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Press review: Foreign firms flock to Army-2023 and China’s defense chief heading to Moscow

Top stories from the Russian press on Tuesday, August 15th

MOSCOW, August 15. /TASS/. Russia’s Army-2023 expo attracts over twice as many foreign companies than last year; Chinese defense chief’s upcoming Russian visit to showcase growing military ties; and the Bank of Russia calls an emergency meeting for Tuesday to prop up the sagging ruble. These stories topped Tuesday’s newspaper headlines across Russia.


Izvestia: Russia’s Army-2023 expo attracts twice as many foreign companies as last year

Russia is open to military and technical cooperation on equitable terms with all countries that are seeking to defend their sovereign interests, Russian President Vladimir Putin said on Monday in remarks at the opening of the Army-2023 International Military-Technical Forum outside Moscow. This year’s forum and exposition is being attended by 82 foreign companies, whereas last year only 32 overseas businesses took part, Putin noted. Russian Defense Minister Sergey Shoigu held a meeting with his Belarusian counterpart, Viktor Khrenin, at the forum. And, experts say, the event shows that military-technical cooperation between Russia and its partners is developing apace.

Commenting on the forum, Ivan Abramov, first deputy chair of the Economic Policy Committee in the Federation Council (upper house of parliament, or senate), told Izvestia that deepening trade with interested countries and strengthening military cooperation should take place in parallel. "Boosting economic ties with friendly nations helps develop military-technical cooperation, which is a must for defending national sovereignty and independence, and this benefits everyone," the senator said.

The range of restrictions imposed by the Anglo-Saxons and their allies on Moscow have boomeranged on their initiators and helped to demonstrate that Russia can free itself from reliance on US or European supply chains, Oleg Vorobyev, a member of the Business Russia General Council, told Izvestia. "The destruction of Western weapons in Ukraine has helped highlight the advantages of Russia’s defense cluster. The Russian Defense Ministry has already announced plans to sign contracts worth over 433 bln rubles ($4.5 bln) on the sidelines of the Army-2023 forum, and even more could be concluded. New [and revitalized] friendly ties with African, Asian and Latin American countries are helping to stimulate partnerships and contracts across economic sectors," Vorobyev noted.

The larger foreign presence at this year’s expo compared to 2022 serves to confirm that military-technical cooperation is growing and expanding, military expert Andrey Frolov told Izvestia. "India and China, as you know, are the largest buyers of Russian weapons. This shows that military-technical cooperation is continuing apace and taking on new forms. This no longer pertains to purely Russian exports, but also concerns certain components that can be procured from these countries and used to enhance the quality of our equipment," he pointed out.


Vedomosti: Chinese defense chief’s upcoming Russia visit to showcase growing military ties

Chinese Defense Minister, State Councilor and People’s Liberation Army (PLA) General Li Shangfu will visit Russia and Belarus on August 14-19 to hold talks with the two countries’ leaders and address the 11th Moscow Conference on International Security, Wu Qian, director of the Information Bureau of China’s Ministry of National Defense, announced on Monday. He said that Li had been invited by the Russian and Belarusian defense ministers, Sergey Shoigu and Viktor Khrenin, respectively.

This is General Li’s second visit to Russia since being appointed as defense minister in March. He first arrived in Russia as China’s defense chief in mid-April, when he was received by Russian President Vladimir Putin. Meanwhile, the Russian Defense Ministry has held the Moscow international security forum since 2012. In 2020, the event did not take place amid the coronavirus pandemic, while in 2021 and 2022 the Chinese defense ministers addressed the Russian military forum via video link.

The South China Morning Post reported on Monday that, over the past decade, the PLA has held more joint drills with the Russian Armed Forces than with any other foreign military. Since Xi Jinping came to power as the general secretary of the Chinese Communist Party in 2012, China and Russia have conducted 45 military exercises.

Li is most likely to discuss holding further joint maneuvers and expanding their geography and scope with his Russian counterparts, said Alexey Maslov, director of Moscow State University’s Institute of Asian and African Studies. The two countries have already held joint drills in the Mediterranean and recently patrolled North Pacific waters off Alaska, he noted. Ensuring collective security has been a key objective for China amid simmering tensions around Taiwan, Maslov added.

According to Vasily Kashin, director of the Center for Comprehensive European and International Studies at the Higher School of Economics (HSE University), Li’s agenda is highly likely to include a meeting with President Putin again on this visit. Military cooperation between Russia and China has been on the rise, he added, while the West cannot impose any adverse consequences on Beijing for proactively pursuing talks with Moscow. It now appears that China has supplied one type of its armored vehicles and personal protection gear to Russian forces, while Chinese artillery munitions have also been observed in the special military operation zone. These items may have been sourced from old stock or indirectly via Iran or another country, and thus Beijing has not yet crossed any red lines as regards weapons deliveries to Russia, Kashin explained. Any major Chinese arms supplies, however, would likely provoke a response from the United States or the EU. But it is unlikely that it would be very harsh, for the Chinese economy is too big to be subject to any knee-jerk Western decisions to impose sanctions on such an economic behemoth.


Kommersant: Central Bank of Russia to hold emergency meeting on propping up sagging ruble

The Bank of Russia’s snap decision to call an emergency meeting on the key rate has translated into support for the beleaguered ruble. Foreign exchange rates, which saw the dollar rise as high as 101.75 rubles during trading on Monday, closed the day at 97.66 rubles to the dollar. Analysts say the banking regulator could raise its key interest rate by 100 to 350 basis points, which should have a positive effect on the ruble. However, the step may not be enough to prompt the falling ruble to reverse course amid a currency deficit, thus requiring other measures to support the national currency.

The central bank’s decision to hold an emergency meeting came as a surprise to the market, as Deputy Governor Alexey Zabotkin said as recently as last week that Russia’s central bankers currently see no risks to financial stability.

Meanwhile, Russian Presidential Aide Maxim Oreshkin said on Monday that the Bank of Russia’s accommodative monetary policy was the key reason behind the accelerated ruble weakening and soaring inflation, while State Duma lawmaker Dmitry Kuznetsov asked Bank of Russia Governor Elvira Nabiullina to explain why the ruble has been plummeting and what consequences that may trigger.

Market players were skeptical of the assurances of financial stability, as well. "[The ruble] trading above 100 per $1 is a crisis for citizens’ finances, if not for the financial system," a forex market player told Kommersant. An accelerated ruble weakening is contributing to a further rise in devaluation and inflation expectations, while undermining confidence in the Russian currency, which creates financial stability risks, said Sovcombank Chief Analyst Mikhail Vasilyev.

And, yet, raising the key rate may prove less effective for ruble strengthening, as it would take six months to fully kick in while the Russian currency may weaken further in the meantime, Head of Analytics at Zenit Bank Vladimir Yevstifeyev noted. Therefore, market players say the central bank may opt for other measures as well. Among other things, Yevstifeyev said, the regulator may reinstate the mandatory sale of foreign currency earnings, impose restrictions on capital outflows, or directly intervene on the exchange rate. In addition, the Russian monetary authority may ramp up sales of yuan from its reserves, the expert concluded.


Izvestia: Georgia unlikely to obtain EU candidate status before fall

The European Commission may issue recommendations to grant EU candidate status to Georgia as early as this fall, Peter Stano, the European Commission’s Lead Spokesperson for Foreign Affairs and Security Policy, told Izvestia. But Tbilisi must first meet all requirements to be eligible for such a step, he warned. Experts say the status itself is unlikely to bring Georgia any closer to EU membership, as Brussels needs "the European card" to exert pressure on the former Soviet republic to compel Tbilisi to toughen its foreign policy stance toward Russia.

Georgian politicians understand that Brussels will not promise the country EU membership without requiring certain concessions from Tbilisi. The leader and political secretary of the opposition party Alliance of Patriots of Georgia, Georgy Lomiya, underscored that the European Union has been playing "big political games" with his country. "Over the past 30 years, they have been saying that Georgia will join NATO, or that Georgia will become an EU candidate before acquiring full membership. At present, they are bargaining with the [ruling] Georgian Dream [party] and the Georgian people by making it clear that they are ready to grant the [candidate] status but alleging that Georgia is not ready for that," Lomiya told Izvestia. According to him, Brussels would perhaps demand that Georgia join its anti-Russian sanctions.

Political analyst Andrey Areshev believes that Brussels has been using the carrot of EU membership and specific stages in the process for purely geopolitical purposes. The bloc will seek to put pressure on Georgia and will secretly support opposition parties, especially ahead of the 2024 parliamentary election, he surmised.

Meanwhile, Georgia has already succumbed to Western pressure. In early August, the country’s Justice Ministry announced plans to impose a ban on the re-export of passenger cars imported from the EU to Russia starting from September 26, based on the EU’s 11th package of sanctions, and as well Tbilisi imposed a similar ban on autos imported from the US on August 1.


Vedomosti: Pakistan seeking discount on future Russian oil imports

Pakistan Refinery Limited (PRL) is set to continue importing and refining Russian crude oil, Pakistan’s The News quoted CEO Zahid Mir as saying. The company is currently in talks to sign a new contract on Russian oil supplies, he added. according to Mir, PRL will process Russian crudes again "when they are available on beneficial commercial terms." Russian Energy Minister Nikolay Shulginov said earlier that payments for oil and petroleum product exports to Pakistan would be settled in the currencies of friendly countries, while Russia would offer its oil at a discount "to everybody on an equal and commercial basis."

Russia and Pakistan signed an oil supply contract in January. Pakistani Energy Minister Masood Malik said then that his country could buy more than 35% of its oil imports from Russia. in April, Pakistan placed its first order to purchase 100,00 metric tons from Russia. While the cargo was delivered by two vessels in June, no information on more purchases has since been available.

To Finam Analyst Alexander Potavin, the 100,000 metric tons of oil Pakistan has purchased from Russia this year is an amount that "is insignificant for Russian exports." By comparison, in June Russia exported 2.2 mln barrels (around 300,000 metric tons) of oil daily to India, he said. Ronald Smith, senior analyst at BCS World of Investments, told Vedomosti that Pakistan currently imports some 400,000 barrels of oil per day.

According to Smith, Russia could account for up to a half of the country’s oil imports, or 200,000 barrels per day (bpd) against the current volume of some 8,000 bpd. And Pakistan may seek to import both Russian oil and petroleum products, the expert said. Pakistan may find Russian crudes lucrative mostly because of their price. "Pakistan is very price-sensitive, and can find even a $5/barrel discount attractive," Smith explained.

Russian oil imports to Pakistan could grow, but a discount that would be attractive for the buyer would be required, Potavin added. Earlier, Pakistan expected to get a 30% discount on Russian oil, he recalled. Meanwhile, India, which buys much more Russian crude, has enjoyed a minimal discount on Russia’s benchmark Urals blend to Brent, the experts noted.

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