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Press review: Syrian envoy slams US raid as aid for IS and Russia doubts OPEC cut

Top stories in the Russian press on Monday, April 10

Izvestia: Syrian envoy views US attack on Shayrat as cover for IS offensive

Washington’s recent Tomahawk cruise missile attack on the Shayrat Airfield in Syria's Homs governorate is an act of "aggression against the sovereignty of the Syrian state and a violation of international law," Syrian Ambassador to Moscow Riad Haddad said in an interview with Izvestia. "This act of aggression also demonstrates support for the leaders of terrorist groups, such as the Islamic State and Jabhat al-Nusra (both outlawed in Russia), the Syrian affiliation of al-Qaida (banned in Russia)," the diplomat said, adding that the recent strike has revealed "a tie-in between the United States and the terrorists." "At the moment of the missile strike, the terrorists conducted an attack, which means they were ready, mustered forces, with a drawn up plan for an offensive, which once again demonstrates that the US supports terrorism not only in Syria, but in Iraq as well," he said.

When asked about the reason for the missile attack, Riad Haddad said that the chemical warfare excuse is a far-fetched pretext, and claims that the Syrian army "has never used chemical weapons against its people." "The Syrian Arab army is a people’s army intended to protect the sovereignty and independence of the country," he said. "I think that the US-led coalition strikes responded to the recent progress by the Syrian Arab army and the successful joint operations with Russian military forces in Damascus and Hama. Each time that the Syrian army achieves specific results, the US administration searches for a pretext to intervene. This time around they’ve found a far-fetched pretext based on an empty accusation that the Syrian army used chemical weapons," the diplomat told Izvestia. "Syria and its army are free of chemical weapons. Syria has jointed the Organization for the Prohibition of Chemical Weapons (OPCW), with the latter confirming that the Syrian Arab Republic has fulfilled all its obligations to remove all chemical weapons from the country," he added.


Kommersant: Russian government doubts relevance of OPEC deal

As the next OPEC meeting nears where the extension of the crude production cap agreement between member-states and non-OPEC members will be discussed, both Russian officials and market players are becoming concerned about potential risks and doubtful whether the deal still holds relevance. Kommersant business daily writes citing sources that there is no consensus opinion on this issue at the moment. Last week, Deputy Prime Minister Arkady Dvorkovich said the agreement had failed to bring the desired result - Moscow expected it to push the oil price up to $55-60 per barrel, which was the first public disapproval of the OPEC deal’s interim results.

The initial plan was to reduce crude production in order to bring global commercial oil reserves to the average level over the past five years. However, as reserves go down, US shale oil producers are accelerating output even faster than expected. "We can simply lose market share if we continue cutting production," Kommersant quotes one of the sources in the industry. "There is some disappointment with the deal in the sector amid the rapid response byf shale oil producers," Ildar Davletshin of Renaissance Capital told the newspaper, adding that another factor making the deal questionable is the unexpected strengthening of the Russian ruble.

Also, Russian oil companies’ production growth plans for 2017 have been moved to the second half of the year due to the OPEC deal, and if the agreement is extended, producers will have to change those plans again, which will worsen the economy of the projects, Kommersant writes. The Economic Development Ministry’s macroeconomic forecast announced last week implies that Russia’s crude production will rise to 549 mln tonnes this year, which at least requires a revision of Russia’s participation in the deal.

On the other hand, if Moscow withdrew from the agreement that would bear risks as well, as it means a breakup of consensus within OPEC, a return to price wars and a fight for market share. "(Oil) prices will plunge, which is of no benefit to both top the budget and companies," a source in the Russian government told the newspaper. "The whole market expects the agreement to be extended as no one is satisfied with prices," Kommersant quotes an analyst in a western investment bank, who thinks that global oil reserves may sharply decrease closer to the summer. Meanwhile, Moscow’s final decision regarding the OPEC deal has to be approved at the presidential level, and one can hardly predict the influence of certain external factors, particularly related to the Syrian crisis, on it, Kommersant says. The official stance of the Energy Ministry is that a decision based on the reserves dynamics, US production and the price level, will be made in May.


Vedomosti: Facebook checks in with Russia’s tax service

Globally-renowned social media giants and Internet majors have launched their registration ‘drive’ with the Federal Tax Service for payment of the so-called ‘Google tax’, which orders foreign companies engaged in online sales of electronic content in Russia to pay the value-added tax (VAT) once every quarter. Facebook is among the first hundred such companies, a source in the Service told Vedomosti business daily. Apple Distribution International, Google Commerce Ltd, Microsoft Ireland, Netflix International B.V., Wargaming Group Ltd, Bloomberg, Financial Times have already completed registration, Vedomosti says. The deadline for the first payments from foreign online companies is set for April 25, 2017.

An official told the newspaper that those who have not registered yet are a small minority. Vadim Ilyin, a partner at EY, says this is a matter of goodwill for companies, and it is not by chance that the Federal Tax Service focused on the biggest players at the first stage. The law signed by Russian President Vladimir Putin on July 3, 2016 essentially intends to impose equal conditions for Russian and foreign Internet companies. It stipulates the introduction of an 18% VAT for foreign companies providing services to Russians in electronic form, on an equal footing with Russian companies operating in the same market segment.

The law will come into force from January 1, 2017. Foreign companies set to be registered with the tax authority are required to submit a relevant application within 30 calendar days from the day when the law comes into force. Foreign Internet companies started bracing for the new law in advance. Google sent out notices of a potential hike in subscription prices of 18% to its users.


RBC: Finance Ministry eyes cutting off foreign banks’ subsidiaries from budget deposits

As part of the Russian government’s initiative to limit the operations of banks with foreign capital in the country due to sanctions, the Finance Ministry has proposed cutting lenders that restrict "banking operations regarding particular sectors, enterprises (organizations) due to anti-Russia sanctions" off from federal budget deposits, RBC reports with reference to a governmental decree. The document also implies that in addition to imposed restrictions, "risks and threats" may become a reason for rejection, as well. Experts interviewed by the newspaper expect the move to limit the operations of foreign banks in Russia.

"This will first of all affect banks with foreign capital since big state-owned banks, major financial institutions with foreign capital and a small number of private banks have access to federal budget deposits," Managing Director on bank ratings at Expert RA, Stanislav Volkov told RBC. Meanwhile, the need for ‘allegiance’ to Russian companies will not be the only requirement - a bank will have to obtain national-scale ratings with one of the raters accredited by the Central Bank, not lower than a level set by the government.

The move may reduce the activity of foreign banks in the Russian market, though it will not significantly impact the amount of funds raised by their subsidiaries, RBC says. "Historically, foreign banks have not raised serious funds from the budget of the Finance Ministry, and have turned to parent banks if needed," Fitch Ratings’ Anton Lopatin told the newspaper. According to Volkov, the initiative "looks more like a symbolic move in the current environment."


Izvestia: Federation Council plans to subsidize domestic tourism

A total of 1 bln rubles, or $17.3 mln, may be earmarked as subsidies for Russian tour operators on collective travel, Federation Council senator Igor Fomin told Izvestia, adding that the initiative may be put on the list of the upper house’s recommendations to the Russian government for budget preparations for 2018. In case the proposal is adopted, Russian tour operators will be granted subsidies to partially recover expenses on transporting travelers, as it is being done in Turkey.

According to Fomin, the Federation Council proposes adding a new line into the budget in order to create a new mechanism to stimulate domestic tourism. "Currently it may be more expensive to spend holidays on Russian resorts than in Turkey, for example, which is related to the fact that air transport is subsidized by the government there. In this environment, Russian tourism can hardly compete with the international market," the senator said.

According to the data provided by the Russian Tourism Industry Union, 3.3 mln holiday trips were recorded in the country last year. The number of tourists has been rising for several years already - in 2015 it increased 11.2%, after rising 25% in 2014. Meanwhile, the share of individual clients accounted for about 10%, while the remaining part of tourists was those using group tours.


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