© AP Photo/Majdi Mohammed/TASS

Top stories from the Russian press on Tuesday, July 4th, prepared by TASS

Israel launches major military operation against Palestinians in West Bank city of Jenin; Sweden seeking approval for NATO bid from Hungary and Turkey before bloc’s summit in Vilnius; and establishing overseas subsidiary of sanctioned Russian Agricultural Bank may help save grain deal. These stories topped Tuesday’s newspaper headlines across Russia.

Vedomosti: Israel launches major operation against Palestinians in West Bank city of Jenin

The Israel Defense Forces (IDF) on July 3 announced the launch of a large-scale counterterrorism operation around the city of Jenin and in a refugee camp of the same name in the West Bank, a territory belonging to the Palestinian Authority. According to the IDF, the military attacked a headquarters of Palestinian groups where militants had set up a gathering point. In addition, the army’s press service said that the site had also housed an explosives and weapons depot, while Palestinians wanted by the Israeli authorities had used the headquarters as a hideout, Vedomosti writes.

There is no military, political or diplomatic solution to the Palestinian-Israeli conflict, said Sergey Demidenko, department head at the Institute of Social Sciences of the Russian Presidential Academy of National Economy and Public Administration. According to him, incidents similar to the situation in Jenin will continue to take place.

As for the international community’s attitude toward Palestine, the European Union and the United States have long realized the cyclical nature of the conflict, which is why they do not intend to expend any effort on what cannot be changed. Additionally, in the expert’s words, given the West’s confrontation with Russia, Brussels and Washington definitely would not contact Moscow on an issue they consider unworthy of attention.

Israeli researcher Alexandra Appelberg sees several reasons behind the current tensions in the West Bank. First, the younger generation of Palestinians, who have lost faith in "the peace process" (which, in fact, does not exist), do not view Palestinian President Mahmoud Abbas and his officials as legitimate. Second, a succession crisis has already begun and various centers of power within the Palestinian Authority are seeking to appeal to this young, hawkish constituency. Violent resistance to Israel is ceasing to be a position on the marginal fringe, Appelberg pointed out.

Third, the current Israeli government’s policy of expanding settlements and its bellicose rhetoric are also adding fuel to the fire. This not only angers Palestinian militants but also incites violence by Israeli settlers in the West Bank, who feel that the government has their back and is essentially encouraging them.

Izvestia: Will Budapest, Ankara approve Stockholm’s NATO entry bid before Vilnius summit?

Hungary will not greenlight Sweden’s accession to NATO until Stockholm changes its attitude toward Budapest. Officials from Hungary’s ruling Fidesz party explained to Izvestia that the Swedish authorities had repeatedly offended Hungarian voters and the country in general, at the same time that NATO frowns upon disputes between member countries. Meanwhile, only a week remains before the North Atlantic Alliance’s summit in the Lithuanian capital of Vilnius.

"Budapest is blocking Stockholm’s NATO bid because of the Swedish authorities’ criticism of the state of democracy in Hungary. The Swedes claim that [Hungarian Prime Minister] Viktor Orban’s policies undermine the ‘rule of law’ in the country. In addition, in late 2020 Sweden supported the EU leadership’s decision to link EU funding to respect for its ‘core values.’ Such a mechanism was expected to compel the ‘violator’ countries - Hungary and Poland - to get in line," said analyst Nikita Lipunov of the Institute for International Studies at Moscow State Institute of International Relations (MGIMO University).

"Brussels and Washington will now put strong pressure on Budapest but Hungary’s demands for the Swedes aren’t as critical and uncompromising as Turkey’s. Hungary likely will play for time and approve the bid right after Turkey does," the expert noted.

Turkey does indeed have strong grievances about Sweden’s policies. Ankara expects Stockholm to comply with its obligations to fight terrorism, particularly with regard to the Kurdistan Workers’ Party and US-based Muslim cleric Fethullah Gulen’s organization, which are both outlawed in Turkey. Apart from that, the Turkish authorities were outraged by a recent Quran-burning incident in Stockholm. The Swedish authorities will have to make a great effort to convince the Turks, but "the Americans will help them in that regard," the analyst assumed.

"[Turkish President Recep Tayyip] Erdogan will take advantage of the situation and continue the process of political bargaining with the West that he has been successfully conducting since last year, achieving tangible results. The US, in turn, will seek to push a decision before the Vilnius summit; the stakes are rising. Still, there is not much time left so the parties are unlikely to reach a compromise," Lipunov concluded.

Vedomosti: Creating subsidiary of sanctioned Russian Agricultural Bank may save grain deal

The Russia-related part of the Black Sea grain deal, which expires on July 17, has not yet been implemented, particularly in terms of the need to lift restrictions on the Russian Agricultural Bank (RAB). This is what Russian Presidential Spokesman Dmitry Peskov said when asked to comment on a Financial Times (FT) report that Brussels was considering easing sanctions on the bank, making it possible to connect its specially established subsidiary to the SWIFT funds transfer network, Vedomosti writes.

The FT wrote on July 3, citing sources, that RAB, which had been cut off from SWIFT in June 2022, could set up a subsidiary that could be connected to SWIFT. This would be a way to meet at least one of Moscow’s demands for the extension of the grain deal. According to the newspaper’s sources, the initiative, put forward at a European Union summit in Brussels on June 29-30, is now under consideration by EU governing bodies.

Neither the US nor the EU has imposed blocking sanctions on the Russian Agricultural Bank, which only faces sectoral restrictions. Given that, making concessions for RAB may be feasible, said Sergey Glandin, a partner at BGP Litigation and expert in international law. US and EU restrictions prohibit the bank from raising long-term financing and also disconnected it from SWIFT. However, the restrictions should not apply to any new subsidiary that RAB may establish unless the subsidiary is itself added to the blacklist, Glandin pointed out.

Reports of the potential establishment of a subsidiary of the Russian Agricultural Bank may have been spread on purpose to gauge the reaction of the EU and Russian authorities amid discussions of the prospects for another extension of the grain deal. According to Pavel Timofeyev, sector director at the Department for European Political Studies at the Russian Academy of Sciences’ Institute of World Economy and International Relations, such a step would contravene Brussels’ tough official rhetoric that Russia’s economic ties must be blocked as much as possible, leaving no loopholes.

But, should RAB open an overseas subsidiary, it would actually gain access to SWIFT. And, if so, the significance of this would clearly go beyond the grain deal, Vladislav Belov, head of the Center of Country Studies at the Russian Academy of Sciences’ Institute of Europe, emphasized.

Nezavisimaya Gazeta: Western experts concerned about BRICS plans to create single currency

The BRICS countries (Brazil, Russia, India, China, South Africa) are seeking to protect their trade links from potential US sanctions by creating a gold-backed common currency. Western experts expect the issue to be discussed at the BRICS summit in South Africa on August 22-24. However, it may prove difficult for the member states to agree on gold guarantees, Nezavisimaya Gazeta notes, citing analysts.

"Any national currency has to be backed by some form of assets in order to be stable and even convertible. In the past, this function was played by gold and silver reserves, but now, it’s more about the relevant country’s GDP, that is, the real goods and services that the issuing country produces. When the amount of the issued currency is not backed by GDP - which is the case with the US dollar - then the given currency has a higher-than-zero probability of facing a crisis and depreciation," said Valeria Minchichova, associate professor with the Department of Global Economy and International Business at the Financial University under the Government of the Russian Federation.

"Today, it’s simply impossible to build a new global financial system based solely on gold. The capitalization of the entire gold market stands at only $12 trillion, which is not enough to serve all [global] financial flows," Andrey Stolyarov, associate professor in the Financial Markets Infrastructure Department at the Higher School of Economics (HSE University), noted.

According to Minchichova, setting up a basket of currencies, and, for instance, a synthetic currency similar to the International Monetary Fund's Special Drawing Rights (SDR) would be a more logical move.

A single BRICS currency could lead to serious economic problems because the member states have completely different economies, policies, geographical positions, logistics and goals, Finam analyst Andrey Maslov pointed out. In his view, the only possible option is to create a currency that would in fact serve as a payment tool for the BRICS countries’ cross-border trade but would not be used as a full-fledged legal tender within their respective domestic economies.

Media: Russia to reduce oil exports starting in August

Russia has announced plans to reduce its oil exports by 500,000 barrels per day (bpd) starting in August in order to support Saudi Arabia’s efforts to stabilize oil prices, Kommersant writes.

In fact, Russia reduced its seaborne oil exports by 450,000 bpd in June compared to May amid a peak in repair work at oil refineries, Viktor Katona at Kpler estimated. That said, if May is considered as the starting point for the cut, Russia will actually reach the reduction target as early as in July. The expert also notes that a reduction in export shipments may allow Russian oil companies to strengthen their negotiating positions for cutting the discount on the Russian benchmark Urals oil blend compared to the global Brent benchmark.

If the entire amount of 500,000 bpd is redirected to refineries, oil companies will increase oil processing by about 10%, said Boris Sinitsyn, head of resource sector analytics at Renaissance Capital. Notably, this amount will impact the global balance, the analyst noted: Earlier, the International Energy Agency expected the shortages on the global oil market to exceed 2 mln bpd in the second half of 2023, but given another reduction by Saudi Arabia and Russia, the shortage may grow accordingly.

Finam analyst Alexander Potavin, in turn, told Vedomosti that reduction announcements by the world’s top two oil-producing countries pointed to "targeted steps aimed at increasing global oil prices for the coming months." He added that global oil demand was not growing at the moment and, thus, it was possible to push prices up only by reducing supplies.

Maxim Malkov, partner at Kept Strategic and Operational Consulting Practice (formerly KPMG in Russia), also believes that the decision on additional cuts stems from the desire to support prices.