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Press review: Lavrov-Tillerson meeting and banking embargo for 'unfriendly states'

Top stories in the Russian press on Friday, February 17

Izvestia: Russia to pay off all Soviet-era debts by this summer

Russia is concluding paying off the external debt of the Soviet Union. The last tranche will be paid to Bosnia and Herzegovina, Izvestia writes on Friday. A source in the Russian government said the deal on settling the last debt estimated at $125.2 mln is ready and expected to be signed in the coming months. The payment will be carried out before this summer. The Finance Ministry confirmed that the Soviet-era debt will be settled by the end of the year.

Last week, the Finance Ministry said the Soviet Union’s $60.6 mln debt to Macedonia was paid off and that the only outstanding Soviet-era debt was to Bosnia and Herzegovina. Like Macedonia, the country was formed as a result of Yugoslavia’s breakup and had the right to reclaim part of the USSR’s debt, the paper says.

The Finance Ministry’s press service confirmed that the debt will be redeemed through state budget funds. According to the ministry’s official documents, some 512.3 bln rubles ($8.9bln) are envisaged for these purposes. The debt to Bosnia and Herzegovina will be paid off within 45 days from the ratification of an intergovernmental agreement.

The payment of the Soviet Union’s debt is a political move, said Professor of the Russian President’s Academy of the National Economy and Public Administration (RANEPA) Yuri Yudenkov. "It is very important for international status that we recognized the debts of the Soviet Union and paid them off. At the same time, we forgave the debts of such countries as Vietnam and Algeria."


Kommersant: Russian and US chiefs of general staff hold first face-to-face talks since 2014

Russian Chief of General Staff Valery Gerasimov met with his US counterpart, Chairman of Joint Chiefs of Staff General Joseph Dunford in Azerbaijan’s capital of Baku on Thursday. The first face-to-face talks between Russian and US military chiefs in nearly three years focused on the crisis in Syria. Both parties agreed to step up contacts at various military levels, but there was nothing on full-fledged military coordination, Kommersant writes.

Sources familiar with the matter told the paper that the preparation for talks had lasted for several months and faced some difficulties. Last time, the US and Russian military chiefs met was in January 2014 in Brussels but two months later the Pentagon suspended all contacts with Russia’s Defense Ministry over events in Ukraine’s southeast and Crimea’s reunification with Russia. Since then, the political situation deteriorated, one of the sources told Kommersant. The meeting was held in Azerbaijan, which is seen as neutral ground, given that both Russia and the US have "strong relations" with Baku.

The meeting was marred by a statement by US Defense Secretary James Mattis, who said negotiations with Russia needed to be from a position of strength. In response, Russian Defense Minister Sergey Shoigu demanded "explanations for the Pentagon’s position." However, sources told Kommersant the ministers’ statements had no significant impact on the talks between Dunford and Gerasimov, which were "held in a rather calm atmosphere." The chiefs of general staff exchanged views on current Russian-US relations and gave their assessment on the situation in Europe, the Middle East and North Africa.

According to Kommersant, Russia’s General Staff is gravely concerned over the Pentagon’s plans to send "boots on the ground" to Syria. Russia’s military says this may destabilize the situation in the country, derailing efforts by the Russian Center for Reconciliation of the Opposing Sides. However, the US military denied that they had such plans.


Media: Lavrov-Tillerson meeting eclipses G20 summit in Bonn

The G20’s two-day summit kicked off in Germany’s Bonn on Thursday, where the world’s top diplomats gathered together. However, from the very beginning of the event, all eyes were on the talks between Russian Foreign Minister Sergey Lavrov and US Secretary of State Rex Tillerson, who met for the first time, Izvestia writes. Sources in Russia’s delegation told the paper that Tillerson had still not assembled his team and the reshuffle is expected to shake up more than half of all US diplomats. So, full-fledged work at the diplomatic level of the two countries has yet to begin.

Political scientist and Honorary Chairman of the Foreign and Defense Policy Council, Sergey Karaganov, said the two top diplomats are likely to find common ground and points of departure for dialogue. "I’m sure the outcome of these talks was constructive. And thanks to this, Russian-US relations will gradually start pulling out of the current crisis," he said.

Alexei Pushkov, a member of the Defense and Security Committee of the Federation Council, said the sides have to continue work in key areas, including the crises in Syria and Ukraine, the war against the Islamic State (terrorist group, outlawed in Russia), North Korea’s nuclear program and European security issues. However, no breakthrough is expected in any these areas in the near future, he noted.

Program Director of the Valdai International Discussion Club’s foundation Dmitry Suslov told Nezavisimaya Gazeta: "De facto, the thawing of Russian-US relations is already underway, and the primarily indication of this is the meeting between the Russian and US chiefs of general staff. But it is also important to have a thaw in relations at the level of department and division chiefs in the Foreign Ministries. It is also important to restore dialogue in a whole range of relations," he explained.

The expert said the Bonn meeting is timely after the controversial departure of US National Security Adviser Michael Flynn. "Until recently, Flynn was the main representative of the Trump administration for cooperation with Russia. He paid the price for that as things had been sabotaged by the so-called irreplaceable state bureaucrats who leaked to the media the outcome of his talks with Russia’s representatives, including Ambassador Sergey Kislyak."

"It is evident that now Tillerson will cooperate with Moscow on behalf of the Trump administration. At least, he will play a key role here," the expert noted. In this context, Russia should discuss all issues with Tillerson, including the US policy in Syria and Washington’s possible withdrawal from the Iranian nuclear deal, Suslov said.


Nezavisimaya Gazeta: Russia’s Finance Ministry mulls banking embargo for ‘unfriendly states’

Russia’s government has plans in store to ban foreign banks from "unfriendly states" from cooperating with Russia’s strategic state companies. Deputy Finance Minister Alexei Moiseyev announced that the respective resolution is already being drawn up. Nezavisimaya Gazeta writes that apparently the Russian authorities do not expect the new US administration to take steps towards a thaw in ties and are gearing up to escalate the already strained situation.

Moscow apparently fears that the anti-Russian sanctions will not only remain in force, but will be toughened to the levels of the so-called Iranian scenario, where the accounts of companies opened in the banks of other countries may be frozen, the paper writes.

Russia’s authorities have decided to extend the embargo on foreign banks, the paper says. Moiseyev said the Finance Ministry has drawn up a draft regulation with demands for banks where the state companies, federal state unitary enterprises, state non-budget funds may open accounts, make deposits and purchase securities of these banks.

One of the proposals is that the government could decide on excluding a bank from the list if its parent company is based in a country that took an "unfriendly decision against Russia." "Unfriendly" meaning those states that introduced anti-Russian sanctions and which are subject to Russia’s food embargo. Among them are the EU states, Norway, the United States, Australia, Canada, Iceland, Lichtenstein, Albania, Montenegro and Ukraine. Switzerland is not on this list and may not be subject to the proposed banking ban.

Experts interviewed by the paper confirm that the Finance Ministry’s initiative is a defensive response against any possible future restrictions. However, Dmitry Lukashov, an analyst at IFC Markets warned of grave consequences. "If all possible avenues of cooperation are closed, the implementation of current projects may be seriously complicated." "The aftermath may be different, and could go as far as ditching some beneficial projects that are almost ready." Russia’s companies, which were not hit by the Western sanctions, may be also affected, he noted.


Izvestia: Russia’s oil giant Rosneft widens cooperation with Schlumberger

A subsidiary of Russia’s oil giant, Rosneft Brasil, has announced the launch of drilling works at the first prospecting well in Brazil. The US-based, global oilfield services company, Schlumberger, and Brazil’s Queiroz Galvao Oleo e Gas (QGOG) will provide their services. Experts told Izvestia that this partnership demonstrates that US companies seek to work with Russia in spite of the sanctions.

At least four wells will be drilled as part of the Solimoes gas project. "The fact that Rosneft is operator of the international project in such a major oil and gas country as Brazil shows that the company has exceptional technology and the needed competence," said Rustam Tankayev, a leading expert at the Union of Oil and Gas Producers of Russia. Regardless of the sanctions, US companies want to work with Russian oil producers, and that’s why such international projects have emerged, Tankayev noted.

The global oilfield services company, Schlumberger, will be in charge of integrated management for the project to organize all the necessary services.

Analyst at Alor group Kirill Yakovenko said Rosneft’s activity abroad is estimated at around 1% in the overall extraction structure and the potential growth is up to 5%.

"Rosneft is actively developing cooperation with all the leading oilfield services companies. The project in Brazil is a good example of our partnership with Schlumberger, one of the renowned leaders in the sector. It is noteworthy that our companies are successfully cooperating in Venezuela," Rosneft told Izvestia.

Schlumberger started curtailing its operations on the Russian market after Moscow was hit by sectoral sanctions in 2014. As a result, Rosneft launched its own drilling business - it purchased services companies and increased the number of drilling teams, the paper writes.


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