MOSCOW, December 13. /TASS/. The EU fails to approve a new anti-Russian sanctions package, what can replace Russian gas in Europe and NATO’s role in the Kosovo conflict. These stories topped Tuesday’s newspaper headlines across Russia.

 

Izvestia: Why the EU failed to approve its new sanctions package against Russia

The European Union will continue to work on new restrictive measures against Russia, top EU diplomat Josep Borrell said following the December 12 meeting between European foreign ministers. Nevertheless, Brussels decided to increase the financing of the European Peace Facility by €2 bln which is used to pay for military supplies to Ukraine. According to a draft of the ninth sanctions package, they are mostly targeting Russian officials, journalists and artists. Experts polled by Izvestia noted that, while some measures are purely symbolic, the EU’s sanctions enter a new level with Brussels beginning to focus on tracking anti-Russian sanctions violations by third countries.

"The sanctions imagination of European officials is getting exhausted although they successfully coordinated eight packages. Some separate initiatives within the framework of the ninth one are not eliciting much enthusiasm or a united effort anymore. However, it is too early to talk about any split," Research Fellow at the Faculty of World Economy and International Affairs/Center for Comprehensive European and International Studies at the Higher School of Economics Sergey Shein told the newspaper.

According to him, the very fact of approving a new anti-Russian package is more important for the EU to prove the consistency of its policy. "Bargaining is already becoming typical. Possibly, the Baltic states will soften up after all while Hungary will be encouraged with something in order to arrive at the version that suits everyone," the expert added. "The EU is already choosing the American style, betting on extraterritorial restrictions. The future of the bloc's sanctions policy is monitoring the use of the sanctions and punishment for non-compliance. However, it will be possible to provide a more substantial assessment of this only after the first instances of secondary sanctions," Shein noted.

Brussels is trying to outdo Washington in confiscating Russian assets. So far, the EU cannot resolve differences with its own legislation to expropriate frozen Russian assets and hand them over to Kiev. MEP Gunnar Beck told Izvestia that many countries would like to see this issue resolved by now. He pointed out that currently the EU has €300 bln of Russia’s Central Bank’s assets frozen as well as about €19 in private assets, adding that Brussels is trying to come up with a legislative base to confiscate these assets and use them to restore Ukraine.

 

Kommersant: Europe’s potential options for Russian gas substitution

Europe is bracing for hard times next winter. According to forecasts by the International Energy Agency, if Russia completely suspends its gas deliveries and China begins to revive its consumption, EU countries will face a dearth of 57 bln cubic meters of gas in 2023, especially considering that there are no anticipated new offers on the LNG market. According to analysts, against this background, competition with Asia for liquefied fuel may only increase in 2023 while any realistic replacements for Russian gas won’t appear until after 2025.

Given the current volumes of Russian gas deliveries, next year Europe will have to find an alternative for at least 50 bln cubic meters, says Sergey Kapitonov, specialist at the Center for Energy Transition and Skoltech's ESG. That said, there are serious problems in terms of supplies of LNG, he added. Before the end of 2022, the launch of a floating LNG plant in Mozambique for 4.5 bln cubic meters, the completed construction of several production lines in the US and the conclusion of repairs at the Freeport LNG plant are expected. No serious LNG inflow is anticipated in 2022-2023. The scheduled expansion of capacities in Qatar will occur only in 2027, while new American projects will be launched in the mid-2020s. "Under such conditions, next year and in the mid-range prospective, stronger competition between Europe and Asia for LNG should be expected which in turn will put pressure on prices," the expert thinks.

In his assessment, given these circumstances, unblocking the remaining gas pipelines from Russia or continuing the policy of decreased gas consumption and de-industrialization would be the only possible options of reducing the repercussions of a gas crisis. "In the long-term perspective, the EU has a large number of options to replace Russian gas but that’s on the horizon after 2025, or, rather, closer to 2030," Kapitonov noted.

According to the International Energy Agency, the volume of new LNG on the market is only 23 bln cubic meters. The agency’s report points out that if China restores its LNG consumption after this year’s drop then Europe won’t get much of these new volumes. "This means that developing Asia-Pacific countries will have to completely forget about any growing demand for LNG for next year at the very least and this is despite the fact that many of them have even decreased consumption this year," says independent expert Alexander Sobko.

 

Izvestia: West’s role in resolving the Kosovo conflict

The current escalation of tensions in the partially-recognized Kosovo may be resolved peacefully if the West puts pressure on Pristina while Kosovo fulfills two conditions: creating Serbian municipalities in accordance with the 2013 Brussels agreement and releasing an illegally detained policeman, Dejan Pantic, Serbian politicians and experts told Izvestia. This time, the situation began to escalate after Kosovo’s special forces occupied the republic’s Serbian-populated region and barricades went up in Kosovo’s northern zone. Given the flare-up, Belgrade is planning to deploy its own troops there in accordance with the UN Security Council’s resolution. However, NATO is unlikely to approve this decision.

"We will try to send our military and police to Kosovo, but we know that NATO will never approve this," head of the Serbian permanent mission to NATO’s Parliamentary Assembly Vladimir Djukanovic told Izvestia. Program Coordinator at the Russian International Affairs Council Milan Lazovic concurs. In his opinion, this move won’t be in the West’s interests since it supports Pristina and simultaneously serves as a guarantor of a peaceful resolution to the Serbia-Kosovo conflict. If Belgrade brings its troops to the region, this will be a direct confrontation and an armed conflict, "since Kosovar Albanians won’t cease their incitement," he explained. Additionally, this will be a failure of Western policy.

That said, the West, particularly, Washington, is confident that the conflict can be settled if Serbia recognizes Kosovo’s independence. Belgrade is under a lot of pressure over this issue, Jovan Palalic, head of the committee on constitutional and legislative issues at the National Assembly of Serbia, told the newspaper. However, the Serbian authorities will never agree to this.

Meanwhile, pauses between the rounds of escalation in the region are becoming shorter while tensions only accumulate. There is a high probability that such provocations in the end will morph into a local armed conflict, Lazovic concluded.

 

Nezavisimaya Gazeta: Indian currency trap for Russia’s economy

Russia’s forced switch from trading in dollars to Indian rupees carries substantial risks. India’s currency has lost more than 10% to the dollar and 25% to the Russian ruble over the past two years. Additionally, Russian exports to India significantly surpass imports from that country. This means that Russia will simply have nowhere to spend the majority of rupees it will receive for its energy products. Experts explained to the newspaper which goods may come to Russia from India but caution that so far it is not possible to balance the trade between the two countries.

Russia may have an opportunity to achieve this balance if India increases the deliveries of Western equipment, cars and spare parts, Alexander Potavin, an analyst at Finam, confirmed. The expert notes that the Chinese yuan is now replacing the dollar and euro while the Indian rupee is not in demand in Russia because it is not being traded on the Moscow Exchange. "However, mainly guided by political motives, Moscow and New Delhi are actively working on expanding payments in national currencies. At least for Russia, such a function will help partially weaken the external sanctions pressure. So goods deliveries from Russia are paid for in rupees and those from India - in rubles," he explained.

In 2022-2023, there is a possibility of an increased trade imbalance because Russian exports are likely to increase more than imports, says Chief Analyst at TeleTrade Mark Goikhman. "Above all, this is related to the transfer of some hydrocarbon deliveries from Europe and the West in general to Asia," he said, noting that in addition to oil and other mineral products, Russia may also increase its deliveries of metals, vehicles, pharmaceutical and chemical products to India. The expert noted that imports from India also mostly include pharmaceutical, chemical and machine industry products while the deliveries of food products, clothes and shoes also have high potential.

"Increasing payments in ‘excess’ rupees makes sense," the expert says, noting that they cannot be blocked in Western banks like dollars and euros. Goikhman also noted that India can become a very significant "transit" country for Russia’s "parallel imports." As opposed to China or Turkey, India is less engaged in trade and political relations with the US, so the potential risks of secondary sanctions while trading with Russia are lower. This way, Moscow can buy from New Delhi products manufactured in other countries which will provide additional use for the rupees. "However, even then their use for our imports is unlikely to surpass their inflow with exports. It is unlikely that the flows will become balanced," the analyst concluded.

 

Vedomosti: Putin, Xi to hold talks before New Year’s

Before the beginning of the new year, Russian President Vladimir Putin and his Chinese counterpart Xi Jinping will hold talks and sum up the results of 2022, a diplomatic source told Vedomosti. A source close to the presidential administration said that the meeting is likely to be held in a videoconference format but the "details are being hammered out."

The talks between the two leaders may be pertinent now to discuss the issues of practical interaction between Russia and China, says Director of the Center for Comprehensive European and International Studies at the Higher School of Economics Vasily Kashin. The discussion of these issues is particularly relevant since China is beginning to relax its coronavirus-related restrictions and this will possibly impact reciprocal travel and border control in the near future, the expert thinks. In his opinion, the issues of energy and industrial cooperation may also be discussed. That said, traditional topics such as Ukraine, the Korean peninsula and growing tensions around Taiwan also remain significant, the expert noted.

It does not make much sense for Putin and Xi to formally sum up the results of 2022, says Deputy Director of IMEMO Alexander Lomanov. Yet there is another event that the Russian side can play up, the results of the 20th National Congress of China’s Communist Party, the expert thinks. So far, Putin has only congratulated Xi on his re-election, the expert reiterated: "Now Russia knows whom it will be talking to in China for the next five years."

Lomanov notes that China sees diplomacy as personal diplomacy of a top official and from Beijing’s point of view, Russian-Chinese relations are successful precisely because they are strategically planned at the highest level. Thus, the leaders are likely to discuss political interaction for at least the next five years and, as a result, the cultivation of favorable conditions both in the economy and the humanitarian sphere, the analyst concluded.

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