MOSCOW, July 24. /TASS/. West hoping Turkey can pull grain deal resumption out of hat; Russia aiming to station bombers in Far East to beef up defenses; and Ukraine seeking Pakistan's cooperation against Russia. These stories topped Monday’s newspaper headlines across Russia.
Kommersant: West pinning hopes on Turkey for winning Russia's return to grain deal
A week has now passed since the termination of the grain deal, but Kiev, Ankara and the West remain committed to resuming shipments of Ukrainian agricultural products across the Black Sea, Kommersant writes. To unblock food exports, Ukrainian President Vladimir Zelensky has called an emergency meeting of the newly formed NATO-Ukraine Council, which allies have touted as an alternative to admitting the country into the alliance. For now, however, the West seems to be placing more hope in Turkish President Recep Tayyip Erdogan’s ability to find convincing arguments in a dialogue with Moscow, the newspaper writes.
It remains unclear precisely how the functioning of the grain corridors could be resumed, Kommersant writes. The proposal to engage a third-party country to escort commercial ships across the Black Sea has been raised several times since Russia’s withdrawal from the Istanbul agreements, but no side has taken it up because all stakeholders see such a scenario as entailing a potentially serious risk of escalation.
Judging by the statements of US Secretary of State Antony Blinken, the West is placing its bets on the efforts of Erdogan who, according to Blinken, is interacting with Russian President Vladimir Putin in an attempt to bring him back to an agreement.
Meanwhile, the US is also trying to enlist African countries to do its bidding by putting pressure on Russia in the run-up to this week’s Russia-Africa Summit on July 27-28 in St. Petersburg. According to the Financial Times, Washington is attempting to persuade its African partners to condemn Russia’s withdrawal from the grain deal. For its part, Russia is not sitting idle and says that Moscow understands "the concerns that may arise among our African friends" and is proposing to provide free food supplies to the continent, but continues to insist that the initial Russia-related provisions of the Black Sea Grain Initiative must be implemented before there can be any return to the deal, Russian Deputy Foreign Minister Sergey Vershinin noted.
Izvestia: Russia to bolster Far Eastern defenses with strategic bomber aircraft
Moscow plans to deploy Tupolev Tu-160 ("White Swan") supersonic strategic bomber aircraft to strengthen its defenses in the Russian Far East. According to Izvestia, the Defense Ministry is considering deploying a new regiment of such aircraft in the region. If the plan is given the go-ahead, the bombers would join the existing long-range aircraft division in Russia’s Far Eastern Amur Region. Experts believe that the deployment of strategic guided missile heavy bombers in the Far East would nullify the dangers posed by the US and its closest allies in the region.
According to Izvestia, no final decision on this potential deployment has been made yet. According to the newspaper’s sources, everything will depend on the scope and structure of state defense procurement orders for the coming years. Upgrades to Tu-160 bombers as well as the production of new "M" index designated airframes are currently underway within the framework of such procurement orders.
According to military expert Yuri Lyamin, the bombers would be stationed in the Far East to deter the United States and its closest allies in the region.
"Special attention should be paid to Japan, with which we still have territorial disputes over the Southern Kuriles. [Tokyo] has recently increased its military spending and is seeking to build offensive weapons systems. Therefore, in order to neutralize the threat from this direction, we need to strengthen our deterrent forces," the expert said.
Vedomosti: Diamond prices hit lowest trough since November 2020
Prices for one-carat diamonds have fallen to their lowest level since November 2020, according to data from the Rapaport pricing agency. As per the company, the RapNet Diamond Index (RAPI) for such diamonds was 6.9 at the start of July, 8.4% lower than the start of January and 23.9% lower than the start of July 2022. Experts told Vedomosti that by year-end 2023 diamond prices could be 10% lower than in 2022, but are unlikely to significantly affect the activities of Russian diamond giant Alrosa.
According to Boris Krasnozhenov, head of Securities Markets Analytics at Alfa-Bank, diamond prices have declined by 7-10% since the beginning of 2023, but remain higher than in 2021. At the same time, he told Vedomosti that, according to Indian statistics, diamond prices are about 60% higher than in 2018, and thus the current drop is not critical for mining companies. According to Dmitry Kazakov, senior analyst at BCS World of Investments, the Zimnisky Global Rough Diamond Price Index has dropped 6.3% since the beginning of the year and 12.5% over the last year.
According to Kazakov, diamond prices will be 6.5% lower in the second half of the year compared to the first half, and 10% lower by the year-end compared to 2022.
Alrosa accounts for over 90% of Russian diamond production. According to the company, there is a surge in demand for diamonds in emerging markets, as well as "strong demand for diamond products." At the same time, Alrosa is seeing a growing shortage of diamond supply on the global market. "The drop in supply to pre-pandemic levels has reached at least 30 million carats, or 25% of global production," a company representative told Vedomosti, adding that the company is "optimistic about the prospects for the industry."
Izvestia: Ukraine seeking to enlist Pakistan's support against Russia
Amid improving relations between Islamabad and Moscow, Ukrainian authorities are looking to deepen military ties with Pakistan, with Ukrainian Foreign Minister Dmitry Kuleba visiting the South Asian nation. This marked the first visit at the foreign ministerial level between the two countries since 1993. According to experts interviewed by Izvestia, Pakistan has consistently demonstrated its neutrality in the Ukrainian crisis.
Kuleba met with Pakistani Foreign Minister Bilawal Bhutto Zardari and Prime Minister Shehbaz Sharif. According to the parties, the meetings are aimed at strengthening bilateral relations between the countries.
According to Alexey Vorobyov, director of the Center for Public Diplomacy and World Policy Analysis at the Russian Academy of Sciences’ Institute of Asian Studies, relations between Moscow and Islamabad have historically been very difficult. At the same time, however, the parties have attempted to work together even during the Cold War. The expert emphasized that, in recent decades, conditions for greater cooperation between Moscow and Islamabad have been created as Pakistan "began to gravitate more and more toward a Eurasian policy, both in the international agenda and in the sphere of trade and investment."
"Given such a long history of cooperation, I don’t think Pakistan will go for a deterioration in its relations with Russia, despite the fact that Ukraine is trying to establish communications and contacts with Pakistan," Yulia Kuznetsova, member of the expert council for protecting retail investors, told the newspaper. She noted that Pakistan considers Russia an important actor in Western, Central and South Asia, adding that Russian imports from Pakistan in 2021 reached $353 mln, for a year-on-year increase of 20.69% over 2020.
Vedomosti: Russian central bank raises key rate beyond market expectations
The Bank of Russia Board of Directors on Friday raised the central bank’s key interest rate by 1 percentage point to 8.5%. This ran counter to market expectations for a smaller increase; analysts polled by Vedomosti had been predicting a percentage point hike of just 0.5%. The fundamental driver for the hike, according to the Bank of Russia, was an excess of demand over the ability to increase supply.
According to Mikhail Vasilyev, chief analyst at Sovcombank, however, the move to raise the key rate to 8.5% was not entirely unexpected. "Many market participants, including us, expected the Bank of Russia to choose a rate hike of 50, 75 or 100 basis points," he told Vedomosti. The sharp depreciation of the ruble in June and July, as well as the rapid growth of lending, caught the regulator off guard and necessitated more extreme measures to tighten monetary policy, the expert explained.
In addition to the obvious factors, the rate hike could be due to the fact that the Bank of Russia and the market continue to struggle with understanding each other’s signals, Bloomberg Economics’ chief economist for Russia Alexander Isakov told the newspaper. Such surprise decisions show that the regulator has yet to find a method of explaining to the market how its rate decisions and publicly available data on inflation and economic activity are linked, he noted.
The regulator will take a break in September to assess the impact of the July rate hike. "However, we do not rule out the possibility that, if inflation accelerates in the future, the regulator will be forced to continue the rate-hike cycle. In this situation, we could see another 50-100 basis point hike in 4Q," chief economist at BCS World of Investments Natalya Lavrova told Vedomosti.
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