On Sunday, the Donetsk and the Lugansk People’s Republics and the areas of Ukraine’s Kherson and the Zaporozhye Regions under control by Russian troops finished their third day of voting on accession to Russia. All four regions said voters were very proactive, though people have so far been casting their vote at mobile polling stations or at places near their homes, while stationary ones won’t open until Tuesday. According to observers and the media, people are queuing up to vote, while official reports said voter turnout had already exceeded 50% in the DPR, the LPR and the Zaporozhye Region, and the referendums there may be considered valid already.
The DPR’s Central Election Commission said voter turnout on the first two days of the referendum was 55.05%, and exceeded 77% by 08:00 pm on Sunday. The LPR’s chief electoral officer Yelena Kravchenko said more than 76% of voters had taken part by Sunday evening. At the same time, voter turnouts in the Zaporozhye and the Kherson Regions hit 51.5% and 48.91%, respectively. Under the legislation on the referendum adopted earlier in the DPR and the LPR, the plebiscites shall be viewed as valid with voter turnout at more than 50%, while the decision on accession is considered made if more than half of people on the list of voters support it.
Kommersant reminds its readers that while residents of the two Donbass republics are invited to choose whether or not they approve of joining Russia as separate constituent members, voters in the Kherson and the Zaporozhye Regions should also decide whether to exit Ukraine. Alexander Malkevich, first deputy chairman of the coordination council for monitoring the referendums at Russia’s Civic Chamber, told the paper that more than 100 international observers from 40 countries, including France, Syria, Venezuela, Germany, Uruguay, the Czech Republic and Cameroon, had been around to monitor the voting.
Meanwhile, two people were killed in a Ukrainian missile strike in a hotel in downtown Kherson on Sunday, among them Alexey Zhuravko, a former Verkhovna Rada member. A home-made explosive device went off in central Berdyansk in the Zaporozhye Region, with no casualties reported. The referendum has been running smoothly, and the reports of incidents only further encourage people, political scientist Alexander Asafov from the pool of observers told Kommersant.
Leonid Ogul, a State Duma member from the United Russia party, who was among the international observers in the LPR’s Artymovsk and Kremennaya districts, told the newspaper that he had interviewed healthcare employees at a polling place in a local clinic, as well as voters at polling stations. "They said the referendum was like a true holiday. Everybody is smiling, and people are congratulating one another on this quite a historic event," the lawmaker said.
Both houses of Russia’s parliament expect President Vladimir Putin to address the Federal Assembly following the referendums in the Donetsk and the Lugansk People’s Republics as well as the Zaporozhye and the Kherson Regions regarding accession to Russia at the end of this week. A State Duma member told Izvestia that Putin may deliver his address on Friday. Another parliamentarian said that the Federation Council, the upper house, was also aware of an important session to be held on that day. The State Duma awaits details later on Monday, when the Duma Council will convene a session and faction meetings will be held, a source told the newspaper.
The Communist Party confirmed to Izvestia that it expected Putin to deliver his address like he did after the referendum on the accession of Crimea. "As long as the referendums are underway, the head of state may deliver such an address. We may vote on decisions to admit new territories jointly with the Federation Council on September 29 or 30," first deputy head of the party’s faction, Nikolay Kolomeitsev, told Izvestia. According to him, these regions should have joined Russia eight years ago.
Yaroslav Nilov, deputy head of the Liberal Democratic Party of Russia (LDPR) faction, told the paper that this week, every day will have historical significance.
The ruling United Russia party’s faction refused to give any official comment.
Putin last addressed the Federal Assembly in April 2021.
According to experts, in his speech, the Russian leader may appeal not only to lawmakers, but to the country’s elite and ordinary people as well as to Western politicians, too.
"Putin’s address is likely to target all categories of society - those would be both parliamentarians and senators, as well as federal and regional elites. I guess the address would mostly concern ordinary Russians, while, naturally, there may be hints for Western elites," political scientist Dmitry Fetisov said. According to him, in his address, Putin will likely talk about the special military operation, the results of the referendums and the accession of new regions to Russia, as well as the mobilization and the need to protect the country’s territorial integrity. Though the introduction of martial law is unlikely, perhaps the president will show his readiness to do so, Fetisov pointed out.
While more and more foreign banks, even from friendly jurisdictions, have refused to work with Russia’s Mir payment system, Turkey, on the contrary, is looking for ways to continue accepting Russian cards in the country. At a meeting to be chaired by Turkish President Recep Tayyip Erdogan later on Monday, the government will, among other things, discuss the use of Mir cards and potential alternatives, an official told TASS. Erdogan discussed this with the heads of Turkey’s Finance Ministry and Central Bank as well as major banking CEOs at another meeting in Istanbul on September 23.
Is Bankasi and Denizbank were the first Turkish banks to announce they would suspend the use of Mir cards in response to warnings from the US Treasury on potential sanctions back on September 16. Ziraat Bankasi, VakifBank and Halkbank, which have been officially accepting Russian cards, have not made such announcements yet, unlike a range of lenders in Kazakhstan and Armenia, though the central banks of the two nations said the decision on which payment systems to choose was up to lenders. The Kyrgyz National Bank published a similar statement, and banks in the Central Asian country still accept Mir cards. Uzbekistan said it had halted transborder transactions with co-badge Uzcard-Mir cards, citing "technical reasons." The country’s National Bank never clarified that.
In light of these events, experts described the Turkish initiative to look for alternative ways of payment for Russian tourists as timely. They also said potential alternatives could be used in other countries as well. Chairperson of the Board of the National Payment Council Alma Obayeva told Kommersant opening local branches of Turkish, Armenian, Kazakh, Kyrgyz and other banks from friendly countries in Russia could be a solution. "I wish the Bank of Russia established its requirements for offices of foreign banks in Russia faster, then all of us would be able to open accounts with foreign banks and hold cards offered by any international payment system," she said. Foreign banks are currently prohibited from opening branches in Russia, and any lender should establish a subsidiary to be able to operate here, she specified.
The head of the legal practice of CM Grace Consulting, Ekaterina Orlova explained, in 2013 the term "branch of a foreign bank" was removed from the text of the law "On Banks and Banking". According to her, by December 1, the law will be updated and will probably allow the establishment of branches of foreign credit institutions again, but only from friendly countries. However, Orlova warned, European and US officials may view this as a means to bypass sanctions, since such branches will not be restricted in their rights to process money transfers via SWIFT, as well as for VISA/Mastercard.
Roman Prokhorov, board chairman at the Financial Innovations association, said there was no option available that could eliminate the risk of secondary sanctions now, while Erdogan’s signals were simply "an attempt to sweeten the pill." The most secure ways of cooperation in terms of avoiding secondary sanctions would require substantial investments, including temporary ones, Prokhorov said. Expanding or simply preserving the geography of acceptance of Mir cards would fade away from the foreground amid a potential drop in foreign travel, he continued. In his opinion, transborder settlements with the use of cryptocurrencies could be more feasible.
The European Union is ready to grant the status of candidate country to Bosnia and Herzegovina (BiH) and finds it necessary to introduce a visa-free regime for the partially recognized Kosovo, a source in the European Council told Izvestia. Brussels did not say when exactly this could happen yet. However, when it comes to integration of the Western Balkans, everything primarily depends on how far the countries have progressed in the necessary reforms.
In light of its readiness to give BiH candidate status, the EU proposed that the European Commission immediately report about the progress the country has made so far on its 14 key priorities, the source in the Council told Izvestia. The priorities were formulated by the EC for the country back in 2019. Those come in four clusters, namely, democracy, the supremacy of law, fundamental rights and government reforms. The EU Council did not say when it would grant Sarajevo the candidate status, as everything will depend on how many of the requirements have been met. And that does not seem to be going well: according to a May estimate by Transparency International, over the past three years, the country has only implemented one of the 14 priorities by forming a parliamentary committee on stabilization and association with the EU. BiH comprises the Federation of Bosnia and Herzegovina, mostly inhabited by Bosniacs and Croatians, and Republika Srpska with a Serbian majority, and there are lots of differences between the two.
"I favor the integration of the entire Balkan Peninsula to the EU, but the EU has set clear conditions for that. My country, Croatia, had to comply with the strictest standards to get a green light for membership," Ladislav Ilcic, a Croatian politician and a member of the European Parliament, told Izvestia. If the political leaders of BiH manage to meet the requirements by the end of this year, there would be no reason not to grant them the candidacy, however, they would hardly succeed, the politician said.
In its report on the situation in Kosovo in 2021, the EC said that the republic was yet at an early stage of its fight against organized crime and that measures were needed to enhance its law enforcement system and to prevent politicians from any interference. The unresolved conflict with Serbia that risks spilling over into an armed one almost on a yearly basis is among geopolitical obstacles. And the Kosovo issue remains a key problem that hampers Belgrade’s integration to the EU.
The Russian Finance Ministry may allocate almost 1 trillion rubles ($17 billion) on foreign exchange purchases next year. Under draft guidelines for the budget, tax and customs policies seen by Vedomosti, the Ministry expects that extra oil and gas revenues would amount to 939 billion rubles ($16 billion) in 2023. An official close to the government said the funds would, in theory, be used to buy foreign currency to weaken the ruble under the budget rule which, according to plans, would be reinstituted, although not in its entirety, next year.
A Finance Ministry official refused to comment for Vedomosti.
Extra oil and gas revenues could be used to buy friendly currencies if an urgent need arises to weaken the ruble in order to keep up the level of budget revenues, Yevgeny Mironyuk, an expert at BCS World of Investments, told Vedomosti. Taking into account the current daily yuan turnover on the Moscow Exchange of 30-70 billion rubles ($512 mln-$1.2 bln), the forex market could guarantee the purchase of the Chinese currency as part of the budget rule in an amount not exceeding that of 2018-2019, when up to 200 billion rubles was bought, he said. Discussions on the purchase of friendly currencies are likely to continue, Mikhail Vasiliev, chief analyst at Sovcombank, said, and the National Wellbeing Fund could keep its reserves in rubles. He expects interventions on the foreign exchange market to be insignificant - of $1-2 billion per month.
By 2025, Russian currency purchases could be made through ruble borrowings, Director of the ACRA Sovereign and Regional Ratings Group Dmitry Kulikov told Vedomosti. According to him, the issue of currency purchases is not very relevant now, which means the ruble could weaken anyway even without the Ministry’s operations on the foreign exchange market.
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