Israel, Hezbollah move closer to full-scale war; India plays peacemaker on Ukraine; and Russia offers up new security framework for Asia-Pacific. These stories topped Monday's newspaper headlines across Russia, according to TASS News Agency.
Vedomosti: Israel, Lebanon on verge of all-out war
Following the July 27 attack on the Israeli-occupied Golan Heights, Prime Minister Benjamin Netanyahu threatened the Lebanese Hezbollah movement with a powerful response, according to the Prime Minister's press service. The threats came after rocket fire hit the Golan Heights, killing 12 people between the ages of 12 and 20 and wounding another 20. Experts interviewed by Vedomosti believe that we could be headed for a large-scale conflict between the countries, one that will not, in fact, lead to Hezbollah’s defeat.
Hezbollah denied any involvement in the airstrike in a statement published on the Al Jadeed TV website on July 27, calling the reports false. The attack on the Golan Heights has freed Netanyahu to conduct a military operation in southern Lebanon, RIAC expert Kirill Semenov told Vedomosti. According to him, this is a question of political survival for the Israeli prime minister, given the army's failures in Gaza.
"Israel did not achieve its goals in the war, and during the months of fighting Hamas even expanded its presence in the Palestinian enclave. Therefore, under the pretext of a threat from the north, Netanyahu may stop the military operations in Gaza and turn the people’s attention to Hezbollah. The Israeli Prime Minister does not need peace," the expert believes.
At the same time, Israelis themselves, with the exception of far-right politicians, are not interested in opening a new front for themselves, senior lecturer at the School of Asian Studies at the Higher School of Economics Andrey Zeltyn believes.
On the one hand, Semenov noted, a theoretical Israeli offensive on Lebanon would not lead to the defeat of Hezbollah - this group is much stronger than Hamas. "I believe that the Israeli authorities also understand this, which is why they will probably limit themselves to air strikes with a small advance of ground forces and will also try to influence other Lebanese groups to force Hezbollah to retreat beyond the Litani River," the expert added.
On the other hand, Zeltyn believes that Iran and other neighboring countries are unlikely to want to get involved in the conflict. "This was the case during the Second Lebanon War in July-August 2006. No one wants to get involved with the Israeli army and bear the cost of the war," he said.
Nezavisimaya Gazeta: New Delhi driven to play peacemaker in Moscow-Kiev conflict
Indian Prime Minister Narendra Modi may visit Ukraine on August 24, the country's Independence Day. If the visit takes place, it would be the Indian leader’s first trip to Kiev since the start of the special military operation and come shortly after his recent meeting in Moscow with Russian President Vladimir Putin. However, the exact date of the trip has not yet been determined and it is also possible that the country’s Foreign Secretary or National Security Advisor will go in the Prime Minister’s stead, Nezavisimaya Gazeta writes. Meanwhile, according to Indian media, the United States has convened an urgent meeting of the Quad group (the US, Japan, Australia, India) to encourage New Delhi to back Ukraine.
India has repeatedly stated that it is ready to act as a mediator in the conflict in Ukraine, independently or together with other countries of the Global South, such as Brazil or South Africa. Modi himself has called for a ceasefire to save lives. It is clear that he is motivated not only by humanitarian but also by political considerations, according to Nezavisimaya Gazeta. The international prestige of a country that could help end the worst armed conflict in Europe since 1945 would be greatly enhanced.
According to the New York Times, Washington is now turning up the heat on New Delhi, demanding that India move away from its neutral position and support Ukraine.
The big question, however, is whether Modi discussed his visit to Ukraine with Putin. Nandan Unnikrishnan, Distinguished Fellow at Observer Research Foundation New Delhi, believes that if Modi is taking peace proposals to Kiev, then he definitely talked about that with Putin beforehand.
"We do not know whether Modi's trip to Kiev was coordinated with Moscow or not. I do not rule out the possibility that Moscow is counting on India as a mediator. It is clear that India will not support Ukraine against Russia, no matter how hard the US tries. India has close and friendly relations with Russia, including in the defense sphere. India is not going to change its position," Tatyana Shaumyan, Head of the Indian Studies Center of the Institute of Oriental Studies of the Russian Academy of Sciences told Nezavisimaya Gazeta.
Izvestia: Lavrov promotes new security model for Asia-Pacific region
Russia is pushing to create an inclusive security model in the Asia-Pacific region - this approach was outlined by Russian Foreign Minister Sergey Lavrov at the conclusion of his visit to the region to participate in ASEAN events, against the backdrop of increasing pressure from the United States on Southeast Asia. Regional powers Moscow and Beijing both support this course, Izvestia writes. Experts told the newspaper that building such a model is possible, but NATO, which is very active in the region, could interfere in this process. And as always, the United States is looking to benefit from any crack in unity between the region’s countries.
Lavrov capped off his tour with a trip to Malaysia, an unsurprising move. In general, Malaysia, together with Indonesia, largely sets the agenda for the entire Asia-Pacific region, Izvestia writes. At the same time, Malaysia is under serious foreign policy pressure from the West, Dean of the International Relations faculty at the Institute of Economics and Business Administration of the Presidential Academy Alexey Svishchev told Izvestia.
"On the other hand, Malaysia is well aware that Russia and China are huge dominant powers in this region and, of course, it is neither advantageous nor strategically sensible for them to lose such partners. In 2019, even before the start of the special military operation, Russia signed a major agreement with Malaysia on boosting relations in all spheres and Moscow does not have good reason to go back on this deal," the expert said.
Thailand also plans to expand its relationship with BRICS. In June, the country's Foreign Minister Maris Sangiampongsa announced that the government was considering joining the bloc. ASEAN countries wouldn’t mind seeing this happen as well, as it would give them more direct access to the developing markets of the Middle East and Africa.
Russia has always been present in this region and has been paying attention to the way the security architecture is being built here, Alexey Svishchev said. Moscow is also ensuring its own security along its borders. The expert believes that Russia and China could build a comprehensive security system. However, one thing that could get in the way here is that the countries of the region are not accustomed to forming military alliances, he noted. NATO is trying to use this lack of experience against them by interfering in the region's security system.
Izvestia: El Salvador eyes BRICS membership
El Salvador is thinking about joining BRICS and may apply for membership in the organization, first secretary of the Russian Embassy in Nicaragua and Head of the office in El Salvador Alexander Ilyukhin said in an interview with Izvestia.
"It is possible that in the next year or two El Salvador will ask to be admitted to BRICS," he said, noting that El Salvador is also interested in attracting foreign investment, especially from BRICS countries.
"They understand that they need to diversify their economic relations and not be fixated only on the United States, or the World Bank. They are also interested in the EAEU, but at the moment they are not ready to join it, although they are considering this possibility," he added.
Meanwhile, the government of El Salvador continues to maintain neutrality in the conflict in Ukraine, and despite Kiev’s best efforts to enlist its support, El Salvador is sticking to its guns, Ilyukhin noted.
"The leadership of El Salvador wants to develop relations with Russia and is well aware of the current situation and the reasons for it. El Salvador has maintained its neutrality in this conflict to this day. We consider the neutrality of its government in the Ukrainian crisis as a degree of support. Vladimir Zelensky's team is constantly visiting El Salvador, trying to get through to the leadership, to get the Foreign Ministry to take action in support of Ukraine, but they have not been successful," he said.
Ilyukhin noted that representatives of the US Embassy in El Salvador have also repeatedly tried to pressure the country's government to get it to vote against Russia at UN meetings. "In all cases, the ambassadors of foreign states were told that El Salvador would not accept interference in its internal affairs and would conduct its policy in the international arena independently," he added.
Vedomosti: Key rate hike slows optimism on Russia's stock market
The MOEX Index, which had been recovering steadily all last week, fell below 3,000 points after the Bank of Russia’s decision to raise the key rate on Friday. In contrast, the RTS Index rose by 2.36% to 1,102 points from July 22 to 26, helped by a strengthening ruble. In the last few days, the market could have started to take into account less strict expectations for the key rate and the macroeconomic forecast of the Central Bank. The market also could be factoring in declining geopolitical risks and sanctions - on July 16, the New York Times wrote that Kiev plans to end hostilities through peace talks. However, the main reason for the market slowdown was the Central Bank meeting where it decided to increase the key rate, Vedomosti writes.
According to Evgeny Nesterenko, analyst at PSB Management Company, the rate hike indicates that the economy is still overheating. A rather harsh signal in the form of an increase in the forecast range (16.9-17.4% in 2024) indicates the possibility of raising the figure at the next meeting in September, the expert believes. The Bank of Russia does not plan to reduce the rate by the end of the year, the regulator’s Governor Elvira Nabiullina said.
Although the results of the Central Bank meeting were in line with market expectations, chief analyst at Sovcombank Mikhail Vasiliev expects them to have a negative impact on stock and bond prices.
A correction in the stock market is also likely in the short term. In the medium term, the dynamics of the stock market will depend on how effectively the interest rate hike can suppress inflation, stock market expert at BCS World of Investments Lyudmila Rokotyanskaya told Vedomosti.
At the same time, over the past week, the dollar fell by 2.8% (2.46 rubles) to 85.57 rubles, the euro - by 2.9% (2.28 rubles) to 93.04 rubles, according to official estimates from the Central Bank based on over-the-counter market data. The exchange rate of the yuan fell by 0.96% to 11.86 rubles.
The Bank of Russia’s decision on the key rate will not significantly affect the ruble exchange rate next week, but in the medium term it could prop the currency up, Mikhail Vasiliev believes. Deposit rates will rise after the key rate hike, which will further increase the attractiveness of holding onto rubles, he explained. In addition, higher interest rates on loans will reduce consumer demand and demand for imports.
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