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Press review: What's behind US new steel tariffs and where Trump will meet Kim Jong Un

Top stories in the Russian press on Monday, March 12


Media: New US move against steel imports seen as political instrument, experts say

The signing of a decree to introduce customs tariffs on steel and aluminum imports by the US President has been viewed as a new protectionist measure and political instrument, several Russian newspapers wrote on Monday. The decree to impose a 25% tariff on steel and 10% on aluminum was signed by Donald Trump on March 8, with tariffs expected to come into force starting March 23. The news has already sparked much debate all over the globe. Certain nations may be exempt from tariffs, including Canada and Mexico.

The United States is the world’s biggest steel importer, which supplies up to 30 mln tonnes per year. Over the past ten years the country boosted steel imports three-fold amid a reduction of its own output due to excess plant capacity globally. China has been named as the main source of overcapacity, as its monthly steel production almost equals the volume produced by the United States in one year. Alexander Pakhomov of Russian Academy of Sciences told Rossiyskaya Gazeta he considers it reasonable for Washington to appeal to the ‘unfairness’ of international trade. "However, Trump’s decisions in this regard have weak arguments backing them up legally and from the viewpoint of the international economy, and have more domestic political and protectionist ground aiming to raise profitability of local production sites and employment in the sector," he told the paper. The expert said he expects a collective action to the WTO arbitration filed by a group of countries against Washington in case of escalation. "Theoretically, such a tough decision made by the US administration may be followed by retaliation measures and trade wars, and could affect Russia’s interests to some extent," Pakhomov added.

Russian businessmen have been quite cautious in their comments so far. A source in Severstal told Vedomosti that any trade restrictions damage industry players and the global economy in general, adding that the US is not among the company’s top priority markets. In 2017, the country only accounted for 2% of Severstal’s sales, which can be easily redirected to other markets. A source in Rusal told the newspaper that Russian metals pose no threat to US aluminum producers, as the country does not supply sufficient volumes of those types of aluminum products. Russia’s NLMK steelmaker said the company "will be looking for a way out within the limits of legislation." Sources among Russian industry players told Kommersant that the authorities might come up with a response. The key here is to launch intergovernmental consultations, prepare reciprocal measures for the US and prevent a shift of steel imports, sources said.


Izvestia: North Korean, US leaders to meet in Pyongyang

The meeting of the US and North Korean leaders, Donald Trump and Kim Jong Un, will most likely be held in Pyongyang, two high-ranked government sources in in Seoul told Izvestia. "The North Korea-US summit is most likely to be held in Pyongyang. The North Korean leadership has not been eager to leave the country for some other place, with the exception of China and Russia. The fact that Kim Jong Un initiated the meeting also supports the suggestion that the meeting will take place in Pyongyang," an official in South Korea's Ministry of Unification told the newspaper. Another high-ranked diplomatic source said that the North Korean territory is considered primarily for a meeting between the two leaders.

The North Korean side plans to raise the issue of establishing diplomatic ties with the United States, one of the sources said. "North Korea will ask the US to enter into diplomatic relations, which will kick-start peace talks," a source in the Ministry of Unification told Izvestia. A representative close to Seoul’s intelligence services said that Kim Jong Un’s consent to meet Donald Trump has become the first sign of the North Korean leader being ready to move towards denuclearization. "It looks like Kim is positive regarding peace talks with the US and denuclearization this year," he said.

As was reported earlier, South Korea's national security adviser, Chung Eui-Yong, told reporters at the White House last week that the US President said he was ready to meet with the North Korean leader by May. Currently, South Korea is playing the key role in organizing the highly expected meeting. A ten-member South Korean delegation, led by National Security Office Director and Special Presidential Envoy Chung Eui-Yong, just returned from Pyongyang. The delegation comprising National Intelligence Service chief Suh Hoon and other officials, held meetings with North Korean officials, discussing ways to strengthen peace on the Korean Peninsula and boost the relationship between the two Koreas.


Nezavisimaya Gazeta: Opposition attempt to boycott Russian presidential election in LA

Russian opposition members living in the United States put the early voting in Los Angeles on March 11 under the threat of failure as they tried to force the polling station to reject holding the vote, Nezavisimaya Gazeta writes. Vitaly Ataev-Troshin, a Russian living in California, who was the initiator of several boycotts and protests outside planned polling places, told the newspaper that he had called the owner of the real estate where the voting should take place and said that "the US authorities had imposed sanctions on Russia due to human rights violation" in an attempt to prevent the voting from happening. Despite the action, the voting took place at the planned polling place, though accompanied by a protest outside.

Head of the Economic and Political Reform Center Nikolai Mironov told the paper the voting in the US "fits within the general campaign to attract attention to the election" and the results will most likely not present any surprise or be different from the general outcome.

A total 1.9 mln Russians residing abroad are registered with the Russian consulates at present. On Sunday, early voting at Russia’s presidential election started in the US cities of Boston, Massachusetts, Albany, New York and Philadelphia, Pennsylvania. Apart from that, the Russian consulate general in Seattle, Washington, organizes early voting in San Francisco, San Jose and Los Angeles, California. On March 18, polling stations will be organized at Russia’s overseas establishments, including the embassy in Washington, the consulates general in New York, Seattle and Houston, Texas.

Presidential elections in Russia will be held on March 18. Eight contenders are vying for the presidential office. They are incumbent Russian President Vladimir Putin, who will participate as an independent candidate, LDPR leader Vladimir Zhirinovsky, businessman Pavel Grudinin nominated by the CPRF, Yabloko party co-founder Grigory Yavlinsky, leader of the Party of Growth and business ombudsman Boris Titov, head of the Russian People’s Union party and former Deputy Speaker of the State Duma Sergey Baburin, TV host Ksenia Sobchak (nominated by Civil Initiative) and leader of the Communists of Russia Maxim Suraikin.


Vedomosti: Chinese government to become co-owner of Rosneft

Although the CEO of Rosneft Igor Sechin said the company’s shareholder structure had already been formed after China Energy CEFC announced plans to purchase a 14.16% share in Russia’s top oil producer from Glencore-QIA consortium last September, a new co-owner of Rosneft’s future shareholder - Huarong Asset Management - has emerged, Vedomosti writes on Monday with reference to Reuters and South China Morning Post. Huarong is controlled by the state-owned China Life Insurance and China’s finance ministry. In December 2017 and February 2018, it acquired 36.2% of CEFC Hainan International, which is acquiring Rosneft shares from Glencore and QIA, in two tranches. Though the sum of the transaction has not been unveiled, CEFC Hainan’s equity capital has increased by $1.52 bln.

A source close to one of the parties of the upcoming deal confirmed to Vedomosti that CEFC Hainan had been recapitalized. "A 36.2% stake are the preferred shares that the company issued at the end of last year," he said. Prosperity Capital Management’s Olga Danilenko suggests that if the Chinese company issues preferred shares for the Huarong transaction, the purchase has helped recapitalize the CEFC structure and eliminate the effect of the company affiliated with the Chinese government on management of both CEFC Hainan and Rosneft.

Currently, the consortium of Glencore and QIA owns 19.5% of shares in the Russian oil producer. In September, CEFC’s subsidiary paid "several hundred million dollars" to QHG Oil for the launch of the deal, two sources close to different sides of the deal told the newspaper. CEFC Hainan has to pay 20% of the total sum ($1.8 bln) by the end of the first quarter of this year, and the remaining part ($7.5 bln) - by September 2018, Vedomosti writes.


Kommersant: Sberbank’s Ukrainian subsidiary to be sold to Belarusian investor

Belarusian Paritetbank, the country’s 15th biggest lender in terms of assets, owned by the country’s Presidential Property Management Department, is now the only bidder to purchase the Ukrainian subsidiary of Russia’s Sberbank, Kommersant says. This comes after Ukrainian businessman Valery Khoroshkovsky scrapped plans to acquire the asset. Previously, he wanted to close the purchase deal by the first quarter of 2018. Kommersant’s sources close to Sberbank’s Ukrainian subsidiary have confirmed rumors that the businessman has dropped the plans due to sanctions-related risks. "On December 21, 2017 the National Bank of Ukraine (NBU) officially received the required set of documents from the Belarusian Presidential Property Management Department for the acquisition of the Sberbank subsidiary through Paritetbank," a source in the NBU said, adding that the regulator currently has no other bids.

In March 2017, Ukrainian President Pyotr Poroshenko imposed sanctions against five banks with Russian state capital operating in the Ukrainian market - Sberbank, VS Bank, Prominvestbank, VTB Bank and BM Bank. Sanctions include a ban on the withdrawal of funds outside of Ukraine, as well as the payment of dividends, interest, return of interbank deposits and loans, funds from correspondent accounts of subordinated debt. The ban also concerns distribution of profits and capital of these five banks. After that, Russian banks announced plans to sell their assets in the country. The sale of Ukraine-based Sberbank has been negotiated for several years already.

Kommersant’s sources familiar with the NBU’s position warn that the transaction’s approval may be "challenging" due to the fact that "Viktor Sheiman is Paritetbank’s shareholder," since the official is under strict sanctions imposed by the US and EU over cases of opposition politicians, a businessman and a journalist who disappeared in 1999 and 2000. However, some analysts say the deal may still be approved as documents do not contain Sheiman’s name.


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