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Press review: Putin unveils new nukes in annual address and Rosneft loses foreign partners

Top stories in the Russian press on Friday, March 2


Media: Putin trots out ‘invincible’ nukes and war on poverty in State of the Nation

On Thursday, March 1, Russian President Vladimir Putin delivered the State of the Nation Address to the Federal Assembly, which carried on for twice as long as usual, and for good reasons: the president needed to outline a number of key goals for the coming years. According to the Russian media, the future of the country depends on how it realizes itself in the very literal sense of the word.

In his very first sentence, Putin indicated that the speech was important and different, Izvestia wrote. According to the newspaper, for example the president did not mention new sanctions, accusations of alleged Russian interference in the American elections, the Ukrainian crisis, the doping scandal and other topics, usually discussed at every recent event. The first, socio-economic part of the address had one distinguishable feature - it set goals for the medium term of 5-7 years, however usually the address tends to be focused on more short-term goals, the newspaper wrote.

The main ideas of this part of the speech included stepping up 1.5 fold per capita GDP by 2024, stabilizing social expenditures at a slightly higher level than in 2017, supporting urbanization and the mortgage boom, encouraging self-employment, and raising the investment rate. According to Kommersant, this generally represented the main ideas of ex-Finance Minister Alexei Kudrin’s group. The program did not seem overly ambitious, the newspaper wrote, "in any case, a fundamentally new government for its implementation is not necessary."

According to Kommersant, the president laid out only a general policy. Some of the topics he covered will be discussed in March-April 2018 (competition policy, infrastructure mortgage), the rest will be hashed over by the new government by the fall of 2018 (for example, adjusting the tax system).

There is a lot of uncertainty in the sources of financing for the new economic policies, Nezavisimaya Gazeta wrote. "The president described a vicious cycle - the economy needs to grow, so that additional resources will appear, but this requires additional assets. Despite the fact that the president spoke about the role of private business, the feeling from the address is different. The state will be the main source of investments. Although, primarily private capital reigns globally for technological innovations," the newspaper wrote. Experts told the newspaper, they also expect the programs to be bankrolled primarily by the state.

According to Nezavisimaya Gazeta, "seemed like the address was delivered by two different presidents" - the domestic agenda was quite "downcast", especially when contrasted with the part of the speech on breakthroughs in the military-industrial complex, one of the key messages of the address being the country's defense capabilities. For the first time, Putin talked about the progress of new strategic nuclear developments and hypersonic weapons, declassifying some of their characteristics, and other new weapons. According to Kommersant, all these projects are included in the state program of armaments for 2018-2027, which Putin signed in a decree on December 14, 2017.

Two sources familiar with the preparation of the "military" part of the speech told Kommersant, until the last moment, representatives of the presidential administration, the Defense Ministry and the top managers of the defense industry were discussing the "degree of transparency " of the address. According to one of the sources, on the one hand, it was necessary to demonstrate the real growth of defense capacity on specific examples, on the other - to prevent leakage of "excessively delicate information".



Kommersant: East and West getting tough on Rosneft

Rosneft risks losing two key foreign partners - US-based ExxonMobil has quit the offshore projects in Russia, and China’s CEFC might have lost the support of Beijing’s officials, according to Kommersant. The founder and chairman of the board of directors CEFC Ye Jianming was detained under suspicion of fraud, which calls into question the big 14.2% Rosneft stake purchase deal by CEFC. In turn, ExxonMobil has recently acknowledged that due to sanctions, the US will withdraw from all joint offshore projects with Rosneft.

According to Kommersant, in 2019, Rosneft and ExxonMobil were expected to start drilling on the Tuapse Trough in the Russian Black Sea basin. Now Rosneft intends to implement such projects independently, the company said.

However, working without the Western partner is difficult, and this might affect the timing, the newspaper noted. Sources in the industry told Kommersant, they do not rule out that Rosneft would postpone the terms of the license for the Tuapse Trough. Similarly, ExxonMobil currently tallied up the losses from withdrawing from the Rosneft partnership at $200 mln after taxes.

According to Kommersant, Rosneft’s offshore projects with ExxonMobil have been practically frozen since 2014 and the formal departure of the Americans does not change things much. However, the CEFC problem can have consequences that are more serious. Because of Ye Jianming’s detention, the deal for CEFC purchasing the 14.2% stake in Rosneft for $9.1 bln from Qatar’s QIA and Switzerland's Glencore remains up in the air. Kommersant’s sources in the industry fear that CEFC may not get the funding. According to the newspaper, not only the fate of Ye Jianming, but also of CEFC itself, which in China was considered being close to the authorities, currently hangs in the balance.


Kommersant: Georgia, Moldova and Ukraine convene to discuss ‘the Russian threat’

An inter-parliamentary conference entitled "Georgia, Moldova and Ukraine: Eastern Partnership and Current Security Challenges" will be held on Friday in Chisinau. This conference is presumed to become a regular event. Its main participants are the three countries’ parliamentary speakers. However, other high-ranking representatives will be attending the summit, among them representatives from the European Parliament, the US Congress and the Atlantic Council research center. The participants plan to sign a joint declaration on regional security and European integration. According to Kommersant, Moldovan President Igor Dodon warned of the threat to the process in advance, criticizing the architects of the conference for taking "another anti-Russian step".

According to the newspaper, if the conference actually becomes a regular event, a new format might emerge for discussing cooperation between countries, "all of which accuse Moscow of violating their territorial sovereignty."

A portion of the conference will be devoted to the issues of "propaganda and disinformation" (in January, Moldova banned the broadcast of Russian news programs). The second and third parts will touch upon economic development and energy security. The final part will be dedicated to unresolved territorial conflicts in all three countries.

Although Russia is directly mentioned in the declarations of two out of the four panels in the conference, Moldovan MP Sergey Syrbu told the newspaper that the conference "can in no way be called anti-Russian." However, Moldova’s president vehemently disagrees.

Georgian lawmakers interviewed by Kommersant consider the Chisinau conference to be important both from the perspective of European integration and from the standpoint of opposing Moscow’s policy. "Our states face multi-faceted aggression from Russia, therefore, consultations on uniting efforts are expected, and we welcome them," legislator from the European Georgia party, member of Foreign Relations Committee Giga Bokeria told the newspaper.


Vedomosti: Stockholm court fuels Russian-Ukrainian gas transit dispute

Instead of resolving the dispute over the contract for gas transit through Ukraine, the Stockholm Arbitration court initiated a new round of conflict between Gazprom and Naftogaz, according to Vedomosti. On February 28, the court decided that in the years since the gas transit contract was signed, the Ukrainian company had received less than $4.63 bln for the transit. In addition, the Russian company was ordered to pay for an annual transit of 110 bln cubic meters through the territory of Ukraine.

Gazprom does not agree with the court’s decision saying that the arbitrators ignored "the decline in purchases by European customers," a narrative that Gazprom uses as the main reason for the decrease in transit through Ukrainian territory. According to Head of Naftogaz of Ukraine Andrey Kobolyev, if Gazprom does not fulfill its transit obligations, Naftogaz will once again appeal to the court and "sue the Russian company for compensation".

To fulfill the decision of the arbitrators, Gazprom will have to reduce transit to other areas, primarily through the Nord Stream project, analyst at the energy center of the Skolkovo business school Alexander Sobko told Vedomosti. "But the contract with the Nord Stream operator has a "pump or pay" condition," he pointed out.

Gazprom has funds for paying compensation, Fitch Analyst Dmitry Marinchenko told the newspaper. "Most likely, Gazprom will have to increase its record program of borrowing even more," he said, since Gazprom is even feeling the pinch from the fine.


Izvestia: Prague may say no to Washington and Moscow on Russian hacker’s extradition

The Constitutional Court of the Czech Republic suspended the process of extraditing Evgeny Nikulin, who was detained in Prague in 2016 at the request of the United States. The decision was made after considering the appeal filed by the defense counsel of the Russian citizen, according to Izvesita. Nikulin’s lawyer Vladimir Makeev told the newspaper that Prague might refuse to extradite his client not only to the Americans, but also to Russia. However, the main goal of the defense was to prevent the extradition of the detainee to the US, where he faces up to 54 years in prison for "cybercrimes".

"The Constitutional Court ruled that the Czech Justice Minister cannot make any decision on the case. We pointed to serious violations of the principle of due process, when my client was significantly limited in the ability to represent his own interests," Czech lawyer Martin Sadilek told Izvestia.

"The court can make a decision not to extradite the detainee to a particular country, that is, to the United States or Russia. From a legal perspective, all the preconditions are in place for this. The main thing now is to prevent his extradition to the United States," Makeev told the newspaper.

Moscow has repeatedly stated that it insists on the extradition of the detainee to Russia. According to the generally accepted legal norms, the request takes precedence, since the detainee is a citizen of the Russian Federation.


/TASS is not responsible for the material quoted in these press reviews/