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Press review: Why Moscow dumped grain deal and is Canada rethinking Russia asset freeze

Top stories from the Russian press on Monday, October 31st

Vedomosti: Russia pulls out of grain deal after terror attack on Black Sea Fleet

As of October 29, Russia has suspended its participation in the grain deal due to attacks on the Black Sea Fleet’s warships and civilian vessels in the port of Sevastopol. "Taking into account the act of terrorism committed by the Kiev regime with the participation of British specialists on October 29, 2022 against the Black Sea Fleet ships and civilian vessels employed to safeguard the security of the grain corridor, Russia is suspending its participation in the agreements on the exports of agricultural products from Ukrainian ports," the statement by the Russian Defense Ministry said. According to Sevastopol Governor Mikhail Razvozhayev, this was the most massive attack with the use of drones and semi-submersibles since the onset of Russia’s special operation in Ukraine. According to the Russian military agency, one ship and a barrier in the Yuzhnaya Bay sustained insignificant damage.

Russian suppliers are ready to fulfill their humanitarian mission and provide grain to countries in need, says Chairman of the Board of the Russian Union of Grain Exporters Eduard Zernin. According to him, international and domestic grain exporters are gradually adapting to functioning under the conditions of hidden sanctions. Due to the end of the grain deal, the degree of responsibility borne by Russian producers has increased, he stressed. "October’s preliminary results give rise to confidence that Russia will fulfill its export potential this season and Russian grain will get to needy countries in the volumes they require," the expert concluded.

The grain deal was more commercially profitable for Turkey and Ukraine than for Russia, Russian International Affairs Council Director General Andrey Kortunov noted. The main buyers of Ukrainian agricultural products also benefited from it, getting 9 mln tons of grain out of this deal while Russia’s benefit is arguable and the fulfillment of Russian conditions on grain and fertilizer exports has been a problematic point of agreements from the start, he added.

According to naval expert Maxim Klimov, currently it is not possible to rule out provocations by Ukraine targeting a civilian vessel and then blaming Russia for it. According to him, a real blockade of ports can be ensured by using ships, motorboats and aviation which will require activating the Black Sea Fleet and moving ships from the Baltic and Caspian before rivers freeze as well as by engaging additional capacities of naval aviation.


Izvestia: Russia not to cooperate with UN special rapporteur on human rights, envoy says

Moscow does not plan to cooperate with a special rapporteur on human rights since this designation is an anti-Russian move, Russian Permanent Representative to the United Nations and Other International Organizations in Geneva Gennady Gatilov said in an interview with Izvestia published on Monday.

"This (a resolution by the UN Human Rights Council establishing a position of a special rapporteur to monitor human rights in Russia - TASS) is yet another move by the so-called collective West. They calculated everything: first, they approved a resolution on suspending Russia’s participation in the UNHRC and then they established the position of this rapporteur. This is an exclusively anti-Russian document which has nothing in common with caring about human rights in the Russian Federation," he told the newspaper.

The diplomat stressed that this resolution was supposed to smear Russia for its activity in the sphere of human rights. The special rapporteur would prepare his reports based on information received from anti-Russian NGOs. "We are already aware of their essence so we are not planning any cooperation with such an agency," he asserted.

According to the envoy, the rapporteur has not yet been appointed. This will be done at the next UNHRC’s session in March.


Nezavisimaya Gazeta: Western politicians at odds over Russian assets

Debates by Western politicians on the fate of Russian assets frozen in Europe and North America took a largely out of the ordinary, unexpected turn.

European Justice Commissioner Didier Reynders spoke in favor of holding Russia’s Central Bank’s assets in a frozen, not confiscated state, until Russia voluntarily consents to rebuilding Ukraine.

Additionally, Canadian Foreign Minister Melanie Joly made a statement that can be viewed as a call to find middle ground with the Kremlin while Canada was the first Western country to prepare a bill on confiscating Russian assets.

However, experts believe that this is far from any sort of sign that the West is softening its stance against Moscow. The issue of Russia is instead being used in the political struggle in a number of states.

Chief Researcher at the Institute of the US and Canada of the Russian Academy of Sciences Yelena Komkova thinks that it is not possible to draw large-scale conclusions from the minister’s short statement. The expert told the newspaper that at 43, Joly is a relatively young politician who has been leading the ministry for a year. That said, she is considered quite promising and viewed as a possible successor to Trudeau along with Minister of Innovation, Science and Industry Francois-Philippe Champagne and Deputy PM Chrystia Freeland. The latter actually authored the idea of confiscating Russia’s assets. "Before Joly, both Champagne and Freeland also talked to the media about Russia, and their statements were extremely tough. They were supporting a complete reconsideration of relations with Russia," the expert noted. Under these conditions, Joly’s statement seems like a dispute with them and it is not guaranteed that the Canadian top diplomat will stick to her words. "After all, she is a less experienced politician than Champagne and Freeland. Additionally, Joly has ties to Quebec which has a slightly better attitude to Russia than the country’s English-speaking part," the commentator pointed out. As for confiscating the Russian assets, Komkova thinks that this issue will be resolved through talks between Canada and the US.


Kommersant: Russia facing difficulties with increasing oil production

According to the newspaper, despite the reserve of OPEC+ quotas and high oil prices on global markets, in October, Russia did not manage to increase its oil production which remained at the level of 1.47 mln tons per day which is below the OPEC+ quota and a bit less than September’s figures. Potentially, it is possible to boost this level by resuming production at Sakhalin 1. However, experts anticipate a continued decrease in production in November due to the looming EU embargo on Russian oil which is set to go into effect on December 5.

According to Maxim Malkov of Kept, before the embargo, oil production is going to remain approximately at the same level or will somewhat drop. The embargo will automatically lead to lowered demand and the necessity to redirect the deliveries of excluded volumes. He notes that it won’t be possible to swiftly resolve the issue since the EU is not alone in refusing to buy Russian oil. Refineries in India have already reduced purchases to avoid secondary sanctions. However, suppliers and consumers are finding alternative arrangements and routes thanks to attractive discounts, he added.

Russia cannot increase production to the level set by OPEC+ for a number of reasons, the main ones relate to sales affected by possible secondary sanctions, high discounts at accessible markets and logistics issues, says Dmitry Kasatkin of Kasatkin Consulting. The withdrawal of technologies due to sanctions also makes an impact since it increases production costs. According to his estimates, in December, the production may drop by 9%, to 1.3 mln tons per day.

In his opinion, from November 2022 through March 2023, the production may decrease by 0.5- 0.7 mln barrels per day due to a structural overhaul and the termination of deliveries to EU countries. In addition, the decline in production may begin as early as November due to some Mediterranean consumers’ early rejection of Russian imports.


Izvestia: China’s Huawei may fully exit Russia

Huawei has completely ceased direct deliveries of smartphones to Russia and may leave the Russian market altogether, Izvestia wrote on Monday citing sources close to various mobile operators and a source at a large smartphone producer.

Izvestia’s source at Huawei’s partner company said that if the Chinese vendor leaves the Russian market, its production will be brought in via parallel import as well as through distributors who will purchase Huawei’s products from intermediaries in China and not directly from the manufacturer. According to the source, currently Huawei is holding talks on supplying smartphones and other gadgets via intermediaries.

"Direct supplies under the current conditions is a very complex notion. The first to come up with the arrangement of bringing gadgets to Russia via a Chinese partner was Xiaomi - it has already been using it for years. In such a case, a Chinese company delivering merchandise to Russia, assumes all risks while a vendor controls all processes," leading analyst of Mobile Research Group Eldar Murtazin told Izvestia. He specified that prices are likely to remain the same.

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