West warming up to idea of Russia-Ukraine peace talks; Israel hits back at Hezbollah as tensions rise; and unrest in Venezuela tests Maduro's hold on power. These stories topped Wednesday's newspaper headlines across Russia, according to TASS News Agency.
Izvestia: West sees Ukraine's negotiating position strengthening
The West is increasingly talking about the need for negotiations between Russia and Ukraine, but this does not mean that the EU and the US are actually ready for the peace process, experts tell Izvestia. In an interview with Le Monde, Finnish President Alexander Stubb said that Kiev is supposedly in a stronger position to start a dialogue with Moscow, despite the fact that the situation on the battlefield does not favor the Ukrainian armed forces. Meanwhile, Kiev shows no clear signs of wanting to start a meaningful conversation about the future of its relations with Russia.
According to Stubb, Ukraine's "stronger position" stems from the West's resumption of aid to Kiev. However, what exactly Stubb means is not very clear, since Russian forces liberated more than ten settlements in July alone and continue to hold the general initiative in the special operation zone, military analysts told Izvestia. Conversely, the Ukrainian armed forces are severely lacking in personnel amid obvious problems with mobilization. In any case, the political landscape in the West is changing, as seen by the growing popularity of right-wing parties in the European Parliament elections, the newspaper writes.
Another reason for the changing winds may be the uncertainty swirling around American politics, particularly the upcoming election. With the Democrats changing candidates and the possible rise to power of Donald Trump, many believe that the country’s foreign policy is headed for a change. "If Western countries took a united position on the need for negotiations, Kiev would have followed their lead, as it is dependent on its European and American partners in this matter. Now it seems that these endless initiatives and talks about negotiations just cover up the real problem, simply diverting attention from the difficult situation Kiev and its partners are in," Denis Denisov, expert at the Russian government's Financial University, told Izvestia.
"Being tired of the conflict and wanting to end it are two different things. The conflict can be frozen, but to end it you need concrete proposals. It’s possible they just want to bring Russia into the negotiation process so that they can freeze the conflict and then resume it when they need to," IMEMO RAS senior researcher Dmitry Ofitserov-Belsky told the newspaper.
On the other hand, as the Russian leadership points out, if Kiev really wants to show that it's ready for communication, it must first cancel its own decree which bans such negotiations. So far, Ukraine has not done this, which means that any rhetoric about the peace process can be seen as nothing more than testing the waters to see how Russia responds, Izvestia writes.
Izvestia: Israel does not intend to limit its recent attack to Beirut’s suburbs
The Israel Defense Forces will continue to attack Hezbollah positions in order to eliminate members of the organization, an IDF representative told Izvestia. On the evening of July 30, the Israeli army struck a southern suburb in Beirut, killing two people, according to the Lebanese Civil Defense. Israeli Defense Minister Yoav Gallant announced that Hezbollah had "crossed red lines." The attack on the suburbs of the Lebanese capital can certainly be seen as a step toward escalation, but experts are not ready to jump to conclusions.
"Until we can restore the security of the residents of the north and give them the opportunity to return to their homes, we will strike Hezbollah positions and eliminate militants and commanders of this organization," representative for the Israeli Defense Forces Anna Ukolova told the newspaper.
"In my opinion, there is no reason to believe that Israel's attack on Beirut will necessarily escalate into a full-scale war. The IDF operation in the Gaza Strip has dragged on, and in these conditions, Israel has no interest in turning the border region with Lebanon into a full-fledged second front. Hezbollah is not Hamas, it has a lot more weapons and capabilities to confront and hurt Israel," Program coordinator at the Russian International Affairs Council (RIAC) Ivan Bocharov told the newspaper.
The expert also suggested that Hezbollah will not look to escalate things for fear of losing its political positions in Lebanon. "The movement will probably respond to Israel's attack, but will try not to provoke it into an even more massive attack on Lebanon," he added.
It is still unclear who can act as a mediator between the warring parties, but experts believe that Qatar could be an option. "This Arab country has strong trade ties with both the direct (Israel, Hezbollah) and indirect (Iran) participants in the conflict, and doesn’t favor any of them. Alternative options from among the European powers - for example, France - will probably not be able to influence the situation, since they do not have stable interaction with Iran," Asian expert Leonid Tsukanov believes.
According to the expert, international mediators will focus on preventing a full-scale war between the conflicting parties.
Vedomosti: Can Maduro maintain control as protests sweep Venezuela?
The opposition protests in Venezuela have spread to 20 out of 23 states. According to the Spanish newspaper El Pais, 46 people were arrested on the first day of protests, and at least two people were killed. The Venezuelan Defense Ministry reported the death of one soldier. Against this backdrop, Venezuelan President Nicolas Maduro accused outside forces of interfering in the electoral process and of incitement. According to experts interviewed by Vedomosti, where the situation goes from here will depend largely on Maduro's ability to mobilize his supporters, as well as the loyalty of the army and police.
The scale of the current protests has surpassed that of the unrest that swept Venezuela in 2019, advisor to the director of the Institute of Latin America of the Russian Academy of Sciences Nikolay Kalashnikov told the newspaper. The opposition has probably been seriously preparing for such a turn of events, and the authorities will be tasked with returning the socio-political situation to normal, as there is now a real threat to the stability of the Venezuelan regime. Everything will depend on whether Maduro can find support in the country and keep the army and police behind him, the analyst emphasized. At the same time, the expert does not rule the Venezuelan army breaking ranks and mutinying. Maduro's statements indicate that he is determined to fight the opposition very decisively, although during his years in power he has shown himself to be a very flexible politician who knows how to find compromises when necessary, he added.
More people in Venezuela are ready to take to the streets, believes Irina Akimushkina, Associate Professor of American studies at the Russian State University for the Humanities. The people are most upset about the low standard of living in the country, the lack of food, and the outcome of the recent elections.
The military's continued support for Maduro remains the key factor in the current situation, she noted. Regarding the election results, Maduro will not make any concessions now, the expert believes, but this may change in the future.
Lawmakers have legalized cryptocurrency mining in Russia. The Bank of Russia promises that the first settlements in cryptocurrencies within experimental regimes will begin before the end of this year, Nezavisimaya Gazeta writes.
Currently, the current legislation prohibits the use of digital currency in payments. The new law allows the use of cryptocurrency as a means of payment in foreign trade activities within experimental legal regimes. Cross-border settlements are vulnerable to sanctions, as they are made in dollars and euros through SWIFT, which is why it is important to develop alternative channels, according to the Governor of the Bank of Russia Elvira Nabiullina.
At the same time, experts assess the consequences of the legalization of cryptocurrencies differently. "Only large exporters will be likely to meet conditions set out in the regulations, making crypto payment like a ‘closed club’ that excludes small and medium-sized businesses. For example, transactions will be restricted to those who have mined crypto themselves, something only big companies in Russia currently do," Bloomberg quoted analyst Ani Aslanyan as saying.
"Digital financial assets are the next stage in the development of the financial market. We need to understand that we are talking about secured assets. Expanding financial opportunities will always have a positive impact on the industry. But I am not sure that working with digital financial instruments will seriously affect cross-border payments," HSE Professor Mikhail Komarov told Nezavisimaya Gazeta.
The use of cryptocurrencies for cross-border payments may not solve the sanctions problem, Law Group partner Vladimir Shalaev told the newspaper.
"In addition to allowing foreign digital financial instruments, it is important to build a fully functional infrastructure both within the country and at the interstate level, as well as to legitimize digital financial instruments in Russia as a means of settlement," Ricom Trust CEO Dmitry Tselishchev believes.
Vedomosti: Stronger Russian ruble may impact tax revenue
A deviation of the ruble exchange rate from the official forecast path could cost the government 500 - 750 bln rubles ($5.79 bln - 8.69 bln) in tax revenue this year, according to estimates from experts interviewed by Vedomosti. However, the risks to budget revenues are offset by higher oil prices and higher-than-expected growth in nominal GDP due to accelerated inflation.
Oil and gas revenues remain the most exchange rate-sensitive item in the structure of budget revenues, Gazprombank economist Pavel Biryukov told the newspaper. In a stress scenario, if the deviation of the actual ruble exchange rate from official estimates continues until the end of the year, the budget may lose about 750 bln rubles ($8.69 bln) of the 10.7 trillion rubles ($124.05 bln) in oil and gas revenues expected by the government, Biryukov added. The scale of the potential impact on the revenue forecast is about 0.3% of GDP, or about 500 bln rubles ($5.79 bln), Director of the Sovereign Ratings Group at ACRA Dmitry Kulikov estimates.
Risks to budget revenues in 2024 are offset by a higher oil price and a higher trajectory of nominal GDP, economist Viktor Tunev told Vedomosti. The dynamics of nominal GDP, which, among other things depends on inflation, are much more important for budget revenues, Director of the Analytical Department of the Regional Investment Company Valery Vaisberg believes.
Emil Ablaev, expert at the Center for Macroeconomic Analysis and Short-Term Forecasting, believes that higher inflation will contribute to the growth of budget revenues. By the end of the year, inflation will be higher than the 5.1% expected by the government, which will lead to additional budget revenues, especially indirect taxes, the expert believes.
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