© AP Photo/Yves Logghe/TASS

Top stories from the Russian press on Monday, January 16th, prepared by TASS

The EU’s next sanctions package revealed, the state of the European economy and main risks for the next 10 years. These stories topped Monday’s newspaper headlines across Russia.

Izvestia: What lies in the next EU sanctions package?

Within the framework of the tenth sanctions package, the EU is mulling sanctions against Rosatom and a lowered price cap on Russian oil, the European Parliament told Izvestia, adding that Patriarch Kirill of Moscow and All Russia may also be blacklisted. Brussels is aspiring to approve the new package by early February, before the EU-Ukraine summit. As reported earlier, the Western restrictions may also involve Belarus and Iran for their support for Russia. Experts interviewed by the newspaper think that the economic fallout from the new measures is not significant given the already introduced sanctions. Additionally, some EU countries, including Hungary, may oppose the proposed restrictions.

Valdai Discussion Club Program Director Ivan Timofeev noted that the EU’s sanctions against Russia’s nuclear industry won’t have a substantial impact because cooperation in this sphere was rather limited.

"Compared with deals on oil or petroleum products, our nuclear cooperation with the EU is insignificant. Most likely, the sanctions in this sphere will involve Rosatom’s projects abroad. This is possible but what is much more important is that simultaneously with the potential introduction of the tenth package, the embargo on Russian petroleum products becomes effective on February 5. Additionally, Brussels with other partners reserved the right to lower the price ceiling on oil," the expert added.

According to him, in the tenth package, Brussels may also widen a ban on delivering certain goods to Russia although "it is hard to come up with something new" in this sphere.

The EU is also actively trying to engage third countries in sanctions pressure against Russia. There are even plans to designate a special envoy for these purposes. However, as Timofeev notes, so far, these attempts by the West have not been effective against India’s and China’s large economies.

Nezavisimaya Gazeta: Europe’s economy adapts to energy costs

The consequences of the energy crisis and limited oil production worldwide did not turn out to be as many Russian experts expected. The prospects of Europe’s industry falling apart over energy prices remain merely a bogeyman. The EU is regrouping its industry and continuing its industrial growth. Foreign experts have been forecasting high global prices on energy products for at least six-seven years. This does not guarantee increased export revenues for Russia due to discounts on its oil.

Euractiv news, citing an analysis by economists from the National Technical University of Athens and the Institute for European Energy and Climate Policy, says that in spite of the energy crisis and the Ukrainian conflict, the EU’s industrial production turned out to be more stable than expected. The main losses were experienced by Europe’s chemical and metallurgical spheres while the rising production was observed in other sectors.

Economist Pavel Ryabov on his Spydell_finance Telegram channel pointed out that low-margin production is decreasing in the EU while the high-margin economy is on the rise like never before. "Production has substantially shifted to the hi-tech and capital intensive sector," he writes.

For example, the chemical industry took the brunt of soaring energy prices and reduced production by almost 15% annually (which is the most substantial drop over the past 30 years). "The metallurgical sphere has declined by 6.4%, the iron ore manufacturing saw a drop of 12.6%, and oil and gas production has decreased by 7.6%. Moreover, the manufacture of other non-metallic mineral products sank 4.4%. The production of paper and said products is undergoing a reduction of 6.8%, and a 5% drop in the production of timber and wood products is underway," he says.

Meanwhile, the pharmaceutical industry has seen a 33% surge. In addition, the production of computer equipment and electronics has grown by 18%, and a 12% increase was noted in the production of automobiles and trailers. Furthermore, the production of electrical equipment has grown by 9.6%. The transformation of the structure of the European industry began before 2022. A year before, high growth rates were noted in the production of computers, electric and optical products as well as pharmaceuticals. A drop was observed in such sectors as the auxiliary activity on mining, oil and gas production and the extraction of metal ores.

Vedomosti: Experts define main risks for the next 10 years

With its first face-to-face event since 2019, the World Economic Forum in Davos is traditionally accompanied by many reports on global problems. The authors of the most comprehensive Global Risks Report have reported out a forecast based on existing and emerging trends. According to them, the main risk until 2033 involves problems related to climate change. This entails the risks of ecosystems being destroyed, natural disasters, the limits of developing the green economy and contradictions between global food security and the preservation of ecosystems.

According to the report, the second most significant risk is the threat to health, the labor market and national healthcare systems posed by global epidemics and their long-term consequences.

War in its narrow and wide sense (for example, economic wars) and the lowered security level are only in third place. However, this problem became central in 2022 and is teeming with global militarization.

Overall, the forum’s analysts correctly determined the long-term trends of the fragmented world order in the political, economic and technological spheres, says Editor-in-Chief of the Russia in Global Affairs magazine Fyodor Lukyanov. He stresses that Russian analysts, including those in the Valdai discussion club, have been recording similar patterns of the degrading mechanisms of international cooperation for many years - even just five years ago this was characterized as the situation of a "crumbling world."

The validity of this ranking of economic dangers is debatable but all the listed risks are indeed pertinent, says Andrey Kochetkov, a leading global research analyst at Otkritie Investment. The level of global debt load has shot up over the past 15 years and the debt crisis can make a comeback if the Central Bank’s rates continue to grow, the expert added. According to him, what can "save everyone" for some time is China’s rapid economic growth following the lifting of its anti-coronavirus restrictions.

Nezavisimaya Gazeta: Special operation’s northwestern flank moves toward Belarus

Amid reports on Russia’s military successes in Donbass, two-week air tactical drills involving combat shooting with the participation of strike aviation of the Russian Aerospace Forces kick off in Belarus. Russian aviation units, comprising an air component of the regional group of troops of the Union State together with Belarusian aircraft and helicopters will work on tasks on all Belarusian air fields and testing grounds of its air force and air defense.

According to reports by the Belarusian Defense Ministry, the concept of the drills will be related to the situation in the special military operation zone and the concentration of NATO forces on the north-western flank of the Union State. It is not excluded that Russia’s tactical strike aviation will remain in Belarus as part of the regional group of troops after the end of the exercise, that is, beyond February 1, 2023.

"I do not rule out that the inspection in the Belarusian army will be related with the air drills and the entire concept will be based on the tasks being resolved by Russia now within the framework of the special military operation," notes military expert, retired Lieutenant General Yury Netkachev. "It is for a good reason that on January 12-13, Belarus was visited by a commission of the Russian Defense Ministry led by the newly appointed Deputy Commander of the integrated group of forces in the special military operation zone, Commander-in-Chief of the Ground Forces, Army General Oleg Salyukov. Then, the press service of the Belarusian Defense Ministry reported that ‘military units and subunits of the Russian component of the regional group of troops were inspected.’ And Minsk particularly stresses that ‘during the commission’s work, the quality of exercises on combat coordination and the readiness to fulfill tasks by the regional group of troops in the interests of ensuring the military security of the Union State were inspected’," the expert explained.

"The onset of the special military operation in the winter of 2022 was preceded by the Union Resolve 2022 strategic maneuvers. A year later, in winter, within the framework of the Union State, the air tactical exercise is organized - these drills are smaller in scale but working through their tasks may facilitate organizing and implementing tasks related to the strategic advance of Russia’s Armed Forces which should be implemented by Chief of the General Staff Valery Gerasimov who is now leading the headquarters of the integrated group of forces in the special military operation zone," military expert, retired colonel Nikolay Shulgin told Nezavisimaya Gazeta.

Kommersant: Russian LNG deliveries to Europe spike in 2022

Liquefied natural gas (LNG) so far remains the only kind of fuel seeing a surge in Europe-bound supplies from Russia in 2022. Novatek increased LNG deliveries to Europe from the Yamal LNG plant by approximately 13.5%, and insignificant volumes so far from Gazprom’s Portovaya LNG plant also contributed to the total supply volume. The reduction of Russian pipeline gas supplies to the EU has led to a 25-percent jump in the share of LNG, previously insignificant, in Russian gas exports.

According to Vygon Consulting’s Maria Belova, by the end of 2022, Europe, including Turkey, imported approximately 125 mln tons of LNG with Russia’s share being about 13%. "Undoubtedly, Russian gas has played an important part on Europe’s gas market in 2022. The deficit was offset only thanks to the lowered gas consumption and the absence of 20 bln cubic meters of LNG deliveries from Russia could play a critical role during the season of pumping gas to underground storage facilities," believes Sergey Kapitonov, a gas industry analyst at the Moscow School of Management SKOLKOVO Energy Center. Amid the lowered volume of Russian exports of pipeline gas to Europe, the share of LNG in overall Russian deliveries has noticeably increased, surpassing 25% from total gas and LNG deliveries (instead of 7% a year earlier), notes independent analyst Alexander Sobko.

Preparing Europe for the winter of 2023-2024 may be even more complicated while new substantial volumes of LNG won’t appear on the market before 2025. So it will still be difficult for Europe to replace Russian LNG. In the absence of restrictions in 2023, substantial deliveries of Russian LNG to the European market should remain, thinks Kapitonov.

However, Sobko thinks that the Asian direction may become more attractive in 2023, even though the European direction is more profitable for the deliveries from Yamal and the Baltic in terms of transportation costs even with equal gas prices. The analyst thinks that as demand restores in China, CNPC will stop reselling its volumes from Yamal LNG to Europe.