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Top stories from the Russian press on Tuesday, December 20th, prepared by TASS

Experts doubt that the move to establish a gas price cap will help Europe resolve its energy issues, Russia and Belarus plan to create a common defense space and Brussels seeks to reconcile Ankara and Athens. These stories topped Tuesday’s newspaper headlines across Russia.

Kommersant: EU sets gas price cap at achievable level

European Union members agreed to set a gas price cap at about €180 per megawatt hour (or $1,900 per 1,000 cubic meters) starting on February 15, 2023. The mechanism will be triggered only if futures on the Dutch Title Transfer Facility (TTF), Europe’s major gas hub, exceed the level for three days and are also over €35 higher than LNG prices. Analysts believe that the new mechanism may be activated this winter, creating the risk that LNG will move from the EU to Asia, Kommersant writes.

Sergey Kondratyev from the Institute of Energy and Finance Foundation points out that the move to establish "a price ceiling" increases the likelihood of its use. Certain amounts of gas may move to the over-the-counter market, but it will most likely have little effect as gas supplies will be redirected to Asia. "The issue currently is not so much about the price cap because the price of gas in the European Union will to a greater extent depend on demand in Asia, where gas will move to so Europeans will be unable to purchase LNG at all," he noted.

Ivan Timonin from Vygon Consulting, in turn, doubts that the introduction of the new mechanism will make it possible to solve the problem of LNG competition between Europe and Asia on a limited market, "which is why its impact on prices will be speculative and won’t last long." The expert expects gas prices to remain at the $1,300-1,500 per 1,000 cubic meters mark in 2023 with high amounts of gas in European storage facilities and the weather favoring importers. That said, "it cannot be ruled out that we won’t have a chance to see the new tool work."

The expert also emphasized that the price cap did not apply to spot prices. "After reaching the price cap, liquidity is highly likely to move from the regulated futures market to the unregulated sport market, which, in turn, will push spot prices up," Timonin stressed.

Izvestia: Russia, Belarus plan to create common defense space

Presidents Vladimir Putin of Russia and Alexander Lukashenko of Belarus discussed ways to ensure the security of the Union State at a meeting in Minsk on December 19. Meanwhile, news broke that the Armed Forces of Ukraine had used Swedish-made Archer howitzers in an attack on Donetsk. Experts point out that NATO countries and their allies have long been using Ukraine as a testing ground to try out their advanced weapons, Izvestia writes.

Putin stated following the meeting with his Belarusian counterpart that they had discussed the creation of the Union State’s common defense space, as well as cooperation within the Collective Security Treaty Organization (CSTO) where Belarus will take up chairmanship on January 1. Apart from other things, the parties agreed to work on the development of new military hardware and maintain the practice of holding joint drills.

Putin pointed out that Russia and Belarus conducted joint military planning as part of consistent efforts to implement their common military doctrine. Moscow and Minsk have a joint regional group of forces and common air defenses. In addition, the Russian president did not rule out the possibility of training the crews of Belarusian warplanes re-equipped for the use of weapons with special nuclear warheads.

As for Western-made weapons in Ukraine, NATO members view the current military activities in the country as a good opportunity to test their existing and advanced weapons, military expert Vasily Dandykin told the newspaper.

According to him, apart from Sweden, the Czech Republic, France, Poland and other countries are also providing NATO-standard 155 mm artillery systems to Ukraine. As those are used in combat, conclusions will be drawn and the systems will be improved.

The expert noted that Sweden was not a NATO member yet but was going to join the bloc in the near future. "The country was one of the first to start providing weapons to Ukraine, making it clear that it has long been following NATO’s policies," Dandykin noted.

Izvestia: Brussels embarks on reconciling Turkey and Greece

Secret talks between Director of the Greek Prime Minister’s Diplomatic Office Anna-Maria Bura and Turkish Presidential Spokesman Ibrahim Kalin took place in Brussels. Athens and Ankara had many times found themselves on the brink of an armed conflict before but this time, the European Union decided to interfere. However, analysts interviewed by Izvestia believe that it should have been done much earlier.

In recent months, Ankara repeatedly accused Athens of building up weapons arsenals on Greek islands in the Aegean Sea, not far from Turkey's coast. Turkish President Recep Tayyip Erdogan hinted publicly the other day that he could target the Greek capital with Tayfun small-range ballistic missiles unless Athens changed its military buildup policy.

Researcher with the Department of the Middle and Post-Soviet East at the Institute of Scientific Information on Social Sciences of the Russian Academy of Sciences Alina Sbitneva points out that the conflict between Ankara and Athens is a long-standing one. "It is first and foremost about territorial disputes over islands in the Aegean Sea, as well as about a number of disagreements on the issue of Cyprus. Meanwhile, both countries are NATO members. Moreover, Greece is also part of the European Union. Such radical contradictions certainly worry the European community who is not ready to face another round of tensions in the Mediterranean region, let alone military activities between countries," the expert explained. "It’s interesting that it was Brussels that made an effort to reconcile the parties. The question is how useful the meeting was because Turkey no longer sees the EU as an organization who it should listen to," Sbitneva noted.

"This conflict is surely too tough of a nut for Europe to crack. Brussels addressed it too late, failing to understand that it should have been connecting the threads step by step all this time, otherwise the only remaining option would be to untangle the accumulated contradictions or just watch Ankara handle the job on its own," head of the Department of the Middle and Post-Soviet East at the Institute of Scientific Information on Social Sciences of the Russian Academy of Sciences Vladimir Avatkov emphasized.

Nezavisimaya Gazeta: Japan views China as challenge in updated military strategy

Japanese Foreign Minister Yoshimasa Hayashi will pay a visit to China before the end of December. It will be the first visit to China by a Japanese top diplomat in the past three years. During this time, relations between the two countries have deteriorated due to the Taiwan issue and territorial disputes in the East China Sea. In addition, Tokyo has announced recently that China will be labeled as "an unprecedented strategic challenge" in its updated military doctrine. Japan also plans to significantly boost defense spending. One would think that these steps make it impossible to improve ties but experts do not rule out a trade and economic agreement, Nezavisimaya Gazeta writes.

In Beijing, the parties will particularly discuss their dispute over the Diaoyudao (Senkaku) Islands, developments in Ukraine and interaction between private companies.

"Although Japan, possibly under US pressure, is joining the policy to deter China, economic ties between the two countries remain at a high level," said Kiril Babyev, the head of the Russian Academy of Sciences’ Institute of China and Contemporary Asia. "Their development greatly benefits Japan. This is why the Japanese government will try to make every effort to soften its political statements to prevent those from harming economic cooperation. This seems to be the main goal of the visit. As for the disputed territories, no compromise is in sight. The issue will continue to cast a cloud over relations between the two countries. Particularly in a situation where Japan and China are building up their military, expecting the confrontation to continue," the expert added.

"As for the Ukraine issue, I think that even if it is discussed, the parties will confine themselves to repeating the positions that have already been stated by the two governments. Any specific talks on that are unlikely to be held at this point," Babayev stressed.

Vedomosti: Russian ruble to continue weakening until end of year

Russia’s national currency has been rapidly weakening since last week. The dollar and the euro have risen to the levels recorded in May, Vedomosti notes.

A decline in the price of Russia’s Urals crude oil, which is trading below $60 per barrel, is starting to tell on the ruble. The low price comes from discounts caused by Europe’s move to impose an embargo on Russian oil imports. This leads to a drop in export revenues and a reduced currency supply on the market, Finam analyst Alexander Potavin noted.

There is always a surge in demand for foreign currency at the end of the year ahead of the holiday season, Sovcombank Chief Analyst Mikhail Vasilyev pointed out. Banks will be closed so there is now an increased demand for foreign currency, the expert explained. The Central Bank’s policy aimed at weaning off dollar dependence has created a situation where December’s foreign currency purchases by companies and individuals have a stronger impact on the ruble rate, the economist pointed out.

Russia is likely to see a further decline in its export revenues, which will reduce the inflow of foreign currency, making it more expensive. In addition, the expert expects a decline in oil exports due to the European oil embargo and a price cap on Russian oil.

However, the December taxation period, which has already begun, will support the ruble as exporters will step up their currency sales to make payments to the budget, Vasilyev said. Potavin, in turn, expects to see demand for foreign currency weaken and the ruble begin to strengthen after the holiday season.