May 21, 13:00 UTC+3
Top stories in the Russian press on Monday
Media: New cabinet appointed as reforms are around the corner
Putin’s new cabinet is a ‘compromise’ of elite groups of technocrats loyal to the president, experts polled by RBC daily presume. According to political analyst Yevgeny Minchenko, the new cabinet consists of heavyweight ministers that can well be considered as President Putin’s direct appointees, among them Sergei Shoigu, Sergey Ivanov, Anton Siluanov, Alexander Novak and Denis Manturov, while the newly appointed ministers have major influential groups backing them.
Natalia Akindinova, Director of the Center of Development at the Higher School of Economics, considers the new cabinet to have a high degree of continuity regarding its economic policy. For example, First Deputy PM Anton Siluanov who managed to defend a tough approach to additional budget expenditures amid the crisis will head the financial and economic bloc. Former head of the Account Chamber Tatyana Golikova, which enjoys President Putin’s confidence, will be in charge for the social bloc. Alexey Gordeyev who carried out mass-scale reforms in the agriculture sector in the early 2000s, will return as Deputy PM.
The new government is expected to take the quantum leap announced during the presidential campaign, worth an unprecedented 25 trillion rubles ($400 bln), and carry out unpopular reforms under Finance Minister Siluanov’s control.
Meanwhile, the most surprising thing about the new cabinet is a “common feeling” that it has no “breakthrough”, according to political scientist Abbas Gallyamov speaking with RBC. However, Vedomosti writes that now it is not going to be easy to avoid reforms, particularly due to the retirement age hike already announced by PM Medvedev.
The key thing is to prepare a sound program of reforms for the whole economy, head of the Economic export group Yevsey Gurvich told Vedomosti. As experience from recent years has shown, monetary policy can help avoid a serious crisis, but not shift from stagnation to growth. A whole set of institutional and structural measures is needed to ensure sustainable economic growth, Vedomosti says.
Kommersant: Sanctions no reason to freeze ties, says Bulgarian leader
Hours are left before Bulgarian President Rumen Radev arrives in Russia to meet with Prime Minister Dmitry Medvedev in Moscow on Monday and then move on to Sochi to speak with President Vladimir Putin on Tuesday. This is going to be the first meeting between both presidents in a decade. “The absence of top-level dialogue for such a long period of time does not meet the interests of our peoples,” Radev said in an interview with Kommersant daily, adding that ‘public diplomacy’, and “communication between tourists, actors, professionals, journalists, and cultural exchange have never stopped.”
“As acting chair of the European Union Council,” Bulgaria strives for a constructive and meaningful dialogue with its partners, Radev told the paper. Asked what made the country refrain from expelling Russian diplomats amid the Salisbury incident unlike most western countries and choose only to recall its ambassador for a week, he said that “a responsible decision like that was the only possible one in a challenging situation requiring forward-looking moves.” Speaking about sanctions and Sofia’s plans to support potential further expansion of anti-Russia restrictions, he said that “sanctions aren’t forever.”
“They are not a trigger to freeze relations. Sanctions hurt all countries and are a nonworking instrument. Moreover, I assume that free trade facilitates peace more through creating interrelations, which no one wants to break,” the Bulgarian president said.
According to Radev, “the EU restrictions against Russia are aimed at solving the Ukrainian crisis. The removal of sanctions is linked to full compliance with the Minsk accords by all sides. Their implementation would restore confidence between the European Union and Russia thus, it would further deepen and expand bilateral cooperation between Bulgaria and Russia. “The EU and Russia have to decide on how they want to build their relationship and on how we are going to solve the issues in dispute – with dialogue or without it. Talks have intensified recently. Chancellor (Angela) Merkel visited Sochi several days ago. Today and tomorrow we will be discussing Bulgarian-Russian relations with Prime Minister Medvedev and President Putin, and (French) President (Emmanuel) Macron will arrive in Russia in coming days, which I think is a promising trend,” he explained.
Speaking about energy cooperation between Moscow and Sofia, the president noted that “Bulgaria needs direct supplies of Russian gas via the Black Sea.” “Let’s call it ‘Bulgarian Stream’. This approach is in line with common sense, energy safety and efficiency requirements, not only for Bulgaria, but also for the European Union overall,” he said. “Both for Russia and for Bulgaria it is logical to choose Bulgarian territory as a route for expanding Russian natural gas supplies, which is why it is in our common interest to ensure direct access to Bulgaria’s Black Sea coast for Russia gas,” Radev added.
RBC: Subcontractors benefit most from Gazprom’s projects, analysts say
Sberbank CIB has pointed to the subcontractors of Russia’s top gas producer, Arkady Rotenberg and Gennady Timchenko among them, as the ‘big winners’ thanks to the company’s projects to construct export-oriented pipelines of the Power of Siberia, Nord Stream 2 and Turkish Stream, RBC says. In their recent report of Russian oil and gas business, Sberbank CIB analysts said that investments in those projects are generating a low return. According to the report, Gazprom’s decisions are absolutely logical if the company is managed in the interests of its subcontractors, rather than for gaining commercial profit.
“The report is a commercial product, which is not for a wide audience and is meant only for highly-qualified investors, who are clients of Sberbank CIB,” the bank’s representative told RBC.
A representative of Arkady Rotenberg, co-owner of Stroygazmontazh, told the newspaper that the company is not a beneficiary of Gazprom’s investment program as the Power of Siberia gas pipeline will remain in the company’s ownership and it will gain its final benefit once this investment project is implemented.
“Stroygazmontazh only participates in the project as a general subcontractor and fulfills construction and installation works on a paid basis within the framework of agreements made,” the representative added. Stroytransneftegaz, 50% of which is owned by Timchenko and his family, did not provide any commentary.
Sberbank CIB analysts estimate the total expenses shelled out on the construction of the Power of Siberia, Nord Stream 2 and Turkish Stream at $93.4 bln. They cast doubt upon the contract to supply 38 bln cubic meters of gas to China annually being beneficial amid the average crude price of $65 per barrel. They also stress the high cost of the Power of Siberia’s construction compared with the Altai project considered earlier ($55.4 bln for Power of Siberia versus $10 bln for Altai), RBC writes. The construction of ‘streams’ – to the northern and southern parts of Europe – is also beneficial for the subcontractors in the first place due to the high cost of onshore infrastructure, Sberbank CIB said. Analysts added that the implementation of both projects might not make it possible to abandon gas transit through Ukraine, which has been consistently mentioned as the main objective of the projects.
Krasnaya Zvezda: US violates short, intermediate range missiles deal
The United States has breached the agreement on short- and intermediate-range missiles as it is developing missile systems with an air range of 500 to 5,000 kilometers, the Russian Defense Ministry’s head of National Nuclear Risk Reduction Center Sergei Ryzhkov said in an article in the Krasnaya Zvezda (Red Star) newspaper.
“Russia has been bringing up the issues related to violations of the short-and intermediate-range missiles deal by the US side for several years already. For example, the US is developing and conducting flight tests with ballistic missiles having a range of 500 to 5,000 kilometers bypassing the agreement,” he said. Washington rationalizes the new missile systems development by the fact that they are “not more than ballistic target-missiles,” while “all those developments are conducted to test the global anti-missile system.”
According to Ryzhkov, “the development and flight tests of such missiles sets a precedent for bypassing the agreement on short-and intermediate-range missiles as those missiles can deliver weapons within a range limited by the deal.”
Washington has been alluding to a potential breach of the agreement on short-and intermediate-range missiles after Russia launched its Iskander-M (NATO reporting name: SS-26 Stone) tests, after which the White House officially stated that the Russian missile Novator 9M729 allegedly violated the INF deal, in November 2017. Ryzhkov considers those accusation “unfounded and unspecific.”
“The US side misrepresents the alleged violation as a true fact, without mentioning the essence of the violation, and where and how it has been revealed,” he said, adding that “such a policy pursues the main objective of diminishing Russia and present it as a country that violates international deals.” The official also noted that Washington is seeking to eliminate the agreement, which may have serious implications for the global community.
Vedomosti: Chinese online platform eyes Russian e-commerce market
Tmall, owned by China’s Alibaba Group, plans to become one of top online players in Russia by the end of this year, Vedomosti says. The seller of famous brands has leased a warehouse in the South Gate Industrial Park near Domodedovo Airport, Anton Panteleyev, a representative of Tmall and AliЕxpress in Russia, told Vedomosti.
The Chinese e-commerce player, which launched operations in Russia in September 2017, is the second online platform of Alibaba in the country after AliExpress.
JLL’s Yevgeny Bumagin suggests that the decision to invest in Russian logistics is related to the strategy of China’s online giant, which sees potential in cultivating online sales in Russia. Currently, retail sales, including e-commerce, is the main driver of warehouse market development. Online retail players ensured a quarter of demand for storage space in the Moscow Region last year, he explained.
Data Insight’s Fyodor Virin believes the objective of entering Russia’s top five online stores is not an extremely challenging one. The market is not consolidated and the biggest players occupy small portions of it. However, he doubts that Tmall will meet its goal by this year, though it may well catch up with the five biggest players in terms of the number of orders by the end of 2018, he noted.
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