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Top stories in the Russian press on Thursday, March 5, prepared by TASS
Izvestia: Moscow hopes to put an end to escalation in Idlib
Russia is not interested in further escalation in Idlib — Moscow expects to see effective negotiations between the Russian and Turkish leaders on March 5, a senior Federation Council member told Izvestia. The experts interviewed by the newspaper are also optimistic, but do not rule out the possibility of the negotiations being difficult, and their results could be unlikely to translate into a long-term agreement. However, the main task now is to prevent a direct clash between the Russian and Turkish military in Syria, the newspaper wrote.
Moscow hopes that Ankara will return to a constructive dialogue, Head of the Federation Council’s Foreign Affairs Committee Konstantin Kosachev told Izvestia. "The meeting of the two leaders is extremely important, without it the situation had all the signs of escalation and could reach the point of no return. There is every chance for the negotiations to be effective, because neither Russia, nor, as I hope, Turkey are interested in developing the worst-case scenario in the region," he said.
A deal between Russia and Turkey can be reached if Ankara agrees to reasonable compromises and understands that troops should be withdrawn from the Syrian territory in the foreseeable future, head of the Institute of Oriental Studies of the Russian Academy of Sciences Vitaly Naumkin told Izvestia.
The main goal of Ankara is to retain observation posts that are currently surrounded by the Syrian army. Russia will insist that the Turks withdraw to their border — now they have delved into Syria for about 50-60 km, and Moscow requires that they stay within 15-20 km from the borders, Turkish political scientist Kerim Has told Izvestia. In any case, the current agreement between Moscow and Ankara will not solve all the problems of Idlib, it will only allow avoiding a direct clash between the Russian and Turkish military, the experts believe. Discussing the details and developing a complete solution will take more time, he added.
Izvestia: Fate of OPEC deal remains in question
At the next OPEC+ meeting in Vienna, which will end on March 6, the decision is likely to be made to further reduce oil production amid the spread of coronavirus. A meeting of the monitoring committee was held recently but did not end in a consensus, when Russia’s Energy Minister Alexander Novak left it early, which provoked a drop in oil prices. According to Izvestia’s source familiar with the position of the Russian delegation, Moscow did not support the idea of increasing production cuts by another 1.5 million barrels. Moscow, most likely, is seeking a more modest decline, according to experts interviewed by Izvestia.
The contradictions in assessing problems in the energy markets between the union countries have clearly heightened, Deputy Director General of the National Energy Institute Alexander Frolov told Izvestia. "Thus, the vision for future steps that need to be taken to stabilize prices is also different. OPEC, led by Saudi Arabia, believes that it is necessary to reduce production, because forecast demand is declining. And Russia, apparently, does not intend to do this, since, on the one hand, the current problems are temporary and demand will grow, and on the other, the situation in our oil industry remains stable even at current prices," he said.
According to Frolov, if Russia does not join the deal, it would lead to a split in OPEC+, but Russia will win back new markets. In addition, it is possible that Moscow is seeking a more modest reduction — at the level of 200,000-300,000 barrels per day, the expert added.
Experts surveyed by Izvestia believe that additional production cuts can be expected after the Vienna meeting. However, the cuts could be adjusted, and then Russia will eventually join the decision. Expert at the Academy of Financial and Investment Management Gennady Nikolaev said that after the meeting in Vienna, Saudi Arabia will take on the major cuts — reducing drilling activity by 500,000 barrels per day. However, Russia, in his opinion, may well have just 70,000-100,000 barrels. In the short term, this decision can support oil prices — they can reach $56 per barrel against the current $52. The potential for further growth is limited by the state of the Chinese economy, the expert told Izvestia.
Kommersant: Russia’s tourism market in turmoil
Political confrontation between Russia and Turkey and the outbreak of coronavirus may push the tourism industry to a new crisis. Analysts do not rule out that the revenue of Russian tour operators in 2020 will drop by 30-50%, and some small players will go bankrupt. The situation will also be difficult for air carriers, which have already faced a 30% drop in demand for flights abroad. According to Kommersant source familiar with the situation, around 20% of the 100,000 tours sold to Italy worth 4.3 bln rubles ($64.92 mln) with departures from March to the end of summer have already been canceled.
The aggravation of Russian-Turkish relations presents a challenge for tour operators, Kommersant wrote. According to Level.Travel tour operator, starting from February 28, the number of booked tours to Turkey decreased by 35% compared to the previous week. The number of bookings of tours to other European countries, according to OnlineTur.ru estimates, has decreased by 30% over the past week.
Two sources in the air transportation market told Kommersant that demand for regular flights is also rapidly declining. According to one of them, since the end of February, the number of airline tickets to international destinations has decreased by an average of 30%, domestically — by 3-5% year-on-year. According to the source, Italy has seen the biggest decline, as ticket sales plummeted losing 80%.
At the same time, the drop in the activity of tourists, most likely, will not be limited only to "problematic" regions, Kommersant wrote. A source in the tourist market told Kommersant that many travelers are now scared by the prospect of ending up compulsory quarantined after returning from Italy.
Analysts do not doubt the serious consequences for the market. Partner at Strategy Partners Alexey Prazdnichnykh suggests that the overall decline in demand for travel services in the current situation could be about 30%. Tour operators face the toughest situation, he said, unlike airlines they cannot count on state support.
Vedomosti: Russian lawmakers will review arms regulation
The government of the new Russian Prime Minister Mikhail Mishustin resumed reviewing the mandatory business requirements initiated by his predecessor Dmitry Medvedev, and immediately expanded the list of areas for reforms. Two working groups were added to review arms sale regulations and transport security, Vedomosti wrote. Changes in management of these two overly regulated spheres could help develop domestic markets, experts told the newspaper.
New groups were created in response to persistent business requests, a source in the government told Vedomosti. There is a demand for one license to purchase all types of weapons, and not separate ones for each, and companies that sell weapons have many redundant rules for bookkeeping, top manager of a Russian arms company told the newspaper. It is important to reduce the number of inspections of arms sellers, Vedomosti’s source believes.
The changes will help develop the domestic arms market, former adviser to General Director of the Kalashnikov concern Andrey Kirisenko told the newspaper. The more legal weapons are sold on the market, the higher the culture of use, and the more the infrastructure (shooting galleries, shooting ranges) and shooting sports will develop, he said.
The transport industry is also heavily regulated, CEO of Infoline Analytics Mikhail Burmistrov told Vedomosti. Many transport safety measures are ineffective, and train stations suffer the most. While it is difficult for them to efficiently use commercial areas, safety does not increase to the expected level, the expert said.
Kommersant: Russia’s IT market grows thanks to state support
The business climate in the Russian IT industry has begun to improve, according to a study by the HSE University. Market participants agree that the worst years have passed, although they recognize that the growth is supported by the state finally becoming the industry’s largest customer, Kommersant wrote. Meanwhile, the study cited resisting risks of inspections and arrests of IT businessmen among the negative factors for the industry’s development.
In 2019, the Russian IT industry went into a phase of active growth, according to the study. Sanctions boosted the development of domestic products, Oberon operations Director Maria Linkova told the newspaper. She notes that it has become more difficult for Russian developers to sell products in Europe and North America, but exports of Russian IT services and software as an alternative to more expensive Western products has grown thanks to the demand in the Middle East, Asia, and Latin America.
At the same time, the growth in the Russian IT market in 2019 is due to the fact that the state became its largest customer, Chairman of the board of directors of Corus Consulting Alexander Semyonov said, referencing development of digital services for the Federal Tax Service, the Ministry of Telecommunications, Sberbank, and the Russian Post.
Meanwhile, lack of specialists hinders development of the IT industry, the situation is aggravated by large state-owned companies "that vacuum the market", Executive Director of developer Raidix Sergey Razumovsky told the newspaper. In 2019, Sberbank, VTB, the Russian Post, and Rostelecom began to position themselves as suppliers of IT services for medium and small businesses, Semyonov added.