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Press review: India's Russian submarine leak and Russia-US ties 'beyond repair'

Top stories in the Russian press on Thursday

Kommersant: Submarine scandal surfaces between Russia and India

An unprecedented scandal broke out between Russia and India with Moscow suspecting that New Delhi granted US Navy representatives access to the Russian nuclear submarine of Project 971i, operated by the Indian Navy since 2011. According to Kommersant, the incident threatens to seriously complicate negotiations both on the lease of the second nuclear submarine, and on other projects in the field of military-technical cooperation between the two countries.

Several sources in Russian state structures have confirmed that with the newspaper saying that the Indian partners have recently committed several "unfriendly acts towards Russia." First, according to them, the US Navy delegation visited the aircraft carrier Vikramaditya (property of the Indian Navy) and Russian officials were forced to issue a note of protest. After some time, a high-ranking military source told Kommersant, the American delegation was already on board the Chakra.

Kommersant’s source working in the military technical cooperation system, called the fact that the US Navy appeared on a Russian submarine (located on the base near Vishakhapatnam, pending repairs) outrageous. "There were well-trained technical specialists, though unlikely to get any real information," the source said.

According to the newspaper, this whole string of incidents can have a very adverse impact on defense cooperation between the two countries, which has been successfully developing over the past five years. According to several sources, specialized Russian structures are preparing retaliatory measures against their Indian partners. "Very difficult conversations are on the horizon, we have a lot of questions," a source said. Some who spoke to Kommersant believe that, in particular, the negotiations on leasing the second nuclear submarine, which the Indian Navy planned to obtain from Russia, will be seriously complicated.

According to Kommersant, Russian Deputy Prime Minister Dmitry Rogozin, who intends to come to India in December with one of the largest deals on Russian arms, will have to iron out the problems that have accumulated. In addition to the Chakra issue, he must negotiate the creation of a fifth-generation fighter under an agreement which was signed back in 2007, but neither the airplane's conception nor its financial parameters have been determined yet.


Nezavisimaya Gazeta: Russia-US relations beyond 'any real repair'

According to Moscow’s top diplomat Sergey Lavrov, Russian President Vladimir Putin is ready to meet with his American counterpart Donald Trump at the Asia-Pacific Economic Cooperation (APEC) forum in Vietnam scheduled for November 10-11. Prominent experts interviewed by Nezavisimaya Gazeta believe that the forthcoming meeting will not offer any surprises, but it can draw the attention of the anti-Trump crowd in the US looking to fuel the "Russian meddling scandal" in the 2016 presidential election.

Commenting on the imminent Putin-Trump meeting, Lavrov said that bilateral relations between the two countries require some serious repair after the Obama administration’s legacy. However, experts told the newspaper that perhaps "a serious repair" of the relationship would fail. "I do not see a defining theme, which could lead to a significant improvement in relations between Russia and America," Director of the Carnegie Moscow Center Dmitry Trenin told Nezavisimaya Gazeta. "In my opinion, achieving direct dialogue between Putin and Trump is not enough. Even the small things that could have been reached are unlikely because of resistance within the US, because Trump continues to be under the gun. He or at least his team are suspected of having close Russian ties, so I am very skeptical about the practical results of this meeting. I think that the less we focus on it, the less disappointed we will be," the expert added.

At the same time, there has been no thorough preparation for the negotiations between the leaders, the newspaper wrote. "There is just an opportunity to meet and reconcile positions, therefore, I think that they will hardly refuse this meeting," Nikolay Zlobin, Head of the Center on Global Interests in Washington, told Nezavisimaya Gazeta. "Well, if they refused, there would be some intrigue. I think everyone understands that today Trump isn’t in charge of US policy on Russia. If one wants to fundamentally change the US stance towards Russia, then Moscow must deal with the US Congress," he added.

As for the "Russian interference probe", the expert does not consider this topic exclusively Russian. "It's not about Russian interference in the US elections, but about the general vulnerability of the American establishment," Zlobin said. "Turns out, American politicians are much less discriminating in means, methods and finances than Americans would have liked. This is a story about political corruption. There could be another country in Russia’s place, but the United States focused on Russia for many reasons," the expert added.


Russian coal miners might be pushed out of their turf

Kazakhstan has drafted an intergovernmental agreement with Russia, which gives Kazakh coal miners the right of priority access to Russian export ports, Kommersant wrote. Starting from 2018, Astana intends to export over 14 mln tonnes of coal through these ports, primarily to the Far East, which will get up to 10% of the total volume of coal export to Russia and up to 50% of the capacity of individual ports. Russian coal miners and stevedores sharply oppose these benefits for their competitors. Amid high demand, the Far East’s railway and port infrastructure is overloaded and cannot cope even with coal exports from Russia.

The newspaper writes that based on the terms the agreement is valid for 25 years. The conditions also state that over the following years, the volume may be increased. Each year before October 1, the parties are to agree on the volumes and routes, the Kazakh quota should not exceed 50% of the transshipment in the port. In addition, railway and port tariffs for this coal should not be higher than the ones for Russia.

Deputy Executive Director of the Association of Mining and Metallurgical Enterprises of Kazakhstan Maxim Kononov told Kommersant that the Ministry of Investment and Development is working of the agreement on behalf of Astana, and the Ministry of Transport on behalf of Moscow. "On September 27, our proposal was sent to the Russian side, on October 30 they answered that they were ready to further touch it up taking into account our interests," he said, adding that he hopes the agreement would be signed in December.

However, Russian coal miners are generally not in favor of the possible benefits for their competitors. The Consumer Council, where Russian coal miners are widely represented, also summed up their opinion, the newspaper wrote. According to the council, the problem of non-delivery of cargo caused by infrastructural restrictions and market factors (deficit of wagons) has now become acute. According to expert estimates, long-term transportation demand will not be fully met. The volume of coal unloading by 2020 is projected to be at 42 mln tonnes. The council believes that Kazakhstan's priority access to railway infrastructure would reduce the transportation of Russian coal, thereby reducing its global competitiveness, exports, production, tax revenues to the budget and the number of jobs.


RBC: Russia’s Central Bank to institute risk-based supervision for payment systems

The Russian Central Bank plans to introduce risk-based supervision for payment systems from the beginning of 2018, according to Director of the National Payment System Department of the Central Bank Alla Bakina. According to RBC, the degree of regulation will depend on the significance of the payment systems and quantitative indicators of their activities. The larger and the more powerful the payment system, the more closely and carefully the Central Bank will interact with it. The regulator also intends to tighten the requirements for foreign money transfer systems.

According to RBC, the calculation methodology for the payment system separation is now being revised, while the Central Bank is yet to comment on the indicators that will be used in the methodology. Market participants interviewed by the newspaper believe that the proposed measures are timely, because they expect that small market participants will be able to escape from overly careful supervision. The requirements for systemically important payment systems have changed several times in the past two years. The volume of remittances has been increasing so the largest players in this market fall under this definition.

Payment systems vary in their business model, based on size and, accordingly, risks, Chairman of the Board and co-owner of QIWI Boris Kim told RBC. "A risk-based approach makes it possible to optimally distribute the burden on the supervisory units and enable development of small payment systems, saving them from unnecessary and expensive guardianship," he said.

Experts also noted that the payment system market is currently under-regulated. In particular, it employs many payment aggregators that are not formally payment systems but provide their clients with payment systems’ functions. "In this regard, the regulator is likely to tighten control over the money transfer market," one of the market participants told RBC.

The Central Bank also plans to change the requirements for foreign money transfer systems. The regulator plans to oblige foreign funds transfer systems to have an authorized organization in Russia and to carry out activities only through Russian banks, the newspaper wrote.

These changes can affect, for example, money transfer systems such as MoneyGram, which deals exclusively with cross-border transfers without opening an account, using Russian banks as providers. According to RBC, currently payment systems legislation is closely related to operations on the territory of Russia.


Izvestia: Russia on par with US on cybersecurity

Around 60% of Russian companies have a cybersecurity strategy, the figure is less than in the UK (64%), but more than in Italy (55%), France (53%), Spain (51%) and Germany (45%), and exactly the same as in the US, Izvestia wrote citing PwC global survey. At the same time, most Russian companies note that the digital transformation of business practices has increased the cost of IT security, and it is becoming increasingly difficult to identify the ultimate reasons for failures.

The Russian business community sees breaches of data confidentiality (48%) as one of the most serious risks associated with hacker attacks. At the same time, according to the survey, the best protected information companies are located in Malaysia (74%), Japan (72%) and Indonesia (70%). In the US, 40% of businesses do not have cyber security strategies - just like in Russia.

"Even with sufficiently high quality and high-levels of security in some segments of business many companies may have shortcomings in overall IT security," Director of Cyber Security Practice in Russia at PwC Roman Chaplygin told Izvestiya.

According to Andrey Gaiko of Digital Security, the public sector spends the most money on protection from cyber threats. Thus, state structures purchase various software protection tools in large volumes and implement large IT projects. However, banks are more efficient in cybersecurity.

According to the newspaper, generally the issue of information security is addressed only after hackers strike. Costs for cybersecurity are growing, but not all market representatives are ready to boost investments in this sphere.

The majority of companies affected by cyberattacks told Izvestia that they are not able to locate the sources of these attacks. Only 19% of the participants in the Russian PwC study are fully confident in their ability to establish offender’s identity and 48% of respondents in Russia note that the digital transformation of business procedures has increased the costs of IT security.


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