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Press review: Austria’s role in Russia-West spat and Russia’s new niche on China’s market

Top stories in the Russian press on Friday, March 30

RBC: Austria seeks to mediate Russia-West crisis

Moscow welcomed Austria’s proposal to act as a mediator in settling the crisis between Russia and the West sparked by the scandal over the poisoning of former Russian military intelligence officer-turned-British mole Sergei Skripal. Vienna has a special approach to its relations with Russia, but it is unlikely to be backed by other countries, RBC writes on Friday.

Good relations between Moscow and Vienna over the past decades can be attributed to the Soviet Union’s crucial role in creating an independent Austria after World War II, said Vladimir Schweitzer, who heads the department for social and political research at the Institute of Europe of the Russian Academy of Sciences. When the Ukrainian conflict began in spring 2014, Austria joined the European sanctions. But in late June 2014 Russian President Vladimir Putin paid an official visit to Vienna, his first trip to an EU country since the start of the conflict. Former Austrian Foreign Minister and current Chancellor Sebastian Kurz suggested a plan for lifting the anti-Russian sanctions step-by-step in 2016 in exchange for fulfilling the Minsk peace agreements.

Austria along with Greece and Cyprus were the only three countries out of the 28 EU member-states which have not announced anti-Russian measures in connection with the Skripal case. However, the positions of the countries, which have not joined the sanctions against Russia, are unlikely to influence other EU member-states. "They [Austria] are not seeking to influence anyone, they are not trying to become leaders in the EU. But they have their own position on all issues and are not afraid of expressing it," Schweitzer said.


Nezavisimaya Gazeta: Diplomatic efforts may extinguish hotbeds of conflict in Syria

Reaching a political settlement amid deterioration in some Syrian areas was a key issue discussed at the talks between Russian Foreign Minister Sergey Lavrov and UN Special Envoy for Syria Staffan de Mistura in Moscow on Thursday. Experts told Nezavisimaya Gazeta that the Syrian opposition is not preoccupied by political issues now. The rebels are busy guessing where Damascus will launch a new offensive.

In May, Kazakhstan’s capital of Astana will host the tenth round of talks under the auspices of Russia, Turkey and Iran. The upcoming summit has been essentially affected by a Damascus offensive in Eastern Ghouta, the paper says. The situation in the Syrian capital’s suburb, which was officially part of the de-escalation zones, shared the same destiny as Eastern Aleppo. After Syrian President Bashar Assad’s forces significantly narrowed down the enclave in Eastern Ghouta, the Syrian regime’s opponents are not ready to sit down at the negotiating table.

However, the agenda of talks between Lavrov and De Mistura shows that global players are still pinning hopes on the Geneva talks and the implementation of initiatives of the Syrian National Dialogue Congress endorsed in Sochi, which would satisfy all sides.

The Russian leadership is mulling over the future political landscape in post-war Syria. However, experts believe it is early to speak about political and constitutional aspects of a political settlement on Syria while the hotbeds of conflict remain, including in Eastern Ghouta.

"Certainly, given the current conditions it is impossible to say that constitutional reform may be discussed with the real opposition amid the continuing operation in Eastern Ghouta," Kirill Semenov, Head of the Islamic Research Center at the Institute of Innovative Development and an expert at the Russian International Affairs Council (RIAC), told Nezavisimaya Gazeta. "At least, the situation in the country should be normalized and only then can attempts to establish a nationwide ceasefire be resumed."

Serious concerns are over the fate of southern Syria, where a de-escalation zone is in force which is under supervision of the United States and Israel, the analyst pointed out. Damascus and Tehran have repeatedly hinted at an escalation scenario in this area, which remains under the control of the opposition groups, including those supported by Israel. "Moscow won’t apparently benefit from this scenario since this may lead to confrontation with the leadership of the US and Israel," Semenov said. "Many believe that an offensive in southern Syria is possible, although it may certainly worsen ties."


Izvestia: Russia may elbow US out of China’s agricultural market amid trade war

Russia’s agricultural products may push out US goods from the Chinese market, Izvestia writes. Russian pork, soybeans and wine have high chances of filling the niche, which American farmers may leave amid the trade war with China. Starting from March 31, Beijing may significantly raise import duties for 128 US goods in response to Washington’s heavy tariffs on the import of steel and aluminum from China. American products will be among the first to be targeted by Beijing’s tit-for-tat measures. For Russia, this situation opens "certain prospects," said sources in respective agencies and major entrepreneur organizations - Opora Rossiii and Delovaya Rossia.

"Amid the trade war, China will search for other more predictable suppliers for its market. There is always a choice and this choice will be in favor of those who talk to you like a partner and when there is reliability and mutual respect," said Alexander Kalinin, President of the Opora Rossii, an organization which brings together roughly 450,000 Russian entrepreneurs.

Russia, which has always been this sort of a partner for China, has a chance to replace the US on the pork market, the expert stressed. "This will be a great advantage for our agriculture," he emphasized.

The situation also opens the door to increasing the share of certain categories of Russian high-tech tubular goods, a high-ranking source in a respective Russian agency said, since Beijing plans to slap duties on their US counterparts.

There is also a chance to supply wine from Russia’s Krasnodar Region and Crimea to the Chinese market, the source told Izvestia.

The strengthening of Russia’s positions on the soybean market will be crucial, Head of the Center for Chinese Social and Economic Studies in the Russian Academy of Sciences’ Institute for Far Eastern Studies Andrei Ostrovsky said, explaining that soybeans play a key role in US exports to China.


Kommersant: Gazprom braces for challenging talks with Ukraine on gas transit fate

In April, Gazprom will hold talks on the fate of Russian gas transit through Ukraine, Kommersant writes. The Russian energy giant won’t do without Ukrainian pipelines at least until 2020 and given the sharp conflict between Russia and Ukraine and the worsening dialogue with the European Union, which has traditionally mediated gas crises, the talks will become one of the most challenging in history.

Gazprom’s contract on gas transit signed with Ukraine’s Naftogaz expires next year. The Russian company planned to reduce dependence on Ukraine’s gas transportation system to a bare minimum by building new gas pipelines - Nord Stream 2 and the Turkish Stream. Under this plan, Gazprom’s exports to Europe and Turkey would remain at the level of 2014 and both pipelines were scheduled to be launched by late 2019. However, by late March 2018, it became evident that Gazprom would have to either extend its transit contract with Ukraine or decide in favor of an unprecedented breach of its commitments to consumers.

So, if Gazprom fails to agree with Ukraine on extending the gas transit contract for 2020, it will have to deal with a shortage of deliveries to its consumers. If exports remain at the level of 2017, given that the first leg of Turkish Stream becomes operational and Nord Stream 2 is launched at the 60% capacity, Gazprom will fail to deliver some 45 bln cubic meters to Europe. With the gas price at $250 per 1,000 cubic meters Gazprom will lose $11.2 bln in profits and pay another $800 mln in fines. The Russian energy giant’s reputation would be also undermined.

Sources in Gazprom say no one is considering this critical scenario now. "Even if we fail to reach a deal with Ukraine by late 2019, the Europeans will come and force Kiev to sign at least a temporary agreement." According to Kommersant’s sources, the key question is whether Gazprom has to agree with the EU on a temporary decision given that after 2022 the transit will be reduced to a minimum or even halted, or try to keep Ukraine as a full-fledged transit route for a significant time.

All sides will lose should the talks collapse, the paper says. Gazprom will have to earmark more funds on building gas pipelines in Europe, the EU may face gas price hikes, and Ukraine’s gas transportation system will lose its strategic importance and shrink, triggering a new hike in gas prices in Ukraine.


RBC: Head of AliExpress Russia may be replaced by Chinese top manager

Head of AliExpress online retail service in Russia, a subsidiary of Chinese holding company Alibaba, Mark Zavadsky, will step down in May, RBC writes. He became the first staff member of AliExpress in Russia in 2014 and was in charge of localizing all services. A spokesman for Alibaba refused to explain the reasons for Zavadsky’s resignation, saying this was his "personal decision."

Zavadsky’s duties will be distributed among staff members of the Moscow office, he said. A source told RBC that one of the Chinese top managers of AliExpress would become acting head of the company in Russia.

AliExpress is the most popular online marketplace in Russia. According to Mediascope, as of August some 22.5 mln people used the service in Russia.

Chinese companies traditionally prefer to employ their managers on local markets and Zavadsky’s appointment was an exception, Executive Partner at Business Communications Ivan Samoilenko noted. "The Chinese company tried to get an understanding of the Russian market and hoped for Zavadsky’s lobbying efforts. Now we see that this mission cannot be said to have been accomplished. Alibaba oriented itself on an average check and preferences of its Russian users and that’s why a Chinese manager has been appointed who will control financial flows and the development of the service in Russia," he noted.


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