izvestia: What’s in EU’s new anti-Russian sanctions package

Some European countries have proposed a gradual gas embargo against Russia yet so far this idea is not supported by the majority, sources in the European Parliament told Izvestia, noting that with the seventh sanctions package, the EU intends to plug any loopholes on sidestepping the current restrictions, and wants to embargo Russian gold. On July 14, EU envoys resumed talks on the Russia-targeted sanctions. Expectations are that the EU will officially present the new package next week.

Slovak MEP Milan Uhrik told the newspaper that within the framework of the discussion on the sanctions, EU members are considering mechanisms to cap prices on Russian oil, that is, the EU would allow Russia to export it though at a lower price set by the West. However, according to the politician, the countries are hardly likely to reach a consensus here. The legislator assured Izvestia that the package is unlikely to include new serious restrictions, noting that the new measures will probably review all the previous sanctions and remove possible loopholes, if any.

Program Director of the Russian International Affairs Council Ivan Timofeev told the newspaper that there had been no practice of secondary sanctions in the EU so right now it is difficult to predict what this loophole issue means.

"To a certain degree, it is strange that a separate package of mechanisms on loopholes is needed. What will be included there is open to debate. For example, the US has far-reaching experience here. They used end-point sanctions against those who helped bypass them: they employed administrative and criminal prosecution measures. In the EU’s practice, only some members have such enforcement measures in their arsenal," the expert noted.

He added that the situation with Kaliningrad is a separate issue which had been partially eased yet this has no significance in the context of other sanctions. "The EU does not want this problem to be advertised now and provided this guidance on interpreting its sanctions which is less radical than that of Vilnius," the expert concluded.

 

Vedomosti: Russian grain to have major impact on world market

Russia, Ukraine, Turkey and the UN have coordinated key aspects of resuming grain exports from Ukraine. The Wall Street Journal (WSJ) reported on July 14 that the first significant step on settling the food crisis was made following the four-party talks in Istanbul. A representative of the Turkish Defense Ministry said that a coordination center for the surveillance of Ukrainian grain exports would be created in Istanbul. Additionally, the parties discussed the transportation procedure itself. A source close to the negotiations told the WSJ, grain would be transported from three Ukrainian Black Sea ports. Meanwhile, Turkish Defense Minister Hulusi Akar revealed that another meeting on the grain issue will take place as early as next week.

Expectations of additional grain volumes will drive prices down, according to Board Chairman of the Grain Exporters Union Eduard Zernin, yet the prospects of a possible agreement with Ukraine have already been mostly included in the prices. However, the main factor determining the prices for the Black Sea grain is the foreseen record-setting harvest in Russia, confirmed by the data of the harvest campaign, he noted. The price of wheat with 12.5% protein content in the ports of Novorossiysk on FOB (free on board) terms has decreased from $370 per tonne to $360 per tonne over the past week, the expert said.

According to Zernin, the supply volume of Russian wheat will significantly surpass that of Russia’s neighbors. The market understands this all too well, therefore wheat prices are plummeting. "The threat of a global food crisis has been alleviated, above all, by a good harvest and Russia’s readiness to supply grain to needy countries," the expert pointed out. Earlier, Russian President Vladimir Putin said that Russia could export 50 mln tonnes of grain of the new harvest. The Ministry of Agriculture forecasts that this year, Russia will harvest 130 mln tonnes of grain (as opposed to 120.7 mln tonnes last year), including a record-setting 87 mln tonnes of wheat.

Falling grain prices are seen even without the Istanbul accords which have not yet even been implemented, SovEcon Director Andrey Sizov said.

 

Izvestia: Why North Korea recognized the Donbass republics

North Korea emerged as a new political player in the events unfolding around Ukraine. It became the second UN member state after Syria, not counting Russia, to recognize the independence of the DPR and LPR. Ukraine’s reaction was not surprising. On the same exact day, Kiev severed diplomatic ties with Pyongyang much like it did earlier with Damascus. While North Korea’s decision was somewhat unexpected for the general public, the experts polled by Izvestia noted that in light of recent events this was a logical step.

As Deputy Chair of the State Duma Committee for CIS affairs, Eurasian Integration and Relations with Compatriots Kazbek Taysaev who coordinates the friendship group of Russia’s lower house and North Korea's parliament told Izvestia, the parliamentary structures of both countries discussed the two republics, however, the decision to officially recognize the DPR and LPR was Pyongyang’s own step. "North Korea is a very large strategic partner for Russia. It has always supported Russia, never voted against us on a single issue [at the UN] and has never even abstained. And this recognition was the result of our consistent friendship," he stressed. The legislator noted that the sides plan to exchange diplomatic missions and everything "that the recognition entails," however this will be implemented taking into account the coronavirus situation in North Korea.

According to Director of the Center for Korean Studies of the Institute of Far Eastern Studies of the Russian Academy of Sciences Alexander Zhebin, since the onset of Russia’s special military operation in Ukraine, Pyongyang has rather consistently demonstrated its solidarity with Moscow. This is partially due to traditional cooperation and interaction with Russia, and Russian and Chinese support for North Korea at the UN Security Council when they turned down US resolution drafts on North Korean rocket launches.

Additionally, the expert thinks that Pyongyang understands that if Russia loses the standoff with the West this will spell problems for North Korea itself, since the West would crank up pressure on it and wants to completely block it off. By recognizing the Donbass republics, North Korea is showing that it stands together with Russia against the collective West, the expert noted. He also did not rule out that Pyongyang counts on receiving humanitarian aid from Russia in return for this move since the food situation in North Korea is traditionally tense.

 

Nezavisimaya Gazeta: Kazakhstan to welcome companies exiting Russia

Foreign companies leaving Russia will relocate to Kazakhstan, but the Kremlin is not dramatizing this decision. Possibly, Kazakhstan will become a channel for transporting foreign goods to Russia which would benefit Europe as well. According to the Higher School of Economics, European manufacturers may end up between a rock and a hard place of low demand and higher prices for raw materials. 

That said, Eurostat figures show that Russia’s share in European exports is “only” 4% which is still tens of billions of euro.

"There is a possibility of delivering goods via third countries. Kazakhstan may serve as such a hub or any other country that didn’t join anti-Russian sanctions," Associate Professor at the Plekhanov Russian University of Economics Anastasia Prikladova explained.

"Kazakhstan’s own market is too narrow for many of the companies leaving Russia to rely on it. So it won’t become a mass phenomenon but even if a couple of companies can relocate to Kazakhstan thus retaining access to the Russian market, both the republic and the firms will profit from this," expert with IVA Partners Artem Shakhurin thinks.

"Some goods from Europe, undoubtedly, will continue to come to Russia along the patterns of parallel imports, especially those that European companies were producing in other regions, especially, in Asia," he thinks. "It seems that Europeans will have to partially decrease production, particularly, due to more expensive energy resources, fertilizers and raw materials," the expert explained.

"If European companies are completely against cooperation with Russia, then the possibility of implementing supply patterns via third countries is close to zero," Prikladova specified. "In this case, it would be necessary to redirect trade flows to other markets which will become a particularly serious problem for those companies for whom the Russian market was the key one," the expert noted.

 

Nezavisimaya Gazeta: Moldova to ready its army for defense against Russia

Moldovan President Maia Sandu for the first time openly named Russia as a potential aggressor that Chisinau should prepare to defend against. Sandu admitted that the Moldovan army is being modernized yet is only receiving "non-lethal equipment" from the EU. Ex-Moldovan Defense Minister Vitalie Marinuta told the newspaper that it is possible to defend against Russia only with combat weapons so it is necessary to ask the West to supply defensive weapons, not communication devices. In his opinion, Moldova should reject neutrality and join NATO.

Former Moldovan Ambassador to the US Igor Munteanu said: "With regards to the Republic of Moldova there have been several hints that lead to the idea that Transnistria is Russian land and will always receive support. It’s just that the Transnistrian region is an enclave and it largely depends on connections that are controlled by Chisinau and Ukraine. In the sphere of trade, export to the European Union depends on Chisinau. The supplies of natural gas conducted by Moldovagaz also depend on Chisinau even though it is a subsidiary of Gazprom and this instrument can be used to decrease the appetites of Transnistrian leaders."

Due to this, ex-Moldovan President Igor Dodon noted the important role of the peacekeeping operation in Transnistria. "This is even more pertinent under the current conditions when we see a very complex conflict where people are dying literally next door to us. This is additional proof that problems should be resolved only peacefully, by way of talks," he noted in an interview with Sputnik Moldova. Dodon pointed out that there are those who want to stir up this complex situation again and destabilize relations between the two Dniester’s shores. "Yet there are also sane forces on the right bank, in Chisinau. I am positive that Transnistria either has no desire to escalate the conflict and launch some sort of confrontation," the former president emphasized.

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