The outbreak of war between Israel and Palestine raises the serious risk of disruption in global oil markets; the West is set to back Ukraine’s Vladimir Zelensky for re-election if the presidential vote actually takes place; and US senators are making the first congressional junket to China since 2019. These stories topped Monday’s newspaper headlines across Russia, according to TASS news agency.
Nezavisimaya Gazeta: Outbreak of Israel-Palestine war raises risk of oil market disruption
Although the outbreak of the latest Israel-Palestine war does not pose a threat to global economic growth, things may change if more countries, or the world’s largest oil exporters, get dragged into the conflict. Experts interviewed by Nezavisimaya Gazeta say the latest escalation presents a serious risk to commodity prices, while demand for gold and other safe havens may rise. Scenarios involving further escalation or a widening conflict do not yet presage any significant decline in oil export revenues for Russia, however.
Over the weekend, the members of Israel’s Security Council voted to formally declare war on radical Palestinian groups in the Gaza Strip. The last time Israel took such a step was exactly 50 years ago during the October 1973 Arab-Israeli War, known as the Yom Kippur War, which triggered the first global fuel crisis. Back then, the West faced a supply embargo by Middle Eastern oil producers, which resulted in a quadrupling of oil prices. The current war comes as Israel’s response to Palestinian missile strikes on southern and central Israel. (According to some reports, 3,000 projectiles broke through Israel’s Iron Dome air defense systems, with dozens of Palestinian fighters swooping over the border on paragliders and trucks. The latest reports say 424 Palestinians were killed and 2,300 were injured during the escalation; over 700 people were killed and over 2,200 were injured in Israel).
"If the conflict grows and risks for vessels arise somewhere in the Strait of Hormuz, oil prices will rise," Stanislav Mitrakhovich, leading expert at the Financial University and the National Energy Security Fund, told Nezavisimaya Gazeta. "Also, given any further escalation, the United States may take actions against Iran. The Americans may tighten control over growing Iranian oil exports, a trend they have lately turned a blind eye toward. This may be a game changer and oil prices may grow because of potential US moves," the expert surmised.
Thus far, however, the risks appear to be low of the conflict expanding further or, more importantly, that it may involve major oil exporters, according to Artyom Klyukin, an expert at IVA Partners. "It’s too early to say how this conflict will unfold. It may end within days, as the entire population of Israel may be mobilized, and the country has a very strong army," Nikolay Dunayev, vice president of the Opora Russia non-governmental organization (NGO), told Nezavisimaya Gazeta. However, should the conflict escalate to a wider confrontation between the Muslim and non-Muslim worlds, an arc of unrest may stretch from Indonesia to Nigeria, with the confrontation with Israel and its supporters being at the very center of it, he argued. Then those who would dare stand against the Islamic world would regret it greatly, and the Ukraine crisis would look like "child’s play" in comparison, he warned.
Izvestia: West to back Zelensky’s re-election if Ukrainian presidential vote goes ahead
The European Union would support Vladimir Zelensky as a candidate for re-election if Ukraine actually holds a presidential election next year as scheduled, members of the European Parliament told Izvestia. However, much will depend on the US stance, the politicians argued. Sources familiar with the situation said that, for the time being, Washington also wishes to see Zelensky run for re-election. The incumbent Ukrainian president suits Western leaders as he has been pursuing the policy course that they need, experts stress.
In the summer, the Ukrainian parliament, the Verkhovna Rada, voted to postpone parliamentary elections originally slated for this month after Kiev extended martial law until mid-November. Kiev then proposed putting off the presidential vote, which is scheduled for March 2024, but Zelensky recently said the election may take place even with martial law still in effect. In late August, he also promised to announce his re-election bid, if the vote is green-lighted.
Several members of the European Parliament (MEP) insist that the EU sees no alternative to Zelensky among the current crop of Ukrainian politicians and that Brussels will support him come what may, even with the rise in corruption and authoritarianism under his tenure. "Signs of criticism are appearing even among Zelensky’s supporters in the European Parliament, as everybody understands only too well that the festering problems of corruption and suppression of the opposition would one day bubble to the surface. But it’s hard for me to imagine the EU supporting any other candidate, judging from how it has been indulging Zelensky’s every whim," French MEP Thierry Mariani told Izvestia. "For the EU, Ukraine means Zelensky, and Zelensky means Ukraine. The West is not interested in having Ukraine portrayed as a divided nation with a split political leadership," he added.
However, whether the presidential election in Ukraine next year takes place will depend entirely on Washington, as Europe does not have any real say in the matter, said Croatian MEP Ivan Vilibor Sincic.
Andrey Suzdaltsev, political scientist at the Higher School of Economics (HSE University), agrees that there could hardly be any alternative to Ukraine’s incumbent leader in the potential election. "In essence, Zelensky suits the West <…>. He is a legitimate president who has been trying to meet Western requirements. The West would like to see him re-elected, and therefore Westerners have been insisting that a presidential election should take place, while the appearance of an alternative candidate is unlikely," he told Izvestia. Moreover, attempting to remove the Kiev regime through normal procedural means is becoming impossible as it is increasingly turning into a dictatorship in which the security forces play a key role, he concluded.
Vedomosti: US senators on junket to China for first time since 2019
A delegation of US senators led by Majority Leader Chuck Schumer (Democrat, New York) arrived in Shanghai on October 7. Although China is just one stop on their Asian itinerary, as the senators are also planning to visit South Korea and Japan, this is the first US congressional visit to China since 2019.
Upon his arrival, Schumer said that the United States was ready to compete with China but that Washington was not seeking any conflict. The senator also voiced concerns raised by US businesses working in China, which, he said, have been complaining of unfair treatment by the Chinese authorities. The senior US lawmakers may also discuss human rights, the fight against fentanyl trafficking to the US, and potential areas for bilateral cooperation. The US delegation also expects to meet with Chinese President Xi Jinping.
The visiting US senators represent states with varying degrees of economic involvement with China, some of which have a rather strong reliance on Beijing, Vasily Kashin, director of the Center for Comprehensive European and International Studies at the Higher School of Economics (HSE University), told Vedomosti. The politicians are seeking to demonstrate that they do care about economic opportunities for their home-state constituents, he added, while surmising that one of Schumer’s goals may be to use interparliamentary communications as an alternative avenue for dialogue with China.
The Biden administration is sending a number of messages to Beijing, seeking to show that it does not wish to escalate tensions in bilateral relations any further, says Vladimir Vasilyev, senior research fellow at the Russian Academy of Sciences’ Institute for US and Canadian Studies. Against the backdrop of the developments in Ukraine and the Middle East, the United States may be looking to block China from using this window of opportunity to escalate the conflict around Taiwan, the expert argues. Whether Schumer succeeds in convincing the Chinese that a bad peace is better than a good quarrel remains to be seen, he added. In any case, economically it is now important for Washington to prevent any decline in cheap Chinese imports as this could trigger a recession in the US economy, Vasilyev concluded.
Izvestia: Russian Navy gets anti-aircraft ground missiles
Russia’s latest air defense system, which is capable of not only intercepting aerial threats but also destroying maritime and ground-based targets, has been put into service with the Navy. The use of the Poliment-Redut system against surface targets has been successfully tested, and the air defense system is currently being finalized to hit ground-based targets, Russian Defense Ministry officials told Izvestia. The missiles integrated into this system will replenish the arsenal of Russian corvettes of the 20380 and 20385 projects as well as the 22350 series frigates.
The Poliment-Redut weapon was built on the basis of the S-350 Vityaz air defense system and is designed to intercept aircraft, helicopters and cruise missiles. It can fire 9M96E or 9M96E2-1 missiles with a range of up to 50 to 150 km, respectively. The system is also equipped with 9M100 short-range missiles. The missiles can hit targets at altitudes ranging from 5 m to 8 km, moving at speeds of up to 3,600 km/h.
Experts say that this system will significantly strengthen the fire capabilities of modern warships. Back in the Soviet era, weapons for ship-borne air defense systems were initially designed to have the ability to shoot sea-and ground-based targets, so this signals a return to previous tactical traditions, Dmitry Kornev, editor-in-chief of the Militaryrussia website, told Izvestia. According to him, the same system can be used in different circumstances, as it can fire at maritime and ground-based targets, without requiring any major modifications. The Poliment-Redut has simply been upgraded to a normal air defense system that can now be used as a dual-purpose system, the expert explained.
Today, the Russian Navy has nine 20380 series corvettes in service, with two more vessels currently being built for the Pacific Fleet, which should be commissioned with the Navy in 2024 and 2026, respectively. Meanwhile, the corvette Merkury entered service with the Black Sea Fleet in May, and work to build another corvette, the Strogiy, is currently being completed. All these warships were designed with the use of stealth technology. And the 20380 series corvettes have a powerful arsenal of weapons. These include the Uran anti-ship system with the X-35 missile and they are equipped with a universal 100-mm A-190 artillery mount that can fire up to 80 rounds per minute.
Kommersant: Russian wheat exports impacted by lower demand
In October, Russia may export less wheat than last October, with the volume potentially falling to 3.9 mln metric tons, according to pessimistic forecasts.
A wheat exporter told Kommersant that falling exports may be caused by the need to follow the price recommendations issued by the Russian Agriculture Ministry. "It has been impossible to sell [grain]," the exporter said, Sovecon CEO Andrey Sizov points to growing competition from Romania and Poland, too, which have been actively exporting wheat as they have accumulated large stocks of the crop.
Although the latest report by Sovecon showed that exporters’ demand for grain remains low, Sizov sees prerequisites for a higher consumption of Russian wheat. Egypt still has a need for grain, while the country bought small amounts of it at recent tenders, which may spur deferred demand later on, Sizov argues. Also, global wheat prices may have bottomed out already and thus could start to grow again, he added. However, Russia will not be able to compensate for any monthly loss because of limited infrastructure capacities, he stressed.
Meanwhile, as of October 5, Russia has exported 18.2 mln metric tons of grain since the season began, or almost twice as much as a year ago, the Agriculture Ministry told Kommersant, citing customs data that excludes volumes sold to the Eurasian Economic Union. In the past week alone, Russia exported more than 1.8 mln metric tons of grain, while another 28 mln metric tons have been contracted for export throughout the second half of 2023, the ministry added.
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