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Press review: Why NATO is upping military drills and China's government reshuffle

Top stories from the Russian press on Monday, March 13th

MOSCOW, March 13. /TASS/. NATO is stepping up military drills in response to Russia’s suspension of the New START treaty, the Chinese National People's Congress has approved the country’s new State Council, and Silicon Valley Bank’s collapse is unlikely to cause a major crisis. These stories topped Monday’s newspaper headlines across Russia.


Nezavisimaya Gazeta: NATO steps up drills in response to Russia’s suspension of New START

The United States and NATO allies continue to escalate tensions along Russia’s northwestern border, particularly in the Gulf of Finland. It was from here that the Pentagon’s strategic bomber practiced a nuclear strike on Russia’s St. Petersburg on March 11, Nezavisimaya Gazeta writes.

NATO’s Arctic Forge 23 drills began in February and will last until March 17. According to Scandinavian media outlets, the goal is to repel military threats coming from Russia. The exercise involves about 20,000 troops from 16 NATO countries, including yet to be included nations Sweden and Finland, as well as 16 warships and 58 aircraft. At the same time, US ground troops are conducting training in winter conditions together with Finnish forces in northern Finland. Meanwhile, the Pentagon continues to carry out maneuvers with its strategic nuclear forces. This is how a US Air Force B-52Н Stratofortress strategic bomber’s flight off Estonia’s coast should be regarded, which, according to a number of media outlets, practiced a nuclear strike on military and infrastructure facilities in St. Petersburg and its suburbs from near the island of Gotland, only 200 kilometers from Russia’s northern capital.

The West stepped up such flights along Russia’s border in the Baltic Sea area after Moscow had announced plans to suspend its participation in the New Strategic Arms Reduction Treaty (New START) on February 21, 2023. Experts view US strategic aircraft’s activities as an implicit response to this very event.

"Judging by open sources, this was the United States’ B-52Н Stratofortress strategic bomber’s first appearance in this relatively narrow seaway, since March 2018," military expert and retired Colonel Nikolay Shulgin notes.

He pointed out that unlike with similar incidents in the past, the Russian Defense Ministry had not issued any comment on the US aircraft’s flight along Russia’s border. "It was from this ‘neck of the woods’ that a US B-52H strategic bomber practiced a ‘virtual’ strike on our northern capital. This is very alarming and dangerous," the expert added.


Media: Chinese National People's Congress approves State Council members

​The 14th National People's Congress has approved China’s new State Council. There are only two newcomers among the 26 heads of ministries and agencies: Defense Minister Li Shangfu and National Development and Reform Commission Chairman Zheng Shanjie. Chinese President Xi Jinping was also re-elected to a third term, Rossiyskaya Gazeta writes.

Officials loyal to Xi Jinping currently hold key positions in the State Council, Senior Researcher with the Institute for International Studies at Moscow State Institute of International Relations Ivan Zuyenko noted. "New Prime Minister Li Qiang is one of them. However, his appointment is based not only on his personal loyalty but also on the expertise that he gained while leading the economically developed regions at the mouth of the Yangtze River, including Shanghai. Most heads of ministries and state committees retained their positions," the expert explained. "As for Li Shangfu, his appointment is first and foremost a reward for his successful work to upgrade the Chinese army. In terms of expertise, he is not a military leader but an engineer. The United States imposed sanctions on him for Russian weapons purchases. Still, we can’t say that his appointment marks or paves the way for a new phase of a standoff between China and the US. The causes of this confrontation are much deeper and more systemic," Zuyenko said.

"Over the past decade, China has seen a significant consolidation of power in the hands of Xi Jinping, and the Communist Party's supremacy over the state and society has also become more apparent," Deputy Director of the Russian Academy of Sciences’ Institute of World Economy and International Relations Alexander Lomanov told Kommersant. According to him, the next decade will be a difficult one for China, given that the old economic development model is exhausted, with cheap labor and free resources no longer available, while the external environment - relations with the US and its allies - is getting more and more toxic. "In this situation, the old structure of power, which involved fighting factions and looked like collective leadership from the outside, has lost its usefulness as it does not allow decisions to be made quickly when responding to threats and challenges. In contrast, Xi Jinping’s current model of government is aimed at ensuring stability amid internal and external difficulties. Hopes for the liberalization of this model may emerge only when China is confident that the hardest times are behind it," Lomanov concluded.


Media: Silicon Valley Bank’s collapse unlikely to cause major crisis

A major bank collapse has taken place in the United States for the first time since the 2008 financial crisis. On March 12, news emerged about the bankruptcy of the Silicon Valley Bank Financial Group (SVB), a lender for Silicon Valley startups, Vedomosti notes.

On March 8, the SVB announced that it needed an additional $2 bln, which caused a drop in the value of its securities and caused panic on US markets. In two days, the S&P 500 Banks Industry Group Index dropped by seven percent and the NASDAQ Bank Index fell by 12.5%. The capitalization of the four biggest US banks - JPMorgan, Bank of America, Citigroup and Wells Fargo - shed $52.4 bln on March 9. European banks were also affected, with the German Deutsche Bank’s stocks dropping by six percent and the stocks of France's Societe Generale and the UK’s HSBC losing three to four percent.

The US banking sector is widely diversified in terms of services, investment advisor at Otkritie Investment Vitaly Averkin points out, adding that oftentimes, one segment offsets the losses of another. This most recent slump in the banking sector does not mark the start of a downward trend and will soon be bought out if the overall situation on the stock market improves, Finam analyst Igor Dodonov said.

SVB is not the first US financial institution to face difficulties in 2023, international stock market analyst at BCS World of Investment Igor Gerasimov told Izvestia. Earlier, the Silvergate crypto bank had similar issues, but these were much smaller than the SVB. "The situation can have a potentially negative impact on medium-sized banks. So far, the market views the risk for major players as low," Gerasimov added.

SVB was a niche bank, which focused on venture investment, and its collapse will hardly trigger a financial crisis in the United States, Associate Professor with the department of political economy at Moscow State University’s Faculty of Economics Maxim Chirkov explained. However, its collapse wasn’t accidental as the root cause was the rate rise. Since the Federal Reserve System plans to tighten its monetary policy, the factor’s effect will grow and Western countries will see more defaults. And although a financial crisis should not be expected any time soon, its beginning is just a matter of time, the expert added.

Meanwhile, if and when the crisis begins in the US, it will eventually spread to the entire world because Western countries consume goods and services from all over the globe, including BRICS countries, Chirkov noted. Moreover, in his words, a crisis is inevitable amid sanctions and it is in the financial sector where it will begin.


Vedomosti: Iran announces signing of contract to purchase fighter jets from Russia

Iran has officially approved the purchase of Russia’s Sukhoi Su-35 fighter jets, the IRNA news agency reported on March 11, citing the country’s permanent mission to the United Nations. The mission said in a statement that Iran had requested that a number of countries consider the possibility of selling fighter jets to Tehran and Russia expressed its readiness to do so. According to the Iranian mission, under the Joint Comprehensive Plan of Action, the arms embargo on Tehran is no longer in effect after October 2020, Vedomosti notes.

The Iranian Air Force’s fighter fleet urgently needs modernization, said Yury Lyamin, an expert in Iran’s defense industry. Russian-made MiG-29 planes and China’s F-7 aircraft, the upgraded version of Russia’s MiG-21 jets, which are about 30 years old, are the newest fighter jets that Iran currently has. The backbone of Iran’s Air Force is still made up of the US-manufactured F-4, F-5 and F-14 fighters bought before the 1979 revolution. Iran’s industry is unable to meet the air force’s needs because it is focused on missile and drone programs, so in terms of manned fighters, an upgraded replica of the F-5 Kosar (Kowsar) jet is the best that Iran can produce at this point.

According to Director of the Center for Analysis of Strategies and Technologies Ruslan Pukhov, the Su-35 is an advanced fighter jet that will become a very valuable asset for the Iranian Air Force. However, several dozen Su-35 aircraft won’t be able to tilt the balance of power because the Arab countries of the Persian Gulf already own or have ordered up to 500 fighter jets that are just as advanced, Pukhov went on to say. Not to mention the more than 300 advanced aircraft that the Israeli Air Force has, including fifth generation jets, the expert added.

Purchasing advanced multi-purpose fighters became one of Iran’s priorities after the lifting of international restrictions on the import and export of conventional arms, which were in effect until the fall of 2020, Lyamin noted. The country’s recent statement should be interpreted to mean that the Iranians are already waiting for aircraft to arrive, the expert stressed.


Rossiyskaya Gazeta: What are the consequences of the US’ plans to ban Russian uranium imports?

A group of US senators has come up with a bill banning the import of Russian uranium. Rossiyskaya Gazeta reached out to experts to find out if a Russian uranium ban was real and what consequences it might have.

"Calls for abandoning Russian uranium have been made repeatedly and the US Congress last discussed the issue a year ago. However, US officials did not dare to approve the initiative because it would have jeopardized the operation of the countries’ nuclear power plants that work mostly on raw materials from our country," AMarkets Analytics Department Chief Artem Deyev noted. He added that Russia supplied large amounts of uranium to European countries and had no export problems. It is the US that is going to have more difficulties because although it’s possible to replace these raw materials, it cannot be done quickly. "The difficulty with nuclear power plants is that uranium supply disruptions cannot be allowed because it’s fraught with technical issues," the expert expanded. This is why the US will either abandon the initiative the way it did a year ago or there will be a significant lag for a ban on Russian uranium imports so that US nuclear power plants can find an alternative.

The market is shaped by the leaders in uranium enrichment. Russia is a very important player in this regard, Finam analyst Alexey Kalachev said. "The quota of Russian uranium on the US market stands at about 20%, which is not a small amount," Kalachev noted. "For years, Russia supplied large amounts of uranium to the US at acceptable prices, even though the US manufacturers' lobby group has never given up trying to somehow limit imports in order to support the domestic nuclear industry. In particular, this issue was brought up in 2020," Kalachev noted.

However, if the US bans Russian uranium imports, China’s share will probably grow. "Any restrictions and the reconstruction of the market will certainly have an impact on prices, sending them upward. The US has uranium reserves but it takes time to find a new supplier, let alone one at a reasonable price," the expert concluded.

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